Even if you multiply the cost by 5 to cover markup as it goes through the chain (of distribution), you have... $2.50 going to $2.75, or ten percent more at retail. Not shocking.
For full disclosure: I've worked about 15 years in hospitality industry and have quite a few work acquaintances in supply chain, as well as chefs and restauranteurs.
Most folks that are commenting here are living in la-la land with some of the absolutely absurd math and opinion that do not tie into reality.
Lets get some baselines going before I unpack the horse shit being said here.
1. Which agricultural concentration has the most migrant/day laborers? Citrus[0] and other labor intensive crops (sugar cane, corn, cotton, etc.) hire the majority of migrant labor. Majority (78%)[1] of seasonal agricultural jobs are performed by folks who are not from the Unite States.
2. What is the average profit margin, per acre, for agricultural farms (that sells for human consumption)? It's shit [2] - like most freaking farms are barely making it...Farms that have a GCFI (Gross Cash Farm Income) of 5,000,000+ should be doing well, however, about 25% of them are in the critical zone of going out of business. Farms with a GCFI less then 500,000. But hey, maybe that government agency has their head up their ass and don't know shit. Lets take a look at studies by Purdue University and Department of Agriculture and Consumer Economics University of Illinois[4]. To make life easier, heres a summary: according to Purdue estimates, on average, farmland has $114 to $227 return per acre. University of Illinois project returns from $200 to $100 per acre.
3. What is the general wage for Migrant Worker? From [5] this study on an orange farm,workeers can expect $16.92/hr that operate machinery and $13.75/hr for general purpose.
4. What percent of overhead is labor? [5] Page 9. Labor accounts for 41% of overhead for an orange farm. This is a industry standard for all labor intensive agriculture production [6], which are listed as: fruits, vegetables, and nursery products.
Great, now that we have some baselines. Lets dig into some math.
According to a previously mentioned study [5], an orange farm that has been established for 10+ years can expect 550 packed cartons of oranges, that weight 37.5 pounds. This represents 80% of the annual crop. The rest of the crop is used for juices and fillers. That 20% accounts for an astronomic $0 return. In most cases, breaking even is considered a win.
Focusing on the 80% of the crop that does bring in money, what are the economics? (this is taken from Ref Doc #5, page 22) It's shit! How shit? well, if the average cost of a carton of oranges is $12 and you gather 700 cartons per acre, your NET RETURN PER ACRO ABOVE TOTAL COST is -1,156...huh? Wait, you just lost money...
How about if we take that number up a notch and sell our beautiful oranges at $15/carton? Well, on 700 cartons gathered per acre you have now achieved profitability of 944 per acre.
But how does this affect the consumer? Well, my curious conversant, a 5lb bag of Navel Oranges is currently selling for $6.48 at Walmart[7]. For comparison, a store in Illinois is selling 4lb bags of oranges for $3/per[8].
So a carton of oranges is being sold, at the highest range of the study [5] is $15/carton. A carton is 37.5 pounds, which means I can get a bit more then 9 bags of 4lb orange bags, that I will sell for $3/per. Which means I will generate a gross of $27/carton.
After reading this, please, do tell me again, how raising wages to $20/hr is going to cause lettuce to go from 2.50 to 2.75?
[0] https://www.reuters.com/article/us-usa-immigration-farms/agr...
[1] http://nfwm.org/education-center/farm-worker-issues/farm-wor...
[2] https://www.ers.usda.gov/amber-waves/2015/januaryfebruary/pr...
[3] http://agribusiness.purdue.edu/blog/understanding-the-margin...
[4] http://www.farmdoc.illinois.edu/manage/2015_crop_budgets.pdf
[5] https://coststudyfiles.ucdavis.edu/uploads/cs_public/19/d4/1...
[6] https://www.ers.usda.gov/topics/farm-economy/farm-labor/
[7] https://www.walmart.com/ip/Navel-Oranges-5-lbs-Bag/44391069
[8] http://waynesmarket.net/shop/247-4-lb-bag-navel-oranges.html
Variables: original cost of labor $8/hour, new cost $20/hour.
As well, trucking is a big industry and I haven't considered paying the truckers more, either.
Look at this video: https://www.youtube.com/watch?v=oxbJVqfIK1U and time the total handling time of 1 head of iceberg lettuce (the round head kind).
Worst case scenario: each head is handled total for about 15 seconds, from cutting or pulling it off its stalk on the ground, quickly removing loose leaves, placing in bag, then sealing the bag and putting into boxes placed on skids.
Thus we have (rounding up, allowing for breaks, turns etc.) 20 seconds per head, 3 per minute, 180 per hour.
$8 / 180 = 4.4 cents of labor per head. $20 / 180 = 11.11
OK, I am off in what I remember ... about 7 extra cents per head of lettuce vs. my remembered 5 cents.
A ten percent increase across an entire grocery bill might be more noticeable though. Likewise with the cost of eating at a restaurant if all workers are paid more (i.e. the $15/hour movement).
Personally I am not opposed to paying the actual costs instead using immigration and government subsidies of crops like soybeans and corn to lower the costs for some farmers.
