Posted by: Thomson Vineyards | July 8, 2012

Labor is Like Fine Wine: Expensive

Whether you’re paying piecemeal, hourly or by the acre there’s a shortage of the right kind of labor right now and it’s not the expensive kind. The shortage of unskilled labor is being exacerbated by the failing U.S. economy and recent elections in Mexico.

The American Farm Bureau Federation is projecting $5 billion to $9 billion in annual produce-industry losses due to current labor shortages. In California alone, farmers are already reporting labor shortages of 30 percent to 40 percent at the onset of what is typically harvest season for much of California agriculture according to the California Farm Bureau Federation.

Los Carneros AVA Since 1983

I talk to numerous Farm Labor Contractors (FLCs) on an ongoing basis mostly because over the past several years I’ve connected them with buyers for their fruit. They didn’t know how to navigate the sales and marketing landscape of the complex grape market, I didn’t know you could use a fork to rake sunburned fruit out of a cluster and save the other half. The relationship just works. Apparently the relationship is working out so well that an FLC said his crews have started to ask, “do we get to go back to the Queen of Carneros’ Ranch?” It was only a matter of time. Only a matter of time.

Three months ago one FLC told me the pool of laborers from the Central Valley are no longer making the trip to the North Coast because the extra $1/hour doesn’t cover gas prices and is not substantial enough of an incentive.

A month ago a Sonoma based director of vineyard operations for a major conglomerate told me he raised his hourly rate from something like $10.44 to $10.88 just keep guys happy, on payroll and complete the operations he needed on schedule.

Three weeks ago I watched a vineyard manager, who is well respected in the industry and manages thousands of acres in the North Coast, negotiate at 8 p.m. over pennies on a piecemeal rate with a crew scheduled to work at 6 a.m. the very next day. He reasoned with the crew over the phone that he kept them working during slow periods and he would continue to give them steady work throughout the season – unlike others who were offering mere pennies more that particular week and who would surely lay them off in July and August.

Last week, a different major conglomerate told me they are utilizing more mechanical leafers not because they like them, but because there is such a shortage of labor and they have no choice. *Growers note, you will be hard pressed to find a winemaker or independent grower who will advocate for mechanical leafing. The technology is still sub par, damages fruit and is either too aggressive or not thorough enough to achieve the industry standard results like those of hand leafing.

Which leaves Sundays as a catch up day to most in the industry and can be a win win for both laborers struggling to make ends meet in this downward economy and growers who need seven day a week labor to keep on top of operations in the vineyard.

On Wednesday I negotiated $500 flat rate for a little under two acres of leafing at our small Merlot vineyard on the East side of Napa Valley. Last year I paid between $175-$250/acre for leafing (depends on vine count and how much canopy they have to remove).

It should be known that I have a good working knowledge of understanding and deciphering spanish. However, I am not as skilled as I should be speaking it. It keeps FLCs, their laborers and the throngs of mexican men who hang at Bistro Sabor on salsa night guessing at just what they can and cannot say in front of me. So on Saturday afternoon, just to be safe, I confirmed via translator the labor rate and the crew’s availability, which was six laborers, $500, leafing only. If I wanted shoot thinning that was another pass/extra money and another day my translator – who I now owe a favor to – relayed to me.

At 9:55 p.m. Saturday night, minutes after the Silva Sonnen UFC fight concluded the crew foreman called to re-negotiate a rate of $18/hour. I sometimes utilize another grower’s internal crew who works for me and the other grower for $12/hour and I told that to the crew foreman who wanted to re-negotiate. We settled on $15/hour and that they would leaf and shoot thin. Four to six guys were supposed to be there. Sunday morning at 6 a.m. there were two.

My assessment is that $18/hour skilled laborers are in vast supply on the North Coast, they need to make extra money on Sundays to supplement rising costs of living, but they want their standard $18/hour for unskilled labor operations. Unskilled and basic hand laborers are in short supply as a result of the ever rising cost of living in the North Coast and the new/reaffirmed attraction to a better life in Mexico under new/reinstated government.

Both growers and vintners organizations will tell you we have the best skilled labor force in the world who live and die by quality, quality, quality. That’s probably an overstatement, but true. And all that quality, quality, quality is costing, costing, costing.  Get to the meat of the issue though and just like there’s a place in the market and a consumer to pay for value, premium, and ultra premium wine so is there a need for unskilled labor, basic hand labor and skilled labor in the industry – priced accordingly.

Skilled labor wants $18/hour and they should probably get it particularly when its more difficult terrain or more labor intensive conditions; not only is it tedious work, but it takes a skill set and knowledge to perform those tasks. Unskilled labor to pull leaf is worth $10-12. But, we’ve run that pool dry due to gasoline prices; made it difficult to get work visas/green cards; lack affordable housing, and when growers are forced to agree to pay $18/hour on a Sunday for skilled laborers to pull leaf just because we need to get the work done – we set a precedence which is hard to go back on.

Moral of the story, growers aren’t getting cocky, as of July 2012 we now have to pay $15-18/hour for basic leafing which makes our costs to farm one ton significantly increase. We’re only doing our due diligence to share the labor issues with everyone, so no one feels left out and everyone knows the reason for increasing the price per ton.

My Uncle’s 50 acre ranch in Carneros puts out 1.5 tons to the acre Pommard clone Pinot Noir on 50 year old vines. Harvest crews sat on their picking lugs and re negotiated price per ton in the middle of the pick or flat out walked off the job for the past three years in a row. I told The Other Old Farmer Friday to get on the phone and call the winery now, who we’ve had a 25 year relationship with, and tell them that given the labor shortage at this point in the season they need to come up with a plan to pay crews hourly or help cover harvest costs because the situation won’t get any better, it can only get worse. Not to mention once a crew knows how long and hard of a pick your ranch is for such low tonnage they black ball you and don’t come back. Our options are dwindling at this particular ranch for upcoming harvests.

I am not the utmost authority on this topic: labor, immigration and wages. I can think of several better than I to discuss the nuances of the old/new Mexico regime and what that means for agriculture, particularly the wine industry. There are individuals who manage larger crews, more acreage, deal with 1000+ touchpoints related to labor, rates and availability than I. But my go-to person to enlighten me about such topics is now on my short-list of FLCs who I will no longer utilize or mingle with because they are either immoral, unprofessional, or I caught them saying something inappropriate about me in spanish. I find it’s a slippery slope for most and somehow if you’re one you’re probably all three.

Since my short list includes yet another offender, if you care to enlighten me, share a solution or want to waive the banner for piecemeal rates leave a comment. From the front lines of the 2012 vintage in Carneros at the Queen of Carneros’ Ranch – adios muchachos!

About these ads

Responses

  1. This is the program that needs to be put in place again but with present congresscritters running the show it would be all but impossible. As some that has work as labor in the fields most can’t even imagine how hard it is to be in 100f heat all day long. Yes, I live in the central valley and my neighbors that do row crops are having the same problems on hiring. Wages are an issue everywhere and I use to hire some guys that were at the local little market but they have stopped coming north just too much trouble for so little pay. Then there is ICE and they aren’t helping either. I’ve done grapes also for half a day and it’s an art not to cut your fingers off. Good Luck and yes learn Spanish.

    The Braceros had to sue America for their SS that they paid into and were told they would receive. Then free health care for all would also help.

    http://en.wikipedia.org/wiki/Bracero_Program

    I’ve pointed this out to Blake in the past.

  2. [...] On the blog for Thomson Vineyards in Napa Valley, Jennifer Thomson writes a fascinating post about the current farm labor shortage — and what it’s going to mean for wine (and produce) prices. (H/T: W. Blake Gray.) [...]

  3. As a woman looking to get into the wine business within the next 5 years or so, I found this really interesting. My first job was with a winery when I was 16 and I’ve had agriculture-related jobs since, all the way up until recently as a representative for a Grower-Shipper Association, so I’ve had a decent amount of experience with labor issues in agriculture. The problems you’ve described with your FLCs are exactly what I’ve been afraid of – It sounds like I definitely need to make a point of learning Spanish.

    Interestingly enough, I found in my experiences with the grower-shippers that FLCs tended to be the least willing to engage and look for solutions to labor issues. The grower-shippers, on the other hand, are definitely eyeballing mechanization as a solution. It will be interesting to see whether technology can manage to produce the hand-care quality we’re accustomed to, or if consumers will have to sacrifice quality to keep food costs down.

    Have you had any experience with labor crews responding to incentives other than pay?


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Categories

Follow

Get every new post delivered to your Inbox.

%d bloggers like this: