Labor Shortage Hits American Winegrowers

Tight labor market will eventually hit consumers with higher prices per bottle.
Fox Run Vineyards workers.

The wine industry is being squeezed by a nationwide labor shortage that has been exacerbated by stricter U.S. immigration policies, even as the Silicon Valley Bank predicts a 2- to 3-percent rise in wine volume this year.

Despite rising wages and an increase in benefits, U.S. workers have not been enticed to join the agricultural labor market. Immigration restrictions first tightened under President Barack Obama are predicted to grow more severe with the current administration of Donald Trump.

“In all my years (30-plus) of active involvement in farming, I’ve never seen the labor market tighter,” said Kevin R. Chambers of the Oregon Wine Board of Directors.

Courtesy Fox Run Vineyards, Finger Lakes Region of New York.

Scott Osborn of Fox Run Vineyards said that some growers in New York’s Finger Lakes region have joined together to form an H-2A program to bring in workers. The H-2A visa program allows U.S. employers to hire foreign nationals for seasonal work, but only if they are able to prove that there are not enough U.S. workers available. Osborn has also begun looking to mechanization to alleviate labor shortages.

Mechanization is not always an option for growers, however. Steep inclines and narrow widths of rows prevent many winemakers from turning to machine harvesting.

Land Investment More Expensive Than Labor Costs

Daniel Sumner, a UC Davis professor of Agricultural and Resource Economics, said that despite some recent increases, farm wages remain low. An improved Mexican labor market has reduced the pressure to leave and low unemployment within the United States has deterred U.S. workers from joining an industry with tough working conditions and a lack of year-round employment.

Sumner noted that labor represents a small percentage of the total cost of grape production, with the biggest investment still being land. “Higher wages would hardly be noticed in grape prices and non-grape costs are a much larger share than grapes even in wholesale cost. For retail prices, consumers would not notice much higher farm wages,” he said.

While the labor shortage might not have an immediate effect on consumer prices, winegrowers are already feeling the strain. David Poldoian of Washington University’s Olin Business School argues that long-term costs in production will eventually be reflected in higher prices.

“There’s no one solution. There’s a collection of solutions that individually, each one will help to mitigate,” Sumner said.

Published on June 21, 2017
Topics: Wine News



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