Author: Alejandro Gutierrez-Li

  • The Costs and Benefits of Mechanization: A Look at the Dairy Sector

    The Costs and Benefits of Mechanization: A Look at the Dairy Sector

    American agriculture has been experiencing labor shortages for many years. Domestic workers left the sector for higher-paying opportunities, and farmers constantly struggle to find people for multiple tasks. While H-2A visas and importing food products from other countries (especially Mexico) are viable alternatives in the short-term, automation is seen as a long run solution to persistent farm labor shortages (Gutierrez-Li, 2021). Machines can be developed to mimic harvesting tasks currently performed by human beings. In addition, robots can tolerate wider weather conditions (like heat waves, smoke from fires, droughts, or excess rain) and operate for longer hours. Drones and other technologies can harvest fruits and vegetables, apply pesticides, water crops, and transport and pack commodities. If mechanization offers so many benefits, why have farmers not automated more production processes? The answer is simple: costs. Designing, creating, and testing machines involves high R&D investments, meaning the price tag for automation is often cost prohibitive for small and medium-sized farmers. 

    One major limitation of the current H-2A program is that its use is restricted to seasonal agriculture, putting year-round sectors, like dairy, at a disadvantage. For this reason, dairy farmers have had more incentives to invest in automation, given their inability to access foreign legal labor. To better understand the unique needs and challenges of dairy farmers related to labor, we surveyed dairy producers in Wisconsin and Minnesota, two important milk-producing states. We were interested in learning about the use of automatic milking systems (AMS). AMS use robotic arms to attach teat cups using sensors, yielding a “hands-free” milking process. These technologies are more prevalent in other regions (particularly Europe), where dairy farmers have more readily adopted robots capable of conducting some of the tasks previously performed by humans. 

    Our survey targeted 2,000 dairy farmers and received 650 responses in January 2023. Of those, only 39 farmers were already using AMS. Most adopters of this technology considered their investment in AMS worthwhile. Some of the benefits mentioned include increasing productivity, reducing the workload of existing workers, allowing owners and workers to plan more efficiently, cows being more comfortable, and farmers not being under the constant stress of finding and managing crews. However, not all comments were positive. Some producers mentioned constant issues with robots breaking down and high maintenance costs. The size of the operation (number of cows) and availability of skilled labor (or the lack thereof) also determined the net value of AMS. A selected sample of comments (each from a different respondent) is included at the end.

    In summary, tight agricultural labor markets, political divisions complicating the passing of immigration reforms, and a growing population to feed emphasize the importance that mechanization will play in U.S. agriculture. However, the transition to automated food production processes is complex. Technologies take time to be developed, do not entirely eliminate the need for labor, and are costly to maintain and repair. Farmers’ decisions to mechanize their practices will depend on the feasibility of realizing increases in productivity that will outweigh the costs of automating. Other considerations such as commodity prices, availability of specialized labor, animal welfare, environmental concerns, and farm succession to the next generation also play a role.

    Farmers’ Perceptions about Using Automatic Milking Systems

    Positive Experiences
    “Yes, it was well worthwhile. it made improvements in all parts of our operation. It’s only been a year and a half, but we are seeing better production, breeding, health, and much easier handling of the cows. We remodeled our existing free stall barn for dry cows and heifers so now we have all animals in 2 barns. So much more efficient and can do all the work in less time. Don’t regret doing it at all!”
    “Yes, because the cows are more relaxed and comfortable. The workers are also more relaxed and get more free time.”
    “The stars all lined up for this project. -Stall pipes needed to be replaced anyways, so it was a good time to redo the barn. – Milking is hard on a lot of bodies especially during cropping. – Finding people to help milk wasn’t getting easier. – This project was money well spent.”
    “Yes, I do. It often is a different type of flexibility than a traditional parlor, but it also ties you down more. Tough to leave further than 30 minutes away because it is difficult to find qualified people to be “on call”. In the last 11 years we have gone from 4 to 8 robots.”
    “For our farm it was either sell the cows or put in an AMS system. My husband’s knees and shoulders are shot, and he’s not old enough to retire, with the AMS he is able to do the other chores (mixing feed, cleaning barn, and feeding calves). It was a big investment, but it is serving us well and it allows me to continue to work full time off the farm. The cows do really well with it, the information you get on each cow is amazing. It also has improved our heat detection and insemination rate.”
    “Yes. Before AMS, we were milking 180 cows in a D8 parallel. All labor included was 18-man hours/day. That’s everything. Breeding, feeding, bedding, milking calves, heifers, everything! After Ams, it’s 12-man hours for same work plus 80 more cows on milk and 10x more milk.”
    Negative Experiences
    “Had robots from 2001 to 2007. Anything and everything went wrong. Robots called house almost every night for problems. Spent hours trying to fix robots. In summer 2006 a new update was put into computer causing virus to get into the system which made cows 2 and 3 titers. Had 30 rows come down with Mastitis in 2 weeks’ time before we figured out where the problem was coming from. The decision was made to pull the robots out and put a herringbone parlor in place of the robots. now we milk 2x per day and can walk away when milking is done and can sleep thru the night without a robot calling us to come to the barn for another problem.”
    “We’ve had robots for 9 years. Certainly, we cannot milk all cows ourselves (just me and my husband) But the monthly bill is extreme. We can fix some things ourselves, but they have to come a lot always something wrong. We find them very frustrating. Would I recommend them? After 9 years I’m still not sure.”

    References

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


    Gutierrez-Li, Alejandro, Cesar Escalante, and Shree Ram Acharya. “The Costs and Benefits of Mechanization: A Look at the Dairy Sector.Southern Ag Today 4(16.3). April 17, 2024. Permalink

  • What is the TN Visa Program?

    What is the TN Visa Program?

    Labor shortages have affected the agricultural sector for many decades. In regions of the country like the South, the reduction in the farm labor supply is a major problem as many labor-intensive commodities are produced across several states. The decline in the availability of workers is in part due to the lack of interest by American-born laborers to engage in field work that is very physically demanding. For this and other reasons, foreign workers have historically been overrepresented in the agricultural sector. In recent years, the H-2A program, which allows U.S. farmers to hire foreign farmworkers legally, has experienced rapid growth (Gutierrez-Li, 2021). The undocumented and H-2A agricultural workers fill the need for manual labor. These employees perform a variety of tasks like planting, weeding, sorting, packing, applying pesticides, and, most importantly, harvesting. While most of the hired labor on farms engages in manual work, highly specialized workers are also needed to perform tasks that demand more training and often college education. In recent years, agricultural employers have also started facing difficulties recruiting highly educated workers, in the context of tight labor markets and new opportunities for college graduates in sectors like data science and engineering.

    When American farmers cannot hire the number of workers they need from the domestic workforce, they turn to foreign workers. In the case of manual labor, they rely on the H-2A program. The option to hire highly skilled foreign workers in agriculture is the TN visa program.  The TN visa system was created in 1994 as chapter 16 of the North American Free Trade Agreement (NAFTA) between the United States, Canada, and Mexico. In 2020, the program was grandfathered into the USMCA, the replacement of NAFTA. This visa avenue allows citizens of Mexico and Canada to work temporarily in the United States. The program focuses on highly skilled professionals whose area of expertise covers around 60 occupations. 

    The benefits of the TN visa system are many. Like the H-2A visa program, there is no cap on the number of TN visas that can be issued every year. Visas can be renewed indefinitely, but holders cannot apply for permanent residency. Canadian citizens only need to show a job offer at a port of entry to obtain a TN visa, while Mexican citizens must apply first at a U.S. consulate. Unlike other visas, the TN visa does not require a labor certification (LC). LC is a lengthy process in which employers must show that they were unable to find qualified U.S. workers to fill the position they are requesting. Moreover, the TN visa allows farmers to file for premium processing, an option that guarantees their petition will be resolved by USCIS (an immigration authority) in 15 days or less for an additional fee. Lastly, TN visas are less likely to be denied than other visas like H-2B or H-2A and allow holders to bring their dependents (spouse and children under the age of 21) through TD visas (TN dependent). On the other hand, some limitations of the TN visa program are that it does not cover all occupations that farmers may want to hire and that it is limited to Canada and Mexico, leaving out specialized talent from other countries.

    The TN visa program was not designed specifically for the agricultural sector. However, among the list of occupations that qualify for workers, there are several professions that directly relate to agriculture (Table 1). Some include veterinarians, animal scientists, animal breeders, agriculturists (including agronomists and food scientists), apiculturists, dairy scientists, entomologists, biologists, soil scientists, zoologists, plant breeders, horticulturists, and poultry scientists. In addition, some bigger farm operators hire economists, engineers, silviculturists, lawyers, and other technicians who can also be brought under TN visas. The main requirement is for individuals to have at least a bachelor’s degree in their field. For example, dairy farmers in the U.S. hire veterinarians with TN visas that help support American veterinarians on tasks like preparing animal health reports, examining herds, vaccinations, artificial inseminations, and birthing. Moreover, TN visa holders from Mexico can interact with H-2A workers (in Spanish), facilitating communication between all workers. 

    In summary, while most of the news on labor shortages in agriculture relate to field workers and the expansion of the H-2A visa program, the reality is that finding workers across the spectrum of skills is proving more difficult for American farmers. Highly specialized workers are becoming harder to recruit as lucrative careers in other sectors are luring college graduates away from agriculture. In this context, the TN visa appears as a viable (albeit less-known) option for U.S. agricultural employers to obtain dependable workers and continue to expand their operations.

    Table 1. Occupations Allowed Under the TN Visa System

    General ProfessionalsMedical/Allied ProfessionalsScientist Professionals
    AccountantNutritionistAnimal breeder
    ArchitectOccupational therapistAnimal scientist
    Computer Systems AnalystMedical laboratory technologistAstronomer
    LawyerPharmacistAgriculturist
    LibrarianRecreational therapistApiculturist
    MathematicianPhysicianBiochemist
    Industrial designerDietitianBiologist
    Landscape ArchitectDentistChemist
    Hotel managerPhysiotherapist/ physical therapist Dairy scientist
    ForesterRegistered nurseEntomologist
    Disaster relief insurance claims adjusterPsychologistEpidemiologist
    EconomistVeterinarianGeologist
    EngineerGeochemist
    Graphic designerGeneticist
    Research assistantGeophysicist
    Interior designerHorticulturist
    Land surveyorMeteorologist
    Range manager/ Range conservationistPhysicist
    Social workerPharmacologist
    Teacher / College or UniversityPoultry scientist
    SilviculturistPlant Breeder
    Technical publications writerSoil scientist
    Scientific technician/ technologistZoologist
    Teacher / Seminary
    Urban planner
    Vocational counselor  

    References

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

    Carolina. NC State Economist. North Carolina State University.

    Payan, T. & Rodriguez-Sanchez, J. (2023). Revamping the TN Visa to get workers where the US needs them. Center for the U.S. and Mexico. Research paper.


    Gutierrez-Li, Alejandro. “What is the TN Visa Program?Southern Ag Today 4(7.3). February 14, 2024. Permalink

  • How to Protect Farmworkers During Heat Waves?

    How to Protect Farmworkers During Heat Waves?

    On July 4, 2023, the world experienced the hottest temperature on record: 17.18 Celsius (62.92 Fahrenheit) degrees (Paddison, 2023). Heat waves have been felt across the Earth in places like India, China, and the Americas in the last few weeks. The United States also hit new highs: Phoenix experienced a temperature of 114 Fahrenheit on July 12, while Fort Lauderdale, Cincinnati, Philadelphia, St. Louis, Detroit, Miami, San Antonio, McAllen, and New Orleans broke records with temperatures close to 100 degrees Fahrenheit or above (Bushard, 2023). Moreover, on July 16 most areas in the South were facing an abnormal (and potentially dangerous) heat wave (Figure 1), which was predicted to extend at least for the entire week (Figure 2). The excessively high temperatures and low air quality could have been exacerbated by the smoke from wildfires in Canada. However, phenomena like “El Niño” and “La Niña” (associated with climate change), are expected to increase in frequency and severity regardless.

    Agriculture, construction, landscaping, and oil and gas extraction are some of the sectors in which workers are most at risk of being impacted by rising temperatures. Farmworkers are one of the most vulnerable populations to be affected by extreme weather episodes, as they perform physically demanding tasks in environments that can be humid, polluted (by smoke from fires or pesticides), and heat stress. Given the nature of their job, agricultural workers are generally exposed to the elements and need to be outdoors a significant amount of time. The harvesting seasons of some labor-intensive crops grown in Southern states and other parts of the country peak around the summer, limiting the ability to re-schedule activities throughout the year as can be done in other industries. Excessive and constant exposure to elevated temperatures can lead to heart disease, heart stroke, faintness, sunburn, dizziness, dehydration, chronic kidney illnesses, and death (Farmworker Justice, 2022).

    There are several measures that can be taken to protect farmworkers during heat waves and prevent negative impacts on their health:

    1. Access to clean water: workers should be able to drink clean and sufficient water whenever they need to. Ideally, water should be cold, provided free of charge, and be offered near the employees’ workplace. Frequent water drinking should be encouraged.
    • Access to shades: workers should be offered the opportunity to access shaded areas during their free and recovery times. Whenever possible, employers should use tractors or other tools to transport and keep shade-providing structures around harvesting areas. Fans and other cooling devices should also be offered to workers in their housing arrangements.
    • Introduction of “alternative” shifts: the hottest hours during the day should be avoided for outdoor activity. If portable lights are an option, shifts could be moved to the evening or early morning to avoid exposure to sunlight.
    • Increasing the frequency and number of resting periods: to allow workers to recover and hydrate. Special considerations should be given to older workers.
    • Implementation of peer-involving strategies: incentivizing workers to constantly look, together with their supervisors, for indications that their co-workers could be suffering from heat stress.
    • Training: workers on how to detect heat-related stress symptoms, what to do if they experience any, where to access water and shades, and how to adapt their clothing depending on the temperature. 
    • Information: about weather forecasts and other recommendations by public officials should be monitored. Generally, Extension personnel at universities, state and local health departments, and non-profit groups can provide additional resources related to protecting workers during heat waves (both in English and Spanish).

    Heat waves are likely to happen more often as the planet experiences the consequences of climate change. Naturally, agriculture is going to be one of the most negatively impacted sectors. Some labor-intensive crops have very small windows of harvesting times. In addition, farmworkers generally get paid by the hour or piece and if crops are lost to heat or not harvested, their incomes can be substantially reduced, making them reluctant to protect themselves. For these reasons, it is important to take precautionary measures to take care of workers’ health, as agricultural production processes will need to continue and adapt to new weather conditions. Measures taken by employers and employees should be complemented by governmental actions tackling climate change.

    Figure 1. Extreme Heat Distribution in the United States: July 16, 2023

    Source: The Washington Post, July 17, 2023, online version.

    Figure 2. Extreme Heat Distribution in the United States: July 17-22, 2023

    Source: The Washington Post, July 17, 2023, online version.

    References

    Ahmed, N., and Muyskens, J. (2023). 70 million people in the U.S. may be exposed to dangerous heat today. The Washington Post, July 17, 2023, online version. 

    Bushhard, B. (2023). Record-breaking high temperatures: Here’s where the U.S. has hit new highs for 2023, including Miami, Phoenix and Austin. Forbes, July 11, 2023, online version.

    Farmworker Justice. (2022). Farmworkers and the climate crisis. Environmental Justice Symposium Report.

    Paddison, L. (2023). The planet saw its hottest day on record this week. It’s a record that will be broken again and again. CNN, July 6, 2023, online version.


    Photo by Pixabay: https://www.pexels.com/photo/abstract-beach-bright-clouds-301599/

    Gutierrez-Li, Alejandro. “How to Protect Farmworkers During Heat Waves?Southern Ag Today 3(30.5). July 28, 2023. Permalink

  • New Rules for the Calculation of H-2A Workers’ Wages

    New Rules for the Calculation of H-2A Workers’ Wages

    In the last several decades, the United States has seen a continuous decline in the supply of domestic farmworkers. Economic and population growth, as well as consumer preferences, have led to an increase in the demand for hand-harvested products. As a result of the strong demand for labor-intensive agricultural commodities and the limited availability of US-born farmworkers, the H-2A program has experienced rapid growth since the first visas were issued in the 90s (Gutierrez-Li, 2021). This legal avenue allows US employers to bring farmworkers for fixed periods of time on a seasonal basis.  

    While the H-2A program has worked as a lifeline to many US farmers who otherwise would have gone out of business, it has been criticized by some agricultural groups as costly and overly bureaucratic. Based on the program’s rules, US employers are obligated to pay for transportation from the country of origin of workers (and within the United States), compensation insurance, housing, and wages. Wages are perhaps the main source of controversy. According to the law, employers must pay their H-2A workers at least the highest of (Osti et al., 2019):

    1. a minimum wage known as the Adverse Effect Wage Rate (AEWR)
    2. the prevailing wage
    3. the prevailing piece wage
    4. the wage agreed upon a collective bargain or
    5. the federal or state minimum wage 

    The AEWR condition is supposed to ensure that employing a foreign worker will not negatively affect the compensation of similarly qualified individuals working in related jobs. The wages differ by state and are generally set to a level above the minimum wage. All AEWRs were previously determined by surveys conducted by the US Department of Agriculture. 

    On February 28, 2023, the US Department of Labor (DOL) published a final rule that modifies how much H-2A workers need to be paid. The changes became effective on March 30, 2023. Specifically, the government agency introduced a new methodology for the calculation of the hourly wages of some H-2A workers. Under the previous methodology, which dates back to 2010, there were 50 different AEWRs (one per state, Figure 1). With the new rules, there could be multiple hourly wages paid to H-2A workers in each state. According to the new methodology, the DOL will continue to calculate the AEWRs for field and livestock occupations based on the US Department of Agriculture Farm Labor Surveys (FLS) whenever such information is reported. However, if the FLS does not report wages in a state or region, the DOL will instead use data from the Occupational Employment and Wage Statistics (OEWS) surveys from the US Bureau of Labor Statistics to set a statewide AEWR for workers of other categories. 

    Field and livestock workers include individuals who “plant, tend, pack, and harvest field crops, fruits, vegetables, nursery and greenhouse crops, or other crops” or “tend livestock, milk cows, or care for poultry,” including those who “operate farm machinery while engaged in these activities.” The Standard Occupational Classification codes (SOCs) and titles associated with these workers are: 45-2041 (Graders and Sorters, Agricultural Products), 45-2091 (Agricultural Equipment Operators), 45-2092 (Farmworkers and Laborers, Crop, Nursery, and Greenhouse), 45-2093 (Farmworkers, Farm, Ranch, and Aquacultural Animals), 53-7064 (Packers and Packagers, Hand), and 45-2099 (Agricultural Workers, All Other) (Department of Labor, 2023). For all other occupations, the DOL will set a statewide annual average hourly wage based on OEWS data. Additionally, if a job includes multiple tasks (thereby giving room for it to involve multiple occupations), the highest wage rate will be chosen.

    It is too early to determine whether the new methodology will achieve the goal (of the government) of paying fairer wages to H-2A workers performing tasks that require more training or skills like van or truck driving. However, the new rule has already faced strong opposition from farming groups (Agriculture Workforce Coalition, 2023), which sued under the argument that it will make the H-2A program more costly and cumbersome than it already is. It remains to be seen how easy it will be for the government to classify workers’ occupations in practice and if employers will strategically classify workers to affect the wages they pay. 

    Figure 1. 2023 H-2A Adverse Effect Wage Rates 

    Source: U.S. Department of Labor.

    References

    American Workforce Coalition. (2023). Letter to the House and Senate.

    Gutierrez-Li, A. (2021). The H-2A Visa Program: Addressing Farm Labor Scarcity in North Carolina. NC State Economist. North Carolina State University.

    Osti, S., Bampasidou, M., & Fannin, J. M. (2019). Labor-Intensive Multiple Cropping Systems and the H-2A Program. Choices, 34(1), 1-6.

    US Department of Labor. (2023). 2023 H-2A Adverse Effect Wage Rate (AEWR) Final Rule FAQs. Office of Foreign Labor Certification.


    Gutierrez-Li, Alejandro. “New Rules for the Calculation of H-2A Workers’ Wages.Southern Ag Today 3(26.3). June 28, 2023. Permalink

  • Adverse Effect Wage Rates of H-2A Workers Increase in 2023

    Adverse Effect Wage Rates of H-2A Workers Increase in 2023

    The H-2A visa program is an option that allows American growers to hire foreign agricultural workers. In the context of persistent farm labor shortages, the number of certified H-2A positions has experienced a rapid growth in the last two decades. Three states in the Southeast (Florida, Georgia, and North Carolina) and two on the West Coast (California and Washington) received more certified H-2A positions in 2022 (Figure 1). Except for Georgia, there was an increase in the amount of H-2A certified positions in the top 10 states using this program. 

    The demand for H-2A workers has remained strong despite continued incremental increases in their minimum compensation levels. Employers of H-2A workers need to pay at least the highest of a minimum wage known as the Adverse Effect Wage Rate (AEWR), the prevailing wage, the prevailing piece wage, the wage agreed upon a collective bargain, or the federal or state minimum wage (Osti et al., 2019).

    AEWRs vary by state but are generally set to a level above the minimum wage. The AEWRs are calculated as the average hourly earnings of non-supervisory field and livestock workers in each state in the previous year. The values are determined through surveys conducted by the U.S. Department of Agriculture (called the Farm Labor Surveys) during January and April (published in May) and July and October (published in November). The information released each November includes annual data based on quarterly estimates of employment and wages (Gutierrez-Li, 2022). 

    In 2023, California has the highest rate, $18.65/hour, while states in the Southeast (Louisiana, Arkansas, Mississippi, Georgia, Alabama, and South Carolina) have the lowest AEWR, $13.67/hour (Figure 2). Overall, all southern states have AEWRs below the national average AEWR of $16.14/hour. However, most of the southeastern states experienced double-digit raises in AEWRs compared to 2022. Florida had the largest wage increase, as the hourly AEWR went up 15.47% (from $12.41 to $14.33/hour) followed by Alabama, Georgia, and South Carolina where wages grew by 14%. In contrast, AEWRs increased by less than three percent in West Virginia, Tennessee, and Kentucky rising from $13.89 to $14.26 an hour. On average, AEWRs climbed 7.5% nationwide.

    The inflation rate in 2022 was approximately 6.5%, slightly below the average increase in AEWRs, suggesting that real wages for H-2A workers will be higher in some states (but lower in others). For growers of labor-intensive agricultural commodities employing large numbers of H-2A workers (like sweet potatoes, Christmas trees, fruits, and vegetables where labor represents at least a third of total costs), the increases in AEWRs could translate into significantly higher wage expenses. The final effect on farmers’ profit margins will depend on whether the prices of the products they sell grow enough to compensate for the rise in labor and other input costs.    

    Figure 1. Change in the Number of H-2A Positions Certified in Top H-2A Demanding States

    Source: American Farm Bureau Federation with data from the Bureau of Labor Statistics. Data available up to the end of September of 2022.

    Figure 2. 2023 H-2A Adverse Effect Wage Rates 

    Source: U.S. Department of Labor.

    References

    Adverse effect wage rates. (2022). Employment and Training Administration. US Department of Labor. Available online at: https://www.dol.gov/agencies/eta/foreign-labor/wages/adverse-effect-wage-rates

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

    Osti, S., Bampasidou, M., & Fannin, J. M. (2019). Labor-Intensive Multiple Cropping Systems and the H-2A Program. Choices, 34(1), 1-6.

    Author: Alejandro Gutierrez-Li

    Assistant Professor and Extension Economist

    North Carolina State University


    Gutierrez-Li, Alejandro. “Adverse Effect Wage Rates of H-2A Workers Increase in 2023.” Southern Ag Today 3(3.5). January 20, 2023. Permalink