Urban Development and Farm Labor Scarcity: Are Workers Leaving Agriculture for Construction?

Urban Development and Farm Labor Scarcity: Are Workers Leaving Agriculture for Construction?

The United States has faced a shortage of farmworkers for several decades. In areas of the country that grow labor intensive crops, the lack of a reliable supply of agricultural workers is one of the main concerns among farmers. The reduction in the availability of workers in the fields is attributed to multiple factors, including a reduction in the number of undocumented immigrants engaging in agricultural work, increased border enforcement, and the reticence of native-born individuals to take physically demanding jobs even in periods of high unemployment (Gutierrez-Li, 2022). 

While the decline in the number of farmworkers may be explained in part by fewer people interested in taking agricultural jobs, the exodus to other sectors is also increasing over time. One of the main industries to which agricultural workers are moving is the field of construction. This sector requires a similar skillset to agricultural work, which facilitates workers’ mobility out of the farm sector (Barham et al., 2020). One incentive that motivates farmworkers to leave farm work to find jobs in construction is relatively higher wages. According to the U.S. Bureau of Labor Statistics, the mean hourly wage of a construction worker in 2021 was $21.22, compared to $14.27 in the agricultural sector. 

In addition to offering better wages, the construction sector has been luring farmworkers as metropolitan areas in the nation are experiencing rapid growth, thereby requiring additional labor to complete real estate developments. As seen in Figure 1, some of the fastest growing cities are in the Southeast. These include areas–Charlotte/Raleigh-Durham in North Carolina, Nashville in Tennessee, Atlanta in Georgia, Jacksonville/ Miami in Florida, and multiple cities (Austin, Dallas, Houston, San Antonio, Fort Worth) in Texas—have also experienced a sizable increase in population. The rise in urbanization in southern states has been driven by their relatively larger percentages of gross domestic product (GDP) growth as shown in Figure 2. If urban development continues to accelerate in states where the agricultural industry is heavily dependent on a human workforce, it is expected that farm labor shortages there may continue to worsen, and the demand for H-2A foreign agricultural workers will continue to rise. 

Figure 1. Population size and growth rates in the 50 largest U.S. cities

Source: Brookings Institution using information from the 2010 and 2020 decennial censuses.   

Figure 2. Growth in Gross Domestic Product in 2022

Source: Kenan Institute of Private Enterprise. The University of North Carolina.

References

Barham, B. L., Melo, A. P., & Hertz, T. (2020). Earnings, wages, and poverty outcomes of US farm and low‐skill workers. Applied Economic Perspectives and Policy, 42(2), 307-334.

Frey, W. (2021). 2020 Census: big cities grew and became more diverse, especially among their youth. Report. Brookings Institution. Washington D.C.

Gutierrez-Li, A. (2021). The H-2A visa program: addressing farm labor scarcity in North Carolina. NC State Economist. North Carolina State University.

The American Growth Project. (2022). 2022’s Fastest-growing U.S. cities, ranked. October report. Kenan Institute of Private Enterprise. University of North Carolina, Chapel Hill.

Author: Alejandro Gutierrez-Li

Assistant Professor and Extension Economist

alejandro-gil@ncsu.edu


Gutierrez-Li, Alejandro. “Urban Development and Farm Labor Scarcity: Are Workers Leaving Agriculture for Construction?Southern Ag Today 2(50.5). December 9, 2022. Permalink

Fresh Tomato Supply Chain: Challenges in Production & Marketing

Fresh Tomato Supply Chain: Challenges in Production & Marketing

Growers in Florida and California, where the majority of fresh tomatoes are grown in the U.S., continue to lose market share to Mexico (due in part to relatively higher U.S. farm labor wages and overlapping seasonal production) and Canada (greenhouse production), resulting in reduced numbers and consolidation among Florida’s growers (Fig. 1). Over the past two decades, shipping point prices reported by the USDA Agricultural Marketing Service are trending upward. Input prices are on the rise since 2020 due to global shocks such as the COVID-19 pandemic and Russia-Ukraine conflict, resulting in record high prices for phosphorus, nitrogen, potash, cardboard boxes and wooden pallets, and irrigation supplies.  Truck driver shortages remain the biggest challenge in distribution logistics, driven mainly by too few drivers and rising fuel costs. 

Figure 1. Fresh tomatoes (field and hothouse): Supply and use, 1960 – 2020 (USDA-ERS)

Fresh produce consumption trends are affected by food prices, food safety, and dietary concerns. In a survey of Southeastern U.S. tomato buyers, fresh produce consumers reported they are more concerned about the safety of U.S. foods relative to U.S. food price trends (Maples et al., 2018). Also, people are searching for food relationships in response to diet-related disease incidences in themselves and their family members (Thapaliya et al., 2017). Since 1996 (just after Canada, Mexico, and the U.S. signed the North American Free Trade Act), per capita availability of fresh tomatoes (field and greenhouse, domestic and imported sources) hovered between 16-17 pounds a year, up from about 11 lbs. per person in 1960. 

The 2015–2020 Dietary Guidelines for American recommends an average adult may consume 2,000 calories per day, and suggest a well-balanced diet include two cups of fruit and 2.5 cups of vegetables. USDA food consumption surveys find that the average American falls far short, consuming only 0.9 (45% of recommended volumes) cups of fruit and 1.4 (56%) cups of vegetables per day. Are veggies really cost-prohibitive? Using the average vegetable price of $0.80 per cup and multiplying by the recommended 2.5 cups per day for a healthy diet, the cost of including vegetables in a healthy diet to equals $2.00 per day, about 20 percent of the average daily food cost of approximately $10 per person. Recently, the Bureau of Labor Statistics consumer price index (CPI) revealed that people are paying prices that are nearly double since 2000. 

There is a need for improved understanding of the roles and dynamic interactions among fresh produce supply chain participants to improve industry coordination and competitiveness, expand U.S. market demand, and build in supply chain resiliency.

Reference

Maples, M.C.*, M.G. Interis, K.L. Morgan, and A. Harri. 2018. Consumer Willingness to Pay for Environmental Production Attributes of Fresh Tomatoes. Journal of Agricultural and Applied Economics 50(1): 1-21. 

Stewart, H., and J. Hyman. August 2019. Fruit and Vegetable Prices. U.S. Department of Agriculture, Economic Research Service. Link: https://www.ers.usda.gov/data-products/fruit-and-vegetable-prices/

Thapaliya, S.*, M.G. Interis, A. Collart, L. Walters, and K.L. Morgan. 2017. Are Consumer Health Concerns Influencing Direct-from-Producer Purchasing Decisions? Journal of Agricultural and Applied Economics 49(2): 211-231.

U.S. Department of Agriculture and U.S. Department of Health and Human Services. December 2020. Dietary Guidelines for Americans, 2020-2025. 9th Edition. Link: DietaryGuidelines.gov

U.S. Department of Agriculture, Economic Research Service. 1 April 2020. Based on data from various sources as documented on the Food Availability Data System home page. Link: USDA ERS – Food Availability (Per Capita) Data System

U.S. Bureau of Labor Statistics. 2 August 2022. Consumer Price Index. Link: USDA ERS – Food Availability (Per Capita) Data System

Author: Kimberly L. Morgan

Associate Professor

Author: Xiuri Cui

Ph. D Candidate

Author: Zhengfei Guan

Assistant Professor

Morgan, Kimberly L., Xiuri Cui, and Zhengfei Guan. “Fresh Tomato Supply Chain: Challenges in Production & Markets.” Southern Ag Today 2(46.5). November 11, 2022. Permalink

A Legacy of Cooperative Leadership

A Legacy of Cooperative Leadership

2022 marks the 100th anniversary of the Capper-Volstead Act, which gives farmers and ranchers the legal right to join together in cooperative associations. The founders of the first agricultural cooperatives held strong convictions and above all else, loyalty to the ideals of collective bargaining and market power for small farmers. Whether competing with large, investor-owned firms or serving an unmet need, this collection of farmers and ranchers planted a belief system and philosophy that would endure for decades. They built a culture around these values and grew a socio-economic model that enveloped the surrounding rural communities where the feed mill, cotton gin or grain storage silo set. These cooperatives invested in the future by developing capital locally and generating an economy that is a mainstay in the agricultural industry today. 

Cooperatives are important on the national landscape for multiple reasons. According to the National Council of Farmer Cooperatives, 1,779 cooperatives in the United States provide300,000 jobs, sales exceeding $200 billion, with $7.8 billion in net income generated in their local economies. Therefore, it is imperative to ensure these businesses are successful. Not surprisingly then, a major part of the cooperative business culture is a recognition of the need for continual education for the board of directors and managers. As leaders of the cooperative system, directors and managers take time outside of the boardroom to participate in various seminars, webinars, conferences, and other educational events each year in order to protect their cooperative. 

For example, the Texas Agricultural Cooperative Council hosts a variety of educational events each year, including:

  • Director Development workshops
  • The Farm Store Summit
  • Board Chair Conference
  • The TACC annual meeting
  • The Academy of Cooperative Excellence
  • South Texas Leadership Conference

If you were to run for a position on the board of directors of your local cooperative, what could you expect in terms of training topics? In our experience, much of director training is geared to simple best business practices and provide information on the challenges facing the modern agricultural industry: carbon sequestration, climate change, agricultural policy, surviving drought, and changes in land use. But some topics are more germane to cooperatives: distribution of cooperative returns, cooperative taxation, maintaining the separate roles of managers and directors, running a board meeting, legal issues, fiduciary duties, and simply, leadership.

The leadership demands on cooperative boards of directors and managers are increasingly becoming a topic of great interest and research. Current leaders are expected to meet new and complex economic and global challenges while continually pressing against the modern challenges of governance, such as inclusion, diversity, and the increasing difficulty of leadership succession. Park, Friend, McKee, and Manley (2019) introduced the concept that leadership competency in agricultural cooperatives is defined by six essential elements of effective leadership: consciousness, conduct, connectedness, interaction, representation, and cooperation.  Cooperative leaders meet many challenges by applying these skills to communicate, inspire others and evoke change in this increasingly complex industry. These are the leaders which will continue to thrive and weather any storm, and it is their agricultural cooperatives that help promote this legacy of leadership education. 

For more information:

The National Council of Farmer Cooperatives,  http://ncfc.org

Park, J.L., Friend, D., McKee, G., & Manley, M. (2019). A framework for training and assessment of the 21st century cooperative. Western Economics Forum17(2 ).https://ageconsearch.umn.edu/record/298048/files/WEF17.2%20-%201.pdf

Diane Friend

Assistant Professor of Instruction 

Department of Agribusiness

Texas A&M University – Kingsville

diane.friend@tamuk.edu


Friend, Diane. “A Legacy of Cooperative Leadership“. Southern Ag Today 2(45.5). November 4, 2022. Permalink

Insurance Plans for Specialty Crops

Insurance Plans for Specialty Crops

Producers face production and marketing risks that could affect the operation’s financial performance every growing season. Developing strategies to mitigate such risk is essential for the health of the operation. USDA offers a number of programs to insure specialty crops including individual insurance programs, federal crop insurance, whole-farm revenue protection, and the production and revenue history insurance plan. 

Interest in insurance plans for specialty crops has increased with the Federal Crop Insurance program alone providing coverage for specialty crops amounting to more than $22 Billion in 2021 (Figure 1). In terms of broad categories, fruits and tree nuts receiving the highest share followed by vegetables and horticulture nursery crops.

Figure 1. Federal Crop Insurance Coverage for Specialty Crops, years 2007-2021. 

Source: Risk Management Agency (RMA 2022).

Some expansions of insurance products and programs to specialty crops piloted in 2021 with the production and revenue history insurance plan made available to FL strawberry producers for the 2021 crop year. Interested in learning more about available programs? A list of individual crop insurance programs is provided by the USDA Risk Management Agency: hyperlink https://www.rma.usda.gov/en/Topics/Specialty-Crops

Author: Maria Bampasidou

Assistant Professor

mbampasidou@agcenter.lsu.edu


Bampasidou, Maria . “Insurance Plans for Specialty Crops“. Southern Ag Today 2(44.5). October 28, 2022. Permalink

Immediate Relief for Financially Distressed FSA Farm Loan Borrowers

Immediate Relief for Financially Distressed FSA Farm Loan Borrowers

On October 18, 2022, USDA announced the implementation of Section 22006 of the Inflation Reduction Act of 2022. The Act provides up to $3.1 Billion in funding to the Secretary of Agriculture to provide payments for the cost of loans or loan modifications for distressed borrowers of USDA Farm Service Agency (FSA) administered direct or guaranteed loans. The distressed borrowers include borrowers eligible for loan modifications defined in the House passed Build Back Better Act and borrowers whose operations are at financial risk. Financial risk is further defined to include borrowers as of August 16, 2022, who are 60 days or more delinquent, undergoing bankruptcy, foreclosure, loan restructuring, and owe USDA more interest than principal. There are different groups of distressed borrowers; the grouping will determine if, when, and how much of a program payment will be applied to their outstanding debt. For many distressed borrowers, the program payment will be applied to the debt to make the loans current (no longer delinquent). 

The announcement indicated that almost $800 million has either already been used or is earmarked to identified distressed borrowers. These program payment(s) will provide immediate relief to America’s farmers and ranchers with USDA FSA direct and guaranteed loans which are financially distressed. USDA officials say over 13,100 borrowers have received immediate relief through automated payments.  Additionally, about 1,600 borrowers with more complex cases have the potential to benefit from some form of relief. To learn more about the announcement, view FSA’s factsheet on the announcement, https://www.farmers.gov/sites/default/files/2022-10/farmersgov-fsa-ira-distressed-borrower-assistance-factsheet.pdf.

The farmer and rancher relief is viewed as a program payment, and USDA FSA program payments, even applied directly to debt servicing, create a taxable event.  The program payment is considered ordinary earned income subject to Self-Employement tax. Impacted borrowers should expect to receive a 1099-G (1099s are required to be sent out for all costs of $600 or more in a year) and a 1098 (if interest was paid as part of the program payment) in early 2023. To enhance support of America’s farmers and ranchers, USDA partnered with tax experts from the National Farm Income Tax Extension Committee to provide resources detailing the important relationship between federal income taxes and USDA farm programs:  https://www.farmers.gov/working-with-us/taxes

To offer added support and trainings, FSA entered into a cooperative agreement with the University of Arkansas Division of Agriculture to develop a tax education and asset protection program.  The agreement resulted in a newly created technical assistance program called Agricultural Finance, Tax, and Asset Protection (AgFTAP).  AgFTAP seeks to enhance farmers’ and ranchers’ ability to understand and navigate the farm business tax and asset protection strategies for their operations. To learn more about the program and its collaborators, visit the AgFTAP portal, https://agftap.org/. The project features a collaboration between educators and the National Farm Income Tax Extension Committee, which offers a collection of tax guidance on its RuralTax.org website. Selected resources, publications, webinars, decision aids, etc., developed by the tax committee will be featured on the AgFTAP portal. For example, individuals interested in understanding 1099s and their tax treatment can view a resource posted on the portal, 1099s.pdf (ruraltax.org). Future AgFTAP resources and training will help farmers and ranchers understand their risk environment and identify resources/expertise to inform their decisions. 

The Importance of Veterinarians in Rural Communities

The Importance of Veterinarians in Rural Communities

Rural communities frequently lack access to veterinary care, for both companion animals and livestock. This unmet need poses a threat to animal health and wellness, as well as ranch and rural community viability. The demand for veterinarians in rural communities is strong; however, fewer veterinarians opt to start a career in rural areas. Concerns about reduced economic opportunities and social experiences in less populated areas contribute to veterinarians’ and their families’ hesitation to locate in rural communities. Distance, lack of accessibility, and concerns about both economic viability of rural practices and hours on-call also have an impact. 

The use of telehealth in both animal and human health has been on the rise since the start of the COVID-19 pandemic, allowing many practices to expand and providing access to more clientele. Keeping up with the advancements of digital information is crucial for telehealth in rural areas and requires viable broadband internet services. Rural areas continue to lag urban areas in both broadband availability and adoption, but ongoing public and private efforts continue to build rural broadband capabilities.

The need for veterinarians located in rural areas will remain. However, telemedicine may provide opportunities both for rural vets and for the ranchers and rural residents who need their services. For example, telemedicine may provide access to specialists in more populated areas. Ranchers may also be able to communicate with their vet virtually (after they have an established relationship), saving travel time.

In recent work, stronger ranch-veterinary relationships supported higher net revenues of $128.25 per cow plus an additional $24/cow increase in profit from reduced death loss of yearlings. Across 5,000 head, higher ranch incomes created an estimated $338,700 in output, including $79,500 in additional labor income, and 2.4 jobs in the county economy.

Gains net revenue were estimated after accounting for higher veterinary, feed, supplement, and other costs. In one rural Texas county (population under 15,000), an estimated $60,000 in additional veterinary expenditures resulted in $72,600 output and an additional job in the county. The largest dollar (output) impacts accrued to a wide range of businesses beyond veterinary services, including real estate, banking, restaurants, electric utilities, and general merchandise retail. Equally important, the presence of a veterinarian may help recruit and retain other economic activities.

King, Kallie, and Rebekka Duddensing. “The Importance of Veterinarians in Rural Communities“. Southern Ag Today 2(40.5). September 30, 2022. Permalink