Category: Farm Management

As we roll through fall, spring-born calves will be weaned and many of those heifer calves will be held for replacement purposes. At the same time, a large number of bred heifers will hit the market and be available for the same purpose. It is not uncommon for someone to comment on how expensive bred heifers are and assume that they can develop their own heifers for much less. While this is true in some cases, I also think it is easy to underestimate some of those costs. The purpose of this article is to briefly highlight three things that are crucial to consider when a cow-calf operator tries to make this comparison. And I would argue these are even more significant given the strength of the current cattle market.

The opportunity cost is the biggest cost

I hope this one is obvious, but the largest cost of developing a heifer is the opportunity cost of that heifer at weaning. High quality weaned heifers, in the 500-600 lb range, are bringing $2,000 and higher across most US markets. Whatever those heifer calves are worth in the marketplace is the first cost of heifer development. By not selling that heifer calf, one is forgoing that income. This cost is huge right now due to the strength of the calf market and higher interest rates, which makes forgoing that income even more significant. While the heifer herself is the easiest opportunity cost to quantify, this applies to all the costs of developing her (feed, pasture, breeding, facilities, labor, etc.). 

They won’t all make the cut

After the initial cost of not selling the heifer at weaning, another year of expenses will be incurred to get that heifer to the same stage as those bred heifers on the marketplace. She will be carried through a full winter and summer grazing season and be bred to calve the following year. There are significant costs in doing this, but it is also important to understand that not all those heifers are going to end up being kept for breeding. Some will fail to breed, and others will simply not meet the expectations of the farmer. Heifers not kept for breeding will end up being sold as feeders and likely won’t cover all those expenses. The “loss” on these heifers becomes an additional cost of the heifers that do enter the cow herd as replacements.

Next year’s calf should be very profitable

This is another one that doesn’t get much attention but really matters in a time like the present. It’s easier to think about this one applied to a specific timeline so I will frame it for a heifer born this spring. A heifer calf weaned in the fall 2025, kept for replacement purposes and bred in 2026, won’t wean her first calf until fall of 2027. Conversely, those bred heifers on the market in fall of 2025 should wean their first calf in 2026. While nothing is guaranteed in the cattle markets, fundamentals suggest that 2026 should be a profitable year for cow-calf operations. The potential profit on that calf in 2026 becomes capitalized in the value of those bred heifers in 2025. For this reason, comparing the cost of a bred heifer in fall 2025 to the cost of developing a heifer weaned in fall of 2025, can be misleading.

The purpose of this article was not to suggest that either replacement strategy was best. There is merit in both approaches, and it largely comes down to the goals of the operator. While I am an economist, I also recognize there are a lot of non-economic considerations that come into play. But the economics of the decision is complex, and carefully thinking through all aspects of the decision is likely time well spent.

---

Burdine, Kenny. “Three Considerations When Comparing the Cost of Buying Bred Heifers to the Cost of Developing Them.” Southern Ag Today 5(41.1). October 6, 2025. Permalink

Declining labor availability has been affecting the agricultural sector for many decades. Limited interest in physically demanding jobs by domestic workers, as well as a reduction in the supply of undocumented farmworkers, have been some of the major reasons behind this pattern (Gutierrez-Li, 2025). As a result, demand for foreign workers coming under H-2A visas to perform manual tasks in agriculture has risen steadily for more than a decade (Gutierrez-Li, 2021 and 2024), making the program very popular among growers of labor-intensive crops. A lesser-known non-immigrant visa program, the H-2B, has been a lifeline for many employers associated with food production in the United States.

The H-2B program originates from the Immigration and Nationality Act of 1952, when the H-2 visa category for manual labor foreign workers was created (Gutierrez-Li, 2024). In 1986, the Immigration Reform and Control Act divided the program into two subcategories: H-2A for agricultural workers and H-2B for non-agricultural work. Both allow workers from a list of countries to come for a season (of less than one year), but with the possibility of holding the same visa for up to three years in a row. The H-2B program covers a variety of industries, including resort and hospitality services, retail sales, landscaping, groundskeeping, food processing, and construction. Employers interested in hiring either type of worker need to convince the government that they cannot find enough American laborers able, willing, qualified, and available to do the temporary tasks they need. Furthermore, both programs require employers to cover transportation from and to the country of origin of workers, but only the H-2A program mandates employers to pay for housing costs.

The determination of yearly wages is not the same for H-2A and H-2B workers. In the case of the former, employers generally pay the adverse effect wage rate. In the case of H-2B workers, they must be paid the prevailing wage rate, defined as “the average wage paid to similarly employed workers in a specific occupation in the area of intended employment” (Department of Labor, 2025). Another important difference between the H-2A and the H-2B programs is that the latter has an annual cap on the number of visas set by Congress, currently at 66,000. The cap is split into two halves. The first 33,000 visas are made available from October 1 to March 31. The second batch runs from April 1 to September 30. However, as shown in Figure 1, the number of H-2B visas issued by the government has increased substantially in the last five years, despite the existing annual cap. This increase is explained by two factors. First, fish roe processors or technicians, their supervisors, and workers in the Commonwealth of the Northern Mariana Islands or Guam are exempted from the cap until December 31, 2029. Second, the Executive branch, through the Department of Homeland Security, has the authority to issue more visas beyond the annual cap just for that year, both for returning and new workers.

Figure 1. H-2B Visas Issued in 2024

Among the top employers of H-2B workers in 2024 were companies related to tree services (like pruning) or nurseries, landscaping, construction work, and seafood production (Table 1). H-2B workers were found performing tasks directly related to the food sector, like cutting meat, poultry, and fish, working as waiters and waitresses in restaurants, and even as cooks. Individuals working in landscaping and groundskeeping tasks could indirectly be contributing to the agricultural sector if their employers produce fresh produce or other food-related commodities.

Table 1. Top 10 Employers of H-2B Workers in 2024

Employer	Workers Approved
ABC PROFESSIONAL TREE SERVICES INC	1,934
PHC CORPORATION	1,772
PROGRESSIVE SOLUTIONS LLC	1,703
ROTOLO CONSULTANTS INC	1,382
BRIGHTVIEW LANDSCAPE SERVICES INC	1,293
THE BRICKMAN GROUP LTD LLC	1,207
CORE TECH CONSTRUCTION CORPORATION	1,111
STRONGWOOD FORESTRY INC	1,022
ALPHA SERVICES LLC	951
WESTWARD SEAFOODS INC	922

Agricultural operations are becoming more complex as rising production costs have led to an increase in the relative number of medium-to-large-sized operators and a reduction in the number of small farms. To stay afloat, larger producers have diversified their businesses to multiple crops and invested in value-added commodities. This trend has resulted in a growing number of companies hiring both H-2A workers (for tasks like harvesting) and H-2B workers for packing, expanding/constructing new facilities, and groundskeeping. Likewise, an increase in demand for housing and eating out has led to the need for more H-2B workers. As such, interest in the program is likely to continue growing. Streamlining the application process, as well as raising (or eliminating) the yearly cap on the number of workers allowed in might be necessary to ensure that the needs of producers are met. Otherwise, given that the H-2B program covers a variety of industries, real estate developers, restaurant owners, and farmers will continue to compete for a limited number of workers, potentially leading to inflationary pressures.

---

References

Gutierrez-Li, A. (2021). The H-2A visa program: Addressing Farm Labor Scarcity in North

Carolina. NC State Economist. North Carolina State University.

Gutiérrez-Li, A. 2024. Feeding America: How Immigrants Sustain US Agriculture. Baker

Institute for Public Policy at Rice University. Center for the U.S. and Mexico.

Gutiérrez-Li, A. 2025. The Unseen Workforce: How Immigration Enforcement Could Shake the U.S. Economy. Choices 40(3).

United States Department of Labor (2025). Prevailing Wage Information and Resources. Accessed online in September 2025 at https://www.dol.gov/agencies/eta/foreign-labor/wages

United States Department of State. (2025). Nonimmigrant Visa Statistics. Accessed online in September 2025 at https://travel.state.gov/content/travel/en/legal/visa-law0/visa-statistics/nonimmigrant-visa-statistics.html

United States Citizenship and Immigration Services. (2025). H-2B Employer Data Hub. Accessed online in September 2025 at https://www.uscis.gov/tools/reports-and-studies/h-2b-employer-data-hub

---

Gutierrez-Li, Alejandro. “The H-2B Visa Program and the Food Sector.” Southern Ag Today 5(40.1). September 29, 2025. Permalink

Foreign workers hired under the H-2A Guest Farm Worker program are assured of being paid at least the Adverse Effect Wage Rates (AEWRs) determined through a federally designed mechanism.  The AEWR determination process serves a two-fold objective: (1) to look after foreign workers’ welfare by assuring they are paid at just, fair wage levels and (2) to ensure that H-2A wages would not “adversely” affect U.S. farm labor market conditions, which could happen if such workers are paid at very low wages that could depress the domestic workers’ market wage rates.

Except for AEWRs set monthly for range occupations (i.e. farms engaged in herding or livestock production operations performed on a range), the wages of the majority of H-2A hires are guided by a single annual rateprescribed for 18 farming territories – consisting of 3 states (California, Florida, and Hawaii) and 15 regions (Figure 1).  Under existing H-2A program guidelines, the AEWR for the current year is derived from the average wage data collected by the National Agricultural Statistics Service (NASS) in the preceding year’s Farm Labor Survey (FLS). A singular state/regional AEWR for non-range field and livestock workers (for such farm work positions as graders, sorters, equipment operators, crop/nursery/greenhouse workers, ranch/aquaculture farm workers, packers, and packagers) is derived as the average of the FLS wage data for six Standard Occupational Classification (SOC) codes and titles.

Despite its economic and market arguments, the AEWR-setting mechanism often drew criticisms. Some contend that state/regional-level AEWRs could be too high.  This especially applies to the last two years, when some farming territories experienced abrupt, radical spikes in their AEWRs.  This year, the prevailing national AEWR is $17.74 per hour, which is 18.01% over the 2022 rate and translates to an annual average nominal growth of 5.68% over the last three years.  This rate exceeds historical nominal AEWR growth trends estimated at only 3.52% between 1991 and 2022.  

In understanding the H-2A affordability issue, the following issues need to be clarified.  

• First, AEWR hikes are market-determined and reflect the previous year’s elevated market equilibrium rates.  It follows that higher AEWRs indicate an aggressive farm labor market, where domestic workers are paid higher wages for farm jobs.

• Second, the H-2A affordability issue under rising AEWRs becomes more concerning when the program’s mandated comprehensive compensation package is accounted for in the compensation equation.  Calvin, Martin, and Simnitt (2022) estimate a 5% wage premium added to the AEWR when calculating total H-2A compensation.  The suggested premium accounts for the mandated additional H2A fringe benefits (including housing, meals, transportation, and insurance) that could add $2.55 per hour in hourly wages but also considers offsetting employers’ benefits realized from non-payment of SS & unemployment taxes.

• Finally, there is the aggregation issue employed in the existing AEWR determination process.  Geographic aggregation (AEWRs for 18 geographic entities) raises questions on whether an AEWR set for several states in a region accurately captures local labor market conditions at the state level. 

In this article, we investigate another form of aggregation that sets one AEWR for all types of jobs and industry employers based on wage data collected from a selected core of 6 SOC-classified jobs.  Table 1 shows that the selected six SOC job titles comprise the bulk (96.46%) of all H-2A workers hired in 2024.  The resulting differentials between the national average AEWR for 2024 ($16.98 per hour) and the average hourly wage for each SOC job category are all negative, thus establishing a cheaper H-2A hiring option since AEWR is consistently lower than all six domestic farm wage rates.  When the H-2A mandated comprehensive remuneration package with fringe benefits is included in the equation (“adjusted AEWR” in Table 1), three negative wage differential results are registered (meaning H-2A labor is cheaper than domestic labor).  Notably these negative results apply to three SOC job positions that comprise 91.62% of all H-2A hires in 2024.  

All told, our analysis makes an important clarification on the affordability of H-2A workers.  Our results indicate that at the national level, most U.S. farm employers of H-2A workers in 2024 find that such employment decisions have not been generally more costly than the domestic farm employment option. However, we qualify our deduction by clarifying that our analysis here is confined only to the aggregation of job categories and farm industries.  Our further research in this area will attempt to validate if such trends in wage differentials and their implications on H-2A labor affordability persist at the state-level under more differentiated, localized farm labor market dynamics and conditions.

Figure 1.  State and Regional Adverse Effect Wage Rates, 2025

Table 1.  H-2A Employment, National Average Wages, and Wage Differentials Relative to AEWR under the Standard Occupational Classification (SOC) Codes Used in the AEWR Formula, 2024

SOC Code	Job Title	Number of Certified H-2A Workers	Percent of All Certified H-2A Workers (%)	National Average Hourly Wage (NAHW)	Difference between AEWR and NAHW1	Difference between Adjusted AEWR and NAHW2
				$ per Hour
45-2041	Graders and Sorters, Agricultural Products	1.246	0.32	18.35	(1.37)	(0.52)
45-2091	Agricultural Equipment Operators	31,837	8.27	19.35	(2.37)	(1.52)
45-2092	Farmworkers and Laborers, Crop, Nursery, and Greenhouse	319,545	83.03	18.30	(1.32)	(0.47)
45-2093	Farmworkers, Farm, Ranch, and Aquacultural Animals	18,042	4.69	17.45	(0.47)	0.38
45-2099	Agricultural Workers, All Other	55	0.01	17.75	(0.77)	0.08
53-7064	Packers and Packagers, Hand	508	0.13	17.40	(0.42)	0.43

Table 1.(Image Format) H-2A Employment, National Average Wages, and Wage Differentials Relative to AEWR under the Standard Occupational Classification (SOC) Codes Used in the AEWR Formula, 2024

References:

Calvin, L., P. Martin, and S. Simnitt. (2022). Adjusting to Higher Labor Costs in Selected U.S. Fresh Fruit and Vegetable Industries. EIB-235, Economic Research Service, U.S. Department of Agriculture, Washington, DC.

---

Escalnate, Cesar L., Naimul Bhuiyan, and Joshua Emmanuel. “Understanding the H-2A Labor Affordability Issue.” Southern Ag Today 5(39.1). September 22, 2025. Permalink

I was at a field day showcasing research conducted at one of our university’s research and education centers a couple of weeks ago. Land grant universities across the U.S. have similar research and education centers, where field research is conducted and results are shared with producers and industry stakeholders. These centers enable experts to conduct unbiased, scientific research that gets disseminated to future adopters of the production practices or technologies being studied. If you have a chance to attend a field day at a local university research and education center, you won’t regret the experience. At the end of this field day, we gathered in the air-conditioned conference room for a debrief. We asked producers and stakeholders about their thoughts and needs for future research and education. When the topic of agricultural economics came up, one producer mentioned the continued need for risk management education.

So how do producers manage their risk?  What follows are a few thoughts on the five main areas of risk in agriculture: production, marketing, financial, legal, and human. 

Production risk impacts the ability to produce livestock, poultry, or crops. The weather is unpredictable and impossible to control, but producers can diversify by growing a variety of crops or meat animals throughout the year. Appropriate crop rotations and nutrient management plans can ensure fertilizers are used efficiently. Integrated pest management programs can help reduce the risk of damage from insects, diseases, and weeds. The use of irrigation management systems can improve water use efficiency. Another way to manage production risk is with insurance, which can help cover losses that may occur from an unpredictable event that impacts production. 

Marketing risk impacts the sale of products and the prices at which they are sold. Producers who know their cost of production can forward contract their products at prices above their costs to lock in their potential for profit. Creating a marketing plan takes out the indecision and emotional component that may occur when prices are changing. Producers may also use futures or options to hedge the cash price of the livestock or crops in production. Futures and options can help establish price floors or ceilings for products. Another way to manage marketing risk is through selling directly to consumers or joining a marketing cooperative to sell products with other producers. Crop insurance, with revenue protection, is also a tool that can be used to manage marketing risk.

Financial risk impacts the business side of the farm or ranch. First and foremost, producers can manage financial risk through excellent recordkeeping and up-to-date financial statements. The use of financial recordkeeping software enables producers to monitor and manage financial performance measures like working capital, liquidity, return on investment, and profitability. Financial software can also be used to look at cash flow and see what times of year operating capital will be needed and when it can be paid off. Keeping an eye on family living withdrawals from the farm business is also important, as well as determining if off-farm income is needed to support the family.

Legal risk impacts the farm business in terms of liabilities and compliance with regulations. The organizational structure of the farm business can be an important strategy to protect farm business owners from personal liability. Sole proprietorships, although easy to form, leave the owner personally liable for any debt of the farm business. Other forms of legal organizational structures include partnerships, limited partnerships, corporations, and limited liability companies. States may vary in the licensing and paperwork required to form different organizational structures, so producers are encouraged to seek advice from their accountant or an attorney. Managing legal risk also means being aware of laws and regulations that impact the farm business and complying with them at the local, state, and federal levels.

Human risk impacts the people in the farm business, from owners and managers to heirs and employees. One way to manage risk between owners and heirs is to have an estate plan in place to help ease the transition of the farm business to heirs. Open communication is important within the family to ensure all members know their role in the farm business. Communication is also important with employees. There should be clearly written job descriptions with clear expectations on performance, and employees should receive appropriate training for their jobs. Managing human risk includes knowing and following all local, state, and federal labor laws that govern occupational safety and agricultural worker protections. 

When risks are managed well, producers can minimize loss and increase their probability of profit. When you get a chance, attend the next field day at your local research and education center so you can learn how best to manage risk.

---

Smith, Amanda R. “Risk Management.” Southern Ag Today 5(38.1). September 15, 2025. Permalink

What is Chapter 12 Bankruptcy?

Chapter 12 bankruptcy is a provision under the U.S. Bankruptcy Code tailored specifically for family farmers and fishermen. Introduced in 1986 during the height of the farm crisis, Chapter 12 allows qualifying family farmers to restructure their debts while continuing to operate. It offers a more flexible repayment structure than Chapter 11 or Chapter 13. 

Chapter 12 Filings in the Southern Region 

Data from 2015 to 2025 (measured from July 1 of the preceding year to June 30 of the labeled year) highlight important developments in Chapter 12 bankruptcy trends across the southern United States. Total Chapter 12 filings in the south have fluctuated over the past decade, peaking at 148 filings in 2020 before sharply declining to 53 in 2023 (see Figure 1). This decline aligns with post-pandemic trends across the United States due in part to government assistance and higher commodity prices, which improved short-term farm financial conditions. However, the most recent year of data (e.g., July 1, 2024 – June 30, 2025) shows a rebound to 101 filings. This may suggest that on-farm financial pressures are intensifying for southern producers. 

Figure 1. Total Chapter 12 Filings for the Southern Region, 2015 – 2025

Digging deeper into state-level filings reveals that Georgia, Texas, and Arkansas account for a large share of filings over the 2015 to 2025 period. Georgia recorded the highest total filings, with more than 30 annually through 2018 and peaking at 42 in 2017. Arkansas has shown a significant surge in the most recent reporting period from 4 filings in 2023 to 25 in 2025 (Figure 1). This increase in Chapter 12 filings signals financial stress in Arkansas despite more stable trends in neighboring states (e.g., Mississippi). The current state-level differences may point to uneven financial pressures within the southern region, which is likely shaped by crop mix, farm size, or local crop production systems. The 2025 rebound in filings could be due to the cyclical nature of agriculture following several years of low bankruptcy filings.  But the increase also raises concerns about on-farm financial stress in southern agriculture. For smaller family-owned operations with limited liquidity, these pressures can become untenable, making bankruptcy not just an option, but a necessity. 

Farm operations are often generational legacies, woven into family identity and rooted in the community. For many, bankruptcy is not only a financial loss but also an emotional burden. Bankruptcies serve as a reminder that financial stress in agriculture extends beyond the farm. It often impacts families, rural communities, and personal well-being. Tight (or non-existent) margins, increasing input costs, and mounting debt pressures can erode both financial stability and a producer’s sense of identity. These realities highlight the importance of timely support through open conversations, proactive engagement, and access to financial and mental health resources, including dedicated services such as the National AgriStress Helpline (1-833-897-2474) and the SAMHSA Disaster Distress Helpline (1-800-985-5990), both of which are available 24 hours a day, seven days a week. As pressure continues to mount, directly addressing farm stress is essential to sustaining farm operations and safeguarding the vitality of families and rural communities. 

---

References

Loy, Ryan, and Hunter Biram. “The Disparity Between Crop Prices Received and Input Prices Paid.” Southern Ag Today 4(28.3). July 10, 2024. Permalink

Fields, Erica, and Ronald Rainey. “Identifying Financial Stress in Farmers and Ranchers: A Guide for Families, Friends, and Agricultural Community Stakeholders.” University of Arkansas Factsheet. Retrieved from: https://www.uaex.uada.edu/publications/pdf/FSA96.pdf

USDA-Economic Research Service (2025). Farm Sector Income & Finances: Highlights from the Farm Income Forecast. Retrieved from: https://www.ers.usda.gov/topics/farm-economy/farm-sector-income-finances/highlights-from-the-farm-income-forecast/

USDA- Economic, Statistics, and Market Information System. (2025). Agricultural Prices. Retrieved from: https://usda.library.cornell.edu/concern/publications/c821gj76b?locale=en

United States Courts. (2025). Caseload Statistics Data Tables. Retrieved from: https://www.uscourts.gov/statistics-reports/caseload-statistics-data-tables

---

Loy, Ryan, Erica Barnes Fields, and Ronald Rainey. “Tracking Chapter 12 Bankruptcies in the South: 2015 – 2025 Trends and Identifying On-Farm Stress.” Southern Ag Today 5(37.1). September 8, 2025. Permalink