Labor costs expected to rise 10% in 2013

02/27/2013 01:32:00 PM
Tom Karst

WASHINGTON, D.C. — Farm labor costs will rise by more than 10% in 2013, according to economic projections from the U.S. Department of Agriculture.

Rising faster than any farm input cost except rent, U.S. farm labor costs will increase an estimated 10.8% in fiscal year 2013, Kevin Patrick, agricultural economist with the USDA’s Economic Research Service, said in a Feb. 21 presentation at the USDA’s 2013 Agricultural Outlook Forum.

The uptick in labor costs will result from a projected 2.3% increase in wage rates and an expected 7.6% rise in total output for labor-intensive crops like fruits, vegetables, nuts and nursery products, according to USDA projections.

In other farm income projections, Patrick said the value of potato production in fiscal year 2013 (Oct. 2012-Sept. 2013) will decline 5.6%, as declines in both quantity sold and end-of-year stocks will more than offset a predicted increase in price.

The forecasted 4.4% increase for cash receipts for vegetables (except potatoes) in 2013 reflects higher expected prices and an increase in quantity sold of fresh vegetables, according to the USDA. Despite larger sales of apples and some stone fruit, expected declines in volumes for avocados, sweet cherries, and almonds factor in a forecast 7.2% decline in cash receipts for fruits and tree nuts in 2013, according to the USDA.

The total value of U.S. fruits and nuts sold in fiscal year 2013 is forecast at $23.6 billion, down from $25.4 billion in 2012 and off from $24.3 billion in 2011. Meanwhile, the USDA projects the value of U.S. vegetables and melons at $20.6 billion, up slightly from $20.3 billion in 2012 but down a notch from $20.9 billion in 2011.

Net farm income from all crops in the U.S. is forecast to rise 13.6% to $128.2 billion in 2013, which the USDA said is the highest inflation adjusted total since 1973. A return to average trend yields for grains is forecast to generate record crop production levels and substantial year-end crop inventories. Meanwhile, the USDA forecasts livestock production will edge 3.5% higher, with the forecast built on expectations of price increases.

Terry Barr, senior director of industry research for CoBank, Greenwood Village, Colo., said in his presentation that agricultural exporters could be faced with negative consequences from subdued growth and fiscal austerity in the global economy. Generally speaking, Barr said that USDA farm income projections reflect too little volatility.


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