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  • H-2A Wage Violations Against Workers Hired by Farm Labor Contractors

    H-2A Wage Violations Against Workers Hired by Farm Labor Contractors

    This article is a companion to the article titled: Hiring H-2A Workers through
    Farm Labor Contracts     published in Southern Ag Today on July 24, 2024.

    The role of Farm Labor Contractors (FLCs) in hiring foreign workers under the H-2A Temporary Guest Foreign Farm Worker Visa Program has grown considerably in recent years.  FLCs’ share in the annual total employment of H-2A workers has grown from 17% in 2007 to 44 % in 2022 (Castillo, Martin, and Rutledge, 2022).  FLCs’ increasing involvement in H-2A hiring coincides with the program’s rapid growth in patronage in recent years.  Between 2017 and 2022, H-2A labor certifications grew by 64.7% (American Immigration Council, 2024).

    There are logical grounds for the relevance of the FLC alternative under the H-2A program.  Compared to potential individual farmer employers of H-2A workers, FLCs have extensive social and business networks in foreign labor markets. FLCs’ greater familiarity and good connections with foreign workers enable them to lure and recruit residents, especially those in rural communities overseas, to consider H-2A employment in the U.S. that offers potential significant economic relief to their families. 

    A cursory review of wage violation data compiled by the Department of Labor’s Wage and Hour Division (WHD),[1] however, indicates the consistent recurrence of FLC-hired H-2A workers in the wage violation cases apprehended by the agency.  According to the wage violation data summary in Table 1, H-2A-related wage violations account for 33.86% (2016) to 73.44% (2022) in terms of number of affected workers in the agricultural sector during the period 2016 to 2023.  In terms of nominal back wages, the program’s share ranges from 29.96% (2016) to 69.70% (2021).  Within the H-2A program, FLC employment’s share in the number of workers with back wages ranges from 27.30% (2022) to 35.03% (2020), while its back wages account for about 14.63% (2022) to 36.42% (2018) of all H-2A back wages.  

    Figure 1 presents a comparison of the extent of FLC and non-FLC wage violation cases.  The trend lines indicate that more workers are usually affected in FLC cases (annual counts of 34 to 56 per case) than in non-FLC cases (11 to 36 workers per case).  Based on the bar plots, FLC cases involve larger nominal wage violations than non-FLC cases in most years analyzed.  

    Figure 1.  H-2A Wage Violations Associated with Farm Labor Contracting, 2016-2023

    Source:  Department of Labor, Wage and Hour Division

    Anecdotal evidence collected from various workers’ accounts and popular media coverage expose at least two types of H-2A wage violations associated with the FLC hiring scheme: petition padding (requesting more workers than needed) and collection of illegal recruitment fees (usually at exorbitant rates) (Grinspan, 2023; Vasquez, 2023; CDM, 2020).  Consequently, some foreign workers begin their work contracts already heavy in debt (because of illegal recruitment fees); some end up receiving less than the “promised” wages; while others find themselves either underemployed or unemployed (when FLCs could not place them in their original work destinations because labor petition padding practices).

    Policymakers must revisit and consider modifying existing regulations on FLCs’ involvement in the H-2A program. In addition to imposing stiffer sanctions and penalties on violations, policies must also launch more effective employer compliance audits. To accomplish this, the government would have to seriously consider expanding its current funding and resource allocation to WHD.  Currently, WHD’s case investigations capture only about 1% of all agricultural employers in the country, as its 2022 budget has not grown since 2006, while its 810 employees are overburdened in handling more than 200,000 cases each (Costa and Martin, 2023).

    [1] WHD is a government agency that oversees the protection of workers’ rights.

    References:

    American Immigration Council (2024). “The Expanding Role of H-2A Workers in U.S. Agriculture.” Available online at https://www.americanimmigrationcouncil.org/research/h-2a-workers-us-agriculture#:~:text=Between %202017%20and%202022%2C%20the,to%20fill %20its%20open%20jobs. Accessed on November 11, 2024.

    Castillo, M., P. Martin, and Z. Rutledge. (2022).  The H-2A Temporary Agricultural Worker Program in 2020.  Economic Information Bulletin #238, Economic Research Service, U.S. Department of Agriculture.  Washington, DC.

    Centro de los Derechos del Migrante, Inc. (CDM) (2020). Ripe for Reform: Abuses of Agricultural Workers in the H-2A Visa Program. Centro de los Derechos del Migrante, Inc., Baltimore, MD; Oaxaca, Mexico; Mexico City, Mexico.

    Costa, D. and P. Martin. (2023). Record-low number of federal wage and hour investigations of farms in 2022.  Economic Policy Institute.  Washington, DC.

    Grinspan, L. (2023). “They all went away:  Why some foreign farmworkers end up leaving the fields.”  Atlanta Journal Constitution.  Available online at https://www.ajc.com/news/georgia-news/they-all-went-away-why-some-foreign-farmworkers-end-up-leaving-the-fields/ZXDQUQHKMNH63ASCASK32BXB3M/. Accessed on October 19, 2023.

    Vasquez, T. (2023). “Human Trafficking or a Guest Worker Program?  H-2A’s Systemic Issues Result in Catastrophic Violations.”  Futuro Unidad Hinojosa. Available online at https://futuroinvestigates.org/investigative-stories/head-down/human-trafficking-or-a-guest-worker-program-h-2as-systemic-issues-result-in-catastrophic-violations/ Accessed on October 19, 2023.

    Escalante, Cesar L., Joshua Emmanuel, and Bishal Gaire. “H-2A Wage Violations Against Workers Hired by Farm Labor Contractors.” Southern Ag Today 4(51.1). December 16, 2024. Permalink

  • Preparing Consumers for Anticipated Soaring Pecan Prices During Holiday Season

    Preparing Consumers for Anticipated Soaring Pecan Prices During Holiday Season

    The pecan is one of the most eaten fruit nuts in the USA, with a per capita consumption that increased in the past decade from 0.35 lbs. (2012) to 0.61 lbs. in 2021 due to its nutritional value and improved marketing strategies (USDA, NASS, 2024). Prior to the 2024 hurricane season, there was an 8% decrease in the production of the improved variety of pecan in 2023 compared to 2022 (USDA, NASS, 2024). Georgia, the established number one pecan producing state (USDA, 2019) was badly hit by Hurricane Helene in September 2024, which affected both production areas, crop loss, and tree loss concomitantly (Sawyer, 2024). Reports show that the state of Georgia suffered a loss of 36 million pounds, an estimated 75% pecan crop loss which is estimated at $6.46 billion loss to the Georgia Pecan Industry due to Hurricane Helene (Flood, 2024). With such a huge volume disappearing from the total production, both consumption and future production will be impacted. 

    Source: Sawyer (2024).  Montgomery County GA.

    Pecans have many health benefits (Royalty, 2024) and multifaceted uses including eating it raw or fresh as a snack, baking, salads, and cooking exotic cuisines such as pecan-crusted chicken, lamb, fish, and the famous pecan pie, etc. 

    Pecans have a key spot in the festive season. Decreased production area, crop loss, and tree loss translate into an immediate shortage in the domestic and export markets, respectively. 

    Consequently, consumers should expect higher pecan prices during the upcoming holidays and festive season. For instance, early-season pecan halves prices were $7 to $8 per pound this year, compared to $4.50 to $5.50 per pound last year (Haire, 2024).  Moreover, the industry will also experience a long-term shortage due to the number of trees that were knocked down, losing about 36 million pounds, equivalent to 48,000 acres, with an estimated value of $6.46 billion loss to the entire Georgia Pecan Industry.  Despite the USDA, ERS (2024) preliminary ending stock of slightly over 70 million pounds shelled, and the anticipated decrease per capita consumption of 0.51 pounds in 2024 compared to 0.67 pounds in the 2022/2023 crop season, the huge production decrease from Georgia due to Hurricane Helene will be felt in the pocketbook of pecan lovers and consumers this and next year.   In addition, the injuries sustained by surviving trees will require time to fully recover, thus putting upward pressure on consumer prices due to persistent shortages (Towfighi, 2024; Haire, 2024).  

    With the US 2023 population of 334.9 million, the USDA, ERS (2024) preliminary domestic availability of 171 million pounds will be difficult to achieve and place upward pressure on prices paid for pecans across the pecan market value chain. 

    References

    Flood, E. (2024).  Pecan Farmers Suffer Devastating blow from Hurricane Helene.  Agriculture Dive News, Online: https://www.agriculturedive.com/news/hurricane-helene-pecan-farm-crop-damage/729603/  Accessed December 1, 2024.

    Haire, B. (2024).  “Pecan farmers see high prices for meager crop”.  CAES Newswire, College of Agricultural & Environmental Sciences, UGA Cooperative Extension. Online: https://newswire.caes.uga.edu/story/2143/pecan-prices.html (November 04).  Accessed December 5, 2024.

    Royalty Pecan Farms (2024).  “The Power of the Pecan: 7 Health Benefits That Make This The Best Nut on Earth” Online: https://royaltypecans.com/pages/the-power-of-the-pecan-7-health-benefits-pecans , Accessed December 5, 2024.

    Sawyer, A. (2024).  Southeast Georgia Pecan Damage from Hurricane Helene. University of Georgia (UGA), Pecan Extension, CAES.  Online: https://site.extension.uga.edu/pecan/2024/10/southeast-georgia-pecan-damage-from-hurricane-helene/  (October 10).  Accessed December 1, 2024.

    Towfighi, J. (2024).  “Hurricane Helene devastated Georgia’s pecan harvest. Farmers are on the brink”. CNN Business, online: https://www.cnn.com/2024/11/09/business/hurricane-helene-impact-georgia-pecan-farmers/index.html (November 09).  Accessed December 5, 2024.

    USDA/ERS (2019).  Pecan Production. National Agricultural Statistics Service.  Online:  https://www.ers.usda.gov/topics/crops/fruit-and-tree-nuts/ Accessed December 1, 2024.

    USDA, NASS (2024).  Pecan Production. Agricultural Statistics Board, ISSN: 2640-0014.  Online: https://downloads.usda.library.cornell.edu/usda-esmis/files/5425kg32f/nv936p236/00001m546/pecnpr24.pdf  Accessed December 1, 2024.

    USDA, ERS (2024).  “Pecans: Supply and Availability (Shelled basis), 1980/81 to date”.  Online: https://www.ers.usda.gov/data-products/fruit-and-tree-nuts-data/fruit-and-tree-nuts-yearbook-tables/ Accessed December 5, 2024. 

    Fonsah, Esendugue Greg. “Preparing Consumers for Anticipated Soaring Pecan Prices During Holiday Season.” Southern Ag Today 4(50.5). December 13, 2024. Permalink

  • State-Level Effects of Potential Trade Policy Shifts on Southern U.S. Agriculture

    State-Level Effects of Potential Trade Policy Shifts on Southern U.S. Agriculture

    In our previous analysis, we explored the overall impact of potential trade policy shifts on Southern U.S. agriculture, highlighting significant risks to critical commodities. However, these impacts will vary widely across different states. This analysis focuses on the state-level effects, examining how the worst-case trade policy scenario (Scenario 2 in our previous study) could affect agriculture across individual states within the Southern U.S.

    Our analysis focuses on the most extreme trade policy scenario following the 2024 U.S. presidential election. In this worst-case scenario, the U.S. imposes a 60% tariff on Chinese goods and a 10% tariff on imports from other countries. This could provoke severe retaliatory measures from China, including a 60% tariff on U.S. agricultural exports and additional tariffs from other trading partners. These disruptions could significantly impact Southern agriculture, a region heavily dependent on foreign markets. The impact would vary by state, depending on each state’s reliance on specific export markets. By focusing on this worst-case scenario, our analysis highlights the localized risks each Southern state might face.

    Our analysis reveals significant economic vulnerabilities at the state level, particularly in critical agricultural commodities. As shown in Figure 1, Texas emerges as the most impacted state, with a projected total trade loss of $3.2 billion. The cotton industry could see an export decline of $847 million, while the beef and dairy sectors are expected to lose $340 million and $184 million, respectively. These figures underscore Texas’s heavy reliance on these major agricultural products, making it highly susceptible to trade disruptions that could severely affect its economy.

    Arkansas and North Carolina also face substantial economic challenges as well, with total projected losses of $2.0 billion and $1.8 billion, respectively. As shown in Table 1, Arkansas’s soybean industry could see a decline of $567 million in export value. The poultry and pork sectors in North Carolina are particularly vulnerable, with expected losses of $258 million and $281 million, respectively. These sectors are critical to the state’s agricultural output, and such large-scale impacts could have far-reaching consequences for producers and the broader regional economy.

    Other Southern states are similarly at risk, with significant commodity-specific losses under the worst-case scenario. For example, Georgia’s cotton and poultry industries could see combined losses exceeding $600 million, with cotton alone projected to decline by $345 million, as detailed in Table 1. Alabama’s poultry sector is expected to suffer a $213 million loss, a significant blow to the state’s agricultural revenue. Kentucky’s soybean exports could also drop by $350 million, while Oklahoma’s wheat and livestock sectors face a combined projected loss of $386 million. These projected trade impacts emphasize the profound impact trade policy shifts could have on critical agricultural commodities across the region.

    Our analysis highlights the severe economic impact that potential trade policy shifts could have on Southern U.S. agriculture under the worst-case trade policy scenario. Texas could face losses of $3.2 billion, with significant hits to its cotton, beef, and dairy industries. Arkansas and North Carolina also stand to lose billions, especially in soybeans, poultry, and pork. These figures underscore the urgent need for targeted, state-specific strategies to mitigate these risks and support the most affected sectors. Policymakers must address these vulnerabilities to safeguard the region’s agricultural economy.

    Figure 1. 2025 State-Level Export Loss Projections for the Worst-case Scenario.

    Note. The figure shows the potential impact on 2025 baseline export projections for Southern U.S. states under the worst-case scenario, which assumes a severe scenario involving a 60% tariff increase from China and a 10% increase from all other countries (scenario 2 in our previous analysis). All estimates are in millions of $. The state-level effects are calculated by summing the predicted losses for all commodities within each state.

    Table 1. Projected 2025 Export Losses by Commodity and State for the Worst-case Scenario (million $).

    Note. This table presents the potential impacts by commodity and state under the worst-case scenario, which assumes a severe scenario involving a 60% tariff increase from China and a 10% increase from all other countries (scenario 2 in our previous analysis). All estimates are in millions of $.

    Learn More

    Kim, D., Steinbach, S., Yildirim, Y., & Zurita, C. (2024). Understanding Trade Strategy Impacts on Soybean Exports and Farm Income in North Dakota. CAPTS White Paper 2024-01. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4920301.

    Goyal, Raghav, Sandro Steinbach, Yasin Yildirim, and Carlos Zurita. “Trade Policy Scenarios after the U.S. Presidential Election and What They Could Mean for Southern U.S. Agriculture.” Southern Ag Today 4(44.4). October 31, 2024. https://southernagtoday.org/2024/10/31/trade-policy-scenarios-after-the-u-s-presidential-election-and-what-they-could-mean-for-southern-u-s-agriculture/

    Goyal, Raghav, Sandro Steinbach, Yasin Yildirim, and Carlos Zurita. “State-Level Effects of Potential Trade Policy Shifts on Southern U.S. Agriculture.” Southern Ag Today 4(50.4). December 12, 2024. Permalink

  • A Statistically Lousy Year for Cotton Prices

    A Statistically Lousy Year for Cotton Prices

    Statistically generated near-term price forecasts are useful to compare/contrast with Extension ad hoc price estimates, USDA monthly price estimates, and trade price estimates.  Ongoing cotton price forecasting research at Texas A&M University provides some timely short-term (monthly average) price forecasts that shed light on the 2024 season.

    As depicted in Figure 1, over the period January 2014 to August 2024, ICE No.2 cotton monthly average futures prices ranged from 53.75 cents per pound to 146.17 cents per pound, averaging 78.23 cents per pound. The first nine years of this data were used as the training sample for model construction, while the 2024 monthly average prices were used for out-of-sample forecasting using a structural econometric model described in the next paragraph.  

    Structural econometric models consider the direct effects of specific variables on our dependent variable of interest:  ICE No. 2 cotton futures prices.  Our best working model specifies monthly average nearby ICE cotton futures as being explained by the monthly stocks-to-use ratio, real disposable personal income, real retail clothing sales, real personal consumption expenditures, the Michigan consumer sentiment index, seasonality indicator variables, and various qualitative factors.  We hypothesize that ICE NO.2 cotton futures prices are positively related to real retail clothing sales, real disposable personal income, real personal consumption expenditures, and the Michigan sentiment index but negatively related to the stocks-to-use ratio.  After estimating the model coefficients, the signs and magnitudes of the continuous variables in the model conform to prior expectations. This model accounts for roughly 96 percent of the variables in monthly average nearby ICE No.2 cotton futures prices.  The results indicate the absence of autocorrelation in the residuals.

    Using our econometric model to forecast prices, on average over the out-of-sample period January 2024 to August 2024, the price forecasts deviated from the actual values by 7.75 cents per month (also known as the Mean Absolute Error), or roughly 9.7 percent (also known as Mean Absolute Percent Error). In other words, the out-of-sample ex post forecasts are, on average, higher than the actual monthly average nearby ICE cotton futures price.  This result continues with the most recent model forecasts:

    • September 2024 Forecast: 76.87 cents per pound (Actual:  70.68 cents per pound)
    • October 2024 Forecast: 78.66 cents per pound (Actual: 71.65 cents per pound) 
    • November 2024 Forecast: 77.60 cents per pound (Actual: 70.03 cents per pound).

    So, what does this mean?   The results of an otherwise well-fitting statistical model suggest what cotton growers already knew:  2024 was an abnormal year.   The nearly thirty-cent decline in monthly average nearby prices between March and August was a statistical anomaly that our model cannot predict.  

    These kinds of things suggest there are atypical factors affecting price forecasts, which means adjustments need to be made by considering market forces that are not captured by economic modeling.  

    Source: Price settlement data compiled from https://www.ice.com/report/12

    Robinson, John. “A Statistically Lousy Year for Cotton Prices.” Southern Ag Today 4(50.3). December 11, 2024. Permalink

  • Rising Prices at Year End

    Rising Prices at Year End

    Cattle and calf prices keep climbing towards the end of the year.  It’s not uncommon for prices to rise late in the year, but this time between Thanksgiving and New Year’s can be volatile.  This year-end rain in areas of the Southern Plains and fewer calves for sale are working to boost calf prices while.  There is also a week’s worth of data on feeder cattle imports from Mexico which gives some insight on the potential impact of import restrictions on Mexican cattle due to screwworm regulations.  

    In the Southern Plains, lighter weight, 400-500 pound, calf prices have jumped about $30 per cwt over the last month.  In the South, the same weight calves are higher, but have not seen quite as large of increase, up about $25 per cwt.  Heavier 500-600 pound steers are up around $20 to $25 per cwt in the Southern Plains and South, respectively.  From Texas across the south to Georgia, 700-800 pound feeders are up about $8 per cwt over the same period.  Seasonal lows in the calf market are in the rearview mirror for 2024.  

    Recent rains have helped stocker prices.  The drought monitor map indicates some significant improvement across wheat pasture country.  Better late than never.  The rains have boosted prospects for late pasture grazing and likely boosted supplies of pond and tank water that had run short.  

    It appears that fewer calves are for sale following the larger Fall runs.  Over the last month, fewer cattle have been reported in USDA’s weekly market receipts data.  The daily CME feeder cattle index indicates fewer cattle changing hands.  Local auction markets around the country also report fewer animals.  When combined with rain boosting stocker demand, tighter supplies are further helping prices.

    Fed cattle prices are climbing too.  Southern Plains fed steers hit $190 last week rebounding from about $185 a month ago.  It looks like the cow market has already passed its seasonal low as beef cow slaughter is declining.  

    The first full week of data on feeder cattle imports from Mexico were released last week.  For the week ending November 30th no cattle (0 head) were reported imported through the 11 ports of entry.   It’s worth remembering that was Thanksgiving week and mid-week holidays can lead to some wide swings in data.  Feeder cattle imports are normally large in November and December as cattle are imported for winter grazing and direct feedlot placement.  The timing of the import restriction is likely causing a bigger price impact than it would at other times of the year when imports are typically lower.

    Rain and tighter supplies are some fundamental factors at work in boosting calf prices.  Those positive factors are likely offsetting the impact of some increasing corn prices. Tighter supplies of claves will continue to boost calf prices in the new year.

    Anderson, David. “Rising Prices at Year End.” Southern Ag Today 4(50.2). December 10, 2024. Permalink