Chicago Tribune (Op-Ed)
By Jerry Nickelsburg
May 04, 2017
Two hundred years ago this year, British economist David Ricardo outlined a theory of international trade based on the notion of comparative advantage. The idea is that each country does something relatively well, and can therefore specialize and trade with others to their mutual benefit.
Economics has since gone well beyond Ricardo’s analysis. But it remains instructive when it comes to agricultural products. That brings me to strawberries.
I look at California’s Ventura County, the state’s mild climate, moist sea breezes and fertile soil — perfect for strawberry production — and I think: “There is Ricardo’s comparative advantage.” But this ideal strawberry climate also extends south of the Mexican border — to the Baja California Coast near San Quintin. With the expansion of cultivation in Baja, Guanajuato and Michoacan, Mexican production has been increasing in recent years.
Both Mexico and the U.S. are major exporters of the crop.
And here’s where things get interesting. Mexican exports tend to be to the U.S.; the U.S. exports to Canada and other countries. Why does the U.S. both export and import strawberries? One reason is the different harvesting season in Mexico, and the perishability of fresh berries.
But there’s another defining quality of strawberries: They are hard to harvest. You have to stoop down and remove each fruit one by one. Machines would damage the delicate berry and fail to separate ripe from budding fruits. So it is up to people, typically immigrants, to pick strawberries.
According to the Los Angeles Times, a good strawberry picker in Southern California can earn $150 per day during the harvest season. That translates to $18.75 per hour. According to the California Legislative Analyst’s Office, between 25 and 30 percent of all non-strawberry pickers in the same region earn less than $12.50 per hour. So why are these less-well-paid folks not clamoring for jobs in the strawberry fields? Strawberry picking is hard, seasonal labor and must be pieced together with other fieldwork.
Down in Baja, strawberry harvest workers make much less than they do in Southern California: about $11 per day. So why doesn’t more of the strawberry business move south across the border? The labor price differential isn’t yet so much as to force the move south. Strawberry farms in the U.S. can still find people to work in the fields. But there is an issue: The people willing to pick strawberries in Ventura County for $18.75 per hour are not Americans. They are Mexicans willing to brave the hazards of living in the U.S. illegally.
But the delicate balance that allows both Californian and Mexican strawberry operations to prosper is under pressure. The Trump administration has vowed to deport residents living in the U.S. illegally. And where more effectively to deploy the limited resources of the U.S. Immigration and Customs Enforcement agency than where there is a concentration of the people living in the country illegally: in the strawberry fields?
The immediate impact of deportations will be a shortage of labor. In the short run, California and the U.S. will have fewer strawberries picked and the berries in the market will command higher prices. In the longer run, farmers will either pay pickers more or plant crops that can be harvested by machines. The result: even fewer strawberries and even higher prices. And the same people who have been picking strawberries in California will still be picking our strawberries. They just will be doing it south of the border.
The shift of the strawberry business farther south should be a boon to Mexican agriculture, food processing and trucking. For the agriculture here in the U.S., profits will be lower as land ideally suited for strawberries might be used for feed corn. And, while President Donald Trump campaigned on closing the trade deficit with Mexico, the deportation policy will expand it, as more profits from the strawberry trade accrue to Mexican land barons.
So it is a policy of “choose your poison.” You can engage in mass deportations with consequent lower income for American farmers and their Mexican farm workers, and increase the trade deficit. Or you can forgo mass deportations, increasing the income of American farmers and their Mexican farm workers, and keeping the trade deficit with Mexico no greater than it is today. But you can’t do both.
And this is just strawberries. In 2015, Mexico exported almost $22 billion of agricultural produce to the U.S. Strawberries are just the topping on the iceberg.
Jerry Nickelsburg is an economist at the UCLA Anderson School of Management.
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