Managers watching closely were no doubt relieved last month when California governor Gavin Newsom vetoed a proposal to prohibit foreign government-linked investment in the state’s ag sector.
Newsom’s decision later in the month to sign into law another bill changing administration of agricultural labor union elections reflects developments in California labor politics that could ultimately have as significant an impact on markets as potential capital restrictions.
In a statement following AB 2183’s signing, farming interest group Western Growers alleged that by allowing labor organization representatives to fill in information on mail-in ballots in which their organizations have a financial stake, the law has effectively allowed unions to replace the state as supervisor of elections.
“The UFW [United Farm Workers] and California Legislature pushed forward an even more flawed version of card check, which is effectively forced union submission for farmworkers disguised as mail-in voting,” said chief executive Dave Puglia. “AB 2183 will unleash a relentless campaign of union pressure and harassment targeting California farmworkers, less than two percent of whom have voted in state-supervised secret ballot elections to pay the UFW three percent of their wages.”
A recent report from Western Growers – which represents farming operations across New Mexico, Arizona, Colorado and California – describes how new requirements on piece-rate pay, overtime work, paid sick leave and health care were key drivers of increased labor costs in California between 2012 and 2018. It cites research that between 2006 and 2017, labor contributed to increases in regulatory costs that averaged 265 percent across fresh produce categories and reached as high as 795 percent for certain crops, like lettuce.
Given these cost increases have not been met with corresponding increases in farm productivity, Western Growers reported production of certain crops – such as broccoli and green onions – have moved almost entirely to Mexico. Even with rising wages for US farm workers, growers reported a continuing struggle with recruitment and a lack of labor security that makes it harder for farmers to forecast how much can be harvested.
“Farmers that increase wages to attract workers are merely poaching farm labor from other growers. To add to this, domestic worker retention and loyalty is a serious issue for growers,” the report’s authors wrote. “Once a worker is hired, they are not obliged to work for the entire harvest season.”
Newsom vetoed a proposal similar to AB 2183 last year and signed the bill in September only after a supplemental agreement between the UFW and the California Labor Federation to limit the number of card-check petitions over the next five years. His decision also came under pressure from the Biden administration, which released a statement supporting the measure and highlighted workers who grow, produce and process food as a focus of its effort to promote “worker power” and collective bargaining within its National Strategy on Hunger, Nutrition and Health, released last month.
Labor issues are especially critical for fresh fruit, vegetable and nut crops popular with investors and attention to worker cost and availability challenges has risen steadily in recent years. Those concerns are key drivers for an interest in harvest automation that Western Growers’ report describes as widespread and growing.
It also reports that most farmers typically expect a payback period of between 18 and 24 months when making investments into automation technologies that have only limited track records and often struggle to provide accurate yield and cost estimates.
The politics surrounding AB 2183 suggest an extra layer of complexity related to broader dialogues around inflation, labor and unions that could cloud efforts to assess the future of US agricultural labor markets for at least as long as it takes farmers to see a payback on automation investment.