2007 September 08 Saturday
American Farmers Moving To Mexico

Half Sigma points to an article in the New York Times about American fruit and vegetable farmers who are setting up farming operations in Mexico in part due to much cheaper labor costs.

CELAYA, Mexico Steve Scaroni, a farmer from California, looked across a luxuriant field of lettuce here in central Mexico and liked what he saw: full-strength crews of Mexican farm workers with no immigration problems.

Farming since he was a teenager, Mr. Scaroni, 50, built a $50 million business growing lettuce and broccoli in the fields of California, relying on the hands of immigrant workers, most of them Mexican and many probably in the United States illegally.

But early last year he began shifting part of his operation to rented fields here. Now some 500 Mexicans tend his crops in Mexico, where they run no risk of deportation.

American farmers are also setting up operations n Brazil where the growing seasons are even longer. Brazil also has lower labor costs and much lower land costs. .

Large American agribusinesses are operating in Mexico.

Western Growers, an association representing farmers in California and Arizona, conducted an informal telephone survey of its members in the spring. Twelve large agribusinesses that acknowledged having operations in Mexico reported a total of 11,000 workers here.

The farmers are following in the footsteps of factory owners and for similar reasons.

Labor is about an order of magnitude cheaper in Mexico.

He acknowledges that wages are much lower in Mexico; he pays $11 a day here as opposed to about $9 an hour in California. But without legal workers in California, he said, I have no choice but to offshore my operation.

Note: I do not see low paying industries as great national treasures that we should try to hang onto. Really, if the only way an industry can compete is to pay low wages with no medical benefits then I say send that industry packing. Bye bye.

Low wage industries socialize costs. Higher income workers have to pay taxes to fund medical care and education and other services for the poor and poorly paid. That's not capitalism. That's socialism.

Since the vast majority of agricultural workers in America are foreign nationals we don't even protect American jobs when we keep this work in America. So I say let these jobs go to Mexico and send the illegals in America back to Mexico to work on farms there.

The Department of Labor has reported that 53 percent of the 2.5 million farm workers in the United States are illegal immigrants; growers and labor unions say as much as 70 percent of younger field hands are illegal.

Florida's growing season is pretty similar in length to that of Mexico. But Florida has both higher land prices and higher labor costs.

"The North American tomato market is grossly oversupplied," Brown said. "Throughout the year, farmers in Mexico and Canada continue to squirt out tomatoes and send them somewhere." The cost of labor on Florida tomato farms is steadily increasing. The average farm worker earned $12.46 per hour last year, according to committee reports.

Still, farmers are losing workers to jobs inside cities that pay more, said Gene McAvoy, a vegetable agent at Hendry County Extension. "With the rapid pace of development, they can make more money building houses in Naples or working at a restaurant, hotel or golf course," McAvoy said. Strict border relations with Mexico " where many farm workers come from " and guest worker legislation are not yet big concerns for farmers.

American farmers need to automate because labor costs will continue to be much lower in Brazil and Mexico.

Share |      By Randall Parker at 2007 September 08 11:35 PM  Economics Labor


Comments
daveg said at September 9, 2007 8:47 AM:

Of course these jobs and compaines should go.

In california farms use a huge amount of the limited water and pay only a fraction of the going rate. It would benefit everyone to see these farms up and leave.

Another secret, all the levies that we are redoing? They are there to protect the farm land. Just another subsidy.

RueHaxo said at September 9, 2007 4:14 PM:

The big gringo comes in, buys Mexican land cheap and pays the help $11 a day. I bet that gives him an ego boost! Mexico's white elite gets another recruit!

Septeus7theParaniod said at September 9, 2007 5:34 PM:

Quote: "American farmers need to automate because labor costs will continue to be much lower in Brazil and Mexico"

We have needed to start automating since 1965 but we decided have a muscle-labor based medieval economy instead of a 21st century robot-labor based economy. The kind of economy we should be working for is one where workers are paid for operating machines that do manufacturing and agriculture jobs better than human muscle. In comparison to where we should be we are still using the equivalent of slide-rules and ticker tape when we should be using supercomputers and the internet.

But this is all by design because the powers that be prefer the control of a servant based economy than uncertain risks of near total and decentralized automation.

Kenelm Digby said at September 10, 2007 3:27 AM:

Sorry, but I hate to lecture you all, but THIS is the entire case for 'free-trade' as originally expouded by Adam Smith, encapsulated in a nut-shell - that it is economic madness to produce at higher cost what could be imported at lower cost from abroad.Smith's set piece example was the imbecility of growing vines in the English climate to produce wine, when abundant wine was produced in southern Europe without the use of glass-houses and hot-beds.
Why is the movement of American farmers abroad such a controversial step?

Bob Badour said at September 10, 2007 2:47 PM:

I have long known that Mexicans would have higher standards of living if they all stayed in Mexico. Without illegal immigration, farmers will bid up the price of Mexican labour right at the source. And then, as Kenelm so rightly points out, we could all benefit from marginal advantage.

Rob said at September 10, 2007 7:03 PM:

Septeus,

My personal idea is elites tend to be lawyers, managers, and other verbally-oriented people. They understand talking, and arguing, and telling people what to do. Since one can't argue with machines, they don't trust them.

Septeus7theParaniod said at September 10, 2007 10:38 PM:

Quote: "Sorry, but I hate to lecture you all, but THIS is the entire case for 'free-trade' as originally expounded by Adam Smith, encapsulated in a nut-shell - that it is economic madness to produce at higher cost what could be imported at lower cost from abroad.Smith's set piece example was the imbecility of growing vines in the English climate to produce wine, when abundant wine was produced in southern Europe without the use of glass-houses and hot-beds.
Why is the movement of American farmers abroad such a controversial step?"

Sorry but there's no trade here but there is the complete outsourcing of America agricultural capacity to Mexico. This is just labor and real estate arbitrage not free trade because we aren't selling Mexico anything and leasing land with our capital isn't trade. When will you libertarians stop calling arbitrage "trade"?

Why the controversy? 1. Because because it means that American will be are wholly dependent on a foreign entities for its food and must accept the increased political influence that foreign entities will certainly possess having been giving complete control of the country's food supply. 2. Fears that food quality and safety will drop but nobody really cares because we all know the FDA sucked at its job anyway.

Free Trade within a free market must include political integration by definition. Free Trade certainly results the greatest immediate economic gain but those are sort lived due to problems factors of production and loss of human capital potential.

The reason I'm mad about this rather than automating so we could remain the free and independent "bread basket" of the world our idiot elite decided that American needed to have its wealth and freedom lost into the sink hole of political interdependence and "free trade" that is called "globalization."

Ivan said at September 12, 2007 7:36 AM:

The national interest should be one of efficiency and competitive advantage.

Naturally, large organizations like the government are very bad at optimizing such complex systems as a market economy.

So the default position should be one of freedom of actors.

To help that along in this area we should eliminate regulation and restriction on food imports, along with domestic subsidies. The benefits to poorer countries would be huge, AND we would benefit with a more distributed and efficient system.

Note that the green crows won't like this. It'll add to food miles, as if transportation is the only carbon-producing part of agriculture.


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