Donald Trump’s promise to deliver “cheaper food” through new trade deals in Latin America sounds like a pledge to tame inflation. But the economics of the food system do not work primarily through diplomacy; they work through wages. And across Latin America’s export crops, wages remain low not by accident but by design. The global food economy keeps its prices down by keeping millions of workers’ incomes down.

Why US Food Is Cheap: Follow the Wages

The United States imports nearly half of its agricultural products from Latin America. Behind that dependence is a wage system with numbers that are remarkably consistent across countries and crops. Agricultural workers are paid well below any reasonable living-wage benchmark.

In most cases, agricultural wages cover roughly half to two-thirds of basic living costs. That gap is not a rounding error; it is the structural feature that allows US consumers to buy fruit, meat and coffee at prices that would otherwise be politically explosive.

The US Import Bill: A Hemisphere Feeding a Supermarket

US reliance on Latin America is not marginal — it is central to its food system. In 2023, Latin America accounted for an estimated 46% of all US agricultural imports, with a handful of countries dominating the flow.

Cheap food in the US is therefore not primarily a domestic productivity story. It is an import story — the result of tying domestic price stability to external labour markets that can be kept cheap.

Farm-Gate vs Supermarket: The Disparity Engine

The gap between what farmers receive and what consumers pay is striking across major export crops. Empirical work on price formation paints the same picture across product lines.

The pattern is clear: the farmer’s share is typically in the low double digits. Most of the value is captured after the product leaves the farm gate — in processing plants, refrigerated containers, wholesale platforms and supermarket aisles.

The Supply Chain: Who Gets Paid?

When researchers disaggregate who takes what from the final retail price of export crops, a consistent picture emerges:

• Farmers: 10–25%
• Exporters & processors: 15–30%
• Shipping & logistics: 8–15%
• Distributors/wholesalers: 15–20%
• Retailers: 30–40%

Retailers — the final link, physically closest to the US consumer — capture the largest single slice of value. Farmers, who bear production and climate risks, often capture the smallest. This is not simply a matter of “market forces”; it is the result of concentrated buying power and the ability of downstream firms to set terms.

Cartels, Monopsonies and the Politics of Price Suppression

In several of the most important sectors, this buyer power hardens into cartel-like or monopsonistic structures. The details vary; the logic does not.

In Mexican avocados, exporter associations with documented infiltration by criminal networks in Michoacán influence who can sell, at what volume and at what price. In Ecuadorian bananas, a small group of global firms controls the majority of exports; smallholders often depend on contracts whose terms they cannot realistically renegotiate. In Brazilian beef, three companies account for most exports, giving them significant leverage over farm-gate pricing and labour conditions upstream.

In each case, the structure makes it difficult for producers or workers to bargain for higher shares. Wage suppression is not just an economic outcome; it is a political one.

The Paradox: Export Crops That Cost More at Home

A further perversity is that export-oriented crops can end up costing more domestically than abroad. In Peru, asparagus aimed at foreign markets has been documented as selling at multiples of what exporters receive at the wholesale level when it appears in local retail channels. In Ecuador, bananas and shrimp can fetch higher prices in domestic markets than the fixed rates paid to producers under export contracts.

The export system is not designed to feed local populations cheaply; it is designed to guarantee reliable, low and predictable prices for distant buyers.

How Low Latin Wages Lower US Food Prices

Studies by international organisations and independent researchers converge on a simple conclusion: low labour costs in Latin American agriculture reduce US retail prices for fresh produce by roughly 10–25% compared with a scenario where workers were paid closer to living wages. If wages moved toward those benchmarks, simulations suggest that US food prices would rise modestly — on the order of 2–4% — while significantly improving incomes in rural Latin America.

The structure persists because the political cost of slightly higher food prices in rich countries is treated as more serious than the human cost of continued underpayment in poorer ones.

The Contrarian Truth: The World Isn’t Broken — It’s Working

Much commentary on globalisation treats outcomes like persistent rural poverty and wage gaps as if they were unintended side effects. The evidence from agricultural supply chains suggests otherwise. The combination of low wages, unequal value capture, cartelised export channels and inexpensive food in rich countries is not a malfunction; it is how the system was built to operate.

When a politician promises “cheaper food” through new trade deals, they are not proposing to raise Latin wages, strengthen unions or reform labour inspection. They are proposing to preserve, and if possible deepen, the very arrangements that hold those wages down.

Who Pays the Hidden Subsidy?

The hidden subsidy behind every aggressively priced supermarket promotion is paid in Latin America:

• in wages that reliably cover only half to two-thirds of basic needs,
• in producer prices that seldom reward productivity with mobility,
• in communities where export booms and persistent poverty sit side by side,
• in labour regimes calibrated to keep bargaining power weak.

The global food system is efficient on spreadsheets because it is allowed to be inefficient in human terms. The question raised by the next wave of trade negotiations is not whether Americans can be shielded from a few percentage points of food inflation, but whether that shield will continue to be built from other people’s foregone wages and futures.