Since 2019 when California minimum wage was $11.00 per hour, the wage rates had increased 45% in five years to todays current $16.00. Some legislators are putting bills forward to raise that to $18- $20.
Some farmers are able to turn to automation but for many crops, picking by hand is still the best way to harvest without damaging the product and maximize field yield. Automation is expensive and the financial resources needed to participate in it are much harder to come by for small farms. This is resulting in fewer, bigger farms, which means less competition.
In combination with sunsetting of the state’s agriculture exemption for over time which had been in place for over fifty years, farms are now required to pay overtime the same way that a manufacturing plant that operates Monday thru Friday, 9am – 5pm does. This means instead of paying overtime after ten hours in a day, it is now required after 8 hours. Crops don’t grow from just 9-5. The result is many farm workers have seen their weekly gross earnings decline significantly as farms add more workers to avoid the over time. The issues this creates for farm workers is a post for another day.
For some produce crops like bell peppers, labor can comprise up to 40% of the total cost of growing, harvesting, and freezing. When 40% of your cost goes up 45% in less than five years, your product becomes uncompetitive very quickly.
For many years California agriculture had an advantage in growing conditions over other areas because of the micro-climates that exist here, and it rarely rains during the peak growing months. When growers control their water they can minimize disease and maximize yields. However, over the past thirty years other states have found ways to compete against California because costs to operate here have accelerated so quickly. It’s not just labor, but other costs like electricity rates which have doubled in the past five years, or workers compensation which says an employer is liable for 100% of a claim if there is a 1% causation.
One growing attribute that California agriculture still dominates in is consistency of supply and quality in the field. It is a very rare occasion where an entire crop in California fails. And even if one valley has a problem, another valley usually does not. Our crops tend to have higher average yields per acre than the same crop in other parts of the country. And since it doesn’t rain during the peak summer growing season and we have long days with lots of sunshine, farmers can maximize their field yields. That is a key driver behind California being the top producer of red bell peppers every year.
Why does all of that matter? Less acres that need planted helps reduce growing cost, improves sustainable farming, and helps the environment. When other parts of the country have a crop issue, there are few other options.
How has Eckert managed to stay relevant for over 75 years in this industry? It hasn’t been easy but we started on a path many years ago that entailed spreading out our grower base to lower the risks associated with heat waves or droughts, putting automation in the plants, and investing in breeding proprietary pepper varieties that are more tolerant to heat, low moisture, and disease.
To further minimize crop risk for our customers, in addition to our two processing facilities in California, we own our processing plant and field in Mexico so we don’t have to depend on a third party to protect us when things get tight. The Mexico season is counter to California so we have two production seasons each year which means more inventory flexibility.
In spite of the challenges of operating here do we think there is still a future in California farming for producing IQF peppers? You bet we do! We feel so strongly about our future here that we’ve recently invested in more automatic sorting technology, more efficient freezing, and even a solar farm.
Eckert is planning on being here for a long time yet to come, but we would never have gotten this far without the support of our customers. For that we are truly grateful, and we look forward to better days ahead for all of us.