Labor scarcity and wage inflation threaten the rural economy and put additional stress on the profitability of agriculture industry according to a study by CoBank.
Manual laborers are chasing higher wages offered in industries like transportation, construction, hospitality and mining, forcing agriculture employers to increase wages at a faster rate to compete.
The scarcity of farm labor is also aggravated by the shrinking number of migrant workers. In addition to immigration controls like tightening borders and increased immigration enforcement, birthrates in Mexico are falling and populations are moving toward urban areas, leaving fewer people with agricultural backgrounds who would be interested in U.S. farm work.
The CoBank study explains how inflated wages result from scarce labor conditions and features direct accounts from a wide cross-section of agricultural operations detailing the workforce challenges they are currently experiencing. “Labor accounts for a significant share of overall operational costs for many types of farms, particularly specialty crops and dairies. In 2016, labor costs on all farms made up about 10 percent of gross income while in the specialty crop sector, that share was closer to 27 percent.
For more on the study watch the video above from AgDay TV.