offset higher wages. Improved irrigation techniques, better pest control, higher yields, and the availability of new varieties can help increase profits. For example, between 1990-92 and 2005-07, U.S. strawberry yields increased 63 percent. Yields also increased for apples, asparagus, and lettuce.
In some cases, total production costs rise with labor wage rates. If there is no trade, rising costs generally lead to a lower quantity demanded, as production declines and prices increase. In today’s relatively open international marketplace, it is hard for growers to pass on higher production costs if the same commodity can be imported for less during the same season. Some growers may shift production from labor-intensive crops to mechanized crops as labor costs rise. In some areas, selling farmland for housing is an attractive alternative. Many California growers, forced out of the asparagus business due to increased imports, have used both options.
Some production of labor-intensive crops may shift to countries with lower labor costs, but so far imports have seldom replaced U.S. production of fresh-market commodities during the season they are produced in the United States. There are more examples of processed fruit and vegetable production moving abroad. While labor rates may be less in other countries, total production costs are not necessarily lower. Imports are not always the result of lower labor or total production costs abroad. For example, the United States now imports small quantities of lettuce from Mexico. Total lettuce production costs in Arizona and central Mexico are similar; wages are lower in Mexico than in the United States, but so are yields. Changes in the U.S. lettuce market have created incentives to import lettuce. Bagged salads are frequently sold under annual or mult-iyear contracts that specify weekly quantities to be delivered. Some U.S. firms grow lettuce in Mexico to enable them to fulfill bagged-salad contracts in the event that bad weather or some other issue restricts the availability of U.S. lettuce, particularly during the winter months.
Growers invest in mechanization to boost competitiveness
Most of the fresh-market fruit and vegetable industry is competitive with foreign suppliers despite relatively high wage rates. However, the potential for immigration reform or changes in enforcement that might make labor availability more unpredictable or increase wages remains a concern. R&D is critical for developing new labor aids and mechanical harvesters that could help maintain economic competitiveness in a world economy. Individual growers, grower organizations, machinery manufacturers, universities, and the Government have all invested in these new technologies. Interest in R&D varies over time, particularly with respect to current and expected labor supply. Unfortunately, the success of mechanization R&D is unpredictable. The harvest of some commodities was mechanized much sooner than many observers expected. And, despite predictions, other industries still are not mechanized. Growers of some commodities need mechanization alternatives more urgently than others.