Increasing labor costs challenge Latin American growers
Fresh produce growers throughout Latin American are facing the twin challenges of a weak U.S. dollar and competition for workers, both of which are pushing up labor costs and forcing owners to re-evaluate how they do business.
The issues have also spurred the industry to push for government action to help improve rural life to keep workers in the field.
Antonio Walker, president of Chile’s fruit growers association Fedefruta, told FreshFruitPortal.com that the fall of the dollar means the cost of a day's work has doubled. He said that five years ago, a day’s work cost about US $14-15, whereas today it reaches some US $30.
“And this is produced by a drop in the dollar, not an actual increase in the compensation for the workers,” Walker said.
For crops such as white seedless grapes, 70% of costs relate directly to labor, according to Fedefruta director Rodrigo Echeverria. With other crops, this number could drop to 40%.
As a result, Walker said that more growers near Chile’s capital of Santiago are already turning to a more mechanized harvest.
Mexico, known as a source of cheap labor for U.S. growers, is facing its own increases at home.
“There is a considerable increase in costs associated with labor such as social security, medical expenses and labor debt,” according to Miguel A. Usabiaga, an executive with Mexican grower and distributor Mr. Lucky. “Labor costs are rising yearly by 5-6% on average,” he added.
As in Chile, growers are looking to ways to further mechanize the harvest and increase productivity, Usabiaga said.
Argentina’s chamber of integrated fruit growers (CAFI) has also focused on the rising cost of labor. It has cited the trend as a main concern for the 2011 apple and pear season, estimating that costs could rise as much as 22%. Costs associated with labor have grown more than 113% since 2002, according to CAFI.
CAFI’s president, Oscar Martín, has asked the government to take measures to help fruit growers, such as lifting export tariffs that cost the industry some US $22 million to offset the rise.
The other headache for growers is a lack of workers. According to Walker, more fruit pickers have moved to work in the city, in search of different surroundings and better working conditions, even if it means lower pay in some cases.
Walker says that for many of the workers, it’s “more attractive to work in a commercial center that has more social allure and requires less sacrifice.”
In Chile’s case the destruction left behind by February’s earthquake affected fruit-growing regions most, leaving growers to compete with the construction industry for workers. Walker estimates that this factor alone has costs the fruit industry 25% of its labor force.
To try to reverse the trend, the industry is offering incentives to growers to improve working conditions and retain workers.
According to Hugo Ortega, agronomist and academic with Chile’s Universidad Central, traditional farm work offers, for the most part, a poor working environment.
“Businessmen are learning very slowly and should get in step with today more quickly,” Ortega said, adding that a few companies have tried to change.
The industry is also trying to improve the overall quality of life in rural areas.
“We have called upon the government to increase its investment in rural infrastructure, in the paving of roads and building schools, for example,” Fedefruta’s Walker said, adding that rural infrastructure development should receive the same amount of resources as urban infrastructure.