RIO RICO, AZ - Always one to bring vital insights to light in the fresh produce world, SunFed Chief Executive Officer Craig Slate guided us on an exploration of some of the most pertinent issues currently impacting the sector in a recent letter to the industry. Eager to learn more about the challenges growers are currently facing across North America, I got in touch for some more details.
“Two of the biggest challenges impacting growers in this day and age are weather and labor, which continue to put pressure on the business in terms of large-scale impacts,” Craig shares, noting that not much has changed since he penned the letter. “Labor at the farm continues to be a struggle—both higher costs and shortages of skilled ag labor. Unlike grain crops, which can be planted and harvested with machinery, specialty crops require people to do the planting and picking. These crops demand not only a lot of people, but an educated workforce based on the specific commodity.”
Craig goes on to note that harvesting and packing are labor-intensive processes, with humans handling all of the sorting and packing. This becomes a challenge as access to labor becomes more limited in Mexico and minimum wage increases continue to elevate costs for suppliers.
“Minimum wage increased 48 percent in Mexico in total since 2020, and it is expected to go up another 20 percent in 2023,” he shares. “For comparison, Arizona minimum wage is up 26 percent over the same period, and will increase 8 percent for 2023.”
These rising costs across labor, growing/packing inputs, as well as transportation, have pushed many providers to explore new ways to optimize efficiency.
“We’ve spent time exploring what can be automated and moved to a technology-based system to decrease labor needs,” says Craig. “I think we will see more companies pursuing automation and increasing their efficiencies for the sake of cost savings and supply assurance.”
While labor costs remain a pressing challenge for Mexico-based growers, transportation rates are currently improving, and materials are reportedly stabilizing. However, there are still critical steps to take to help suppliers recover from these unprecedented year-over-year cost increases.
“Agriculture is a space where there is a high level of risk because we deal with mother nature, which is the biggest unknown,” Craig points out. “At this stage right now, the biggest focus is on negotiating price points. Fresh produce buyers should work closely with their vendors to ensure they are getting a return they can operate with. We all want to keep prices low and minimize inflation at the consumer level, but it could create more long-term problems if we put too much pressure on the supplier to where they are unable to produce. Fewer growers in the space means we lose even more control over inflation.”
