By Ariel Singerman
Harvesting citrus is manual and labor intensive, making the cost of labor a key component of the cost of harvesting. The H-2A guest worker program allows companies to temporarily hire non-U.S. citizens to perform agricultural labor or services of seasonal nature. Given that domestic workers for harvesting are in short supply, harvesting companies in Florida (and other states) hire a large proportion of foreign workers under the H-2A program to ensure crops are harvested on a timely basis. This article uses data to examine trends in citrus harvesting in recent years.
WAGES AND RELATED COSTS
The wage rate for workers under the H-2A program is called the adverse effect wage rate (AEWR). Figure 1 shows a comparison of the Florida minimum wage and the AEWR as well as the difference between the two from 2016–17 to 2022–23. Hiring H-2A workers has been more expensive than hiring domestic workers by a range between $2.41 and $3.33 per hour, depending on the year.
However, according to regulations, whenever the harvesting crew includes any H-2A workers, the employer must provide the same benefits to both domestic and foreign workers. Therefore, when a company employs both H-2A and domestic workers, it must pay all their workers the highest wage among the following: the AEWR, the federal minimum wage, Florida’s minimum wage, the applicable prevailing wage or the agreed-upon collective bargaining rate. The highest wage rate is generally the AEWR.
When using the H-2A program, harvesting companies also incur costs related to recruitment, guaranteed number of seasonal hours, administration, inbound and outbound transportation for workers and their housing. Harvesting companies also need to provide housing to domestic workers whenever they are not able to return to their residence within the same day. Domestic employee compensation also involves additional costs, which include social security, unemployment tax and workers’ compensation insurance.
PERCENTAGE OF H-2A WORKERS
Figure 2 shows the percentage of H-2A workers in Florida citrus harvesting crews based on survey data collected from 2016–17 to 2022–23. The continuous blue line in Figure 2 shows the average percentage of H-2A workers in harvesting crews.
Such an average was at its lowest (89%) in 2016–17. That season, one of the surveyed harvesters stated that only 20% of its crew members were H-2A workers. After that, the average percentage of H-2A workers in harvesting crews increased. Interestingly, however, such an average decreased from almost 100% in 2018–19 to 93% in 2021–22.
The decrease was due to a combination of different participating harvesters in the annual survey, but also, and perhaps most importantly, due to the pandemic. The dashed black line in Figure 2 shows the percentage of citrus harvesting crews that had at least 80% of H-2A workers. The line denotes that all harvesters that participated in the surveys have had at least 80% of H-2A workers in their crews since 2018–19. This highlights how critically important foreign workers are to harvesting citrus in Florida.
NOMINAL VS. REAL HARVESTING COSTS
The cost of harvesting (picking and hauling) processed Valencia oranges in Florida has been increasing since 2003–04, as illustrated by the blue continuous line in Figure 3. The trend is similar for processed early and mid-season oranges. The average cost of harvesting was $2.14 per box in 2003–04 and $3.72 per box in 2021–22. This represents a 74% increase over the period.
But given that inflation also causes the overall level of costs and prices to increase over time, economists use the terms “nominal” and “real” dollars to refer to the current dollar value and the constant dollar value, respectively. The difference between the two is that the real dollar value denotes an amount that has been adjusted for inflation. By doing such an adjustment, comparing changes in costs and prices over time due to factors other than inflation becomes easier.
When taking inflation into account, the cost of harvesting processed Valencia oranges in Florida has been mostly flat. This is denoted by the dashed grey line in Figure 3, which shows that the real cost of harvesting processed Valencia oranges was $3.86 per box in 2003–04 and $3.72 per box in 2021–22.
The reason behind the cost of harvesting being flat in real terms is likely due to the combination of two factors. The first factor is the availability of H-2A workers, which has increased the supply of harvesting labor. This is in contrast with the situation that occurred in multiple seasons during the 1990s when labor shortages drove up the cost of harvesting and caused the harvesting season to be extended into July and August. So, if H-2A workers were not available, the industry would likely face similar issues to those observed in the past. The second factor behind the cost of harvesting staying flat in real terms is the decrease in yield per acre due to the impact of HLB. The disease has caused a decrease in the amount of fruit harvested and, therefore, in the demand for harvesting labor.
The flat trend for the cost of harvesting in real terms described above contrasts the trend observed for the cost of production, which has been increasing in both nominal and real terms (see previous article here). Because of that disparity, the cost of harvesting processed oranges per box as a percentage of the total cost of production per box has been decreasing since the early 2000s as shown in Figure 4.
Figure 4 illustrates that the cost of harvesting used to represent approximately 36% to 53% of the total cost of production before the outbreak of HLB. But in recent years, the cost of harvesting represents approximately 20% to 25% of the total cost of production. This trend highlights how challenging and costly growing citrus under HLB endemic conditions has become.
The hiring of H-2A guest workers has become essential to harvest citrus in Florida. All harvesters that participated in these surveys have had at least 80% of their crews be H-2A workers since 2018–19. The availability of H-2A workers has increased the supply of harvesting labor. This increase combined with the significant decrease in yield per acre due to HLB, which has caused the demand for harvesting labor to decrease, have contributed to keep the cost of harvesting citrus flat in real terms since the early 2000s. Without the availability of H-2A workers, the industry would likely face not only higher harvesting costs but also delayed harvesting, as occurred in the past.
Ariel Singerman is an associate professor at the University of Florida Institute of Food and Agricultural Sciences Citrus Research and Education Center in Lake Alfred.
Share this Post