The Efficiency of Labor Input in the Tree Nut Growers Industry: A Stochastic Frontier Production Approach Study in Butte County, California

The U.S. government recruits immigrant workers through the H-2A program as a short-term solution to the agricultural sectors’ labor shortage problem. Although the sector insists hiring immigrant workers is essential for their survival, history has proven the socio-economic cost for doing so is enormous. This paper aims to investigate the contribution of labor to agricultural production efficiency. A discussion of marginal rate of technical substitution, economies of scale, and economies of scope will also be included. The stochastic production frontier regression approach was applied to input/output data collected from a survey of tree nut growers in Butte County, California. Results indicate the labor input is not significant in deciding farm production efficiency. Instead of attempting to increase short-term labor, producers’ and policy makers’ efforts should be directed toward improving the logistics of farm management and the quality of labor, thus more efficiently utilizing available resources.