Full text of Agricultural Highlights : February 1984

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DALLAS
Federal Reserve Bank of Dallas

February 1984

Frozen Fruits and Vegetables: No Jobs For Farm Workers
The “Siberian Express’’ cold wave of
late December froze the lower Rio
Grande Valley and parts of the Winter
Garden region of Texas. Farm workers
who would have harvested the fruits,
vegetables and other winter crops were
suddenly thrown out of work. Farmers
struggled to salvage what crops they
could and contemplated long lasting
damage to fruit trees.
Much has been written about the ac
tual damages and the level of
unemployment in the affected area.
But this article focuses on the relative
ability of Valley farm workers to cope
with an economic shock. The capacity
to withstand such shocks depends
upon individuals’ savings and in
vestments, their diversity of income
sources and their ability to generate
new income from alternative or tem
porary employment.
Valley farm workers have less of a
financial cushion, operate within a
weaker local economy, have lower job
qualifications, and receive less income
than their counterparts in the rest of
Texas. They are thus less able to ride
out the effects of the freeze.
The Freeze and Valley Farm Work

Much of the farm work available in
the Valley is picking fruits and
vegetables on a seasonal basis. This
sort of employment is particularly
vulnerable to weather disruptions. By
contrast, livestock producers during
the recent freeze had their hands full
keeping stock watering ponds open
and feeding their animals. After a fruit
and vegetable freeze, however, almost

all the pickers are laid off except a few
to gather damaged but salvageable
produce.
Valley farm workers reside in an area
that was particularly hard hit by the
1982 peso devaluation, which drastic
ally reduced cross-border retail trade
and pushed up unemployment. As a
result, unemployment rates in the
Valley have been much higher than
those for Texas as a whole. For exam
ple, the pre-freeze December unem
ployment rate in Cameron County was
15.7 percent, while in Hidalgo County it
was 19.3 percent. This compares to a
December rate of 7.1 percent for all of
Texas. Few alternative employment op
portunities exist in the Freeze area.
Unemployed farm workers in the

Valley have two options. The first is
to remain where they are, relying on
savings and perhaps requesting
government assistance. The second
option is to seek work outside the
Valley. This option involves all the dif
ficulties of job search: the matchup of
skills and qualifications against
employers’ needs, getting information
on available jobs, and transportation.
Comparing Valley and other
Texas Farm Workers

Farm workers in the affected coun
ties are less able to ride out the
economic consequences of the freeze
than the typical farm worker in the rest
of Texas. Two comparisons are rele(Continued on back page)

Christmas Freeze Hits Valley and Winter Garden
On December 23 the temperature in
extreme South Texas dropped below
32 °F and stayed there for 48 hours.
Hidalgo, Cameron, Starr and Willacy
counties were declared disaster areas
by President Reagan. Dimmit, LaSalle,
Zavala, and Uvalde counties reported
losses, and the state has applied to the
Federal Government for disaster
status there as well.
In aggregate, the Office of the Gover
nor made preliminary estimates that
food processing output would decline
by $200 million. The value to farmers of
crops destroyed by the freeze is esti
mated at $99 million. At the time of the
freeze, about 70 percent of the crops
were unharvested. Only 15 percent of
the vegetables were harvested. One

hundred percent of the Valencia or
anges were still on the trees, while 21.5
percent ofthe grapefruit and45 percent
of the early oranges were harvested.
Despite sometimes large regional
and individual losses (for example, 30
percent of the farmers in Cameron
County lost at least 40 percent of their
crops), Texas produces relatively little
of the nation’s citrus and vegetables:
around 19 percent of the grapefruit,
and less than 4 percent of the oranges.
For most vegetables, Texas production
as a percent of national production is
in the single digit range. Most price ef
fects of the freeze come from the ef
fects on Florida, rather than Texas,
citrus production.
—Hilary H. Smith

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

PRIME INDICATORS OF THE TEXAS AGRICULTURAL ECONOMY
INDEX OF
PRICES RECEIVED: TEXAS

TEXAS CASH RECEIPTS

PRICES RECEIVED/PRICES PAID1

i— 170 (1977 = 1 0 0 )--------------------------------------ALL FARM PRODUCTS
-

160

i— 120 (1977 = 100) --------------------------------------

110

— 100

1982
1984

*—

1983

, I F IM IA„ M
I JI , I J, IA. IS_ O
I _ NI ID _ I

J
SOURCE: U.S. Department of Agriculture.

1. Prices received by farmers in Texas divided by prices paid by farmers
nationwide (No separate series exists for prices paid in Texas).

SOURCES: U.S. Department of Agriculture.
Federal Reserve Bank of Dallas.

TEXAS FARM REAL ESTATE VALUES1

INTEREST RATES ON TEXAS FARM LOANS1

I—

12 HUNDRED DOLLARS PER A C R E -----------------

23 PERCENT------------------------------------------------------------------

IRRIGATED CROPLAND

BANKS

PRODUCTION CREDIT
ASSOCIATIONS
-

DRYLAND CROPLAND
■—

FEDERAL LAND BANK ASSOCIATIONS
L-

4
1981

1983

1982

1. 3 quarter centered moving average.

7
1

1981

1982

1983

1. FLBA rates are for farm real estate loans.

ELEVENTH DISTRICT AGRICULTURAL LOANS
Bankers report whether the variable is “ greater,” “ the same,” or “ less” than a year ago.
Percent reporting “ greater” or “ less” are depicted below.

AVAILABILITY OF FUNDS

DEMAND FOR LOANS
I—

60 PERCENT OF BANKS REPORTING

1981

1982

1981

1983

1982

COLLATERAL REQUIRED

RENEWALS OR EXTENSIONS

l—

80 PERCENT OF BANKS REPORTING

1981

1982

1983

80 PERCENT OF BANKS REPORTING

1981

1982

AGRICULTURAL BRIEFS
• New dairy legislation pays dairy farmers not to
produce, but fewer farmers signed up than had
been anticipated. The low farmer participation
will have several consequences: dairy sur
pluses will continue to mount, dairymen will
face as much as $1.00 per hundredweight re
duction in price support next year, and cattle
prices will not be pressured downward in a
market flooded with cull dairy cows.
• Interest rates on farm operating loans drifted
upward less than ten basis points during the
fourth quarter of 1983, as the cost of funds first
declined then backed up. For the year, the
average rate on all farm operating loans was up
fractionally, from 13.25 to 13.47 percent.
• The severe cold weather damaged the wheat,
oats and other small grain pasture that are
used for winter cattle grazing in much of Texas.
This grazing loss has greatly increased cattle
feeding costs, cutting profit margins for
ranchers.
• The January Cattle on Feed report showed that
the mix of cattle on feed has been altered to

favor more steers and fewer heifers, possibly a
sign that cattlemen are responding to the
higher prices of the last few months and
expanding their herds. Texas placements on
feed were up a whopping 56 percent in
December, as cold, snowy weather forced cat
tle off wheat pasture. On January 1, 1984 total
Texas cattle on feed were up only 2 percent
over the same period a year ago; nationally, cat
tle on feed were down 4 percent. Once again
Texas cattlemen are well positioned to take ad
vantage of national trends—producing more
while others cut back.
• Despite the publicized avian influenza outbreak
in Pennsylvania and New Jersey, in which more
than 8 million birds (mostly chickens) were
killed, price effects are likely to be inconse
quential. U.S. production is on the order of 4
billion broilers, so the kill numbers are relative
ly small. Texas produced 222.5 million broilers
in 1982, worth $258 million. But these broilers
account for only 2.7 percent of Texas
agricultural cash receipts.

TEXAS COMMODITY MARKET PRICES
UPLAND COTTON

ALL WHEAT

GRAIN SORGHUM

I—

72 CENTS PER PO UND-

4.4 DOLLARS PER BUSHEL -

6.5 DOLLARS PER HUNDREDWEIGHT —

4.1

5.7

1983

/
/
/

1984
-

\_ _ /
L~ 40 1J. 1FIT1M A

1983
.1984

4.9

v \

-J

4.1

1982

1982
L-

M J1 , 1J,1AJ S O N D

SOURCE: U.S. Department of Agriculture.

3.3
'

SOURCE: U.S. Department of Agriculture.

'm '

SLAUGHTER STEERS

FEEDER STEERS

CORN

I—

i—

3.8 DOLLARS PER BUSHEL-

3.4

75 DOLLARS PER HUNDREDWEIGHT —

» .«• / > 2
Ji

/ J

\ N

1983

55 I", I _ I. . I . I ..I . I , I . I _ I „ I I „l
J

F M A M J

A S O N D

SOURCES: Texas Department of Agriculture.
Federal Reserve Bank of Dallas.

1983

\ \

\ X

80 DOLLARS PER HUNDREDWEIGHT—

// \\

1984

7 /
/

SOURCE: U.S. Department of Agriculture.

1982

y \
XX -A
' y
\\
/
'V / y

3.0

2.6

►1984
'

1983
__Z\

\y
\ X

X '

1982

I , I r- l . . l . I . . I J

F M A M J J

. I . I „ I „ l .. A

A S O N D

SOURCES: Texas Department of Agriculture.
Federal Reserve Bank of Dallas.

2-2 r7J ' vF ’ M ’ a

’m '

SOURCE: U.S. Department of Agriculture.

Farm Workers (cont.)
vant. The first compares each group’s
income and assets to determine their
respective capacity to withstand a loss
of income from farm work. The second
comparison looks at each group’s
qualifications as job seekers. Tb make
these comparisons, data from the 1980
U.S. Census was analyzed.
Valley farm workers have less finan
cial strength to deal with the unex
pected onset of unemployment than
their counterparts in the rest of Texas.
The 1980 Census provides no data on
savings or assets per se, but useful
proxies are income and home owner
ship. Average Valley farm workers’ in
come from farm work in 1979 was only
66 percent of that in the rest of Texas.
Both sets of farm workers have farm
work as their major source of income
and neither are very well diversified.
But with 55 percent of the Valley farm
workers falling below the poverty in
come (as compared with 27 percent for

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non-Valley Texas farm workers), sav
ings are meager. On the asset side,
Valley farm workers own a greater
percentage of their homes: 56 percent
compared with 31 percent for the rest
of Texas farm workers. This advantage,
however, is offset by values of non
freeze county homes that are 80 per
cent higher and the fact that these
higher valued homes exist in a more
viable real estate market. So despite
higher percentage of home ownership,
Valley farm workers most likely do not
have the ready savings available to
cushion unexpected unemployment.
The second option for the unem
ployed farm worker is to leave the
Valley in search of work in the more
prosperous sections of Texas. Here the
Valley farm worker is at a clear dis
advantage when compared with his
Texas counterpart. Educational levels
and proficiency with the English
language have large effects on the out

come of any job search. Valley farm
workers’ educational achievements
are below those for farm workers from
the rest of Texas. The largest barrier
may be lack of English language skills.
Nearly 30 percent of Valley farm
workers speak no English compared
with only 6 percent of non-Valley Texas
farm workers.
Conclusions
The capacity of freeze county farm
workers to respond to the economic
shock of unexpected unemployment is
diminished by a web of circumstances:
weak local economy, low job-seeking
qualifications, and less income than
farm workers elsewhere in Texas.
While their plight will have little effect
on the Texas economy, the farm
workers will have to struggle to make
ends meet even with some governmen
tal assistance.
—Hilary H. Smith

Full text of Agricultural Highlights : February 1984

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