The earlier analysis leads to the third leg of the stool: how imports affect domestic growers and crops.
“The third response to rising farm labor costs,” says Philip Martin, a professor at the University of California at Davis, “is more imports of fruits and vegetables.
“Over 60 percent of the fresh fruit available to U.S. residents, and 35 percent of the fresh vegetables, are imported,” he observes. “Mexico provides half of U.S. fresh fruit imports and three-fourths of the fresh vegetable imports.”
Another factor, according to Martin, is the expansion of protected agriculture, known as controlled environment agriculture or CEA. “Many Mexican imports are from controlled environment agriculture, protective structures that range from plastic-covered hoop structures to greenhouses.
“Controlled environment agriculture raises yields, lengthens seasons, improves food safety, and employs 750,000 workers on Mexican export farms,” continues Martin. “Workers in export ag earn two- or three-times the 2022 Mexican minimum wage of 173 pesos ($8) a day and 260 pesos ($12) a day in the border areas.”
If you do the math, three times $12 is $36 for an 8-hour day, compared to $58 in even the states using the low U.S. federal minimum wage.
Exports
But the traffic does not all move in the same direction. According to a report by the U.S. Foreign Agricultural Service (FAS) issued earlier this year, “U.S. agricultural and related product exports to Mexico increased 42 percent to a record high of $27 billion.”
The U.S. trade deficit in agricultural products declined by 15 percent; fresh and processed fruits and vegetables together accounted for $1.7 billion of U.S. exports.
“In 2021, U.S. exports of fresh fruit ($748 million) and fresh vegetables ($234 million) to Mexico reached record levels,” notes the FAS report.
The most significant development in U.S. produce exports to Mexico has to do with the latter’s opening its markets to American potatoes earlier this year. It has been a long and arduous process.
“Potato growers in Idaho and across the country were promised meaningful market access more than 15 years ago,” says Idaho senator Jim Risch.
Until recently, only a 26-kilometer (16-mile) stretch of Mexico along the U.S. border was open to potatoes from this country. But after long negotiating by U.S. agriculture secretary Tom Vilsack, an agreement was announced, and in May 2022, a shipment of Idaho fresh potatoes crossed the border.
The shipments came after more than 25 years of regulatory and legal obstructions by Mexico, and one year after the Mexican Supreme Court ruled unanimously that U.S. fresh potatoes were legally authorized to be imported according to the U.S.-Mexico-Canada trade agreement known as USMCA.
The potato industry estimates access to the entire country for U.S. fresh potatoes represents a market potential of $250 million per year. Current trends suggest that the United States and Mexico will increase their international commerce and interdependence, especially in produce.
This is an excerpt from the cover story in the November/December 2022 issue of Produce Blueprints Magazine. Click here to read the whole issue.
