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Understanding the H-2A Labor Affordability Issue

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

Sources: American Farm Bureau Federation and USDA-National Agricultural Statistics Service

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
SOC Code	Job Title	Number of Certified H-2A Workers	Percent of All Certified H-2A Workers (%)	$ 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

Notes:  ¹ The 2024 national AEWR is $16.98/hour.
²  The 2024 AEWR is adjusted by a 5% incremental factor to account for H-2A’s mandated fringe benefits (housing, meals, transportation, and health insurance, among others)
Sources:  USDA National Agricultural Statistics Service and Department of Labor

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

September 22, 2025

Federal Estate Taxes, Succession Planning and the One Big Beautiful Bill

“In this world nothing can be said to be certain, except death and taxes” – Benjamin Franklin, 1789.

On July 3^rd, 2025, the passage of H.R. 1, commonly known as the One Big Beautiful Bill, made several changes to federal spending that directly impact American agriculture, including a permanent increase to the unified credit to $15 million per individual starting in 2026 and indexed to inflation moving forward. Why does this matter to American agriculture? Without the change to the unified credit in H.R.1, the credit would have sunset back to the 2018 amount of $5 million per individual adjusted for inflation which would have been around $7 million. For estates over the amount of the unified credit, the maximum estate tax rate is 40% of the net worth that exceed the current unified credit. As a simplified example, if a farmer owns a tractor worth $100,000 and has already used their unified credit, then their estate would need to pay $40,000 in taxes for that tractor at their death.

While $7 million sounds like a tremendous amount of money to an individual, in an economic reality where farm equipment can cost more than $800,000 per piece of equipment and land can bring more than $20,000 per acre in certain parts of the country, this credit can be rapidly expended. The net worth over this amount would be subject to the estate tax. A popular saying amongst producers is that farmers are “asset rich and cash poor.” This means that succeeding generations could be forced to sell off land or equipment to meet estate tax obligations. This has not been the case over the past several years because of the high unified credit, so the estate tax has only been an issue for some of the larger farms in the country. There is also the issue of portability, which is combining the unified credits of married couples with some simple estate and tax planning. Portability essentially allows the surviving spouse to double the unified credit in many cases. With a high unified credit and portability, this makes the likelihood of the vast majority of farming operations paying estate taxes remote for the immediate future.

So, does this solve the problem? H.R. 1 resolves one problem centered on the estate tax; however, a larger problem is looming for American agriculture, and that is the lack of succession planning. Suppose the principal operator of a farming operation is incapacitated in the immediate future. Do other members of the farming operation have the necessary experience and knowledge to keep the farm economically viable? Has the older generation planned and prepared for a transition in a way that may not fracture relationships between members of the younger generation? Because farms and families are unique, this means that succession plans are also going to need to be carefully tailored to meet their specific needs. Attorneys and CPAs have not done a good job of convincing their farm clients of the importance of succession planning, and farmers are more than willing to put off the issue to a later date. The problem is that Benjamin Franklin was correct when he stated that death was a certainty. Avoiding succession planning does not make the problem go away, it just leaves an even larger burden on the next generation.

Rumley, Rusty. “Federal Estate Taxes, Succession Planning and the One Big Beautiful Bill.” Southern Ag Today 5(38.5). September 19, 2025. Permalink

September 19, 2025
Rising Imports and Soaring Costs: Dual Pressures Squeeze U.S. Fresh Produce Growers

The U.S. fruit and vegetable (F&V) industry is a cornerstone of American agriculture, but it faces continuing challenges from imports and rising production costs. According to USDA, 2025 cash receipts for all crops are projected at $236.6 billion, a 2.5 percent decline from 2024. While fruit and nut cash receipts are expected to rise slightly, those of vegetables are set to fall. Despite strong consumer demand for fresh produce, its perishable nature and exposure to international competition leave U.S. growers in a vulnerable position. Two pressures dominate: a widening trade deficit fueled by imports, and rising input costs, especially labor.

For decades, U.S. agriculture ran a trade surplus. That changed in 2019, when imports began outpacing exports (figure 1). By 2021, the overall agricultural trade balance turned negative and has stayed there since. Fruits and vegetables lie at the heart of this shift. In 2024, horticultural imports (excluding nuts, alcoholic beverages, cut flowers, and essential oils) totaled $49.8 billion—about one-quarter of all agricultural imports. Increasingly, these imports arrive during U.S. harvest windows, driving down domestic prices at critical times. Exports, by contrast, were only $15.9 billion. Mexico dominates U.S. fresh produce imports, particularly vegetables, while Canada, Peru, and Chile are major fruit suppliers. Canada, Peru, and Guatemala also stand out in vegetables. These countries benefit from lower labor costs, government subsidies, favorable climates, and large seasonal labor pools. The result is a structural disadvantage for U.S. growers, who face high costs while competing against cheaper imports.

Even as imports increase, U.S. growers must contend with rising production costs. Specialty crops like fruits and vegetables are among the most labor-intensive in agriculture. Unlike corn or soybeans, they cannot be fully mechanized and require hand-harvesting, pruning, and close crop management. According to USDA, production expenses across the farm sector are projected to reach $467 billion in 2025, up 2.6 percent from 2024 and more than 36 percent higher than in 2018. Labor is the single largest cost driver for F&V producers. Since most workers are hired through the H-2A guest worker program, rising wage rates – mandated through the Adverse Effect Wage Rate – have significantly increased costs. Growers also face higher fees, stricter compliance rules, and added administrative burdens tied to H-2A. Surveys confirm these challenges: in 2024, 44 percent of growers cited H-2A labor costs as their top concern, while 54 percent reported labor shortages—up sharply from 41 percent in 2019.

The U.S. F&V industry is squeezed between cheaper imports and rising domestic costs. Labor shortages and wage pressures magnify these risks, leaving growers uncertain about future profitability. Given the importance of specialty crops to the agricultural economy, strategies to strengthen resilience are urgent. These may include risk management tools, expanded research into labor-saving technologies, and policies that level the competitive playing field. Without such measures, U.S. growers will remain caught between global market forces and domestic labor constraints.

Figure 1. Trade Balance for U.S Agriculture and the F&V Industry

Source: USDA Outlook for U.S. Agricultural Trade (2012-2025).

Munisamy, Gopinath, and Dixit Poduel. “Rising Imports and Soaring Costs: Dual Pressures Squeeze U.S. Fresh Produce Growers.” Southern Ag Today 5(38.4). September 18, 2025. Permalink

September 18, 2025
Major Increase in Corn Production Expected Across the South

The USDA released the latest World Agricultural Supply and Demand Estimates (WASDE) on September 12^th. Last month’s report introduced the first yield estimates of the year for various crops, and this month’s report updates those yield estimates while adjusting planted and harvested acreage estimates given data from the USDA Farm Service Agency (FSA) certified acres. The September report did not show drastic changes, as corn production is still expected to set a new record, in part due to increased production in southern states.

The record corn production forecast in the last report is projected to increase slightly to 16.8 billion bu. This increase in corn production is due to estimated planted acres increasing to 98.7 million acres, up 1.4 million acres from the August estimate. The production increase comes despite the corn yield forecast decreasing 2.1 bu. per acre from last month’s forecast to 186.7 bu. per acre. This decrease in the national corn yield forecast was driven by 1-3 bu. per acre reductions in several major-producing Midwest states, including Iowa, Illinois, Minnesota, Nebraska, North Dakota, and South Dakota.

Figure 1: 2025 Forecast Corn Production by State (Change from 2024 in parentheses), million bushels

Data source: USDA NASS. Crop Production. September 12, 2025.

Overall, 1.95 billion more corn bushels are expected to be harvested compared to last year. One quarter of this new production (489 million bu.) comes from Southern states (Figure 1). Mississippi is expected to have the largest increase at 70 million bu., followed by North Carolina at 60 million bu., and Louisiana at 59 million bu. Texas and Kentucky remain the largest corn producers in the region, at 250.1 million bu. and 248.5 million bu., respectively.

Other crops saw small changes in this month’s report. Cotton had minor changes in production and use forecasts relative to August, leading to no change in ending stocks, and the forecast price remains at 64.0 cents per lb. Soybean ending stocks for 2025/26 are forecast to increase by 10 million bushels, resulting in a $0.10 price decline to $10.00 per bu. Sorghum and wheat both saw no changes to the projected price for this marketing year.

References

Maples, Will. “USDA Projects Largest Corn Supply in History.” Southern Ag Today 5(33.3). August 13, 2025. Available at: http://southernagtoday.org/may-wasde-projects-higher-supplies-and-lower-prices-again-in-2024/

USDA-NASS. World Agricultural Supply and Demand Estimates. September 12, 2025. Available at: https://www.usda.gov/oce/commodity/wasde/wasde0925.pdf

USDA-NASS. Crop Production. September 12, 2025. Available at: https://downloads.usda.library.cornell.edu/usda-esmis/files/tm70mv177/sx61gm45w/gb19h565z/crop0925.pdf

Sawadgo, Wendiam. “Major Increase in Corn Production Expected Across the South.” Southern Ag Today 5(38.3). September 17, 2025. Permalink

September 17, 2025
Turkeys – A 2025 Holiday Outlook

A few weeks ago, the current state of beef and pork prices was addressed in Southern Ag Today. Poultry, namely chicken and turkey, make up the bulk of the remainder of the American animal protein diet. Chicken is at the top of the list, with over 100 pounds per capita annually consumed. Turkey, on the other hand, is last on the consumption list.

However, Thanksgiving is Turkey’s time to shine. This seasonal demand certainly affects price, but it is also part of the turkey production schedule. Late May or early June placements of young toms are targeted to be ready to hit the fresh market for Thanksgiving. August placements would target smaller young hens. So far in 2025, poult placement is down every month leading up to August compared to last year. Also, turkey egg set was lower in most months in 2025 compared to 2024. However, July eggs set in hatcheries for August poult placement are up 1 percent over last year. Depending on the hatch, these eggs could bolster more fresh birds ready for the table in November. But overall, there have been fewer poults placed in 2025, likely meaning fewer fresh young toms and hens, which could lead to higher prices this holiday. The frozen market, while seasonally trending up, has less pounds of turkeys in cold storage compared to years past (Fig. 1), which also suggests a lower supply this holiday season.

With lower supply usually comes higher prices. In Fig. 2, we see that, for both large and small lot purchases, fresh turkey prices are higher in 2025 than in 2024. Although large quantity buyers were steady at $1.40/lb going into fall, those prices may increase over the next month as availability dwindles, and holiday inventory build begins. In fact, early September trading is trending in the $1.55/lb area. Many of these birds may be going into cold storage for Thanksgiving sales.

While current turkey prices are looking positive for producers, turkey growers have had a difficult time these past few years dealing with the loss of over 18 million birds to Highly Pathogenic Avian Influenza (HPAI). Overall production has been below historical averages in the past two years (Fig. 3). This fall has seen several cases of HPAI hit turkey operations, causing bird losses totaling 195,200 from August through early September. As wildfowl migration ramps up, more cases will likely appear this fall. Depending on the timing and severity of such outbreaks, the fresh turkey market could get hit with additional supply shrinkage, which would translate into yet higher prices for the 2025 holiday season.

(Fig. 1) Frozen turkey in storage is lower this year than the previous three years but trending upward as is usual for the season. With overall placements being down, this decreased supply may linger and be a positive leverage for prices this year.

Fig. 2: Smaller turkeys, typically young hens, are where most whole birds come from, both fresh and frozen. Large truckload lot prices have been steady for these birds, perhaps reflecting contracted long-term pricing from larger buyers. However, as can be seen in the small lot pricing, as holiday demand starts to build, prices are likely to increase in the next month.

Fig. 3: Turkey production has been below historical average for the last two seasons, and looking at egg set and poult placement, this number is not expected to rebound soon.

Brothers, Dennis. “Turkeys – A 2025 Holiday Outlook.” Southern Ag Today 5(38.2). September 16, 2025. Permalink

September 16, 2025