Jan 18 2009
Competition and rising costs force Southwestern farmers to consider alternatives
Published by Jason Welker at 8:45 pm under
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WikipediaNPR : Farmers May Switch Crops Due to Labor Shortage
Pure competition forces firms to produce their output in the most efficient manner. Productive efficiency is achieved when producers achieve their minimum average total cost. Any increase in costs may lead to economic losses for a firm, and if costs increase too much a firm may be forced to shut down.
The scenario above is basically a textbook explanation of the reality faced by farmers in the American Southwest this very day. Hundreds of fruit and vegetable farmers are facing higher variable costs as tougher border security and immigration laws has led to a shortage of cheap labor, which the farmers depend on in the labor-intensive fruit and vegetable industry.
Listen to the podcast above, then study the graphs that accompany this article.
Rising costs for in a perfectly-competitive (PC) industry: Click on the thumbnails of the graphs to see the full-sized versions
Discussion Questions:
- What changes have occurred in the American fruit and vegetable industry?
- What are the possible outcomes for Southwest farmers?
- How might technology help save these growers from having to shut down their operations?
- What other alternatives do they have to shutting down in the long run?
About the author: Jason Welker is a teacher at Zurich International School in Switzerland, where he teaches Advanced Placement and International Baccalaureate Economics. Jason was an international school student in Malaysia before studying economics at Seattle University then earning his Masters in Education. He calls Seattle and Northern Idaho home. In addition to maintaining an economics wiki and this blog for economics student and educators, Jason also gives presentations on using Web 2.0 tools in education at workshops and conferences around the world. His economics wiki won the 2007 "Best Educational Wiki" award from the "EduBlog Awards". Related posts:
- Non-price competition in the market for… WIKIS!! Wetpaint makes a move to gain market share
- Review Lesson: Econ concepts in 60 seconds – Perfect Competition
- Diminishing returns and the short-run costs of production – “Econ Concepts in 60 Seconds”
- Dominican Republic struggles to find its “comparative advantage” as it faces new competition from Asia
- Return to Shanghai, and a supply/demand paradox
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Labor is a factor of explicit costs, therefore, with the shortage of cheap labor, average total costs would increase thus affecting economic profit. There will be a loss for Southwestern farmers in the short run. Because of the economic losses, firms will leave the industry, such as farmers leaving labor intensive crop industries such as strawberries, to machine harvested crops such as corn. This will decrease the supply. Because supply has decreased and demand is the same, the price will increase. The higher prices will attract new firms into the industry and consequently decrease the price back to long run equilibrium.
The lack of labor seems to be a problem here. The green chilies cannot be harvested by machines and there for they have to use human labor to harvest. It’s said that the lack of labor should increase the wages for farmers. However, it did not. And there are no signs of decreasing in vegetable and fruit production.
In the long run, I think that farmers should also plant other things too, not just be dependent on green chilies, this way they can still be earning some normal profit, meaning that they don’t have to shut down in the long run.
The lack of labor has caused farmers to switch products because fruits and vegetables such as strawberries and lettuce require farmers to hand pick it. Having a lack of labor causes inefficiency which causes them to not be very productive.
If farmers change to products such as wheat and corn, they have machines that can pick and process them. So a lack of labor would not be as big of a problem. In the short run, they’ll be losing some money because they have to switch products and buy the new machines which will probably cost a lot. But in the long run they will break even because eventually they should be making enough money to make up for the machines and switch the product.
The shortage of labor will lead to a more expensive product, unless something can be changed in the long run. Essentially with new technology and cheaper capital, farmers can invest the wages of workers into machinery in order to decrease harvest time and have a greater output of product, but money doesn’t grow in fields. Most farmers can only afford the cheap illegal labor that is being taken away, in their current situation they can’t even harvest enough of the good to sell it so they must instead harvest what they can and make littler or no profit.
With the labor shortage, and the fact that labor is more intensive for harvesting crops such as lettuce, strawberries, and broccoli, many farmers have begun to changed their harvests to corn and such as they can be machine-harvested. Although, the farmers would in the short-run lose some money from switching the crops they’re harvesting, they would in the long run, probably make a profit.
A shortage in labor is the main problem and that is making the farmer’s production inefficient. In the long run, the farmers would be best off investing in new machinery and switching to a different crop so as to cut down the number of variable inconsistancies in production.
Just like the farmer in the voice clip states, their methods of crop harvesting must be changed in order to survive in the farming market. As the immigration laws and tougher border security eliminate the cheap labour, they have to manage their resources differently in the long run by;
1) Investing in more and better machinery so as to decrease their dependency on labor and reduce their AVC. Although their AFC might increase, they can still remain in the market if it surpasses the demand curve, but as shown in the third graph, if the AVC surpasses the demand curve, the firm can only decrease costs by shutting down.
2) The farmer can switch crops that demand less labor work.
3) He can move some of his operation to Mexico to continue to have cheap labor within reach for his crops.
As Costs of Production have increased over the years, farmers have been forced to turn away from more labor-intensive farming. Instead, they are growing crops like corn, that don’t require as much labor. The example used in the podcast was that of green chili peppers. The farmer had decided to instead use his resources to produce corn (ethanol). The farmer reasoned that with new immigration restrictions, he simply couldn’t afford to harvest green chilies anymore. Without the cheap labor, farmers will have to consider moving their operations to Mexico where they can be competitive or shutting down. In other American markets, the unskilled labor force has been substituted with technology, making those industries more efficient. If these farmers had access to new technology that was capable of harvesting vegetables like green chilies, then they would be able to produce a greater amount with only a small labor force.
What changes have occurred in the American fruit and vegetable industry?
American fruit and vegetable industry has moved from handpicking labor to heavy machinery harvest because farmers are experiencing shortage of cheap labor. Because the US government passed legislation that tightened immigration laws, there is a limit to the availability of Mexican people who were the major labor force of this industry.
What are the possible outcomes for Southwest farmers?
Because machines cannot harvest the hot pepper, farmers with labor shortage will face serious drops in their profit. Moreover, it is likely that these firms will fall below the normal profit and possibly shut down due to excessive costs.
How might technology help save these growers from having to shut down their operations?
Technology will help save these growers from having to shut down their operations because only two or three people are required to manipulate the harvester. Therefore, if these machines could replace the Mexican labor force, the farmers will perhaps earn more than they did because machines do not require wages to keep working.
What other alternatives do they have to shutting down in the long run?
One possible alternative that the hot pepper producer can do is to transplant the entire firm into Mexican territory where massive labor force is available at cheap wages. In doing so, the farmer will not face any legal issues and will continue to make profit out of the industry.
What changes have occurred in the American fruit and vegetable industry?
A. There has been a shortage of immigrant labor within the United States due to increased regulation and restriction as well as a crackdown on illegal immigration. This has caused many farmers in the U.S. to be without labor. This is needed to grow and collect green chili. As a result, many acres where this would usually be grown are now being substituted for corn fields which can be cultivated mechanically.
What are the possible outcomes for Southwest farmers?
A. With fixed costs becoming more burdensome to meet, it will be very difficult for farmers to produce a lot of a good with high variable costs. This may result in an economic loss for the farmers and give them an incentive to rethink their business plan, much the same way as the man in the NPR broadcast did. In fact, some of them may need to leave the industry all together or move to an area where there is cheaper labor (such as in neighboring Mexico).
How might technology help save these growers from having to shut down their operations?
A. As is said in the podcast, some farmers have adapted to this new labor shortage and have began utilizing devices such as a converted tomato-picking machine. Though it breaks down often, picks up debris, and destroys green chili, it is effective in collecting red chili and takes only 2 – 3 workers to operate. This has the potential of saving the chili growers in the Southwest.
What other alternatives do they have to shutting down in the long run?
A. As I stated above, some farmers are considering moving their operations to Mexico where the supply of cheap labor is abundant. This option has actually been taken by some farmers as is noted within the NPR broadcast. Another option that has been tried (unsuccessfully) has been to hire illegal workers at extremely low prices. This, of course, is illegal and is not the most advisable path to take.
Masaya,
Hi, I’m from the IB Economics HL Section A class. You make some very good points in your response. I think it is interesting to speculate whether these farmers will have to shut down their operations. It’s very good that you brought up the fact that they are not making normal profits, a fact illustrated by the thumbnail images provided for us above. As soon as that horizontal line drops below the AVC line, there will be no choice but for the firm to shut down.
Trevor Tezel
What changes have occurred in the American fruit and vegetable industry?
Because of new laws restricting the movement of illegal immigrants from Mexico to the United States, there are fewer laborers available
to harvest fruits and vegetables. This is a problem because certain vegetables such as chilies can only be harvested by hand, and therefore farmers’ variable costs have greatly increased.
What are the possible outcomes for Southwest farmers?
If no other solutions became available, the variable costs of the farmer’s would rise to an extent that total cost would exceed total revenue, meaning that the farmer is operating at a lost. The loss would not be able to be sustained for a long period of time, so it is likely that a continuation of this situation would see many farms shut down or relocate.
How might technology help save these growers from having to shut down their operations?
What makes the US agricultural industry competitive is the advanced machinery that is used. This means that high levels of productivity can be achieved with relatively few inputs of labour. If this method can be replicated in the fruit and vegetable industry this would cause variable costs to fall and fixed costs to rise, making the industry more capital intensive. For example, the podcast describes a converted tomato-picking machine that has been modified to pick chillies. The machine is not perfect, but it only takes 2 to 3 people to run. However, technological development takes time and money that an individual farmer would not be able to afford.
What other alternatives do they have to shutting down in the long run?
Some Southwest farmers have decided to avoid rising variable costs by shutting down their operations in the US and moving to Mexico, where they are able to draw from a large supply of cheap labour more easily without having to face the difficulties imposed by US immigration laws. Other farmers are lobbying Congress to introduce legislature to free up the movement of immigrants into the United States for seasonal labour. If they succeed, this would result in variable costs falling.
Hey Trevor,
I was reading your response whilst listening to the podcast. Both you and the reporter mentioned that there were some alternative technologies being developed to allow red-chillies to be picked by machines, but they faced many problems because they were all DIY projects on a small scale. If this is such a big problem, I’m wondering why the US government is not investing money in research and development in order to resolve this issue. The benefits of carrying out this research would far outweigh the costs, because this is an ongoing problem and also agriculture forms an important part of the US economy.
Meiling
1. What changes have occurred in the American fruit and vegetable industry?
Increased regulation of immigration has decreased the number of immigrants in Southwest America. These immigrants provided labor for many farms. This loss represents an increase in average variable costs, because the labor now available costs more and is less productive.
2. What are the possible outcomes for Southwest farmers?
There are several things that could happen. The first possibility is that the farms will be unable to cope with increased costs, and will be forced to shut down. This will be felt throughout the agriculture industry, and will hurt food production. Another possibility is that farmers will either find another source of labor, or will reduce their need for labor through technology. This would return output to it’s previous position.
3. How might technology help save these growers from having to shut down their operations?
The use of machines to harvest rather than people would greatly reduce costs to farms. Machines require less people to operate than manually harvesting crops does. Less labor will be needed, and costs will decrease.
4. What other alternatives do they have to shutting down in the long run?
There are several options Southwest farmers have considered. One possibility is moving farmland to Mexico, the source of the cheap labor the farms depend on. This way, labor would be more readily available and farms could increase output again. Another option is using machines to harvest crops rather than manual labor. Machines require fewer people to operate, and would thus decrease costs.
Mei,
I think it’s interesting how you mentioned farmers’ attempts to lobby Congress. Immigration is a very controversial topic, so it’s unlikely that their goals of looser regulations will be realized soon. However, if the farms are forced to shut down because of the higher AVC, the effects will be felt throughout America as the supply of vegetables like chili peppers decrease. This could prompt action on Congress’s part, but hopefully it won’t come to that.
–Mattea
The American fruit and vegetable industry has changed because the food output has shifted in favor of foods that require less human labor to harvest.
The Southwest farmers could either continue to produce high-labor crops like strawberries, lettuce, broccoli, or chili peppers; plant lower-labor crops such as red chili; move to different locations with more labor; use converted machinery; or try to breed crop hybrids that can be mechanically harvested.
Technology might help to save the operations of these growers through machinery or new plants. Some farmers are converting existing machinery in order to harvest plants that are normally hand-picked. Others are breeding hybrids of plants so that they can be harvested by machine.
Other than shutting down, farmers may move to Mexico, begin to use new machinery, or plant crops that take less labor.
–Chamonix
Masaya,
Your comment, especially the first part, really made me think. You said that American farmers have switched to mostly using heavy harvest machinery. Of course many crops (such as chili peppers, broccoli, strawberries, and lettuce as noted in the podcast) cannot be harvested by heavy machinery. This means that in order to use the machinery, farmers will either need to grow different plants or breed hybrids that can be mecahnically picked. This makes me wonder about the effect that this change would have on world agriculture. It would reduce the supply of the usually hand-picked crops. This might drive up consumer demand for goods such as corn and other machine-picked fruits and vegetables. This becomes serious when one considers the poor of the world. In many cases, these people rely on staples such as corn. If the demand goes up, then so will the price. This could increase world hunger. Perhaps Congress should begin research into new techonolgies to harvest the delicate crops. Thanks so much for raising these points!
–Chamonix
1. There has been a loss in labor due to a bigger crackdown on immigration. Since many fruits and vegetables are handpicked and need human labor, a shortage is becoming very possible. This will cause a rise in prices that will affect Americans everywhere. In addition, this labor shortage is forcing farmers who wish to stay afloat to move out of the country, which causes our GDP to go down.
2. The Southwest farmers have been hurt very badly by the shortage of labor. They face having to be shut down because they cannot get enough profit or they will have to change to another crop, such as corn. They can also just move to Mexico, which is labor rich.
3. Technology would solve many of the farmers’ problems. If a machine could pick lettuce and chili, they would not need as much labor and would not be as hurt by the labor shortage. They could actually increase output and at a lower cost.
4. Farmers have other alternatives to shutting down. They could move to Mexico where they can continue to be competitive and have an abundance of labor at a lower cost. They could also switch their crops to one that can be easily harvested by machines. They could even invent a way to use a machine to pick fruits and vegetables that required labor.
Chamonix,
I like how you said food output has shifted in favor of foods that require less human labor to harvest, but you did not explain why. In order to make up for the increased costs created as a result of less cheap labor, the farmers charge more for their products, which cause us to pay more. The objective is to make money, so if your costs increase, farmers and any other good business owner is likely adjust to make similar profit. Which then chain reacts and causes the consumer to pay more.
1. In the American fruit and vegetable industry, there has been a recent decrease in the cheap labor force due to stricter immigration laws. This increases costs for farmers to a point where they are experiencing an economic loss, which makes them need to think of alternatives and solutions to their problem.
2. Southwest farmers will either go into an immediate shut down state due to costs increasing higher than revenue (farmers will not be able to sustain firm due to inability to pay fixed costs) or will be forced to innovate with more efficient machinery.
3. Technology might help save these growers from having to shut down their operations because they would increase efficiency of a smaller labor force, thus eliminating the need for increased labor, which would be ideal in this state of lack of cheap labor force.
4. The only other realistic alternative to shutting down or improving machinery is moving the entire operation to Mexico, where cheap labor is abundant. Also, there are no American laws governing the firm if it were to move to Mexico, thus it would alleviate many tough financial situations.
-Dennis-
Hey Mei,
In regards to your question, the US government probably does not invest money into the research and development of such machines because it is such an insignificant factor in the farming industry that it is not worth it. Think of it this way, would the government rather fund research in the field of food production or research in the field of minimizing labor costs? Clearly minimizing costs of labor is the job of the firm, while finding new methods of growing food is the government’s job. Well that is what I think at least. Regarding your actual post, everything you said was excellent and you included economic theory in each response as a proof, which was, again, excellent.
-Dennis-
1. What changes have occurred in the American fruit and vegetable industry?
Recent tightening of immigration laws has caused a shortage of available cheap labor as it has restricted the movement of Mexican workers. This is important because the harvesting of fruit and vegetables is extremely labor intensive. A shortage of labor means that less can be harvested and the costs of labor have increased. Because of this many farmers have stopped producing the labor-intensive fruits and vegetables, or have moved their farms out of the United States across the border to Mexico.
2. What are the possible outcomes for Southwest farmers?
Southwest farmers may have to stop producing the crops that are the most labor intensive as a way to cut down on labor costs. They may also have to move their farms out of the US so that they can have access to cheap labor. Another possible outcome is that farms that can’t compete at higher labor costs may close which will lower the labor costs for everyone else by a small increment.
3. How might technology help save these growers from having to shut down their operations?
Technology can help to make the harvesting of crops less labor intensive. The production of special harvesting machines or hybrid crops means that the majority of the firm’s costs will change from being variable to fixed. If farms get to make most of their costs fixed, then average total cost over time will be less than before. This is because average fixed costs keep decreasing with an increase in output, whereas average variable costs initially decrease and then start to rise again.
4. What other alternatives do they have to shutting down in the long run?
Farms can move to Mexico where labor is cheaper. This will reduce the variable costs of the farms. The farms can also plant different crops that are less labor intensive. Another possibility, is that the firm can develop technology so that the harvesting of crops is less labor intensive, and therefore make a larger portion of total costs fixed.
Hey Dennis,
Do you think that the U.S. government will become more lenient on immigration laws surrounding farm labor in an effort to prevent the movement of American farms to Mexico? I see that you commented on Meiling’s post by saying that the government wouldn’t invest in research into farming innovation, because it’s not worth it. However, do you think that the threat of the loss of American farms to foreign soil, thus eliminating any opportunity for American labor in the midst of an unemployment crisis will cause the government to rethink its policies? Is some American labor better than none?
-Issa
Due to immigration laws, Hundreds of fruit and vegetable farmers are facing higher variable costs as these laws lead to a shortage of cheap labor and the farmers are depending on the labor intensive fruit and veggie industry. The industry changed from a move to Fruits and Veggies that require less Workers and less work, providing more profit on the industry. A good outcome is if there are fewer workers and the farmers changed to a more easy supply of their edibles, profit on them would rise because the shortage of labor and the amount of labor or machinery you have leads to the right amount of care, making more profit from your fruits and no complications. Machines work faster then human labor and can usually be more efficient in getting the dirty work done. The amount of immigrated labor falls and to a point disappear and the industry gets a greater amount of harvests. Besides, you don’t need to pay a Tractor. If all else fails, Farm land can be moved inwards into the Mexican country in order to have the machines and human labor required at a low cost.
Hi Rocio,
When you expressed a farmer switching to different crops due to outcomes in his industry, how can it be possible if you change the supply but would’nt you still have a small amount of human labor? I Agree to find crops that require less work, and farmers have considered moving their operations to Mexico where the supply of cheap labor is abundant. If no other solutions arise, then the variable costs of the farmer’s would rise to an extent that total cost would exceed total revenue. The loss of human labor and machinery cant hold for a long period of time, so it is likely that a continuation of this situation would see many farms shut down or relocate. This option has actually been taken by some farmers as is noted within the NPR broadcast.
1. What changes have occurred in the American fruit and vegetable industry?
Fewer laborers are available, because of tightening of immigration laws, which leads to shortage of cheap labor. Some fruits and vegetables can only be harvested by hand, which means that average variable costs will increase. Labor costs are increased but less productive.
2. What are the possible outcomes for Southwest farmers?
Farmers with labor shortage are facing serious changes in their profit. Farms are falling below their normal profit. Many farms will shut down.
3. How might ethnology help save these growers from having to shut down their operations?
Farmers can replace vegetables such as chilies with corn, so they can use machines to harvest vegetables like corn, less human labor will be used and profit will go up.
4. What other alternatives do they have to shutting down in the long run?
Farmers could move their entire farm to Mexico , human labor will increase that way.
Hi Marisa
I totally agree with you that to make a good profit farmers don’t really need a lot of human labor, may be they can have 50 people for a small farm instead of having 100 although they will have the same amount of work done. I like the point which you made about machines that they are faster and much better at getting the dirty work done. With getting more machines and few workers farm can become better.
What changes have occurred in the American fruit and vegetable industry?
As American immigration laws have drastically changed, implementing severe regulations for immigrants, and almost eradicating all illegal immigration, there has logically been an immense decrease of cheap labor in the US. As Mexican immigrants were formerly able to illegally cross the border or obtain visa, but still had a great lack of working opportunities, farmers in the US could enjoy from their willingness to do intensive work with low salaries: cheap labor. However, as this changed, farmers in the US are now running out of labor, having their production costs increased enormously, and being forced to seek alternatives, such as the use of machines for cultivation.
What are the possible outcomes for Southwest farmers?
Southwest farmers must change their production strategies, as no more cheap labor is attainable; they will need to substitute this cheap labor somehow, or switch from the goods presently produced to others which require less intensive labor. Anyhow, these farmers will always lose money at first, and depending on their decisions might hence improve or simply shut down production.
How might technology help save these growers from having to shut down their operations?
Technology, such as the transformed tomato-picking machine, could replace the cheap labor, as they need very few workers to maneuver, and could effectively do the work. However, these machines are still having technical problems and breakdown too often.
What other alternatives do they have to shutting down in the long run?
They could improve their technology to make it effective, or move to Mexico, as is stated in the broadcast, or hire illegally workers. However, this would not be very recommendable. Or they could change their production goods to other which would use less labor.
Hey Margaret,
I like the way in which you link up the decrease in cheap labor, with all the many steps in betwen, to the logical decrease in price again. It is a really good connection which I had not thought of before. However, if farmers already left the industry, due to the high costs of production, what prevents them from shutting down again after they have been attracted back due to the high prices? If the price falls again to the normal equilibrium, they will not earn as much anymore and the costs of production would be again unaffordable. Hence, the same process will happen over and over again. Thus, I believe you forgot to mention important aspects, or simply have some issues with your logical linking.
1.What changes have occurred in the American fruit and vegetable industry?
The government’s tightening of the immigration laws has restricted the immigration of Mexican workers, therefore causing a shortage in cheap labour. This affects the fruit and vegetable industry because the shortage of cheap workers causes an increase of labour costs and stops or decreases the production of labour-intensive fruits and vegetables.
2.What are the possible outcomes for Southwest farmers?
Many farmers will have to shut down because they cannot deal with the increased costs of production. They can also move to a different location where cheap labour is more available, or they can stick to producing fruit and vegetable which are less labour-intensive.
3.How might technology help save these growers from having to shut down their operations?
Technology would decrease the need for intensive labour, therefore the need for cheap workers keeping the farms from shutting down. It would decrease the production cost and increase the production rate of fruits and vegetables bettering the fruit and vegetable industry.
4.What other alternatives do they have to shutting down in the long run?
The alternative could be moving to Mexico where cheap labour is plentiful and there would be no problem with the immigration laws. The farms could also switch to less labour-intensive fruits and vegetables so that they don’t have to spend as much money on the workers.
Hey Trevor,
I’m also taking economics HL but i’m in section B. I really like your idea about the illegal workers, no one else seemed to think of that. Your example about the chilli is really good aswell, and yeah it will save the chili farms, but what about the rest of the fruit and vegetables? The population of the United States can’t live on chilli for the rest of their lives. It would be good to find a way to reduce the labour for all of the fruits and vegetables possible. I really liked your answers, they were different from everybody else’s and interesting to read.
Sara
3. How might technology help save these growers from having to shut down their operations?
4.
1) What changes have occurred in the American fruit and vegetable industry?
The American government’s tougher laws on immigration have restricted the availability of cheap, illegal workers to farmers. This is a considerable problem for American fruit and vegetable growers, since fruits and vegetables(especially lettuce, strawberries and broccoli) are labour intensive and the farmers depend for a great part on these illegal workforces. Farmers are forced to take up legal labourers and this will raise variable costs significantly. With the average variable cost curve nearing and maybe even crossing the price line – meaning the loss is bigger than the fixed cost – a lot of fruit and vegetable farmers, especially lettuce, strawberry and broccoli farmers, will have to switch to less labour intensive crops. Supply of lettuce, strawberry and brocolli will decrease and prices of these crops will rise. The higher price will encourage farmers to start cultivating these crops again.
2) What are the possible outcomes for Southwest farmers?
They will have to look at ways of reducing variable costs – otherwise they will suffer a loss bigger than the fixed cost and will have to shut down.
3) How might technology help save these growers from having to shut down their operations?
Introducing technology requires a lot of investment, and while not all farmers can afford this, the farmers who can will benefit from doing so since it reduces the labourers needed and will reduce variable costs. Technology will probably also increase the rate of productivity.
4) What other alternatives do they have to shutting down in the long run?
Moving their farms to places where cheap labour is available is one alternative, and another is cultivating other, less labour intensive crops as well so they are not entirely dependant of the labour intensive crops.
Marcelo,
Your response is very good, it sums up pretty much everything and when talking about alternatives farmers have to shutting down, you discuss the weaknesses of these alternatives as well as how they would benefit the farmer. I liked your explanation of the effect the tightened immigration laws have on the availability of labour, it was interesting to read.
-Eline
What changes have occurred in the American fruit and vegetable industry? Some changes in the American fruit and vegetable industry are farmers are not making as much money as they one were. This is because there have been negative changes on imports and exports for goods coming in and out of the country.
What are the possible outcomes for Southwest farmers? Farmers are going to have to start reducing costs quickly so that their businesses can stay afloat. If they do not than they will lose their jobs.
How might technology help save these growers from having to shut down their operations? Technology could play a huge part in saving farmers from peril. Technology makes things happen in less time than manual labour and in the long run will help produce more product which balances out prices.
What other alternatives do they have to shutting down in the long run? If the farmer produced something that didn’t take so much care and was easy to grow than this would help farmers stay afloat. Another alternative would be moving to an area where a certain crop was needed.
Masaya,
I like your point on replacing the mexican work force with a machine that does their job more efficiently in less time. Also you have a good point about moving the firm to Mexico because it will be true that labour would cost even less there.
- Kurtis
• What changes have occurred in the American fruit and vegetable industry?
The American government restricted the work of Mexican immigrants, causing a decrease in cheap labor. This law affects the fruit and vegetable industry because the cheap labor shortage causes an increase in labor costs; they cannot enjoy anymore of intense work at lower salaries. Consequently this can cause a decreased production of good fruit and vegetables. This situation might cause the shut down of the production.
• What are the possible outcomes for Southwest farmers?
Some farmers will have to change their strategies of production or just shut down. If they decide to look for strategies they will need to substitute in any way the cheap labour, or maybe move the location of their cultivation.
• How might technology help save these growers from having to shut down their operations?
Some farmers might bring in technology instead of workers, however technology needs investment and some farmers might not be able to afford for a technological farm.
• What other alternatives do they have to shutting down in the long run?
They could think on producing less labour intense crops, to afford machinery to farms or to move their plantations to cheaper locations.
Sara,
Sara,
I like your point of moving the farms to mexico or to any other place were the workforce is cheaper. your ideas are very similar to mine.
karen
There has been a lack of labor. Harvests that can be collected by machine such as corn are replacing chili as that can only be picked by hand. There is not enough legal farm workers to pick all the red and green chili. There has a new modified tomato machine to pick the red chili but it is far from perfect and it could not be used for green chili as that would be to fragile. Legal farm workers are usually in their 50’s or 60’s and always get older this is because younger workers would either not get a working visa or do not want to do this kind of work. The Farmers are thinking about moving their chili plantations to Mexico where there are more legal farm workers and the vegetable can be harvest in greater amount. In future there can be machines developed that will be able to harvest red and green chili. To not shut down in the long run the farmers could plant other vegetables or move their plantation to Mexico where labor and growing will be cheaper.
Eline,
I think you answered and explained the first question very well. In answer 3 It is true that only some farmers will be able to afford machines and unfortunately the smaller farmers will go down or have to change crops. This might be good in one point that with the farmers that can afford machines the productivity will increase and everything will go faster. But this will also conclude to fewer jobs not only the farm workers on those farms (the ones that can afford machines). But also all the smaller farms will loose their existence and might fall into poverty
- What changes have occurred in the American fruit and vegetable industry?
With the implementation of new, stricter immigration policies by the United States, fruit and vegetable growers in America can no longer rely on cheap labor, especially from Mexico. The industry now calls for fruits and vegetables that require less labor to harvest, and no longer favors the hand-picked varieties. (The industry wants to minimize production costs.)
- What are the possible outcomes for Southwest farmers?
At this point, Southwest farmers can continue their growing with higher labor costs (and lose revenue), convert machinery to make labor faster, or even move the farming to Mexico in pursuit of cheap labor.
- How might technology help save these growers from having to shut down their operations?
Developments in technology can make labor faster and more efficient. For example, look to the converted tomato picking machine that requires 2 to 3 people to operate it. This technology does not require vast manpower, and will save growers money in the long run.
- What other alternatives do they have to shutting down in the long run?
One of the alternatives is moving the business to Mexico, where the strict immigration laws will not apply. Another solution would be to switch over to different types of machinery that work faster and more efficiently.
Hi Victoria,
You point out that technology like the modified tomato picking machine is not helpful to the green chili industry. Do you think that there are other technologies out there that could be helpful in terms of efficiency and manpower? I think another interesting thing that you mention is the average age of the workers, as well as the unwillingness of younger people to work in agriculture. I wonder if that will ever change as the demand for laborers continues to increase.
- Catherine
1.What changes have occurred in the American fruit and vegetable industry?
The changes that have occurred is the new enforcement from the American government of stricter immigration control especially from Mexico leading to a decrease in cheap labour for the farmers to use for such labour intensive industries. they now need to change to a more technological ways in order to reduce there workforce and their product costs.
Also we see an increase in fruit and vegetable that is easier and less labour intensive fruits and vegetables coming to the market and being more favourable to harvest.
2.What are the possible outcomes for Southwest farmers?
The option open to the farms now are to reduce there workforce and work at a reduce rate will will effect there output and turnover. They could look to change crops so they are able to harvest the crops with machinery and look to exploit economies of scale through the use of new advance technological machines. They could change their geographical location to Mexico so that the cheap labour is freely and readily available and they will be unaffected by the tightening effects of stricter immigration.
3.How might technology help save these growers from having to shut down their operations?
Technology can play a big part in helping farmers from having to shut down as they reduce the workforce considerably reducing costs and they also increase output which means a greater turnover is possible. If there are machines to pick there crops then they would be able to reduce there production cost.
4.What other alternatives do they have to shutting down in the long run?
Another long term alternative other than technological use would be moving the business to Mexico where the labour would be there and also very cheap and the effect of stricter immigration would have gone. They could use more efficient machinery as well although costs lots of capital it will in the long run reap better reward as they will reduce costs and increase output.
Victoria
The idea of growing different crops is good but they may not bring in shuch good profit and also there may be more competion in these crops as there easy to produce and so the prices would be lower as there are many substitutes. The sam problem can be found in moving to mexico because there may not be a thriving market for vegatbles and fruit unlike the usa and they may not be able to sell in the usa because they are in mexico. The point about the average is good and the idea that they are getting older and will be a slower workforce so he needs alternatives is a good idea.
Southwestern Farmers Perfect Competition
1. What changes have occurred in the American fruit and vegetable industry?
There has been an increased amount of immigrants in Southwest America due to a stricter regulation of immigrants. Many of these immigrants, mainly Mexico, provide cheap labor for many farms. Farmers now have to which to more expensive labor increasing their average variable cost.
2. What are the possible outcomes for Southwest farmers?
The farmers have several options they can do. First, the farmers could decide to harvest half of the crop to keep the average variable cost low, because only more expensive labor is present. This way the farmer will experience a smaller loss. Another option for the farmer would be to find another source of cheap labor, machines. In the podcast it said that there was a machine available that destroyed some of the crop in the process but in the long-run, the damage will not be as terrible as the loss of the farmer. With machines a lot of average variable costs could be decreased because only two or three workers are needed to operate the machine. To the point where it become extreme, the farmer may decide to shut down, this must only happen if the loss of the farmers is greater than the average fixed price. This will affect the entire food industry slightly. The price would increase because of shift in the supply curve to the left. Then the farmer should reenter the food industry with a high selling price than before, this way he will be able to pay for his cost and earn normal profits.
3. How might technology help save these growers from having to shut down their operations?
With the use of machines the farmer could greatly reduce his average total costs. A machine only needs two or three people to operate it thus the average variable cost of labor is greatly smaller than the previous hand picking labor. The farmer could possible also harvest at a faster rate, so even more decreasing the average variable cost of labor. If the farmer’s harvest is constant but the average total cost decreases the farmer will receive more profit, possibly even abnormal profits.
4. What other alternatives do they have to shutting down in the long run?
There are several options instead of shutting down. Like it said in the podcast, farmers could start a plantation in Mexico; the labor would be more plentiful and readily available. Furthermore, the farmer could use the cheap labor and have lower average total costs. Another alternative to shutting down would be to harvest crops with a machine instead of handpicking labor. A machine only requires two or three workers to operate instead of 250 workers harvesting an entire field. This decreases the average variable cost of labor. Lastly, a farmer could also decide to harvest a portion of his crop instead of everything, his average variable costs would decrease because he doesn’t need as much labor there for the loss is smaller than harvesting the entire field at a more expensive average variable cost.
1. There are fewer workforces, as the number of people coming form other countries, such as Mexico, are being reduced. As a result, the American farmers now have to switch to a more expensive workforce.
2. The chili can’t be picked by machines, and it must be picked by hand, otherwise the crops will be damaged. However, it is a possible outcome if the farmers consider the long-run, as the loss due to damaged crops will be less than paying for more expensive workforce.
3. The total costs for buying and operating a machine is less than paying for all the workers to harvest the crops by hand. However, it is only in the long-run that this will be an economical way to do, because the cost for buying a machine will definitely increase the total fixed costs. however in the long-run, the average fixed costs will be lower and lower, but if farmers pay for the workers, it would cost a lot more.
4. Farmers have more options than shutting down. Firstly is to move the entire plant to
Mexico, where they have cheap labor. Secondly, they can decrease the size of the plant, say a half of what they have now, because it would cost less to run a plant half a size. However, along with that, they have to find some technology to increase the efficiency of plant.
1) The changes that have occurred in the American fruit and vegetable industry are due to a shortage of labor. Some fruits and vegetables can only be handpicked, because they are too delicate to be picked by machine, and a shortage of labor causes great inefficiency. For this reason, farmers have had to switch to growing different fruit and vegetables in order to be more productive.
2) The Southwest farmers were growing chili peppers, but because machines are incapable of harvesting them, the farmers who do not have enough labor force will suffer from serious decreases to their profit. It is possible that these farmers will fall below the normal profit and therefore will be forced to shut down due to increasing costs.
3) Technology might help save these growers from having to shut down their operations because if new machines were invented that were capable of harvesting the fruits and vegetables that they were growing before they switched, they would not have had to switch in the first place. The machines would allow the farmers to be very efficient and therefore very productive. Either they would then produce at a point that will give them normal profits, or, if their average total cost is below their average revenue, they would be receiving abnormal profits.
4) In the long run, the farmers could start a plantation somewhere else, such as in Mexico, which they suggest in the podcast, where there is more labor available. The labor in Mexico would be cheaper, meaning that the farmers’ average costs would be lower, so their profit might increase. Another alternative for farmers would be to invest in machines, because they are far more efficient than labor. Another way for the farmer to prevent having to shut down would be to only keep a portion of their land, which would decrease their costs since it is cheaper to run a smaller plant than a large one. However, if the plant is smaller, it means the farmer is able to harvest fewer crops, which would lead to less output. To compensate for that, there would have to be an improvement in technology that would allow the farmer to be more efficient, in order to prevent him from having losses.
1. What changes have occurred in the American fruit and vegetable industry?
Certain fruits and vegetable need require labour intensive work. Most of this labour comes form Mexico accross the border. Farmers are now resorting to capital intensive ways to harvest their goods. Eventhough some goods are very hard to harvest using machinery, so farmers resort to producing other fruits or vegetables, which can be picked by using machinery.
Due to the new immigration laws, Farmers have found it less hard to employ workers, which is mostly because the new immigration laws are making it alot harder for illegal immigrants to come and work over in the US. These new illegal immigrants tend to be young immigrants searching for a new life. These are the ones farmers want to replace the old workers that are allowed into the country.
2. What are the possible outcomes for Southwest farmers?
Farmers have the option of resorting to producing fruits and vegetables that require machinery, however the cost of this is very expensive on the short term, long term this would be very advantageous.
Another would be changing location as mentioned in the podcast, and moving the company to Mexico where cheap labour is widely available. However there is also a cost tied to this.
The worst outcome possible is for Farmers to close down their business
3. How might technology help save these growers from having to shut down their operations?
Technology will help farms be more efficient in working, however they will have to produce fruits and vegetables which can be easily harvested by the technology that is provided.
The cost however is large, and I don’t necessarily think that this will avoid farmers from having to shut down their farms, due to the simple reason that capital intensive equipment costs alot of money. Which some farmers just don’t have.
4. What other alternatives do they have to shutting down in the long run?
Investing money in capital equipment
Joining forces with other farmers
Move business location