Specific Objectives of the Project:

1. To analyze the extent to which the COVID-19 health crisis affected California farmers’ access to farm workers in 2020.
2. To analyze how COVID-19 affected farming decisions in California in 2020.
3. To analyze how the COVID-19 pandemic is likely to influence the use of labor-saving technologies in the future.

Summary of Results:
We surveyed a broad sample of fruit, vegetable, horticultural, and nursery farmers covering California and the entire United States, in conjunction with the California Farm Bureau Federation, the National Council of Agricultural Employers, and American Hort. Surveyed farmers reported significant labor shortages. For example, in a national survey, nearly two-thirds of the farmers reported having difficulty hiring all the workers they wanted to produce their main commodity in their highest revenue producing state during 2021. The average farmer who would have normally hired 100 workers but faced a labor shortage would have only been able to hire 82 during 2021.

Farmers reported incurring additional costs related to COVID-19, including purchasing additional personal protective equipment, extra cleaning and sanitation activities, and adding sanitation facilities for workers. Some farmers reported spending thousands of dollars on each employee. COVID-19 played a role in the labor shortage issues that California farmers reported, with over half of the farmers who experienced a shortage indicating that COVID exacerbated it. Farmers reported a number of factors related to COVID-19 that contributed to labor shortages, including direct exposure to the virus, shelter-in-place orders, and generous unemployment benefits that allowed workers to obtain more income by not working. Most farmers who faced labor shortages indicated that the labor shortages were worse in 2020 than 2019.

H-2A workers are increasingly common, consistent with a USDA Economic Research Service study (co-authored by Professor Rutledge) revealing that H-2A visa use is rapidly expanding (Castillo, Martin, and Rutledge, 2022). There is no sign of this trend slowing down. H-2A workers continued to constitute a small share of labor use among California survey respondents. However, the H-2A program in California is expanding rapidly (Martin and Rutledge, 2022).

A significant share of farmers reported using a new labor-saving technology to help them mitigate problems stemming from labor scarcity. More than a third nation-wide made changes to their product mix to reduce labor costs. One in three California farmers reported implementing new labor-saving technologies in 2020, and among these, the main labor-saving technology was used on an average of 66% of their main crop production in their main county. The most oft-cited reasons for using labor-saving technologies and mechanical harvest aids, respectively, were rising labor costs and the ability to harvest faster.

Overall, this project found that many farmers face significant issues stemming from a lack of labor, while many are struggling to navigate the situation. Farmers are clearly making efforts to mitigate production and profit losses resulting from labor shortages; however, this issue continues to be a major challenge for fruit, vegetable and horticultural and nursery farmers in California and throughout the United States.

As background for these studies, we conducted detailed reviews of the changing agricultural workforce in the US and abroad, why it is happening, and its implications (Charlton, Rutledge and Taylor 2021); the agricultural labor supply response (Hill, Ornelas and Taylor 2021); and the future of work in agri-food (Christiaensen, Rutledge and Taylor 2021).

Specific Objectives of the Project: Objective

1. To analyze how labor shortages are affecting the use of the H-2A visa program and farm labor contractors in California.
2. To analyze how higher labor costs are affecting the crop mix, the use of labor-saving technologies, and cultivation practices in California.
3. To analyze the extent to which reductions in the farm labor supply are affecting the production of fruit and vegetable crops in California.

Project Report/Summary of Results:
The funds provided through this grant enabled us to continue processing and analyzing the data we collected from a 2019 survey that we conducted in collaboration with the California Farm Bureau Federation. Additional analysis of these data revealed that farmers have found it increasingly difficult to gain access to an adequate supply of farm workers between 2014 and 2018. Fifty-eight percent of the 1000+ farmers we surveyed reported that they were unable to hire enough workers at some point between 2014 and 2018, and a higher share of those reporting labor shortages between that time span said that they experienced shortages in 2017 and 2018. In response to labor-availability problems, farmers reported making a variety of changes to their usual production practices. First of all, the vast majority of farmers reported having to raise wages to attract and retain workers. Between 2014 and 2018, the share of farmers reporting that they had to raise wages to attract workers increased from 31% to 79%. Second, farmers report becoming increasingly reliant upon farm labor contractors (FLC) and the H-2A visa program. The most common reason for using an FLC was to make sure they had enough workers, while about a quarter
of respondents indicated that they used them to reduce the administrative burden associated with hiring farm workers. About 5% of farmers indicated that they had switched acreage out of labor-intensive fruit and vegetable crop production into mechanically-harvested crops. Of those who indicated that they had switched some acreage out of labor-intensive crop production into non-labor-intensive crops, the majority switched into the production of tree nuts, revealing evidence that is consistent with some media reports. About one-third of the farmers indicated that they had to change one (or more) of their usual cultivation practices at some point between 2014 and 2018 either because there were not enough workers available or because of rising labor costs. The percentage of farmers who reported having to change cultivation practices increased by 18 percentage points between 2014 and 2018. Roughly twenty percent of the farmers indicated that they had started using a labor-saving technology for the first time between 2014 and 2018. The most common types of labor-saving technologies were mechanical harvesters for wine grapes and specialized tractor attachments. The main reason for adopting these technologies was rising labor costs; although, over half of those who adopted a labor-saving technology for the first time also said that farm worker availability played a role in the decision, too.

Additional research that was conducted under this grant included ongoing work with cooperating personnel member Diane Charlton, which led to a (forthcoming) publication in the journal Agricultural Economics (see publication section below). This work uses panel data from a nationally-representative survey of rural households in Mexico and finds that educational attainment among rural Mexicans, which has been stimulated by investments by the Mexican government, has led to a decline in the supply of farm workers. This decline in the supply of farm workers is driven by higher returns in non-farm sectors of the economy due to the acquisition of valuable human capital, which has opened up opportunities to engage in non-farm employment for rural Mexicans.

Specific Objectives of the Project: Objective
1: To estimate recent and future trends in California farm wages.
2: To analyze the farm labor supply response to changes in farm wages.
3: To explore how increases in California farm wages affect the adoption of labor-saving technologies, the mix of labor-intensive crop production, and the employment of H-2A visa workers.

Project Report/Summary of Results
The funds provided through this grant enabled us to develop and implement an online survey of California farmers to study how they are adapting to the reduced availability of farmworkers. This survey was developed with the cooperation of the California Farm Bureau Federation (Sara Neagu-Reed and Bryan Little), who helped develop the survey and sent it to their members and affiliated grower groups on our behalf. The survey was tailored to elicit information related to (i) the extent to which farmers have had to increase wages to retain an adequate workforce, (ii) the use of farm labor contractors and the H-2A visa program, (iii) changes in acreage resulting from higher wages or reduced access to farmworkers, (iv) the adoption of labor-saving technologies, and (v) changes in cultivation practices resulting from labor scarcity. Over 1000 farmers responded to the survey. Some key findings from the survey include evidence that (i) the rate at which farmers have to pay higher wages to retain a sufficient workforce is increasing, (ii) the use of farm labor contractors and the H-2A visa program is expanding, (iii) some farmers are reducing acreage dedicated to labor-intensive crops and are switching into less labor-intensive crops like nuts and grain/row crops, (iv) many farmers (about 1/3 in our survey) have started using labor-saving technologies for the first time during the past few years, and (v) farmers are increasingly having to change cultivation practices as a result of reduced access to workers, including reducing or delaying pruning, weeding, and harvesting. Additional work will quantify the effects of labor shortages and higher wages on these various outcomes, but the survey format was tailored to facilitate these types of analyses and provide the data to conduct them.

We also engaged in a collaborative effort to co-author two Choices Magazine articles, one of which has been accepted for publication (the other is currently under review). The first article conveys the economic theory behind a farmer’s decision to adopt a labor-saving technology in the face of higher wages and includes a discussion about agricultural technologies that have been used and are being developed to help farmers produce with a smaller workforce. The second article discusses trends in farmworker employment and wages and draws upon previous research supported by the Giannini Foundation to provide estimates of how high farm wages will need to increase in order to keep the farm workforce stable.
Taylor and Charlton’s new book, The Farm Labor Problem: A Global Perspective, was published by Elsevier Academic Press in December 2018, with acknowledgement to support from the Giannini Foundation of Agricultural Economics. We created a website to feature the book and other farm labor research; see https://farmlabor.ucdavis.edu/.

There is substantial interest in this area of research, as can be seen by recent invitations for us to present work related to this topic at conferences, including the UC Davis Agriculture and Natural Resource Annual Vegetable Crops meeting, the World Bank’s Future of Work in Agriculture conference, the Department of Labor’s NAWS at 30 conference, and the Gifford Center for Population Studies’ Farm Labor 2019 conference.

Specific Objectives
To uncover long-term trends in the farm labor supply from rural Mexico and their implications for California farms and rural communities. This project has two components. The first is to continue our work “unpacking” a negative trend in the farm labor supply, which we identified using panel econometric methods with support from a Giannini Minigrant in 2013-14, and explore the implications for specific California crops, by integrating labor into a detailed crop production model. We will estimate the relative contributions of developments in Mexico, including the expansion of rural education and nonfarm economic growth; US border enforcement; drug-related violence along the US-Mexico border; and sector- and location-specific migration networks in explaining the significant decline in rural Mexicans’ probability of doing farm work. We will simulate the implications of this decreasing farm labor supply on specific crops (in collaboration with Richard Howitt and Josue Medellin). The second component (with Katrina Jessoe) will expand work initiated in 2013 on the impacts of weather shocks on labor allocations in rural Mexico, including migration to the US. Our early findings already have been presented at several conferences and workshops. They indicate that an increase in harmful degree days in rural Mexico, particularly at the start of the maize-growing season, negatively impacts both farm and nonfarm employment and increases emigration pressures. Both components will be the basis for constructing long-term projections of changes in the supply of farm labor to Mexican and US farms, the implications for California agriculture, and the role of immigration policy in an era of less abundant farm labor.

Summary of Results
Charlton (2014) and Charlton and Taylor (2015). They were presented at the UC Davis “Frontiers of Immigration International Conference” on January 22, 2015, and they appeared in The Wall Street Journal the following day. They also have been presented to grower and farm labor conferences, including the 2015 Oregon Wine Symposium, the Harvard University Farm Labor Challenges conference (November 2014), the “Farm Labor and the ALRA at 40” conference (2015), and the Banco de Mexico (2014).

In a related study (Jessoe, Manning, and Taylor), we find evidence that rural Mexicans are less likely to work locally in years with a high occurrence of extreme heat. This reduction is largely due to a decline in non-farm labor and wage work. Extreme heat increases migration within Mexico from rural to urban areas, particularly at the height of the growing season, and international migration to the U.S. Findings from this study were presented at the Agricultural & Applied Economics Association’s 2014 AAEA Annual Meeting in Minneapolis, and the Fifth World Congress of Environmental and Resource Economists.

Specific Objectives of the Project

This project used panel econometric methods to econometrically estimate and identify the determinants of the declining trend in the farm labor supply using household data from rural Mexico and began estimating the impacts of a changing farm labor supply on California agriculture.

Summary of Results

Data from the Mexico National Rural Household Survey (Spanish acronym: ENHRUM) permit us to track a nationally representative sample of rural Mexicans into and out of farm jobs over time—a total of more than 125,000 person-years of data. Our econometric analysis of these data shows a significant decrease in people's probability of working in agricultural jobs over time. This includes agricultural work in the village, in other parts of Mexico, or in the US. The downward trend in farm labor supply is pervasive across Mexico's five census regions. The supply of agricultural labor from rural Mexico is falling at a rate of 0.13%, or 11,200 workers per year. Our preliminary findings show that a number of different factors explain rural Mexica ns' gradual shift out of farm work. We are using the ENHRUM data to analyze these factors using panel econometrics. The two largest negative factors appear to be growth in Mexico's non-farm economy and the expansion of rural schools in Mexico. Increased US border enforcement increased the farm labor supply slightly, by keeping some people from migrating to the US. Border enforcement, drug-related violence, and economic conditions in the US influence where Mexicans work more than whether or not they do farm work. All of this is against a backdrop of a dramatic fall in Mexico's fertility rate, which is 2.05 children per woman, almost the same as the US and below replacement.

The transition of Mexican workers away from agriculture will have profound impacts for the U.S. farm sector, which historically has depended on an elastic supply of Mexican farm labor and will now have to compete with Mexican farms for a dwindling supply of labor. In the short run, the ramifications of a lower agricultural labor supply are partly mitigated by a decreased labor demand because of the California drought. We have begun collaborating with Josue Medellin and Richard Howitt to integrate labor into their California crop model, which was originally designed to evaluate the impacts of drought on specific crops. We are deriving employment multipliers of the drought, and will follow this with simulations of the impacts of farm labor-supply shocks on production. This will make it possible to understand interactions among climate change, farm labor supply, and crop production in California. On the Mexico side, we have compiled daily rainfall and temperature data from all weather stations within a 50 km radius of each village in our national rural household data set for the entire period covered by our labor data (1980-2010). This, we hope, will enable us to project impacts of climate change on labor allocations—including farm labor migration—by rural Mexican households.

We investigated the impacts of the "great recession" in 2008-09 on migration from rural Mexico to U.S. farm work using nationally representative panel data from households in rural Mexico with observations in years 2002, 2007, and 2010. Taylor, Charlton, and Yúnez-Naude (2012) compare individuals' employment in 2007, before the "great recession," and in 2010, after the recession. The study found a greater percentage decline in the number of rural Mexicans migrating to farm than nonfarm jobs in the U.S., even though the demand for farm labor remained steady throughout the recession. Of the migrants who remained in the U.S. between 2007 and 2010, some switched from the nonfarm to the farm sector, as expected given the change in the relative demand for labor across sectors, but even more migrants switched from the farm to the nonfarm sector. Additionally, the number of workers in the Mexican nonfarm sector grew steadily from 2002 through 2010. This evidence suggests that the rural Mexican workforce is transitioning off the farm. Our panel econometric estimates confirm this. The transition of the labor force away from farm work is consistent with a trend observed in nearly every country around the world: as per capita GDP rises, the share of workers in agriculture rapidly declines. The transition of Mexican workers away from agriculture will have profound impacts for the U.S. farm sector, which historically has depended on an elastic supply of Mexican farm labor and will now have to compete with Mexican farms for a dwindling supply of labor. To adjust to a smaller supply of labor, in the future U.S. farming will need to become more mechanized, relying on fewer and more productive workers. This will impact both the U.S. farm industry and rural communities; increasing skills and wages of farm workers may help break a vicious circle of farm employment, immigration, and poverty.