Pundit Interviews

Pundit Letters





Perishable Pundit
P.O. Box 810425
Boca Raton FL 33481

Ph: 561-994-1118
Fax: 561-994-1610


email:
info@PerishablePundit.com

a

Produce Business

Deli Business

American Food & Ag Exporter

Cheese Connoisseur



Pundit’s Mailbag — Tom Nassif And WGA Speak Out — Pundit Challenge: The Industry May Be Persuaded
But How Can We Be Persuasive?

Our piece, Preaching To The Choir: Shouldn’t The Industry Seek To Persuade Constituencies Who Have Other Prioritiesbrought much feedback, including this piece from an important industry leader:

In his July 25th Perishable Pundit column, Jim Prevor misses the mark in his analysis of the produce industry’s approach to immigration reform, which he characterizes as unpersuasive.

In particular, Prevor is critical of the industry talking point that states Americans will not do the work that is required to grow and harvest our fresh fruits and vegetables, which is why we claim to need immigrant farm labor. He goes on to espouse the capitalist tenet that “if you can’t attract labor, you change the job or the compensation so you can attract labor.”

From Prevor’s point of view, the solution to our labor shortage problems — and, consequently, our public policy challenges, because of those who oppose using foreign-born workers — is to mechanize, thereby limiting the need for laborers. He also goes on to assert that our industry has been slow to automate because of the availability of cheap labor.

On his first point, Prevor assumes that everything we do in fresh fruit and vegetable production can be mechanized, a notion that is not rooted [pun intended] in reality. Selecting fruits and vegetables for maturity and ripeness, while at the same time leaving the immature and unripe crops in the ground, is not the same as robotically assembling a car in a Detroit auto factory. 

Still, the produce industry is investing heavily in agtech to reduce the need for manual labor. For example, Western Growers is investing millions of dollars to expedite agtech innovation, including through its Center for Innovation and Technology. But the fact is, it will take years and yet-to-be-invented technology for automation to become viable and ubiquitous for the majority of produce commodities.

Prevor’s second faulty supposition is that by paying field laborers higher wages, produce farmers would attract domestic labor. The truth is, the hourly rate for most farm workers in California and Arizona is already well above the minimum wage, while many field workers can earn upwards of $20 per hour or more on a piece rate basis. Still, Americans do not come.

Let’s play along. Suppose we were to raise wages to $25 or $30 per hour? How many Americans would be willing to move to remote rural regions of California and Arizona — places like Firebaugh, Huron, Shafter, Blythe, El Centro and Yuma — for seasonal work? Location and seasonality are equally prohibitive barriers to attracting domestic workers to the farm.

The real point here is that by raising wages to some hypothetical level that would attract seasonal American labor, we would most assuredly price domestic produce farmers out of business. Our industry would quickly move to other countries with cheaper labor, effectively making our country dependent on imported food.

Tom Nassif
President and CEO
Western Growers Association
Irvine, California

We appreciate Tom’s thoughtful response. We know some of the WGA members were up in arms about this piece, and we value Tom’s outreach efforts.

First of all, it is important that we recognize our writings are generally separated by the medium we choose. For example, we sometimes write in outside publications, such as the Wall Street Journal, to reach influencers. In writing in the Pundit (and reprinting Pundit articles in sister publication Produce Business), we write for the industry. In this case, we were addressing the industry and not so much disagreeing with Tom as arguing that these industry points have simply failed to persuade those who disagree with the industry position.

The problem, we would submit, is that the people who are personally invested in these types of issues are already supporting the kinds of policies the WGA advocates!

‘OUTSIDE’ POINT OF VIEW

Looking at this from the position of an industry outsider, let us imagine the internal dialogue of a hypothetical citizen who would hold the following positions on immigration and workers:

1) The US can certainly benefit from allowing in some immigrants.

2) However, we should limit the number of immigrants to ensure they can have time to acculturate and to encourage civic harmony. I am mindful that as David Frum wrote in The Atlantic: “In the 60 years from 1915 until 1975, nearly a human lifetime, the United States admitted fewer immigrants than arrived, legally and illegally, in the single decade of the 1990s.”

3) If we are going to limit the number of immigrants, we should select those who can contribute the most to the country. We should consider criteria such as this: Can they bring investment capital? Can they bring high levels of STEM education that can enable our industries to advance? Do they speak fluent English and are they thus able to assimilate more quickly?

4) Because we are a democracy, ultimately our immigrants become citizens and so have an equal vote with me, so our immigrants need to be carefully selected. It is almost like choosing someone to be your partner in business.

5) It is very important to make sure that immigrants do not strain public services, such as free medical care at hospitals.

6) It is very important to make sure that immigrants do not cause undesirable social effects — crime, public drunkenness, etc.

7) We need to make sure that any temporary worker programs are truly temporary. I want an ironclad assurance that these people will actually leave. For example, I worry that they might have a baby while in America and that the baby will be the basis for an immigration petition one day for the parents. We have laws that limit this for illegal immigrants, but people here under a guest-worker program would be able to have children, who would legally be citizens from birth.

8) We should be hesitant about introducing or continuing programs that create political pressure for more immigration. In other words, it may be true that a summer youth camp in North Dakota has trouble attracting workers, but, if that is true, and if we allow guest workers to be employed there, we will see people build more summer camps there and then lobby for special immigration programs. I don’t want to encourage that.

9) We need to be fair to those who took the legal road of applying for a Visa at the embassy in their home country. Those who illegally jumped the line should never be favored over those patiently waiting to go through the legal process.

10) Illegal activity, such as entering the country illegally, or entering legally but failing to depart when legally required, must always have consequences. Otherwise the message we send is that whatever laws we make in the future, we are not serious. This will encourage illegal activity in the future.

The important thing is not whether this hypothetical person is correct or not in thinking of the issue this way. It is just to note that the industry, which understandably has different priorities, is not addressing any of this hypothetical citizen’s concerns. We are talking to the proverbial hand!

Ensuring an “effective inflow of farmworkers” is not on his list! That is on our list as an industry! Giving illegal workers “the opportunity to earn legal status” as long as the they don’t commit additional crimes is simply not on this hypothetical citizen’s list!

When we claim that the industry’s arguments on immigration reform are “unpersuasive,” this does not mean they are incorrect. Nor does it mean that this Pundit doesn’t agree with these points. It simply means that they won’t persuade people who have other priorities. This seems to us unarguable, since the industry has been lobbying for a Guest Worker Program, without the various requirements of the existing H2A, for as long as this Pundit has been writing. Yet the industry has not been able to achieve this goal.

For the produce industry focused on production, this would be a reasonable solution. But to persuade others to come over to our side, we need to address their concerns, not our concerns.

Tom is, of course, correct that it is highly unlikely we will suddenly get lots of Americans to harvest produce. But this claim may not resonate with the intended audience as the industry might wish. Partly, the issue is that the claim, so simple to a producer’s ears, translates differently to those who are anti-business and believe business people look to profiteer on their labor force. Remember that only 48% of the general population trusts business as an institution. So when the industry says Americans won’t do these jobs, what many Americans hear is: “The industry is unwilling to improve conditions and pay to make these jobs appealing to Americans.”

SPEAKING OF WAGES

Tom focuses on the robust hourly wage, but maybe that is not what will attract workers. Perhaps workers want 52-weeks-a-year guaranteed employment, and the industry has to create collaborative bodies to offer this. Perhaps the workers want to know they will still get paid if the weather is bad or they fall ill. Perhaps workers want health insurance, 401K plans, tuition reimbursement. Maybe with such a physically demanding job, they value paid vacation or shorter work weeks.

Despite the high hourly wage, the Bureau of Labor Statistics states that in 2018, the median pay for an agricultural worker in the US was $24,620 per year – as opposed to a national median for all workers of $38,640 per year.

In the produce industry, many ag workers do not work full time. The Economic Policy Institute published a piece by Philip Martin and Daniel Costa titled, Farmworker wages in California: Large gap between full-time equivalent and actual earnings:

A report in the LA Times last week explored why farmers in the Central Valley are having a hard time finding enough workers, despite reportedly paying up to 40 percent more than the California minimum wage. “Today, farmworkers in the state earn about $30,000 a year if they work full time — about half the overall average pay in California,” notes the Times. “Most work fewer hours.”

The second sentence here is key: most farmworkers are not employed 40 hours a week 52 weeks a year, so most earn far less than $30,000 per year. In fact, in 2015, workers who received their primary earnings from agricultural employers earned an average of $17,500 — less than 60 percent of the average annual wage of a full-time equivalent (FTE) worker in California.

A related issue is that producers are, of course, focused heavily on the economics of their business, and farm labor is a big expense. But the truth is that farmers receive only a small portion of what consumers pay for produce. Retailers, distributors, truckers … the whole supply chain takes a share.

This opens the possibility that farmworkers could be paid much more, without dramatically increasing the cost of produce. A recent article published in National Geographic, ”Can We Afford to Pay U.S. Farmworkers More?” breaks it down succinctly:

Giving the 3.5 million workers picking produce on American farms a raise to match the $15 an hour many fast food workers are fighting for sounds unaffordable, right?

Not really. According to University of California-Davis agricultural labor economist Philip Martin, the likely additional cost to American shoppers of that wage hike would be about $20 a year.

“Farmers don’t get much of the retail dollar, and then of course farmers don’t give everything they get to workers,” Martin says. “So it’s fractions times fractions, and you get down to a relatively small share for farmworker wages in retail food cost.” And Martin says that means that raising the wages for farmworkers wouldn’t cost most Americans very much money at all.

Here’s how it breaks down:

Farmworkers Don’t Make Much Now
Farm employers reported paying their hired, seasonal harvest workers — the folks picking and sorting everything from grapes to peaches to tomatoes — an average wage of $10.19 an hour in 2010. Because harvest work is seasonal, many farmworkers only find employment for part of the year; it’s not uncommon for farm laborers to report working about 1,000 hours a year, the equivalent of six months of full time work. And that brings their annual salary to just $10,200 — notably less than the federal poverty line of $11,670 for one person in 2014.

Farm Worker Labor Is a Small Percentage of Produce Cost
Those salaries represent a fraction of grocery bills. The average American household spent $515 on fresh fruits and vegetables in 2014, and about 28 percent of that — around $137 — went to produce farmers. The farmers paid about a third of that to workers, while the rest went to farm maintenance and other costs. At current wages, farmworkers’ annual share of each family’s grocery bill is $45 — less than 10 percent.

A Higher Wage Would Still Be a Small Part of the Price
Raising farm worker wages in the U.S. to $15 an hour — and annual earnings to $15,000 — would represent a 47 percent wage increase. That might seem huge, but Martin says Americans spend so little on produce that it wouldn’t mean much for families’ grocery bills.

Remember that farmworkers’ share of each U.S. household’s annual grocery bill is $45. If farm worker wages go up by 47 percent, grocery bills would go up just $21.15 a year, or $1.76 a month.

Now, in fact, even enormous wage increases such as this probably would not attract many American citizens to the job of harvesting produce. In America, we have substantial welfare systems and a generally affluent population. Bolstered by public and private support, we do not have people starving to death who would take these jobs, even with a substantial increase in wages. Most likely, it would take even more expensive structural change – lots of paid vacation and whatnot to make people willing to accept these very difficult jobs.

As Tom points out, there is a big geography issue. Now none of these things are insurmountable. They are just very expensive. People who are paid enough will volunteer to live on oil platforms in the Arctic. Employers today often have to provide employee housing. This is true even in places, such as Aspen. Tanimura & Antle built such housing in Spreckels. The Casa Boronda Project is another example, with the Nunes, Hibino and Rodriguez families driving that project.

Which brings us to two points that Tom emphasizes: International competitiveness and automation. Tom’s salient point is not that labor cannot be found, but that the price to acquire such labor, is too expensive. Even the National Geographicarticle sort of misses the point, because there is no mechanism for consumers to pay more to help our farm workers domestically. As Tom points out, quite correctly:

...by raising wages to some hypothetical level that would attract seasonal American labor, we would most assuredly price domestic produce farmers out of business. Our industry would quickly move to other countries with cheaper labor, effectively making our country dependent on imported food.

This sounds portentous, but, again, it is not clear that this argument actually resonates with those who are not endorsing the ag trade’s political positions.

Part of the problem is that the claim is overstated. The vast majority of US farming is highly mechanized grain production. These farms use few illegal aliens, indeed few immigrants at all. The other issue is that the percentage of US produce sales that are produced outside the US is already substantial.

In March, 2018, the New York Times ran a piece titled, Most of America’s Fruit Is Now Imported. Is That a Bad Thing?

Growth in American incomes spurred greater demand for fresh produce year-round. Immigrants brought tastes for the foods of their homelands, and in some cases (like avocados and mangoes) these tastes have became mainstream. Foreign growers took advantage of lower labor costs. International trade agreements reduced tariffs and other obstacles to imports, while many American farmers, facing regulatory hurdles at home, have responded by shifting production abroad, mainly to Mexico.

Source: USDA Economic Research Service

It is hard to imagine that the citizenry is ready to man the ramparts to keep fruit imports from going from 50% of US sales to 70%.

AUTOMATION SAVINGS

When it comes to automation, we are, of course, well aware of the enormous difficulty of automating many aspects of produce planting and harvesting. Of course, it was not us claiming that there were big advances being made in this space. We were quoting Gary Wishnatzki of Wish Farms, who wrote about his robotic strawberry picker:

The session on farm automation particularly interested me, so I made a point to sit in on it. The panel included Brian Antle of Tanimura & Antle, Dan Steere of Abundant Robotics and independent strawberry grower Javier Zamora. The discussion centered around robotic solutions for the farm. Brian Antle and Dan Steere spoke of the technologies they are using for planting lettuce and picking apples, respectively. When Javier was asked about automation in strawberries, he made a point to say how hard it would be for a machine to pick strawberries. He described the delicate nature of the fruit and the difficulty with identifying ripe berries. He ultimately said it was nearly impossible and he would not see an automated solution for strawberries in his lifetime.

At this point, I’m getting agitated. We’ve spent countless hours trying to bring a solution to market, so this subject has been very near and dear to my heart. Now, here I am listening to a person who was totally oblivious of our developments, and he was speaking as if he was some expert in the robotics industry! I was more than a little miffed. As I sat there, teeth gritting, I remember thinking “not in his lifetime, huh?”

When the panel discussion was over, I spontaneously sprung to my feet and made a beeline toward Javier. As he came down the steps, I greeted him and extended my hand: “Hello Javier, my name is Gary Wishnatzki. It’s very nice to meet you.” I got up close and put my hand on his shoulder. I stated in a somber tone: “I am very sorry to be the one to inform you, but (I took a dramatic pause) …you only have a year to live.”

At first, Javier was taken aback by my brash statement. Eventually, he began to chuckle once I explained the context. I urged him to come by our booth and see the video of our technology. After he did, I’d like to think that his perspective shifted on the prospect of a robotic berry picker happening in his lifetime.

One of the issues is that when people think of mechanization of farming, they think of dramatic machines with spider-like arms that replace all humans on the field. More likely is incremental progress that will reduce the need for labor and shift the need for labor to higher caliber positions.

David Marguleas, CEO of Sun World International, mentioned to us that many procedures, such as harvesting grapes and putting them in wheelbarrows to be moved to the packing shed, hadn’t changed in generations — but were changing now due to robotics.

The reality is that the automation of anything is related directly to the cost saved by automating that task. You can’t judge what can be automated without also judging the cost of labor. If labor is $15 an hour, and we only pay for the hours needed to harvest, the feasibility of automation is much lower than if we figure $20 an hour and have to add in guaranteed 40-hour work-weeks, 52-week-a-year employment, medical, dental, housing, paid vacation, etc.

Yet, none of this means the industry is wrong. There are tradeoffs in life, and it is perfectly appropriate for the industry to choose to bring concerns of the industry to the attention of voters, influencers, policy-makers and others. If, however, the industry wants to actually make something happen, it needs to take a different approach.

It is very easy for trade associations and industry spokespeople to say what the industry believes and wants to hear. What we need, though, is for industry leaders to coordinate efforts to test industry messaging to find out what arguments actually will sway voters. This is an investment and a long-term process. We need focus groups, mall intercepts, national and regional surveys.

As an industry, we already know what arguments make sense to us. We need to know what arguments will change the minds — and the votes — of those who oppose industry positions.

With his political background and connections, we can scarcely think of anyone more qualified than Tom Nassif to lead this effort!

Mail to a Friend

© 2019 Perishable Pundit | Subscribe | Print | Search | Archives | Feedback | Info | Sponsorship | About Jim | Request Speaking Engagement | Contact Us