Enforcement only strategy: dark times for farming

 

A study by the American Farm Bureau Federation forecasted the impact on farming and food prices if Washington pursued a strategy of enforcing immigration laws without expanding a guest worker program.

The report estimated (in 2014) that 525,000 or about half of hired farm workers are unauthorized. “Labor is farmers’ third highest expense, accounting for 17% of production costs for the sector as a whole and up to 40-50% in labor-intensive subsectors such as fruit, vegetables, and horticulture.” The guest worker program, H-2A, accounts for about 50,000 workers. I’ve been told that if California farmers were to implement e-Verify (employer verification) the impact on employment would be catastrophic. Native born workers have widely demonstrated their distaste for farm work.

Aggressive enforcement “is the most severe for agriculture since [it] not only tightens labor supply in the general work force but eliminates half of the hired farm work force. Agriculture’s initial losses are exacerbated by the cut-off of further undocumented immigration and the drying-up of the pool of workers generally drawn on by farm employers.”

The AFBF projects:

 A 1% to 3% reduction in grain production due to lagging feed demand due to lower livestock production. This translates into a 3% to 6% drop in grain producer returns based on both lower production and higher costs.

 A 13% to 27% reduction in meat production linked to higher wages’ double impact on the livestock sector.

 A 15% to 31% and 30% to 61% drop in vegetable and fruit production, respectively, combined with an offsetting increase in imported products. With U.S. producers unable to pass most of their increased costs on to consumers, vegetable and fruit producers absorb most of the wage cost increases and face the loss of 30 to 40% of their net revenues due to lower production and higher costs.

 A drop in net farm income of 15% to 29% due to lower production, lower gross receipts, and higher expenses.

 A drop in farm asset values linked both to the drop in farm income and the realization that the down-turn in the farm economy is due to a permanent shift in labor supply. Hence, the drop in asset values would most likely be stronger than the 10% to 15% generated in the model solution.

 A rise in food prices of 5% to 6% as consumers bear a small part of farmers’ higher costs but face smaller supplies of products generally despite higher imports, with the change in supply largest for fruit and vegetables as well as meat and dairy products in particular.

Imports of food have close to doubled in the past 25 years: “The import share estimate for 2013 is 20 percent based on value and 19.4 percent based on volume. In the early 1990s, the share estimates from volume were 12 percent and the shares from value were close to 11 percent.”

 

 

 

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