The Sustainability of Organic Farms Under the H2A Program: Evaluating the Program's Effects on Mitigating Farm Labor Shortages and Maintaining Business Viability

The Sustainability of Organic Farms Under the H2A Program: Evaluating the Program's Effects on Mitigating Farm Labor Shortages and Maintaining Business Viability

Summary

A number of research accomplishments highlight the project’s second year of implementation.  A master’s thesis was completed in May 2016 that analyzed the impact of county and state level immigration laws on H2A applications in the Southeast region, controlling for a variety of macroeconomic variables.   The study finds that state-level strict immigration laws actually have a negative effect on number of H2A visa applications as farm employers could have possibly adopted alternative production plans that requited less labor inputs.  A couple of papers on immigration and farm labor were also completed.  These dealt with important labor-related issues in the farm sector such as the alarmingly increasing farm labor turnover rates and employer-provided health benefits.  These discussions provided important implications on how the H2A foreign farm labor program can actually resolve the need to retain workers in the farm sector that are adequately covered by the necessary health benefits.   On its third year of implementation, efforts are aimed at producing more notable research outputs as well as widely disseminating the findings of this study.

Objectives/Performance Targets

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 tradeoffs will be collected from farmers that have had availed of the H2A hiring alternative.

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 disseminate this project’s results to producers, commodity groups, policy makers, and academic professionals to clarify the program’s impact on farm businesses.

Accomplishments/Milestones

During the project’s second year of implementation, a number of research accomplishments were produced. A Master’s thesis was completed by Xueqian Lu, who graduated in May 2016.  The title of her thesis is “The Impact of Local Economy on Sub-Federal Immigration Laws in the U.S. and How These Laws Affect Agricultural Labor Force.” Her study investigated on the effects of the enforcement of sub-federal immigration laws on the demand for H2A farm laborers.

A poster was prepared and presented by Odeidra Williams at the annual meeting of the Southern Sustainable Agriculture Working Group (SSAWG) in January 2017 at Lexington, Kentucky. The title of the poster is “Evaluating the Effects of the H2-A Temporary Agricultural Visa Program in Mitigating Farm Labor Shortages and Maintaining Business Viability in the Southeastern United States.”  This poster presented the major findings of the H2A farmer-applicant survey conducted during the project’s 1^st year term.

A couple of papers on immigration and farm labor were also completed and now accepted for publication in major academic journals. Though not directly or explicitly revolving around the H2A program, these papers dealt with important labor-related issues in the farm sector.  The discussion of such issues only reinforced the relevance and importance of the H2A farm labor program.  The first paper “The U.S. farm workers’ employment time allocation and tenure decisions” will appear in the print version of Economic Labour Relations Review within the year.  The second paper “Employer-Provided Health Benefits (EPHB) and the Employment Decisions of U.S. Farm Workers” will be featured in a 2017 issue of Agricultural Finance Review.  The important implications of these studies will be discussed in another section of this report.

The academic conference presentations during the year include:

• Selected Poster, 2016 Annual Meeting of Agricultural and Applied Economics Association, Boston, MA. T. Luo and C.L. Escalante. “Health Care Service Access and Constrained Choices of U.S. Farm Workers.” July 2016.
• Selected Conference Paper, International Conference on Business & Information, Nagoya, Japan. T. Luo and C.L. Escalante. “The U.S. Immigrant Farm Workers’ Relative Access to Health Services”, July 2016. (Winner of Best Conference Paper Award)

For the final year of project implementation, two more Master’s theses are expected to be completed. Hofner Rusiana is working on the optimization-simulation modeling phase of the research plans and will submit a thesis based on his results.  Odeidra Williams will also complete a thesis that reports the results of some econometric models for H2A labor demand and benefits/costs (labor productivity, costs, and profit potentials).  These are expected to produce journal articles that will submitted to peer-reviewed journals. 

Impacts and Contributions/Outcomes

Xueqian Lu’s thesis analyzed the impact of county and state level immigration laws on H2A applications in the Southeast region, controlling for a variety of macroeconomic variables. H2A farm work visas are ideally needed by farm business owners to fill in their requirement for agricultural workers, but many farm employers contend that the processing period is too long and too complicated that the program has not effectively addressed their needs (CBS Money Watch, 2010). The study analyzed the possible effects of immigration laws on H2A visa applications based on individual H2A application cases from Southeast region from 2006 to 2014. The study finds that state-level strict immigration laws actually have a negative effect on number of H2A visa applications. This possibly suggests that farm employers could have considered shifting to the production of crops that are less labor-intensive, or could have employed more machines as a substitute for the inadequate labor input. Also, illegal workers who may have migrated to other areas may not want to come back to their adopting county due to fear of being deported. Thus the state-wide law has not increased the total number of H2A visa application as expected. In addition, the unemployment rate of the previous year has a positive effect, which could possibly reflect the situation of farm workers in the U.S. where even the unemployed domestic residents are reluctant, they do not want to work in the agricultural sector, possibly because of the relatively tough working conditions and the sector’s usually low wage rate.

The employment turnover study focuses on the constrained employment choices of undocumented farm workers, who undoubtedly still remains a significant source of farm labor inputs. The study primarily lays out the constrained employment choices of such workers that are supported by the reality that these workers are usually deprived of basic employment rights stipulated by existing labor laws, given their employers’ gross violations in the form of unreasonably low wages, lack of benefits, and unacceptable working conditions, among others, that could not be reported to proper authorities. Even legal workers are difficult to retain in farm positions. The farm industry’s high labor turnover rates can be attributed to several factors. Relative to the nature of manual work in the manufacturing, service, and other non-farm industries, farm operations involve more physically strenuous labor under working conditions that usually pose serious health risks (Calvin and Martin 2010; Escalante, Yu, and Li 2016).  Even with such work demands, farm workers do not receive commensurate compensation as farm wages and benefits are hardly competitive with those offered by non-farm businesses (Emerson 2007; Kandel 2008; Escalante, Perkins, and Santos 2011).

The results of the farm labor turnover study only elucidate the significant relevance of H2A farm workers program that ensures acceptable and competitive wages, in addition to regulated working conditions that comply with decent working standards. The H2A could be a remedy to the farm labor turnover problem.

The EPHB study is a follow-up to the farm labor turnover study that focuses on health benefits. As existing federal laws assure documented workers of insurance benefits in businesses with more than 50 full-time workers in other industries, these workers’ employment decisions are more influenced by wage differentials, work demands, and workplace conditions between farm and non-farm employer firms. However, the study’s results for undocumented farm workers suggest a higher elasticity effect as these workers were found to increase their actual farm work days upon acquiring EPHB incentives while also affecting their farm employment expectations. These results provide more interesting implications.  First, employers in general are not mandated by law to provide undocumented workers with EPHB, except for compensation for job-related injuries and accidents.  Thus a farm employer can effectively use EPHB as a retention strategy for these workers.  Under this arrangement, these workers evaluate the farm employment package with EPHB and relatively more inferior wage rates against a higher paying job in another industry, possibly without an EPHB feature in the compensation package.  The farm employers, on the other hand, evaluate trade-offs between incurring incremental expenses in offering EPHB and business viability realized more through increased labor productivity that undocumented workers can be relied on to deliver.

As related to the H2A farm labor program, H2A workers are assured the same health benefit privileges as documented farm workers. Hence, the results of this study should offer some important suggestions for reinforcing the offering of health benefits with other work incentives to hired H2A workers.

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