- Farm Business Management: agricultural finance, financial management, labor/employment, whole farm planning
The purpose of this project is to assess the effectiveness of the H2A program in mitigating shortages of seasonal farm labor and evaluate the effects of certain program restrictions and requirements on the viability of organic farms in the Southeast. As the strict implementation of immigration policies displaces illegal residents that normally supplied farms with seasonal, unskilled labor, the government’s H2A Agricultural Guest Worker Program is considered as possibly the only remaining legal hiring alternative. The program allows farmers to temporarily hire nonimmigrant foreign workers for seasonal agricultural work when domestic workers are unavailable (GAO, 1997). In addition to established H2A minimum standards on workers’ housing, transportation and meal employee benefits, farm employers also have to contend with recent policy amendments resulting in more restrictive wage and domestic hiring effort requirements. This project evaluates the H2A program from the producer’s viewpoint to determine whether it remains a viable option, especially for the more labor-intensive organic farms.
This project involves conducting a survey among farms in the Southeastern region that filed H2A hiring applications in 2012, which can be accessed through the Department of Labor’s Foreign Labor Certification Data Center website. The survey instrument will gather information on organic and conventional farmers’ assessment of their previous H2A hiring experiences; their evaluation of the H2A workers’ quality of work, type of work they were needed for, and effectiveness in meeting the farm’s labor requirements; and their opinions on recent H2A program amendments and suggestions in further improving the program to make it more usable by more farmers.
Moreover, an optimization-simulation analysis model in a multi-period programming framework will be conducted on about four case organic farms, each representing a distinct enterprise group. This framework will analyze the farms’ production and financial decisions and consider various employment scenarios (such as comparative worker productivities of different labor providers; alsoconsidering opportunity costs of non-H2A employment scenario versus various scenarios capturing actual aggregate costs of wage rates and investments in required H2A infrastructures) to quantify the economic effects of the availability and non-availability of H2A workers. The multi-period component of the model will allow analysis of effects (such as probable opportunity losses) caused by the hiring time factor as well as differences in worker productivities.
Relying on the collaborative efforts of academic professionals (University of Georgia and Fort Valley State University and several producers (Ms. Davis, Ms. Quintero, Mr. McClam, and Ms. Thornton), this project has the potentials for producing results with important policy implications and suggestions for farmers’ business strategic actions – all for the grand goal of sustaining the viability of organic farms in the Southeast.
Project objectives from proposal:
1. Initially, this project will determine the relative effectiveness of the H2A program in terms of filling in the farm labor supply gap among organic and conventional farmers in the Southeast. Feedback, opinions, assessments and/or suggestions on the program’s usability and benefits-costs tradeoffswill be collected from farmers that have had availed of the H2A hiring alternative.
2. This project will also evaluate the impact of the real value (cost) of the H2A program on the organic farms’ profitability and viability as well as indirect effects on the local economy. The farm-level impact will be assessed through an analysis of labor input substitution decisions, especially considering labor sourcing and opportunity cost issues, under a farm simulation-optimization analytical framework. Various possible model scenarios that capture H2A adoption and non-adoption options as well as several iterative combinations of possible H2A cost structures will be analyzed to accomplish the following:
a) discern the minimum conditions that will allow farm businesses to realize their viability and profitability potentials; and
b) determine the appropriate (ideal) cost structure of the H2A program that will make it easily more usable by small organic farmers and more compatible to the farm business’ operating profit goals.
The impacts on the local economy will be analyzed through a measurement of a number of macroeconomic indicators that could possibly be indirectly affected by the farmers’ hiring decisions and possible changes in the H2A program; and
3. To disseminate this project’s results to producers, commodity groups, policy makers, and academic professionals to clarify the program’s impact on farm businesses under the following scenarios:
a) existing program features; and
b) a proposed modified version of the program as recommended by results of this project’s analytical methods.
The ultimate goal of this project is to communicate emphatically any need for specific modifications or adjustments in the H2A program that will be mutually beneficial to farm business owners and workers.