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.