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Immigration reforms may cost farmers, consumers head 36/38

Closing off the U.S.-Mexico border to all but a few legal immigrants could come at a much higher price than the cost of more Border Patrol agents and the concrete for a 700-mile barrier between the two countries.

Economists with the American Farm Bureau Federation who have analyzed pending immigration legislation say the bills could lead not only to higher food prices but also to shifts in the sources of supply of fruits and vegetables for American consumers.

“With at least half of hired workers displaced with a migrant worker cut-off, agriculture would have to bid workers away from other sectors of the economy,” says Stefphanie Gambrell, an economist with the Farm Bureau's Washington office. “This would come at a time when those sectors would also face a loss of workers.”

Speaking at the Southern Region Agricultural Outlook Conference in Atlanta, Gambrell said Farm Bureau believes agriculture's current average wage of $9.50 per hour would have to rise to $11 to $14.50 per hour to attract sufficient labor from other job categories.

“Wages would probably need to rise to the upper end of this range because of the increased skills needed by agricultural workers in a variety of agricultural jobs,” she said.

Some might think that farmers could simply go to their local area or towns and find an abundance of workers to do chores on their farms, but that's not the case in many rural communities, says Gambrell.

The supply and demand for farm labor has stabilized at 3 million workers (compared to about 10 million in 1950), she says. And the proportion of hired workers to total labor is at an all-time high of 30 percent. The majority of those hired workers are foreign born.

“With rural unemployment rates near structural minimums; i.e., rural unemployment is at an all-time low, migrant labor is frequently the only kind of labor available,” said Gambrell, who grew up in Alvin in the Texas Rice Belt near Houston.

“What we're seeing is that agriculture has already been raising wages to attract and hold hired workers,” she said. (The average wage rate for farm labor has risen from about $8 an hour in 2000 to $9.50 an hour at the end of 2005.)

Gambrell cited some factors contributing to the increased demand for farm labor:

  • The market for fresh fruits and vegetables has grown by more than 30 percent in the last two decades. “That market puts a premium on peak quality and ripeness — qualities that depend on human judgment and dexterity in picking and packing,” she noted.

  • Technology advances and consolidation have put a premium on employees with advanced skills. “Dairies are an example of increased reliance on technologically adept hired labor with the average worker now earning about $40,000 per year (compared to $22,000 in 1996).”

As farms have consolidated, farmers have had to increase their dependence on hired labor. The case of a grower farming 200 to 300 acres with his son or wife and no hired hands is becoming increasingly rare even in areas like the Midwest.

“More than half of agriculture now hires labor with traditional crops such as corn and soybeans as well as livestock operations paying a significant share of labor costs,” Gambrell said.

Although agriculture's demand for labor is growing, Congress is considering major pieces of legislation that could close off one of the largest sources of hired workers and send many back to their countries of origin.

One bill, H.R. 4437, focuses exclusively on securing the border through increasing the surveillance and enforcement resources of the Department of Homeland Security and the creation of a new concrete and steel barrier along a portion of the U.S.-Mexico border. The legislation contains no guest worker provisions.

Another measure, S. 2611, contains some of the same border protection provisions as the House bill (more Border Patrol agents and unmanned aerial vehicles), but it also provides for a guest worker program for agriculture and non-agriculture sectors.

“This bill would also include a Blue Card program for agricultural workers that would not require workers to exit the country pending reapplication,” she said. “Both the agricultural and non-agricultural programs would provide potential for permanent status, if the workers pay fines and back taxes.”

Sen. Kay Bailey Hutchinson, R-Texas, and Rep. Mike Pence, R-Ind., have proposed a compromise bill that would focus on border security and immigration reform. The legislation, which has not been introduced, would make securing the border a priority and create new guest worker provisions after the border was certified as secure.

The Hutchinson-Pence proposal would require illegal aliens to first return to their countries of origin. Then they could apply to return to the United States through “Ellis Island-type” guest worker centers in NAFTA and CAFTA countries after passing background checks and health screenings. Employment would have to be prearranged in the United States.

Any guest workers would have to be employed in the United States for 17 years before they would be eligible for permanent residency, and they would have to show English proficiency before their status could be renewed.

Two of the three proposals could result in 50 percent or more of hired farm workers being forced to leave the country, she said. And producers would be forced to look to other sectors such as food preparation, construction and cleaning to find replacements at a time when those workforces would also be shrinking.

“Vulnerable fresh fruit and vegetable producers would be at severe risk of going out of business as added imports displaced domestic production,” says Gambrell. “The rest of the sector will see a drop in net farm income, given farmers' very limited ability to pass on the higher labor costs to consumers.”

The Farm Bureau analysis shows that for even a minimal increase in the average farm wage rate from $9.50 to $11 an hour, imports of fruits and vegetables could increase from $16 billion to $21 billion annually. If the average wage rate increased to $14.34, imports could increase to $25 billion annually.

“The potential labor cost increases for livestock, crop and other enterprises could have a $3 billion to $9 billion impact on net farm income,” says Gambrell. “Production losses — particularly for fruits and veggies — could range from $6.5 billion to $12 billion a year. And there would be further impacts to packers and other operations up the supply chain.”

So why wouldn't farmers simply move more harvesting machines into their fields?

It's true that growers favor mechanizations because it generally cuts costs, she said. But the availability of that equipment depends on long lead times and joint public-private investment in research and development.

“The harvesting of some crops cannot be mechanized,” says Gambrell. “There is still a need for judgment, dexterity and a complete harvest to make sure the producer can maximize returns.

“Without a viable temporary worker program capable of handling 500,000 to 700,000 migrants, U.S. agriculture faces significant and disproportionate losses. As a result, imported food will replace U.S.-produced products on grocery shelves and farm incomes will drop.”

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