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  • Coping with Delayed H-2A Worker Arrivals During the Pandemic

    Coping with Delayed H-2A Worker Arrivals During the Pandemic

    During the pandemic, the farm sector’s real concern has not been a decline in demand, but rather supply chain disruptions.  Among these potentially disruptive factors was the mobility and availability of foreign contractual workers needed to sustain business operations.  In the early days of the pandemic, the government promptly released regulations to ensure that the supply of H-2A workers would not be hampered.  Indeed, H-2A labor petition approvals remained high during that time. However, border entry restrictions and strict screening procedures disrupted the flow of worker arrivals.  A survey was conducted among farms with approved H-2A petitions in three southern states (Georgia, Florida, and North Carolina) consistently among the top 5 states patronizing the H-2A program in recent years.  Results indicate that more than half of the expected H-2A workers were actually 3 to 5 weeks late in arrival.  In order to mitigate such conditions, the popular coping strategies employed by farmers include maximizing family labor contributions (62.5 percent), reducing off-farm employment hours (52.9 percent), and adjusting production methods to less labor-intensive alternatives (47.1 percent).  Reliance on domestic worker replacements was considered by 30% of the respondents, but this alternative was costly as farmers contend that labor productivity and efficiency differentials between domestic and H-2A workers led to about 52 percent decline in outputs during the interim period.  

    H-2A Workers’ Actual Arrival Status during 2021 Planting Season, Survey on Georgia, Florida, and North Carolina Farms

    Source:

    Cowart, W.L., C.L. Escalante, and V. Shonkwiler. “Agribusiness Employers’ Coping Strategies and Business Effects of Pandemic-Induced Delays in H-2A Worker Arrivals.” Outreach Bulletin, Department of Agricultural and Applied Economics, University of Georgia.  August 2021. (Project is funded by the Georgia Farm Bureau)

    Escalante, Cesar. “Coping with Delayed H-2A Worker Arrivals During the Pandemic.” Southern Ag Today 1(51.3). December 15, 2021. Permalink

  • Meat Prices and CPI

    Meat Prices and CPI

    The November estimates of retail meat prices were released last week by the USDA Economic Research Service (ERS). This dataset sheds light on average retail meat prices using data from the Bureau of Labor Statistics (BLS). Retail prices for beef, poultry, and pork were all up sharply from year ago levels. The all-fresh beef retail price was reported at $7.52 per pound during November. This was a few cents below the October level but still about 21 percent above the same month a year ago. Pork and chicken retail prices were also higher as compared to a year ago.  Retail pork prices were up about 18 percent and chicken prices were up about 10 percent compared to November 2020.

    The monthly BLS Consumer Price Index summary was also released last week and showed the all-items price index has increased 6.8 percent over the past 12 months. This is the largest 12 month increase since 1982. Higher energy prices were a contributor to the CPI increase. The energy price index was up 33 percent over the past 12 months. The food price index was up 6.1 percent over the past 12 months with meat price increases being a key factor. 

    Maples, Josh. “Meat Prices and CPI.” Southern Ag Today 1(51.2). December 14, 2021. Permalink

  • U.S. Sorghum, An International Commodity

    U.S. Sorghum, An International Commodity

    In the past marketing year, the U.S. exported a total of 7.19 million MT of sorghum (milo) with an estimated value of $1,991 million, according to USDA Foreign Agricultural Service. Sorghum exports in 2020/21 are among the highest export levels in history and only surpassed by the exports observed in 1989/90, 2014/15, and 2015/16. The U.S. is the world’s leading sorghum exporter, followed by Argentina. Last year, about 87% of total U.S. production was exported. For instance, 2020/21 U.S. sorghum exports represented 65% of world exports. Moreover, in the last 30 years, U.S. sorghum accounted for about 73% of all international exports. Recent increases in export demand improved the local sorghum/corn price ratio from 0.93 in 2017-19 to 1.03 in the last two marketing years.

    Historically, Mexico, Japan, and Sub-Saharan African countries have been the principal importers of U.S. sorghum. Since 2013/14, China has become the primary buyer, compensating for the loss of traditional market destinations. Specifically, China imported 94% of total U.S. sorghum exports during 2020/21, and about 81% of the total U.S. sorghum exports since 2013/14. Exports to China have increased by 1,029% from 2018/19, and nearly doubled from 2019/20. The US-China Phase One Trade agreement (i.e., compared to corn and wheat, U.S. sorghum exports are not subject to tariff-rate quotas), the recovery of the Chinese swine sector severely affected by the African swine fever, and relatively higher corn prices have supported high exports of U.S. sorghum to China during the last two years. 

    Source: USDA FAS

    Abello, Pancho, and Samuel Zapata. “U.S. Sorghum, An International Commodity.” Southern Ag Today 1(51.1). December 13, 2021. Permalink

  • Agricultural Land Conversion a Concern for Cooperatives

    Agricultural Land Conversion a Concern for Cooperatives

    Recently, a great deal of concern has been expressed about challenges resulting from the conversion of agricultural land to non-agricultural use. On the whole, the challenges from a loss of farmland might seem benign given increases in productivity, but on a local level these changes can be devastating to agribusinesses whose volume is tied to crop acreage. Nationally, approximately 4% of working land (including land used for crops, grazing, timber, and wildlife management) has been lost to non-agricultural use over the last twenty years. However, the problem is stronger in Texas and the south and along coastal areas. 

    Mainly the problem stems from increased land values, which provide greater incentives to sell or subdivide agricultural land. This might be especially problematic when we consider that the demographics of the farm population is skewed toward an older generation looking to retire or provide an inheritance. Land values continue to increase with trends toward urbanization fueled by population growth. The Texas population has increased 42% since 2000, compared to 18% growth for the entire United States in the same time.

    Data from the Texas A&M Natural Resources Institute shows that the losses in working land are primarily in crop land and grazing land. Anecdotally, cooperative managers in coastal Texas report that much of the land lost from agricultural production was good productive farmland. Reportedly, much of the decision to sell land has been from landowners, not farmers. 

    Cooperatives being impacted by these trends have basically four strategic alternatives:

    1. Restructure or downsize
    2. Exert greater control over land use
    3. Gain economies of scale through consolidation
    4. Expand into new markets

    A successful strategic response may incorporate one or all these alternatives. They each have their merits. Restructuring or downsizing recognizes that the cooperative may have assets that are no longer providing an adequate return. However, this strategy on its own seems to admit defeat. Some cooperatives in the citrus industry exert greater control over the land use by offering grove management services, thus providing landowners the motivation and expertise needed to keep land in production. Mergers and acquisitions are likely when there are economies of scale to be gained. However, for mergers to be a successful strategy, cooperatives must engage in these discussions while there is still value in both organizations. The cooperative that waits until there are no other options will not be an attractive partner for a merger. Finally, a cooperative could reinvent itself to meet the changing demands of members and the needs of new customers. This will require an evaluation of the mission of the cooperative and its value proposition. This is perhaps the most difficult of the strategic options, but also the choice with the greatest potential benefit. Changes in land use may come with new market opportunities. For example, some working land has been converted from crop land and grazing land to wildlife management, including hunting leases. These landowners will likely have some needs similar to farmers. The land is still there. Its use has changed. The successful cooperatives will be those that can remain relevant to the business opportunities around them. 

    SOURCE: Texas A&M Natural Resources Institute. 2020. Texas Land Trends: A database of compiled and analyzed values for working lands in Texas. College Station, TX. USA. URL: http://txlandtrends.org

    Park, John. “Agricultural Land Conversion a Concern for Cooperatives.” Southern Ag Today 1(50.5). December 10, 2021. Permalink

  • Build Back Better?

    Build Back Better?

    Congress is rushing to finish up its year-end work.  President Biden has already signed the continuing resolution to fund most of the Federal government through February 18, 2022, and Congress has now reached agreement on other priorities like the National Defense Authorization Act and raising the debt ceiling.  Reaching agreement on the Build Back Better Act (BBBA) – which passed the U.S. House of Representatives on November 19, 2021 – has proven to be more elusive.

    While the BBBA touches on a number of different topics – falling mostly under the banner of “human infrastructure” – most of the agriculture-related provisions are tied to addressing climate change.  As noted in Figure 1, the bill dedicates an estimated $76.9 billion in spending on agriculture-related priorities over the next 10 years.  For example, $26 billion is provided for forestry activities, most of which is for forest restoration and fuels reduction projects.  Another $25.3 billion is provided for a number of rural development priorities, including $6.6 billion for a “fix” to the debt relief for socially disadvantaged producers provision from the American Rescue Plan (which has run into a number of constitutional challenges in the courts).  Perhaps most notably, the bill also includes $23.5 billion for conservation, with $5 billion going to cover crops and most of the remainder going to temporary plus-ups for existing conservation programs.

    The path forward for the BBBA is not clear.  Even if the Senate reaches agreement before the end of the calendar year, they may very well amend the bill which will require the House to weigh in again.  Finally, even if the bill does become law, the temporary nature of the funding increases on the agriculture-related provisions may very well add to the complications that Congressional negotiators will face as they write the next farm bill.

    Fischer, Bart. “Build Back Better?” Southern Ag Today 1(50.4). December 9, 2021. Permalink