Labor input substitution decisions and business sustainability strategies under changing farm labor market conditions: comparative economic viability analyses of organic and conventional farming systems

View the project final report

• 2007 annual report
• 2008 annual report

Commodities

• Agronomic: peanuts
• Fruits: berries (blueberries)
• Vegetables: tomatoes

Practices

• Farm Business Management: budgets/cost and returns, feasibility study, agricultural finance, whole farm planning
• Production Systems: organic agriculture
• Sustainable Communities: employment opportunities

The purpose of this project is to determine the farmers’ strategic responses to expected changes in the labor market conditions as stricter immigration regulations are enforced. It will also analyze the relative economic impacts of these responses among organic and conventional farming systems. The impending changes in the farm labor market conditions will be expected to have significant effects on farm operations that are heavily labor-intensive. Organic farming, an economically and environmentally sustainable farming system, is a more labor-intensive operation compared to the conventional farming system that employs larger farm machineries and synthetic agrichemicals. The organic farms’ characteristic limited use of synthetic chemical inputs requires them to implement alternative techniques for pest removal, soil additions and conservation that are usually done manually. Organic farmers in the Southeastern region face even more challenging growing conditions. The region’s mild winters, long warm summers and abundant moisture define the need for soil enhancement management techniques to address the rapid decomposition of organic matter and the more compounded weed and pest problems. Moreover, this research will fill in organic farming data gaps in the Southeast, which has been poorly represented in national survey data. This study will employ both quantitative and qualitative research methods by conducting a survey and several case studies, respectively. These approaches will elicit responses from farmers on their strategic plans responding to the expected changes in the farm labor market conditions and their repercussions on the farm business. Specifically, the survey will be conducted among organic, transitioning, and conventional farms in Georgia, North Carolina, South Carolina, Alabama, and Mississippi. The survey questionnaire is designed to gather information on the farms’ labor requirements and how these requirements have been previously and are currently met by the respondents. Additional information will also be collected on business strategies that either complement or supplement labor-related decisions in order to maintain or enhance the farms’ profitability and viability potentials under the new labor market conditions. On the other hand, case studies will be developed from interviews with an organic farmer and a conventional farmer for each of (at least) three selected enterprises. These interviews also will be designed to collect financial information from the business owners to reconstruct their profit and loss conditions. Enterprise budget models will be developed as decision aids for both organic and conventional farmers producing the crops being analyzed in this project. Project results will be disseminated to a wide range of audiences, including farmers and fellow researchers in the region. Other researchers and audiences from the academic and professional communities will be informed of this project’s results and importance through journal publications, bulletins and presentations to professional (academic and farmer commodity) audiences. This project is expected to produce empirical evidences that will have potential significant contributions to the growing body of research on organic farming systems. This research project’s appeal is further enhanced by its special focus on the labor input problem under the backdrop of a more timely and controversial setting of government immigration reforms.

1. To determine and compare the strategic plans (or decisions) adopted (or intended to be adopted) by organic and conventional farm businesses in most of the Southeast region in maintaining overall business profitability and viability as farm wage rates increase due to changes in the government’s immigration policies;

2. To identify structural, demographic and economic determinants of farm labor input substitution decisions (i.e. substituting family with hired labor, and vice versa) made by conventional farms and organic farms at various stages of business maturity (such as established versus transitioning organic farms); and

3. To supplement the quantitative research (survey and econometric analyses) approach of objectives 1 and 2 with qualitative case studies designed to analyze relationships of business decisions and strategic actions under a whole-farm perspective, and determine other operational constraints, strategies and their business implications not captured by the other (quantitative) research method used in this study.