WHO WILL GROW OUR FOOD? - How the Farm Labor Shortage Is Driving Innovation in Agriculture
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ISSUE NO. 2 SUMMER 2019
WHO WILL
GROW OUR FOOD?
How the Farm Labor
Shortage Is Driving
Innovation in Agriculture
IN THIS ISSUE
Business Case for a
Worker-focused Culture PAGE 3
Increased Competitive Advantages
Through Labor Management PAGE 7
Robots in the Field PAGE 9
Riding the Wave of Industry Change
PAGE 11
Benefits of Scale Through Mergers
and Acquisitions PAGE 12
For centuries, labor has been treated
as a commodity, with an abundant
supply of immigrants coming to
America every year. Labor was always
plentiful and available whenever
needed, much like turning on a
water tap. However, just as we can
no longer take water for granted in
many parts of the U.S., we can no
longer rely on labor as an unlimited
resource.
AG WORKER SHORTAGE
The perfect storm of a strong economy and reduced there are more Mexicans leaving the U.S. than arriving.1
immigration has caused a steady decline in the number While immigration is a hotly debated topic, the
of people willing to perform the physical labor needed unspoken truth is that as much as one-half of the
to cultivate, harvest and process food in America. nation’s farm workers are unauthorized, with the vast
majority coming from Mexico.2 For U.S. farmers, this
From 2010 to 2017, the undocumented population from fundamental shift in immigration patterns is having a
Mexico fell by 1.3 million, according to the Center for devastating impact on their ability to grow and harvest
Migration Studies. For the first time since the 1930s, their crops.
1 | WHO WILL GROW OUR FOOD? HOW THE FARM LABOR SHORTAGE IS DRIVING INNOVATION IN AGRICULTURE
Compounding the labor issue for farmers are recent
changes in minimum wage and ag overtime laws in
California, and similar legislation pending in New York, Growers in California now rank labor as
that will impose the following: their number-one concern, surpassing
• Annual increases in the minimum wage from $11 to
water issues in the drought-prone state.
$15 per hour by 2022
• Gradual decrease in the minimum number of hours, women drivers. According to the ATA, women, who
from 60 to 40 hours per week, before overtime is have always been an untapped market for drivers,
paid to ag workers made up 6.2% of all truck drivers as of 2017, up from
4.9% in 2008.
The combined impact of these two changes will
increase hourly labor costs by as much as 60% over the The construction industry has also been operating
next three years. For crops that are hand-picked, such under the weight of labor shortages. With an estimated
as fresh grapes, peaches and strawberries, the overtime 15% of workers undocumented,3 the industry has
rule change alone may be all that is needed to put responded to shortages by expanding health benefits,
some farmers out of business. offering signing bonuses and using internships to
promote construction as a career for high school
Growers in California now rank labor as their number- students.
one concern, surpassing water issues in the drought-
prone state. PATH FORWARD
To remain competitive in a tightening labor market,
food and ag companies will have to adapt in one or
The perfect storm of a strong more ways:
economy and reduced immigration • Identify new and creative methods for attracting and
has caused a steady decline in the retaining workers.
number of people willing to perform
• Invest in technology that will reduce dependence on
the physical labor needed to cultivate, manual labor.
harvest and process food in America.
• Consolidate with other growers or scale up to gain
an advantage in a seller’s market of ag labor.
NOT JUST FARMING By adapting to the new realities of today’s food and ag
industry through creative hiring approaches,
Agriculture is not the only industry grappling with labor
technology advances, consolidation and growth
shortages. In 2019, the American Trucking Associations
strategies, companies can not only remain competitive
(ATA) estimates a shortfall of approximately 60,000
in the face of mounting labor shortages but also begin
drivers, which could top 100,000 in only a few years.
to develop the mindset and flexibility needed for
Although self-driving vehicles may be the future of
industry changes yet to come.
freight delivery, reliable technology is still several years
away from being a viable solution. In the meantime, the
trucking industry is taking a new approach: recruiting
WHO WILL GROW OUR FOOD? HOW THE FARM LABOR SHORTAGE IS DRIVING INNOVATION IN AGRICULTURE | 2
BUSINESS CASE FOR A
WORKER-FOCUSED CULTURE
Every company with a mission statement claims that “People are our greatest asset”
but few actually behave that way. Only those companies that genuinely understand
the scarcity value of labor, and adjust their business models accordingly, will prevail in
the long run.
Consider Agriland Farming Company, a farm-management Many employees who have been with Agriland since it was
company based in Chowchilla, California and located in the founded in 1990 attribute their loyalty to the company’s
center of one of the world’s most productive agriculture worker-focused culture. The company provides on-the-farm
regions. With over 27,000 acres under management, Agriland health clinics, English as a Second Language (ESL) classes for
knows the only way to secure a workforce of 275 full-time ag employees and their families, and scholarships for
employees is to treat each person as a resource just as employees’ children. In 2018, the Migrant and Seasonal Head
valuable as the land they farm. Start Program recognized Agriland for leadership in
promoting the compassionate care of its workers.
The following discussion identifies six ways farmers are
Some agribusinesses offer a variety of adjusting their business models toward a worker-focused
culture to attract and retain the best workers in a highly
benefits to attract and retain workers,
competitive labor market.
ranging from paid training, vacation
and healthcare to incentives that are HIGHER WAGES
unique to farm labor, such as housing, The Wonderful Company is a major producer of packaged
goods and is known for its pistachios and POM beverages.
transportation and free meals. The company, which is heavily dependent on ag labor, farms
approximately 125,000 acres and employs over 9,000 people
3 | WHO WILL GROW OUR FOOD? HOW THE FARM LABOR SHORTAGE IS DRIVING INNOVATION IN AGRICULTURE
EXPANDED BENEFITS
Year-round employment provides Some agribusinesses offer a variety of benefits to attract and
retain workers, ranging from paid training, vacation and
workers with the opportunity to healthcare to incentives that are unique to farm labor, such as
develop the experience and housing, transportation and free meals. The vice president of
knowledge needed for higher-paying human resources for a large Texas-based food manufacturer
with over 3,000 employees across four states describes the
jobs available across the industry. current labor environment as the typical “bear in the woods:”
“We don’t have to outrun the bear. We just
worldwide, one-half of whom are in California. To ensure the have to outrun our competition.”
continuity of its workforce, The Wonderful Company
increased its minimum pay for all California employees to $15 To remain competitive in the state, where the unemployment
per hour starting January 1, 2019, three years before the rate is less than 3%, the industry veteran has implemented
state-mandated deadline.4 initiatives to attract and retain workers. Initiatives include on-
site healthcare, legal assistance and a program that pays
Other growers use a piece-rate payment structure to reward employees an additional $1.60 per hour bonus for every two
highly productive employees. At Gerawan Farming, the weeks of full attendance.
largest stone fruit grower in the U.S., workers sort and pack
the delicate fruit by hand. Packers are paid on a sliding scale YEAR-ROUND EMPLOYMENT
based on meeting Prima® brand quality standards A major disincentive for ag workers is the lack of year-round
throughout the day, focusing on quality over quantity. As a employment and the uncertainty and instability it can bring
result, Gerawan packers are paid more than typical industry to them and their families. Farmers who specialize in one
wages, with the best packers earning 75% above the industry crop typically have only one harvest season, requiring them
average. to source large numbers of temporary labor for a very short
employment period.
SIX WAYS
GROWERS ARE
COMPETING
FOR LABOR
HIGHER EXPANDED YEAR-ROUND
WAGES BENEFITS EMPLOYMENT
GREATER CAREER IMPROVED WORKING RAISED STANDARD FOR
OPPORTUNITIES CONDITIONS COMPANY CULTURE
WHO WILL GROW OUR FOOD? HOW THE FARM LABOR SHORTAGE IS DRIVING INNOVATION IN AGRICULTURE | 4
One solution available to farmers is to diversify their crop mix. Growers (APG) Association, noted that “in the U.S., we tend to
For example, mandarins are harvested throughout the winter equate sustainability only with environmental concerns, and
and spring months, starting in November and extending rarely with labor, social responsibility and an ag product’s fit
through May. Peaches, on the other hand, are a summer crop, into a ‘sustainable diet.’”
beginning harvest in June and lasting through September.
Farmers growing both crops are better positioned to offer To meet buyers’ preferences and rising expectations,
year-round employment and stand out among the growers/packers/shippers are making strong strides toward
competition when attracting and retaining the best workers. their role as corporate citizens by improving working
conditions. Examples of recent improvements include:
GREATER CAREER OPPORTUNITIES
• Shorter, denser fruit trees are easier to pick and require
An additional competitive advantage resulting from year- less ladder work, which saves time and reduces worker
round employment is career progression for ag workers, and fatigue.
the stronger financial returns and job satisfaction that can
follow. Year-round employment provides workers with the • Trellis Systems can be designed to provide a canopy for
opportunity to develop the experience and knowledge workers to pick table grapes under constant shade and
needed for higher-paying jobs available across the industry. without having to stoop under vines.
Jobs can range from machine operators and crew managers
to plant breeders and food-safety technicians – and the • Packing houses with comfortable working conditions,
demand for experienced workers is climbing. such as cooled, well-lit workspaces with conveyor systems
designed to reduce range of motion, are highly sought
Oscar Ramos, CEO of OFR, a farm-labor contractor and after by the best workers.
custom farm-management company located in Kingsburg,
California, provides farm crews to dozens of different growers RAISED STANDARD FOR
in over 20 counties in the state. Ramos’s clients are always on
COMPANY CULTURE
the lookout for experienced supervisors and managers, and
Creating and maintaining a culture of inclusion, responsiveness
he believes one of the reasons agriculture is suffering from a
and transparency is as important in the food and ag industry
labor shortage is because there is a misconception that
as it is in any other service or manufacturing industry.
upward mobility does not exist:
However, as agribusinesses have grown, the connection
between farmers and field workers has become more distant,
“The food industry must do a better job of
and in some cases, strained.
advertising the benefits of learning a trade
from the ground up.” For example, large-scale farmers often rely on crew bosses to
manage the daily activities of the field and plant crews, which
Ramos’s clients prefer to hire people who have worked in the further distances farmers from workers. Connections weaken
fields and understand the all-in, hands-dirty, let’s-go attitude further with less-than-ideal working conditions and workers
prevalent in the ag industry. Agriland Farming CEO Jim who do not speak English and rely on crew bosses to explain
Maxwell feels the same way. “We are handing over the keys to their concerns to management.
a $300,000 piece of equipment. We need highly competent
employees.” Then again, some growers have chosen to adopt a more
inclusive business culture where owners, management and all
IMPROVED WORKING CONDITIONS company employees work together to create an environment
Buyers, particularly in Europe, prefer working with suppliers where productivity, safety, communication and teamwork are
that include corporate citizenship in their business model. prioritized and rewarded. Those owners respond directly to
On a recent marketing trip to Brussels, Judy Hirigoyen, vice employee concerns and are transparent with their decisions
president, Global Marketing of the American Pistachio and the results that follow.
5 | WHO WILL GROW OUR FOOD? HOW THE FARM LABOR SHORTAGE IS DRIVING INNOVATION IN AGRICULTURE
GERAWAN FARMING:
CASE STUDY OF MANAGEMENT AND FARM WORKER PARTNERSHIP
In the fall of 2013, farm workers at Gerawan Farming carried In September of 2013, a group of Gerawan farm workers
signs and marched on Sacramento, though not in protest of petitioned the labor board to hold an election to decertify
management as might be expected. Those farm workers UFW as its representative. Under most circumstances, this
were fighting for their right not to be represented by the decision might seem to be an unusual step for farm workers
United Farm Workers (UFW). to take. However, their relationship with Gerawan
management was based on trust and transparency, and they
In 1992, Gerawan Farming employees certified UFW as their enjoyed some of the highest wages in the industry.
bargaining representative. However, other than a brief
bargaining session in 1995, there was no contact between the Although elections were held, the ALRB refused to tally the
union and Gerawan Farming management. In 2012, the UFW votes. Gerawan employees responded with large-scale
reappeared and insisted on a 3% deduction from workers’ protests to demand their ballots be counted. The dispute,
wages for union dues. which first came before an administrative law judge,
eventually reached California’s Fifth District Court of Appeals.
After unsuccessful negotiations, the UFW invoked California’s In May of 2018, the court finally resolved the issue and ruled
Mandatory Mediation and Conciliation (MMC) law to enforce that the ballots must be counted – 1,098 votes against the
the union-dues deduction in late March of 2013. The MMC UFW’s position and 197 in favor.
law is a provision of the state’s Agricultural Labor Relations
Act that created the Agricultural Labor Relations Board Five years after their votes were cast, workers at Gerawan
(ALRB), a third-party arbitrator for union disputes. Farming had their voices heard.
Source: “California Farm Workers Fight Their Union – and the State – in Court,” National Review, June 18, 2018
WHO WILL GROW OUR FOOD? HOW THE FARM LABOR SHORTAGE IS DRIVING INNOVATION IN AGRICULTURE | 6
INCREASED COMPETITIVE ADVANTAGES
THROUGH LABOR MANAGEMENT
The growing emphasis on health and sustainability is there is an opportunity for producers of labor-intensive
driving consumer preferences away from corn and crops to use labor management to gain a competitive
wheat-based diets, and increasing demand and retail advantage in the growing market for fresh fruits and
sales for perimeter-of-the-store products, such as lean vegetables.
meats, nuts, and fresh fruits and vegetables.
Rather than mechanizing production of their specialized
However, the fresh produce consumers crave, such as products, and risk compromising quality and leveling
tomatoes, avocadoes and strawberries, require careful the playing field, some industry leaders are capitalizing
handling and processing, making them very labor on farming know-how, improved genetics, consistently
intensive, unlike crops such as corn and wheat that are applied protocols and strong customer relationships to
highly mechanized. As a result, labor costs make up further uphold their leadership position. They are also
42% of production costs for most fruit and vegetable adopting labor management as a competitive
farms, compared to only 12% for corn grown for grain advantage by:
and less than 4% for wheat.
• Creating dynamic hiring processes that actively seek
out the best employees.
There is an opportunity for producers of • Offering training and compensation programs that
labor-intensive crops to use labor provide workers with the skills they need and rewards
for top performance.
management to gain a competitive
advantage in the growing market for fresh • Committing to open and transparent
fruits and vegetables. communications that drive dedicated, loyal and
highly motivated employees.
• Becoming the industry’s employer of choice.
One outcome of the difference in labor inputs is the
commoditization of highly mechanized crops. The more The results are increased market share, greater barriers
a product can be mass produced the more difficult it is to entry for new market entrants and a stronger
to develop a distinguishable brand. On the other hand, competitive position.
THREE
ADVANTAGES
OF EFFECTIVE
LABOR INCREASED
GREATER BARRIERS TO STRONGER
MANAGEMENT MARKET SHARE
ENTRY FOR NEW MARKET
ENTRANTS
COMPETITIVE
POSITION
7 | WHO WILL GROW OUR FOOD? HOW THE FARM LABOR SHORTAGE IS DRIVING INNOVATION IN AGRICULTURE
LABOR INTENSIVE CROPS
Labor costs vary significantly among fruits and vegetables, depending largely on whether the
crop requires manual picking or can be harvested mechanically. Fresh-market produce with
delicate outer skins, such as apples, peaches and strawberries, requires careful handling.
Examples of other highly popular labor-intensive crops include:
Grapes,
California’s top Avocados
crop, require 55 hours have become
of labor to produce one one of the most
ton of fresh table grapes, most of sought-after fruits in
which are packed by hand in the field. the U.S, largely due to the
Labor costs represent nearly 60% of the total rising awareness of their health
costs to grow, pack and ship table grapes in the benefits. However, each avocado
U.S. Conversely, almonds, California’s second- tree can bear fruit at different stages of
largest crop, are harvested using a shaker system maturity, requiring avocados to be hand selected.
with the tree or canopy shaken to dislodge the Pickers use ladders up to 36 feet high and
nut, requiring only 12 hours of labor per poles up to 14 feet long to harvest fruit in
ton produced, or approximately 9% some of the tallest trees.
of total costs to farm and
harvest.
Tomatoes, Asparagus
with their is uniquely labor
delicate outer skins, intensive because
require a great degree the quick-growing plant
of careful handling and must be harvested every
do not have a high day of its three-month
tolerance for machine growing season. Each
harvesting. However, plant sprouts multiple
tomatoes used in sauces and spears per day, which
ketchup are immediately crushed need to be hand cut,
after harvest and can withstand wear requiring workers to
and tear from mechanical harvesters, cut 14 hours a day, seven
similar to other processed fruits days a week from approximately
and vegetables. February to May.
WHO WILL GROW OUR FOOD? HOW THE FARM LABOR SHORTAGE IS DRIVING INNOVATION IN AGRICULTURE | 8
ROBOTS IN THE FIELD
A rising number of farmers are responding to the farm labor shortage by investing in
advanced technology that automates picking, pruning, seeding, weeding and other
labor-intensive tasks.
What seemed impossible only a few years ago is now, or will Robotic technology is bringing to farmers new capabilities,
soon be, a reality, thanks to advancements in artificial ranging from picking the most delicate fruits and vegetables
intelligence and sensor technologies that allow robots to to pollinating orchard crops that deliver improved efficiencies
cope with a far greater degree of task-to-task variability. and healthy crop yields. Robotic harvesting
Although the up-front investment is expensive, new vehicles are now being tested in Florida and California to pick
technologies can yield impressive returns for farmers and strawberries and replace labor-intensive tasks normally
improved working conditions for ag employees. performed by dozens of farm workers. Efforts are also
underway to develop small agriculture field robots that can
Until recently, ag technology’s deepest impact has been on attack weeds5 and “walk the field” collecting data that tracks
reducing direct labor costs for grains and other field crops plant health and soil content.
using smart tractors and precision farming. However, more
than 200 specialty crops, such as asparagus and cherries, are The following are among the groundbreaking robotic
still harvested by hand. Enter robotics, which could one day technologies that are shaping today’s and tomorrow’s food and
help reduce the need for farm labor. ag industry.
9 | WHO WILL GROW OUR FOOD? HOW THE FARM LABOR SHORTAGE IS DRIVING INNOVATION IN AGRICULTUREAGROBOT DROPCOPTER
Agrobot has developed a robotic harvester that picks fresh The Dropcopter drone is a new robot that solves a major
strawberries around the clock. The machines perform issue plaguing growers – the decline in bee populations. The
autonomously within the rows of a traditional strawberry robot uses drone technology to pollinate large expanses of
farm. The harvester’s platform applies an artificial vision orchard crops. Pollen-filled drones with automated rotors
system to identify strawberries in real time using dust crops, such as apples, almonds and cherries, more
morphological and color analysis. The analysis systematically precisely than bees, and according to the company, provides
determines the ripeness of the fruit, selecting only those a 15% boost in fertility. Dropcopter allows farmers to
strawberries that meet the farmer’s previously set prescribe a specific pollen variety at a specific time, allowing
quality standards. harvest to take place once per season rather than two to
Ag Cred: Driscoll’s, the world’s largest berry company, is three times using traditional pollination methods.
testing Agrobot. Ag Cred: Walmart filed a patent on autonomous robotic
bees.
SOFT ROBOTICS
Soft Robotics is exactly what it sounds like. The company RAMSAY HIGHLANDER
designs and builds automation solutions and soft robotic Ramsay Highlander is a manufacturer of specialized
gripping systems that can grasp and manipulate delicate harvesting aids for the vegetable-growing industry. One
fruits and vegetables with the same dexterity of the human product example is the company’s self-propelled spinach
hand. harvester that is capable of cutting over 15,000 pounds of
Ag Cred: Soft Robotics has raised over $50 million to date spinach per hour and can replace 100 workers, reducing
and counts Taylor Farms, the world’s largest producer of harvest costs from 28 cents per pound to less than 1 cent per
fresh-cut vegetables, among its customers. pound. The newest product launch is a mechanical harvester
with a water-jet cutter designed to harvest romaine, green
leaf and some iceberg lettuce varieties. Results include
AUTOMATED AG SYSTEMS increased yields, extended shelf life and reduced labor.
Automated Ag System’s new technology, The Cyclone, is a Ag Cred: In 2009, Taylor Farms was one of the first
vacuum machine that improves efficiency when harvesting companies to purchase a water-jet harvesting machine.
apples, alleviates worker fatigue and reduces bruising during
harvest. Although the fruit is still picked by hand, workers are
stationed on a mechanical platform and place the fruit into
padded buckets. Attached to the buckets are fabric-lined
suction tubes that transport the fruit and carefully place it in a
bin. The system speeds up harvesting time and eliminates the
need for workers to carry heavy buckets of apples up and
down ladders.
Ag Cred: The Cyclone was selected as a winner in the 2019
World Ag Expo Top-10 New Product Competition.
Robotic technology is bringing to farmers new capabilities, ranging from picking
the most delicate fruits and vegetables to pollinating orchard crops that deliver
improved efficiencies and healthy crop yields.
WHO WILL GROW OUR FOOD? HOW THE FARM LABOR SHORTAGE IS DRIVING INNOVATION IN AGRICULTURE | 10RIDING THE WAVE OF INDUSTRY CHANGE The farm labor shortage is having multi-level repercussions on the food supply chain, ranging from rising costs to changes in crop selection. Yet, despite those challenges, the farming and food sectors are thriving. Findings from the Bureau of Economic Analysis’ Value Added by Industry series, released by the U.S. Department of Agriculture’s Economic Research Service, indicate they contributed $1.05 trillion to the U.S. gross domestic product (GDP) in 2016, a 5.8% increase over 2015. Lost Profits Higher Food Change in Increased Industry A recent study of New Prices Crops Grown Imports Innovation York apple growers Bread and other Between 2012 and Producers of The AgFunder found the state’s value-added food 2016, acreage planted unmechanized AgriFood Tech scheduled minimum products return in almonds, which are commodities who Investing Report – wage increases would approximately 3% of machine harvested, face strong import 2018 found that raise hourly labor their retail price to the increased by 33%, competition, such as AgriFood tech costs by 43% farmer, while milk and while table grape and asparagus producers, startups raised $17 between 2015 and other whole foods peach acreage, both are likely to lose billion in funding in 2021. If those return approximately labor-intensive crops, market share to 2018 as investors increases were 30%. Generally, rising decreased by 6% and imports as labor costs recognize the combined with farm labor costs will 16% respectively. rise, unless there is a opportunity for overtime rules similar have a more direct breakthrough in biotech and robotics to California’s rules, impact on the retail labor-saving to build solutions for New York farmers price of fresh foods mechanization. farmers and the food could expect 2021 (located at the supply chain. wages to be 52% to perimeter of the 70% higher than they store) than on were in 2015. processed foods. 11 | WHO WILL GROW OUR FOOD? HOW THE FARM LABOR SHORTAGE IS DRIVING INNOVATION IN AGRICULTURE
BENEFITS OF SCALE THROUGH MERGERS
AND ACQUISITIONS
As the variable cost of labor continues to increase, or transitions to large one-
time investments in new technology, scale will become even more critical to
maintaining profitable margins.
Consolidation in the food and ag industry is likely to Some industry leaders are investing in AgTech
continue as farmers search for new ways to solve their companies as a means to buy rather than build needed
labor issues and pursue the benefits of industry technology to help solve the labor issues. For instance,
consolidation. in 2018, Taylor Farms invested in Ganaz, a software
developer that has created a workforce management
• YEAR-ROUND PRODUCTION: Consolidation among tool that allows growers to message thousands of
growers of different crops or varieties creates more workers at once, automatically translate between
opportunities to employ workers throughout the languages and respond quickly to questions and
year, which solves a critical problem when attracting feedback received directly from individual employees.
farm labor – lack of year-round employment.
• IMPROVED BENEFITS: Smaller operations, unlike
their larger counterparts, struggle to provide workers Some industry leaders are investing in
with a range of benefits or even a dedicated human AgTech companies as a means to buy
resources department to address worker concerns.
rather than build needed technology to
• GREATER OPPORTUNITIES FOR CAREER GROWTH: help solve the labor issues.
Ag businesses with the scale to provide workers with
a variety of opportunities to progress into supervisor
and management positions can better compete with
According to Vice President Jonah Kolb of Moore &
non-ag companies, particularly among younger,
Warner Ag Group in Clinton, Illinois, “We’re going to
more educated immigrants.
continue to see industry incumbents adding to their
existing technology portfolios by acquiring start-ups
• ADVANCED RESEARCH AND DEVELOPMENT
because it’s a way for those companies to stay relevant.
CAPABILITIES: Large ag companies can invest more
It’s also a way for them to bring innovation – that is
funds in developing improved processes and
sometimes hard to foster in-house – under their
advanced technology that will reduce dependence
corporate umbrellas.”6
on manual labor.
WHO WILL GROW OUR FOOD? HOW THE FARM LABOR SHORTAGE IS DRIVING INNOVATION IN AGRICULTURE | 12CLOSING THOUGHTS The food and ag industry is facing many challenges, from sustainability concerns and weather anomalies to new trade legislation and consumer-trust issues. Although some of those challenges are often cyclical, the marketplace forces affecting farm labor shortages and costs are causing a permanent industry shift that will impact farm and food chain profit margins for years to come. Food companies that innovate and scale their operations, provide attractive employment opportunities, and continually look for new ways to incorporate technology into their operations will be better equipped to keep pace with an ever-changing labor environment. As the perimeter of the store continues to take center stage in the retail grocery industry, produce and fresh-food suppliers have an unprecedented opportunity to connect with new customers and improve margins, if they understand and capitalize on changing consumer preferences. Sustainability no longer applies only to environmental concerns but also to corporate citizenship, responsible labor practices and transparency in the way our food is grown.
CONTACT US
To learn more about industry trends, financing alternatives or merger and acquisition opportunities in the food and ag sector,
please contact:
Bill Harrison Leigh Hudson
Managing Director Managing Director
Head of Consumer Investment Banking Consumer Investment Banking
917-596-5533 415-850-3729
wharrison@capstoneheadwaters.com lhudson@capstoneheadwaters.com
Nancy Ervin Shaun Kalnasy
Managing Director Managing Director
Consumer Investment Banking Consumer Investment Banking
559-903-5358 404-502-2946
nervin@capstoneheadwaters.com skalnasy@capstoneheadwaters.com
ENDNOTES
1
Congressional Research Service, “Mexican Migration to the U.S.: Policy and Trends,” hyperlink, accessed June 1, 2019.
2
CBS News, “These U.S. Industries Can’t Work Without Illegal Immigrants,” hyperlink, accessed May 28, 2019.
3
Pew Research Center, Hispanic Trends, “Size of U.S. Unauthorized Immigrant Workforce Stable After the Great Recession,” hyperlink, accessed May 21, 2019.
4
Merced Sun-Star, “Wonderful Will Raise Its Minimum Wage to $15 – Years Before California Law Demands It,” hyperlink, accessed June 6, 2019.
5
CNBC, “From Strawberries to Apples, a Wave of Agricultural Robotics May Erase the Farm Labor Crunch,” hyperlink, accessed June 3, 2019.
6
Successful Farming, “7 Ag Tech Start-Ups to Watch in 2018,” hyperlink, accessed June 1, 2019.
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WHO WILL GROW OUR FOOD? HOW THE FARM LABOR SHORTAGE IS DRIVING INNOVATION IN AGRICULTURE | 14capstoneheadwaters.com Disclosure: This report is a periodic compilation of certain economic and corporate information, as well as completed and announced merger and acquisition activity. Information contained in this report should not be construed as a recommendation to sell or buy any security. Any reference to or omission of any reference to any company in this report should not be construed as a recommendation to buy, sell or take any other action with respect to any security of any such company. We are not soliciting any action with respect to any security or company based on this report. The report is published solely for the general information of clients and friends of Capstone Headwaters. It does not take into account the particular investment objectives, financial situation or needs of individual recipients. Certain transactions, including those involving early-stage companies, give rise to substantial risk and are not suitable for all investors. This report is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. Prediction of future events is inherently subject to both known and unknown risks and other factors that may cause actual results to vary materially. We are under no obligation to update the information contained in this report. Opinions expressed are our present opinions only and are subject to change without notice. Additional information is available upon request. The companies mentioned in this report may be clients of Capstone Headwaters. The decisions to include any company in this report is unrelated in all respects to any service that Capstone Headwaters may provide to such company. This report may not be copied or reproduced in any form or redistributed without the prior written consent of Capstone Headwaters. The information contained herein should not be construed as legal advice.
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