Labor costs pinching tobacco growers
In 2020, farmers will see the wage rate that they pay foreign labor increase, signifying another blow to many who are struggling in these challenging times.
The U.S. Department of Labor announced that the Adverse Effect Wage Rate, the amount effective for the hiring of H-2A labor, will rise by 42 cents per worker for Virginia and North Carolina farmers, and 19 cents per worker for Delaware and Maryland farmers, compared with last year’s rate.
“The continual rise in guest worker wages poses a significant challenge to a labor-intensive cropping system like tobacco,” says Stephen Barts, unit coordinator and Extension agent with the Pittsylvania County Virginia Cooperative Extensive Service.
He points out that tobacco labor done by hand harvesting amounts to about 40 to 50 percent of a grower’s annual variable cost.
Unfortunately for farmers, those labor costs, which are by far the largest expense they deal with, have risen between 3 to 7 percent annually.
At the same time, Barts says the per pound price that growers have received hasn’t gone up. Wage rate increases have been offset some by a decline in input prices; however, profits in general have dipped at the farm level.
While he serves as an agent helping farmers, Barts also farms himself along with his brother, Greg. He says they have tried to evaluate their operation for efficiency, looking at equipment, workers and daily obligations.
“The question growers need to ask themselves is: ‘Does this decision/task/operation contribute in some way to a profitable crop and does that contribution outweigh the expense.’
“We are hunting for those aspects of the daily routine that can be combined, eliminated or done in a more efficient manner,” he says.
Even though their ideas may not necessarily result in better efficiency, they remain adaptive. “We are doing everything possible to keep our cost low and making every move count,” Barts says. “In the current climate of shrinking margins, the pencil needs to be as sharp as possible.”
The increase in the Adverse Effect Wage Rate in 2020 will hurt, indicated Lee Wicker, deputy director of the Vass, N.C.-based North Carolina Growers Association, the largest user of the guest worker program in the country, according to the group. “It will put us under even greater pressure,” he says because U.S. growers are already trying to compete against foreign competitors who are paying workers nominal wages. Unfortunately, Wicker says American growers can’t compete under rising wage rates.
Coming off a downturn in demand domestically and globally and the uncertainty of the recent trade war between the United States and China put U.S. growers at a disadvantage to their livelihoods. “Growers — we’re in trouble,” Wicker says. “There’s no room for error. There’s more and more pressure,” whether that’s wage increases, COVID-19 concerns, rising input costs, or a disruption to the food supply chain.
Despite the high cost, growers know they need the labor. In the largest tobacco-growing state of North Carolina, foreign workers under the federal H-2A program are arriving to assist tobacco, vegetable, fruit and Christmas tree growers with transplanting, cultivating and harvesting. These essential guest workers are needed because growers can’t do everything by mechanical means. The coronavirus made their arrival questionable, but the major labor association in the state adapted quickly, especially after it learned the guest workers were able to come to the United States.
“We’re getting workers in,” Wicker says. “We have really stressed to workers to social distance. It’s slowed everything down, but we are thankful to have them here.”
As of March 27, 1,800 H-2A workers had arrived for NCGA farms, Wicker says, and he expected 3,000 more to arrive within five to six weeks of that date.
Whether Wicker could get the workers here was an uncertainty, and he says what could happen if an H-2A worker contracts the virus is concerning for the association and growers. The challenge is keeping workers separated and virus free.
Before they entered the United States, Wicker says the foreign laborers had their temperature taken before they departed Monterey, Mexico, and again by Customs and Border Protection agents before they crossed the border.
The workers were given the Centers for Disease Control and Prevention one-pagers on symptoms and how to prevent getting sick and spreading the virus before they crossed the border.
“Once workers arrive in Vass for orientation, association staff are vigilant about requiring workers to comply with the social distancing guidelines,” Wicker says. North Carolina Gov. Roy Cooper issued an executive order on March 30, restricting group gatherings to 10 people during the coronavirus pandemic and directs everyone to stay at least six feet apart from others.
Wicker adds that he constantly reminds workers to be cautious during this time and has asked growers to do the same.
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