Lux Research: The relative cost of industrial robots and human labour

ATN-300InsightaaS: Lux Research is a firm focused on "strategic advice and ongoing intelligence on emerging technologies." Today's feature provides an example of the company's coverage: it compares the cost to strawberry farmers of farm labour (after Obama's minimum wage hike) to industrial robot alternatives.

To some extent, this feels a bit like science fiction; Lux's description of a harvester "incorporating 60 robotic arms" conjures up visions of War of the Worlds-style behemoths. And in fact, the scale of the device is its downfall: Lux finds that a robot is less expensive than humans for farming 345 acres (assuming that each labourer is paid at the new minimum wage standard of $7.25), or even for smaller farms (using the 2014 farm average wage of $11.50, the robot becomes cost-efficient for farming more than 218 acres), but with the average strawberry farm covering only 4.7 acres, it would take many years to achieve break-even on a robot investment. So most of today's strawberry pickers are safe - for now. However, less expensive technologies are also being introduced, and these reduce the payback threshold for individual farmers.  

If the robots bring Orson Welles to mind, this debate over strawberries might invoke reminiscences of Humphrey Bogart as Captain Queeg. But this debate over the use of technology - robots in the fields, expert systems in other contexts - to replace human labour is important on many levels. ATN has covered viewpoints on this issue from thought leaders like Nicholas Carr and Andrew McAfee on this issue, and I expect we will see increased debate in the months to come. As we do, it's helpful to have posts like this one to help calibrate the cost equations that underpin this trend.

On November 20, 2014, U.S. President Barack Obama announced an executive order to grant an estimated 4 million illegal immigrants who have lived in the U.S. for at least five years protection from deportation. In exchange for this protection, the executive order requires workers to submit to a background check and pay taxes on wages earned. This legal status will give formerly unauthorized workers many of the same protections as legal workers, such as worker’s compensation and the right to a minimum wage. According to the 2011/2012 National Agricultural Workers Survey (NAWS) conducted by the U.S. Department of Labor at least 48% of hired crop farmworkers in the U.S. are undocumented and about half of those undocumented workers are considered “settled,” which would indicate qualification for protection under the recent executive order.

Given this large percentage of potentially affected farmworkers, the recent executive order could increase the cost to harvest many fruit and vegetable crops that rely heavily on undocumented farm laborers. The U.S. Department of Agriculture (USDA) reported the average U.S. fieldworker wage as $11.52/hour on November 20, 2014; however, undocumented workers are commonly paid far less than this average. If the recent executive order remains in effect or if Congress passes comprehensive immigration reform, it would be reasonable to assume a significant increase in the wages paid to all farm workers, including U.S. citizens.

Automated harvesting robots have become an interesting topic in recent years as a potential lower-cost alternative to hand-harvesting crops, which is the standard for many high-value fruit and vegetable crops. However, cheap labor supplied by undocumented workers has largely limited robotic harvesting technologies’ use to date because of high initial capital equipment costs and the resultant long payback periods...

Read the entire post on the Lux blogsite: Link

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