Remarkably oversimplified.  Farmers (and large scale agribusiness) do business in a legal environment provided by their state and federal government.  If everyone is using cheap illegal labor, that is the environment they have to compete in.  There are a number of factors that influence the type of crops a farm can grow.  The choice of crop is not an arbitrary decision that a small farmer can make easily, nor are decisions to automate.  If a small farmer sells out because they can't make a profit without using illegal labor,, who do you think is going to buy their operation?  You seem to think there is some set of farmers that are competing in these same regions and markets that are doing it all with legal workers.  

I agree with ericnorstog below.  We need to develop and enforce a robust documented migrant labor system.