Looking for reliable labor?

The current political climate in Washington, D.C., is not conducive for broad-based immigration, labor and workforce reform, which could help the horticulture and agricultural industries resolve worker shortages.

The H-2A agricultural guest worker program may be an option—but it’s going to cost you.

During the AmericanHort Impact Washington Summit in September, over 120 people from 25 states came to Washington, D.C., to discuss with their elected officials the major issues facing the horticulture industry.

“Summit attendees had nearly 160 meetings with lawmakers and their staffs,” said Craig Regelbrugge, who is executive vice president advocacy, research, and industry relations at AmericanHort. “Every conversation on the Hill during the Summit, at the heart of it was discussion of workforce challenges in the horticulture industry. Labor was very much front and center. Unfortunately, for the horticulture industry and agriculture in general, we are not in a particularly conducive environment for optimism about broad-based immigration, labor and workforce reform.

“Of the primary issues discussed, most of the conversations started with an acknowledgement of the importance of not shutting down the government. Typically, that’s not a horticulture industry lobbying priority.”

While much of the news about the government shutdown was related to federal workers and government contractors who wouldn’t be paid or would be furloughed, Regelbrugge said there are definite implications that a shutdown could impact the horticulture and agriculture industries related to labor.

“If a government shutdown occurs that will result in the Department of Labor (DOL) stopping the processing of H-2A agricultural guest worker applications,” he said. “The staff processing H-2A applications for labor certification are not viewed as essential workers and they are not user-fee funded. It is funded through general appropriations.”

Regelbrugge explained the reason a government shutdown matters is all based on timing.

“Particularly for greenhouse growers and some nursery growers in warmer climates, it is very common that these growers have their job orders starting close to Jan. 1. With greenhouse plant production during January and February, growers are starting to gear up for planting and preparing to ramp up their operations.

“Most people start the H-2A application process, which is the first step in using the program, about 90 days out, which brings the initial start to around Oct. 1. If a government shutdown occurs and lasts a day or two, the impact would be minimal. But if the government shuts down for several weeks, it would contribute to application processing delays that are going to be particularly challenging for H-2A program users.”

A short-term spending bill was signed by President Biden on Sept. 30 just hours before a federal government shutdown would have taken affect. Lawmakers now have a 45-day extension to come up with some type of long-term funding legislation.

A costly, inflexible program

Regelbrugge said the existing H-2A program is costly and the situation has gotten dramatically worse this year with new DOL rules.

“The wage structure is a key element of the cost problem,” he said. “But the cost problem is bigger than just a debate about how to properly set wages. The wage setting process got worse as a result of a DOL rule that took effect at the end of March.”

A second problem with the H-2A program is its lack of flexibility for jobs that don’t meet DOL’s current arbitrary definition of seasonality.

“DOL has always interpreted and implemented the H-2A program wrongly,” Regelbrugge said. “The actual underlying statute talks about workers coming in temporarily to fill jobs on a temporary or seasonal nature. DOL has implemented the law as temporary and seasonal.

“While there is not a hard-and-fast definition, the way that DOL interprets seasonal-based on some court cases as 10 months or less. Considering controlled environment and warmer-climate production, DOL often asserts crops can be grown year-round and the work isn’t seasonal. DOL is increasingly questioning seasonality and throwing up barriers over its interpretation of seasonality.”

Another issue facing growers trying to use the H-2A program is related to worker housing.

“The decision to implement the H-2A program typically means that an employer has to provide worker housing,” Regelbrugge said. “Housing is a major capital investment. In many parts of the country, it is difficult to gain approval. California and Oregon are two states where receiving farmworker housing approval through local zoning laws is extremely difficult. Regardless of the location, acquiring housing can be challenging and costly.”

In fiscal year 2022, DOL certified about 370,000 temporary jobs under the H-2A program. The program has rapidly expanded over the last 12 years. In 2010, about 79,000 workers participated in the program. Of the positions filled in 2022, 35 percent of the total jobs available were certified in Florida, California and Georgia. USDA Economic Research Service reports H-2A growth is uneven across the United States with larger employment changes in the Southeast than in other regions.

“More growers are looking at the H-2A program because the labor situation is becoming more dire and it is the only safety net,” Regelbrugge said.

Increased use of labor contractors

According to ERS, farm labor contractors account for a growing share of H-2A employment. These contractors directly employ farmworkers and lease their services to farms. ERS found that H-2A employment by contractors increased from 15 to 42 percent between 2010 to 2019. Although H-2A employment by contractors increased across all crop sectors, those that saw the biggest increases occurred with fruit, vegetables, tree nuts and melons.

“Because of the complexity of the program, most employers turn to a third-party intermediator of some type to handle the paperwork and application process,” Regelbrugge said. “They are involving a third-party agent or facilitator, which involves a cost. There are application fees and costs each step of the way.

“When workers are approved, employers have to pay for inbound and outbound transportation. Traditionally this has been from Mexico, where for many workers, bus transportation is the most cost-efficient option. When workers start coming from southern Mexico and Central America, then it may become a case of air transportation. Once the workers are here, there is transportation plus daily subsistence, providing or subsidizing meals.”

In addition to these expenses, employers have to pay a premium wage, which Regelbrugge said is typically well above what would traditionally be considered typical market wages.

Impact of more food imports

Regelbrugge said labor force constraints are impacting agriculture production in the United States, particularly with fruits and vegetables.

“These are labor-intensive crops,” he said. “With the absence of labor solutions, more food production is likely to end up moving offshore because production can’t be sustained here without the necessary labor at a cost that still allows U.S. growers to compete.”

USDA reports the value of U.S. agricultural imports grew by 17 percent in 2021 from 2020. Horticultural products accounted for 52 percent of U.S. agricultural imports in 2021. These imports included fruits, vegetables, tree nuts, wine, spirits, essential oils and nursery stock. In 2021, sugar and tropical products, including coffee and cocoa, comprised 15 percent of U.S. agricultural imports.

“U.S. producers of fruits and vegetables are squarely in competition with imports and are most vulnerable,” Regelbrugge said. “U.S. producers do have comparative advantages. What U.S. growers are doing successfully, in terms of foreign competition, comparative advantages outweigh disadvantages. These advantages include the stability that comes with U.S. food safety laws and structures, nearness to market, lower transportation costs because of nearness to markets, consumer appeal and demand for U.S.-grown products and to the degree that the market values. We have these comparative advantages, but labor costs are a tremendous disadvantage.”

The National Council of Agricultural Employers did an analysis that compared wage rates in the U.S. under the current H-2A program with wages typical in Canada and Mexico.

“In Mexico the fruit and vegetable production for export is exploding and Canada has long been a head-to-head competitor,” Regelbrugge said. “The labor cost disadvantage facing American growers is huge. Anything that makes that disadvantage worse is going to cause more growers to tip to the other side of the equilibrium. When the comparative advantage of being a domestic producer is no longer as efficient, more farms will close and production will move offshore and will be captured by foreign producers.”

USDA implements labor stabilization program

USDA Farm Labor Stabilization and Protection Pilot Program (FLSP) will award up to $65 million to provide support for agricultural employers to implement “robust” labor standards to promote a safe, healthy work environment for U.S. workers and workers hired from northern Central American countries through the seasonal H-2A program. FLSP aims to improve food and agricultural supply chain resiliency by addressing the challenges agricultural employers are experiencing with labor shortages and instability.

The goals of FLSP include:

1. Drive U.S. economic recovery and safeguard domestic food supply by addressing current labor shortages in agriculture.

2. Reduce irregular migration from northern Central America through the expansion of regular pathways.

3. Improve working conditions for all farmworkers.

The 2023 FLSP grant application period closes Nov. 28, 2023.

For more: Craig Regelbrugge, AmericanHort, craigr@americanhort.org; https://www.americanhort.org/.

This article is property of Urban Ag News and was written by David Kuack, a freelance technical writer in Fort Worth, Texas.