The Impact of Labor Constraints on the Farm Performance

Abstract

Stricter immigration policies that affect an estimated 12 million unauthorized immigrants, 40% of whom are hired as farm workers, can potentially leave the highly labor-dependent organic farms more economically vulnerable. The displacement of unauthorized immigrants will expectedly create labor shortages. This study analyzes the impact of hiring constraints and changes in farm labor market conditions (due to stricter immigration policies) on the technical efficiency and financial performance of organic and conventional farms. A production function approach is used to analyze survey data that has a mix of organic and conventional farms in the Southeast region. Adjustment strategies to deal with labor shortage and providing workers with nonwage incentives have been determined to be an important determinant of farm income. Among the strategies, adjustment of wage and nonwage benefits were found to be the most effective but a combination of strategies is the most preferred approach to deal with labor shortage. Furthermore, we found productivity difference between farmers with labor shortage adjustment strategies and those who do not.Agricultural Finance, Production Economics, Productivity Analysis,