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Farm exports and farm labor: Would a Raise for Fruit and Vegetable Workers Diminish the Competitiveness of U.S. Agriculture?

Briefing Paper #295

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A quarter of the fresh fruit produced in the United States and almost a tenth of the fresh vegetables are exported. These exports—largely enabled by technology and transportation revolutions allowing fruits and vegetables to be consumed far from their place of production1—are a significant and growing force in the U.S. economy. In 2008, U.S. agricultural exports of $115 billion exceeded agricultural imports of $80 billion, generating a $35 billion farm trade surplus. Between 1989 and 2009, the value of U.S. agricultural exports rose 2.5 times, while exports of highvalue agricultural products, including fruits and vegetables, more than tripled.

However, over the same 20-year period, average hourly earnings for U.S. farmworkers only increased $1.52, from $8.55 to $10.07 (in 2009 dollars). The workers who are helping to produce these labor-intensive commodities are not seeing much benefit from rising exports.

How would the competitiveness of U.S. fruit and vegetable exports be impacted if farmworker wages rose? And how would this affect the pocketbooks of U.S. consumers? By examining the links between U.S. farmworker wages and fruit and vegetable exports, this briefing paper answers these questions. Specifically, the paper finds:

  • A 40% increase in farmworker earnings would lift a typical seasonal farmworker’s earnings from about $10,000 a year to $14,000 a year, above the poverty line for an individual.2
  • A 40% increase in farmworker earnings would at the most raise U.S. household spending about $16 a year, roughly the price of two matinee movie tickets. U.S. consumers, who spent less than $430 per household on fresh fruits and vegetables in 2009, would need to spend less than $446 to accommodate the tiny share of retail prices going to farm labor.3 (This $16 estimate assumes that rising wages would not change production or consumption, which likely would change, as follows.)
  • If farm labor costs rose, farm operators could and likely would make changes that increase worker productivity, including providing workers with productivity increasing harvesting aids, hastening the adoption of productivity-increasing growing and harvesting techniques, providing labor aids that reduce the physical demands of farm work and thus expand the potential workforce, and speeding the mechanization already underway in harvesting of commodities such as oranges and raisin grapes as well as in pre-harvesting activities such as pruning. (Producer responses would of course vary by commodity, producer size, and location.)
  • If higher wages prompt changes by farm operators to boost worker productivity, wage increases might expand, rather than reduce, U.S. fruit and vegetable production.
  • The impact of any price changes from increased wages (i.e., production cost increases not offset by corresponding increases in productivity but passed along to consumers) would be small because the major export markets for U.S. fresh fruits and vegetables—Canada and Mexico—have few lower cost alternative sources. (Rising U.S. farm wages may have relatively few shortterm impacts on certain high-value exports to Asian markets, but these exports could be threatened in the long run by the lower-cost, high-quality production in places such as China even at current wages.) In short, increasing farmworker wages to raise farmworkers out of poverty poses little threat to consumer pocketbooks or U.S. exports.

See related work on Trade and Globalization | Immigration

See more work by Philip Martin