Projects Funded for Zachariah Rutledge

2020-2021

The Effects of a Declining Farm Labor Supply on Fruit and Vegetable Production in California

  • Zachariah Rutledge
  • Pierre Mérel

Abstract

Specific Objectives of the Project
1. To quantify the extent to which decreases in the supply of farm workers affect the quantity of fruit and vegetable crops produced in California.
2. To determine how reductions in the supply of farm workers affects the number of acres of fruits and vegetables that can be harvested in California.
3. To quantify how much farm revenue is lost because of reduced access to farm workers in California.

Project Report/Summary of Results
Recent studies point to a decline in the U.S. farm labor supply driven by demographic and structural changes in Mexico, increased U.S. border security measures, and a decline in the number of farm workers willing to engage in follow-the-crop migration, which has reduced the geographic reach of local farm labor markets. A smaller farm labor supply has the potential to reduce access to safe and healthy produce, increase the nation’s reliance upon foreign producers, and reduce the profitability of U.S. farm operations. In order to examine the extent to which changes in the farm labor supply may affect crop production, we estimate panel regressions using a rich set of production and employment data from California counties.

This study brings together three datasets pertaining respectively to crop production, farm employment, and weather. Our empirical strategy deploys fixed-effects panel regression
models at the crop-county-year level of aggregation, where the regressor of interest measures county-year farm employment during the peak harvest season. The identifying
variation comes from differences across counties in the evolution of employment about smooth county-level trends, net of weather effects. The fact that crop employment, an equilibrium value, is used as the explanatory variable in place of the underlying yet unobserved labor supply variable causes important identification challenges. We use an equilibrium displacement model to gain insight into the bias likely to affect our empirical estimates. Our regression results reveal statistically significant upper bounds for the
effects of labor supply shifts on the production of hand harvested fruit and vegetable (FV) crops, but, as expected, not on that of mechanically-harvested nut or field crops.

Our empirical results indicate that a ten percent decrease in the farm labor supply (in terms of the number of workers willing to supply labor at a given price) causes at most a 4.2% decrease in hand-harvested FV production in the top 10 producing counties, which together produce 86% of the value of all labor-intensive crops in the state. Reduced production is primarily channeled through a decrease in the number of acres harvested (- 2.8%), although we also uncover small yield effects (-1.4%). Impacts on the total value of production appear to be concentrated in the top 5 counties (Monterey, Fresno, Tulare, Kern, and Ventura). There, a ten percent decrease in the farm labor supply causes at most a 5.5% decrease in production value.

Although the bounds for FV production are economically meaningful, they indicate that the impacts of a declining farm labor supply will likely be limited in the foreseeable future. These effects are perhaps best exemplified by focusing on the top 5 producing counties, which produce 67% of the value of all labor-intensive crops in the state. Recent estimates suggest that the U.S. farm labor supply is shrinking by about one percent each year. A decline in the farm labor supply of that magnitude in the top 5 counties could cause a loss of 60,000 tons of hand-harvested FV each year. Under the assumption that the decrease in hand harvested FV production is not replaced by the production of other crops, production value losses of an additional 0.55% per year for the 69 crops we consider in those counties could add up to as much as $3.8 billion, or 3.0% of the total value of production, over the course of a decade. Our analysis also suggests that harvest mechanization could provide an alternative to the use of hand-harvest labor in a time of labor scarcity, provided that technologies are advanced enough to prevent unacceptable damage to fragile FV crops.

2018-2019

The Impacts of a Declining Farm Labor Supply on Farming in California

  • Diane Charlton
  • Zachariah Rutledge
  • J. Edward Taylor

Abstract

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.