'Bitter Harvest' Watch: Time Magazine Edition
Senior Editor, CNBC.com
Any day now I expect my editors at CNBC are going to tire of me constantly returning to the theme of the phony farm labor crisis.
“Look, Carney. We get it. There’s no such thing as the farm labor shortage. It’s time to move on to something else,” they’ll say.
Fortunately, the world keeps supplying me with evidence that we’re not quite ready to move on to something else. The myth of the farm labor shortage is not only alive and well—it’s gaining momentum.
A piece on Friday from Alfonso Serrano of "Time Magazine" almost reads like a parody of the "farm-labor crisis" genre. From the headline, through the citations of apple growers in Washington, California and Arizona farms, to blaming immigration reforms, it’s got every clichéd element — and all of them seem completely counter-factual.
The one thing it doesn’t have: any facts supporting the idea that there is a shortage of labor on farms in America.
Serrano’s piece is entitled “Bitter Harvest: U.S. Farmers Blame Billion-Dollar Losses on Immigration Laws.” But the piece never goes on to vindicate this very central claim that billion-dollar losses exist.
That’s probably because there are no billion-dollar losses.
As I reported earlier, American farmers last year had their most profitable year ever in history. Profits rose 35.5 percent to $134.7 billion. That’s not revenues and its not because of rising property prices—it’s net cash revenues, real honest-to-god profits. (Read more: Phony Farm Labor Shortage: We Need to Talk About It)
The year before that? Yeah. That was a new record in profitability too.
This year? The U.S. Department of Agriculture expects new records in profitability.
So the farmers in Serrano’s piece are blaming immigration laws for something that just hasn’t happened at all.
The piece begins by talking about apple farmers Ralph and Cheryl Broetje, who “rely on roughly 1,000 seasonal workers every year to grow and pack over 6 million boxes of apples on their farm along the Snake River in eastern Washington.”
The Broetjes, and an increasing number of farmers across the country, say that a complex web of local and state anti-immigration laws account for acute labor shortages. With the harvest season in full bloom, stringent immigration laws have forced waves of undocumented immigrants to flee certain states for more hospitable areas. In their wake, thousands of acres of crops have been left to rot in the fields, as farmers have struggled to compensate for labor shortages with domestic help.
“The enforcement of immigration policy has devastated the skilled labor source that we’ve depended on for 20 or 30 years,” said Ralph Broetje during a recent teleconference organized by the National Immigration Forum, adding that last year Washington farmers—part of an $8 billion agricultural industry—were forced to leave 10% of their crops rotting on vines and trees. “It’s getting worse each year,” says Broetje, “and it’s going to end up putting some growers out of business if Congress doesn’t step up and do immigration reform.”
That sounds really bad. Last year, 10 percent of the crops were left rotting on vines. Must have been a terrible year for Washington farms, right?
Oh. No. Wait. It was a boom year in Washington. Farm profits rose from $1.98 billion to $3.14 billion, a 58 percent rise. That’s a crazy rise in profitability. The Washington farmers would be the envy of corporate America if they were listed on stock exchanges.
Serrano then turns to Arizona, where he gives voice to a pecan farmer named Nan Walden, whose “complaints mirror those of the Broetjes.”
Walden says the Arizona’s immigration laws have created a climate of fear. Perhaps that’s true. But it certainly hasn’t created a climate of losses for farmers. Last year farm profits in Arizona rose 77 percent, from $734 million to $1.3 billion.
What comes next is so far beyond reality it’s almost hard to believe that it made it into print:
“Farming operations nationwide—from New York to Georgia to California—are reeling from similar labor shortages, despite offering domestic workers competitive packages that include 401(k) plans and health insurance,” Serrano writes.
The first clause is obviously nonsense. Farming operations nationwide aren’t “reeling” from anything—except a massive influx of profits.
We’re experiencing the great American farm boom.
But the intervening clause, the part stuck between the dashes, borders on parody. The two states Serrano names, New York and Georgia, also saw profits grow last year. New York farm profits rose from $1.5 billion in 2010 to $2.2 billion in 2011—a 53 percent gain. Georgia’s growth was a more moderate increase from $2.5 billion to $2.6 billion.
It’s almost as if "Time Magazine" was trying to undermine its own story by naming these states. They certainly are good examples of what is happening nationwide—but what’s happening nationwide is a farm boom, not a labor crisis.
Let’s now look at that last clause. Serrano says that the farms are suffering the labor shortage “despite offering domestic workers competitive packages that include 401(k) plans and health insurance.”
The data certainly do not bear this out. As I reported yesterday, American farms are not facing increased costs in the workers they hire directly. The costs of workers hired directly by the farms contracted 3.8 percent from 2010 to 2011, from $23.5 billion to $22.6 billion.
Next year it is forecast by the Department of Agriculture to shrink by another 2.1 percent.
The cost of labor figures from the Department of Agriculture include benefits. So if Serrano were right about benefits and health insurance being added on to compensation packages, that means wages are falling even more rapidly than they appear to be.
Farm labor is getting cheaper, not more expensive.
The article cites the Farm Bureau Federation, which is a Washington, D.C.-based trade group for farmers, for the proposition that "labor shortages will result in losses of up to $9 billion."
I couldn't immediately get anyone at the Farm Bureau to explain that number. But it certainly isn't a "net loss." Farms will be profitable this year, we know that for certain. So all we're really talking about, at best, is profits being lower than they would be.
But in a sector already making record profits and seeing eye-popping gains in profitability, why should this be a matter of public concern at all? Moreover, with labor costs falling each year, isn't this just a way of saying that if farmers had their druthers, labor costs would be falling even faster?
Note to farmers: if you are paying less for workers and making more from farming, you aren’t experiencing a labor shortage. You just aren’t.
Note to editors and reporters: next time someone pitches you a story about a labor shortage, please ask for evidence that labor prices are rising and that this is somehow creating a broader economic problem.
If any other business sector in America were to claim a shortage of workers in the context of falling labor costs and rising profits, you’d laugh them out of the room. Just because someone is wearing overalls doesn’t mean you should become so incredibly credulous.
Sigh. I imagine that “Bitter Harvest Watch” will have to remain a regular feature for quite sometime.
- by CNBC.com senior editor John Carney
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