Mexico’s competitive edge in labor and climate could lure production away.
A shrinking and aging agricultural workforce, combined with rising labor costs, has created new challenges for U.S. farms over the past decade. A recent study by University of California agricultural economists Alexandra Hill and James Sayre sheds light on the shifting demographics of U.S. and Mexican farmworkers and the economic pressures they create.
Declining Migration and Shifting Trends
Over the past two decades, U.S. farms have faced a declining supply of domestic crop workers. A significant driver of this shortage is the decreasing number of immigrant farmworkers coming from Mexico. This trend is fueled by Mexico’s transition toward manufacturing and service industries, declining birth rates, higher education levels, and stricter U.S. immigration enforcement.
At the same time, the H-2A visa program—allowing temporary foreign workers to legally work on U.S. farms—has become a growing source of crop labor. The program’s wage requirements often result in pay rates 4–5 times higher than average farmworker wages in Mexico, creating a strong financial incentive for Mexican workers to pursue legal H-2A opportunities over unauthorized farm labor in the U.S.
“While the high costs associated with the H-2A program will pull in workers, they may also push farms out of the United States,” says Hill.
Costly Labor and Competitive Pressures
H-2A wages, particularly the adverse effect wage rate (AEWR), are significantly impacting the profitability of farms employing H-2A workers. States like California and Washington, which grow high-labor crops such as fruits and nuts, are feeling the strain. Meanwhile, Mexico’s lower labor costs and favorable climate are giving the country a growing competitive edge.
The study highlights a sharp rise in Mexican production of high-labor crops over the last two decades. For instance, between 2003 and 2022, blueberry production in Mexico grew 2,600-fold, raspberry production increased 140-fold, and strawberry production rose 13-fold. During this period, exports of these crops to the U.S. also surged, suggesting that U.S. farms may increasingly lose market share to Mexico.
What Lies Ahead for U.S. Agriculture?
As labor costs climb and demographics evolve, U.S. farms may be forced to adapt by exploring automation, shifting crop production to less labor-intensive options, or even outsourcing more production to Mexico. The potential implications for the future of U.S. agriculture are profound.
For a deeper dive into these trends, read the full study by Alexandra Hill and James Sayre:
English Version | Spanish Version.
