Category: Specialty Topics

Many specialty crops are cultivated in nurseries including flowers, shrubs, seasonal vegetables, and fruit trees. During the spring and early summer seasons nursery products are in high demand for landscape contractors, landscape architects, and people working on their yards and gardens. Nurseries also supply wholesale and retail distribution firms, such as garden centers, home stores and distribution centers. 

The last couple of years nurseries face added stress to keep up with increased demand while securing key production resources. An increase in nursery products and services can be attributed to (i) a spike in demand that started during the pandemic as more people turned to home gardening, (ii) adapting to new production practices such as adopting sustainable practices, and (iii) switching to soilless systems such as container production. The nursery industry faces same increasing cost and input supply issues as other agricultural sectors. Figure 1 presents information on farm production expenses with labor and fertilizers being two inputs that we have seen increases the last year. Persistent supply chain disruptions, price fluctuations caused by the pandemic and volatile energy prices, as well as increased labor costs particularly for those operations depending on H-2A labor are well documented.

In the nursery industry, labor costs, and fertilizers and pesticides are two costly production inputs. Jeb Fields reports that a $600 barrel of herbicide in 2021 now costs at least $1,500 so differences between 2021 and 2022 would be even more extreme. Another resource that is high in demand and low in supply is growing media and containers, with orders taking more than one year to be fulfilled. In nursery and greenhouse ~85-90% of all ornamental production nationally is containerized. The only non-container-grown ornamentals are some large trees, but even those are shifting to containers. 

While the nursery products and services are high in demand, the challenges the industry faces are persistent, and the new ones are daunting with ripple effects experienced in the green industry.

Figure 1: Selected US farm production expenses, 2020-2021F USDA, ERS 

Maria Bampasidou is an assistant professor in the LSU AgCenter Agricultural Economics and Agribusiness Department, and Jeb Fields is an assistant research coordinator and extension specialist at the LSU AgCenter Hammond Research Station.

Bampasidou, Maria and Jeb Fields. “Increased Demand and Persistent Resource Challenges for the Nursery Industry.” Southern Ag Today 2(22.5). May 27, 2022. Permalink

Agriculture is known to have numerous unique occupational hazards. Physical hazards include heat and sun exposure and the potential dangers of working with heavy machinery. Working out in the elements also brings the risk of venomous snakes, spiders, and disease-carrying mosquitos. What is less often discussed, however, are the mental and emotional hazards associated with working in agriculture. The volatile farm economy, long days at work, social isolation, and natural disasters can add stress beyond what is expected or tolerated in other industries. 

May is Mental Health Awareness Month and is a significant opportunity to remind anyone struggling that they are not alone and do not have to suffer in silence. A 2021 poll commissioned by the American Farm Bureau Federation found that farmers and farm workers were more comfortable talking to friends, family, and doctors about stress and mental health than in 2019. Open dialogue about stress and mental wellbeing can help reduce stigma in the community, which is often cited as a barrier to seeking care for a mental health challenge. Emotional wellness is a key dimension of our health and must be maintained, just like physical wellness, to live a fulfilling life. If you are struggling or notice someone else struggling, seek help. Recovery from a mental health challenge or illness, like recovery from a heart attack or other physical illness, is possible.  There is always hope.

The following resources are designed for agricultural producers and families:

• Ag Law in the Field Podcast Mental Health Episodes: https://aglaw.libsyn.com/category/Mental+Health+
• Commodity Classic Mental Health on the Farm Panel Recording:  https://commodityclassic.com/mental-health-on-the-farm
• Do More Ag Foundation:  https://www.domore.ag/
• National Agricultural Law Center Compilation of Mental Health Resources by State:  https://nationalaglawcenter.org/center-publications/family/mentalhealth/
• National Suicide Prevention Hotline:  https://suicidepreventionlifeline.org/
• Southwest Ag Center: https://www.uthct.edu/southwest-center-for-agricultural-health-injury-prevention-and-education/agstress/
• Ted Matthews YouTube Channel: https://www.youtube.com/channel/UCSvJTRFczJh8DJwWmAx7NpQ

Authors:  Miquela Smith, MPH Extension Program Specialist – Health and Tiffany Dowell Lashmet, Associate Professor & Extension Specialist – Ag Law

Smith, Miquela, and Tiffany Dowell Lashmet. “Mental Health & Agriculture: There Is Always Hope.” Southern Ag Today 2(21.5). May 20, 2022. Permalink

Fertilizer prices exploded during the past year and are now further fueled by the Ukraine conflict.   Interest rates have also increased substantially. There is a theory, associated with economist John Taylor that for every percentage point of inflation, interest rates should be raised by a similar percentage.  That principle would suggest that our interest rate climb is not over.  Numerous articles have discussed the impacts of these trends on farm and ranch profitability.  Many producers are also member-owners of agricultural supply cooperatives.  Those cooperatives are also impacted by both fertilizer prices and interest rates.

The impacts can be illustrated using a cooperative financial simulator developed at Oklahoma State University.  Prior to interest rate and fertilizer increases, the representative wheat marketing and farm supply cooperative had a return on assets of 6.8% and a return on equity of 11.5%.  The representative cooperative distributed 50% of profits as cash patronage and needed 29% to service an 18-year equity revolving program.  The remaining retained profits allowed the cooperative to grow at an annual rate of 2.4%.  If interest rates and fertilizer prices double, the cooperative must either increase farm supply profit margins by 8% or reduce cash patronage to 45%.  The impacts are even more dramatic if members expect to maintain the value of their equity position in the cooperative. If length of the equity revolving period is reduced to 10 years, the cooperative must either reduce patronage from 50% to 35% or increase farm supply margins by 42%.

These results illustrate the challenges that will be faced by cooperative boards of directors.  In coming months, protecting the financial viability at the cooperative level may require increases in margins or reduction in cash patronage.  If interest rates impact producer expectations of equity revolving periods, those challenges will be even more substantial.  Cooperative boards may be tempted to try to isolate the members from increasing interest and inventory costs.  The danger of that strategy is that cooperative’s reserves and growth rate may be reduced to the point that it will not be in a position to serve future members (Table 1).

Kenkel, Phil. “Impact of Increasing Fertilizer Prices and Interest Rates on Farm Supply Cooperatives“. Southern Ag Today 2(20.5). May 13, 2022. Permalink

Amid widespread decline and disinvestment, numerous small towns and rural communities throughout the US have taken action to restore their downtown as the focal point for economic, social, and civic activity in the region.

Downtown revitalization approaches—such as the widely adopted “Main Street Program”—typically operate from the principle of “if you build it, they will come,” requiring community leaders, business owners, and volunteers to invest their resources and efforts in a vision that is hoped for, but not guaranteed. This involves capital investment toward building rehabilitation and corridor beautification, as well as less tangible investments of time and coordination toward promoting downtown, organizing events, and managing limited resources. 

But does it work? The continuing popularity of the Main Street Program—with 1,500+ participants and counting—would suggest that downtown revitalization programs are, to some degree, effective. For many policymakers, however, anecdotal data is not sufficient to justify the investment of time and resources required to engage in revitalizing downtown.

In a pair of recent articles, I examined the quantitative effect of the Main Street Program. The first study focused on job growth, finding that small towns in Iowa gained new retail jobs and establishments in the years after adopting the program. In the other study, I focused instead on residential property values, finding that homebuyers placed a higher premium on homes located closer to downtown districts with an active Main Street Program. Together, the two studies provide evidence for the idea that revitalization efforts go a lot further than simply beautifying a town’s historic business district. Vibrant downtowns are building momentum as places where people increasingly desire to live and work, creating the conditions for strong rural economies to flourish.

Van Leuven, Andrew J. . “In Historic Town Centers Beauty is More Than Skin Deep“. Southern Ag Today 2(19.5). May 6, 2022. Permalink

Access to farm labor continues to be a significant challenge for specialty crop growers,¹ who face challenges filling positions with domestic workers. This is due in part to the physical and temporary nature of employment, and the ability of employers to offer salaries that are competitive against employment opportunities in other sectors. Farm wages were only 59% of the wage rate of comparable positions in other industries in 2020.²

The decline in the farm labor supply has resulted in a growing reliance on the H-2A temporary agricultural program. This program allows employers to recruit foreign workers to fill seasonal positions. During the last decade, the number of H-2A visas issued increased at an approximate average rate of 17% annually, quadrupling from 65,345 in 2012 to 257,898 in 2021 (Figure 1). This growth was stronger in the specialty crop sector. The expansion in H-2A employment is, in part, the result of an increase in the number of workers petitioned and the number of operations—including small and medium-scale—employing H-2A workers.³ The H-2A program has its challenges and can be costly for producers who must provide transportation and housing for H-2A workers and pay the state’s Adverse Effect Wage Rate, which is often higher than the local worker hourly pay. 

With an aging farm labor force³, agricultural labor issues are likely to persist, posing a significant limitation to the specialty crop industry. Mechanization and immigration policies that improve the H-2A program and make it more accessible for farmers will be crucial for maintaining the competitiveness of the U.S. industry.

References

¹ American Vegetable Grower. 2020 State of the Vegetable Industry Survey. Available online: https://www.growingproduce.com/tag/2020-state-of-the-vegetable-industry/

² US Department of Agriculture. Economic Research service. Farm Labor. Available online: https://www.ers.usda.gov/topics/farm-economy/farm-labor.aspx³ 2019 State of the Vegetable Industry Survey – American Vegetable Grower Magazine. Available online: https://www.growingproduce.com/vegetables/which-issues-have-your-attention-2019-state-of-the-vegetable-industry/

Canales, Elizabeth. “Reliance on H-2A Workers Continues to Spike as Specialty Crop Producers Face Labor Shortages“. Southern Ag Today 2(18.5). April 29, 2022. Permalink