Farmers Struggle as Food Prices Fall, California Piles on New Labor Costs
With cries of “Si Se Puede!” ringing in their ears from SEIU public union governmental workers masquerading as United Farmworkers union members, California’s legislative leadership and party-line voting loyalists in the Assembly yesterday pushed through a repapered farmworker overtime bill just a day before the Wall Street Journal published its article, “Food Price Deflation Cheers Consumers, Hurts Farmers, Grocers and Restaurants.”
Nationwide consumer food prices — and farm commodity prices — are dropping through the basement floor and are in free fall to reach subterranean depths not seen since 1966. Deflation is coming to mouths like yours.
The WSJ details that “the U.S. is on track this year to post the longest stretch of falling food prices in more than 50 years, a streak that is cheering shoppers at the checkout line but putting a financial strain on farmers. …The current food-price slump soon could beat the nine months of year-to-year declines experienced in 2009 and 2010—the longest stretch since 1960, according to the Bureau of Labor Statistics.”
“The glut is so severe in some places that dairy farmers have been dumping millions of pounds of excess milk onto fields. The U.S. Department of Agriculture just bought $20 million worth of cheese…Farmers who had built a nest egg after a robust period earlier this decade now have exhausted those reserves. …Tractor suppliers like Deere & Co. are cutting production due to the farming slump.”
It takes a very short memory indeed to recall that California’s farmers and farmworkers are suffering doubly at the hands of the markets in combination with a half-decade-long drought — over a million acres of farmland were fallowed in 2014-2015 for lack of water, and social services providers remain strained after farmworker unemployment rates jumped to over one in three field laborers being idle and unable to feed their families.
All those real-world fact patterns gained little recognition and produced even less effect yesterday in California’s politically driven capitol.
California’s political labor agenda is driven by a coalition of public labor unions using a tiny public-sector union as its mascot and public mask. According to its federal filings, the UFW represents just 7,007 worker members out of California’s more than 1.2 million or so individual farm laborers. In payback, the UFW employs over 75 governmental affairs and public relations specialists — roughly 1 for each 100 of their working members — to drive the coalition’s Latino and Hispanic legislative agenda.
When Assembly members voted yesterday to support the UFW and Hispanic farm workers, they were doing so at the bidding of the public-union coalition that funds their political campaigns and supports their shared base of power over labor issues in the Golden State. They were whipped into action by Governor Jerry Brown and the legislative leadership holding treats in one hand and retribution in the other. Representing the urban core rather than rural sensibilities, the impact of these influences and actions on real people — the farmworkers — will be felt far and wide.
Roadkill includes the farmworkers, the farmworkers’ employers and the economies of the many rural communities and smaller cities surrounding California’s agricultural areas. AB 1066 will decimate annual incomes for most farm laborers — already hovering around the Federal Poverty level. Paradoxically, farm labor costs will increase for our nation’s farm employers. There will be more workers, each earning less money — assuming that enough labor remains to go around. Farm labor shortages are already the norm, not the exception, in California.
California ignores its food producers at its own citizens’ and voters’ risk. Food prices may be going down in aggregate, but markets seek equilibrium. Lower prices means strained bottom lines at the farms — even foreclosures and bankruptcies — and increased pay for laborers means higher costs. These fundamentally opposing trends — one driven by market and the other by unfeeling and ill-considered legislative policy — bode a day of reckoning ahead.
Like California’s failed experiment in energy deregulation that led to the Enron debacle, citizens of California and the nation are about to know the impact of rash labor-cost decisions made by short-sighted individuals looking only at their political power flying under the false flag of social justice.
Addendum—Aug. 31, 2016
Two days after the Assembly passed AB 1066, the Sacramento Bee published information released by the U.S. Department of Agriculture’s National Agricultural Research Service that California farm revenue plunged $9 billion in 2015, from $56.61 billion in 2014 to $47.07 billion in 2015.
The Bee reported, “The figures from 2015 show the era of rising [farm] revenue has ended.” They cited as causes “the drought, which as cut off deliveries of surface water supplies to large swaths of the Central Valley,” expenses due to “pumping more groundwater,” and “the fallowing of 540,000 acres in 2015.”
“The state’s dairy business alone dropped by more than $3 billion last year,” they noted. Dairy is California’s number one agricultural commodity.
Separately, the Wall Street Journal also published a story reflecting national elements of the USDA farm income report. “Net farm income will drop 11.5% to $71.5 billion this year, from $80.7 billion in 2015,” they quoted from the USDA report.
“That would be the third straight annual pay cut for farmers since incomes soared to record levels in 2013. …Domestic growers also are battling a strong U.S. dollar that has encouraged some of their foreign customers to find grain elsewhere.”
These reports, released just after California’s Legislature voted to burden California’s farmers with escalating costs that will rise each year from 2017 to 2020 as minimum wage provisions and lower overtime thresholds kick in, requires serious reconsideration and — perhaps, but unlikely — a governor’s veto of AB 1066.
Has California’s one-party-dominated Legislature and executive branch become detached from economic reality as it pertains to tinkering with agriculture, a major upstream supplier for the nation’s food supply? The evidence to date is a clear, “yes.”