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 Business News | May 2008 
Some US Farms Outsourced to Mexico
 Jessica Bernstein-Wax - Associated Press
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Irapuato, Mexico - Antonio Martinez used to pay smugglers thousands of dollars each year to sneak him into the United States to manage farm crews. Now, the work comes to him.
Supervising lettuce pickers in central Mexico, Martinez earns just half of the $1,100 a week he made in the U.S. But the job has its advantages, including working without fear of immigration raids.
Martinez, now a legal employee of U.S.-owned VegPacker de Mexico, is exactly the kind of worker more American farm companies are seeking. Many have moved their fields to Mexico, where they can find qualified people, often with U.S. experience, who can't be deported.
"Because I never moved my family to the U.S., I was always alone there," said Martinez, 45, who could never get a work permit, even after 16 years in agriculture in California and Arizona. "When I got the opportunity to be close to my family, doing similar work, I didn't even have to think about it."
American companies now farm more than 45,000 acres of land in three Mexican states, employing about 11,000 people, a 2007 survey by the U.S. farm group Western Growers shows.
There were no earlier studies to document how much the acreage has grown. But U.S. direct investment in Mexican agriculture, which includes both American companies moving their operations to Mexico and setting up Mexican partnerships, has swelled sevenfold to $60 million since 2000, Mexico's Economy Department told The Associated Press.
Major corporations such as Archer Daniels Midland Co. and Bunge have invested across Latin America for decades, particularly in countries like Brazil, where agribusiness is booming.
Some small farmers have cultivated parts of Mexico for much longer, seeking to secure year-round supplies of fruits and vegetables, while taking advantage of cheap labor and proximity to the U.S.
But the latest move south has been fueled by something new, farmers say: a way to continue to deliver cheap, fresh farm goods amid the current U.S. political standoff over an estimated 12 million undocumented immigrants, the majority from Mexico.
Recent Immigration and Customs Enforcement raids have targeted major agricultural producers, including Del Monte Fresh Produce in Portland, Oregon, and several large packing plants across the nation — scaring away immigrants and persuading many agricultural employers to clean up their hiring practices.
"Employers can't find legal workers to replace this huge number of illegal workers," said James Holt, an agricultural labor economist and independent consultant based in Washington. "Their only option is to go where the workers are."
Many of the growers, once based in California's Salinas Valley, are also heading south to escape high land prices and water shortages. Mexico is closer to eastern U.S. markets than California, they say. Shipping times to Atlanta are a day shorter from Mexico's central Guanajuato state.
Not everyone in Mexico has welcomed U.S. companies. Mexican farmers complain that they have driven up land rental prices. Many local growers worry they can't compete against big, foreign firms, said Felipe Sanchez, president of a farmers group in Guanajuato state.
"How can a ranch that farms 70 acres compete with a company that came to farm 10,000 acres?" Sanchez said. "We'll become laborers on our own ranches."
Farm workers at U.S. companies in Mexico make two or three times Mexico's minimum wage of $4.80 a day. But they still earn far less than the average $9.60 an hour that field workers in the United States made in January 2008, according to the U.S. Department of Agriculture.
Juan Antonio Linarez, 19, makes a tenth of his U.S. roofing income at Taylor Farms de Mexico's vegetable cooling plant in Guanajuato. But he has health insurance and can live nearby with his family — without the dangerous and expensive trek across the border.
Some experts argue that farmers simply refuse to raise U.S. wages to compete with other industries, something they say would help ease the labor crunch.
As the United States heads into a recession, more native-born workers might consider agricultural work if wages were high enough, said Harley Shaiken, director of the University of California at Berkeley's Center for Latin American Studies.
"Labor shortage always is a question of at what pay rate," Shaiken said. "Very often, if the wages are artificially low, it will be very difficult to find a work force."
But Steve Scaroni said he did offer higher wages and still couldn't find a steady work force in the U.S. Scaroni owns VegPacker, a California and Guanajuato-based company that grows lettuce, celery, cauliflower and other vegetables. VegPacker has struggled after forking out millions of dollars to launch its Mexico division two years ago.
The problem is that cheaper labor in Mexico often is offset by lower productivity and high training costs, especially when it comes to enforcing U.S. food-safety standards.
"The only thing that's cheaper down here is diesel fuel and the labor per day," Scaroni said. "My productivity is down 40 percent" from U.S. levels. |
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