Editor’s Note: This is the latest report in a series that explores the shifting economic landscape of the specialty crop industry.
Growers face regulatory headwinds across nearly every aspect of specialty crop production, from labor and packaging to water and pesticides. Rather than a single rule, it is the cumulative burden that squeezes farm efficiency and profitability.
“It certainly feels like everybody likes to talk about supporting the farmer, but at the end of the day there’s not that much support coming,” says Patrick Smith, a fourth-generation apple and hop grower in Washington. “We’ve got to find a way as an industry to better communicate with our lawmakers about the situation that we’re dealing with and to do it in a more politically neutral way.”
Jon DeVaney, president of the Washington State Tree Fruit Association, says regulatory shifts are especially damaging for perennial crop growers who rely on long-term capital planning.
“You have all of these changing requirements that are just unknowns that you have to try to retroactively fit into your business plan,” he says. “I would argue that just change in general and an unstable regulatory environment is a frustration almost equal to, if not exceeding, the direct costs of some of these individual regulations and dealing with them.”
Cumulative Weight of Unpredictable Mandates
Navigating labor laws is a primary driver of instability. California growers face strict overtime mandates, while Washington growers contend with overtime and midseason prevailing wage adjustments.
Lynn Hamilton, a professor of agribusiness at Cal Poly State University, says that, quite simply, labor regulations make up the most significant portion of regulatory costs for growers in the state.
“The higher the labor needs for an industry, the higher the regulatory burden will be, so crops that require hand-harvesting — such as lettuce, table grapes or strawberries — will have some of the highest costs of regulation,” she says. “Our studies have shown that California growers are paying between 8% and 12% of production costs solely for compliance, so that automatically reduces profitability.”
DeVaney points to wage rates that changed midseason this year for cherry growers; that is difficult for growers to manage, as a change in rate could mean the difference between picking the crop or the block or not picking it at all, he adds.
“You don’t know exactly what you’ve committed to when you brought workers in and already committed to paying them to harvest a crop,” he says. “Your profit margin, if there was even going to be one, is now maybe evaporated by a change that was not included in the known at the time that you signed that contract.”
Midseason Cost Shifts Threaten Harvest Margins
Mark Powers, president of the Northwest Horticultural Council, says the reality of today’s farmer is “trying to prepare for and respond to a multitude of factors outside of their control that can significantly impact their sustainability from one season to the next — whether it be weather, marketplace volatility, the price of fuel or dramatic increases to labor costs imposed in the middle of harvest.
“They must evaluate on the fly whether they can make enough upon the sale of the fruit in individual orchards, depending on the volatile market conditions at the time, to recoup the costs of harvest following the unexpected spike in their largest input cost,” he adds. “Unfortunately, more and more often, the answer is no — and the grower ends up losing 100% of the input costs (fuel, crop protection tools, water, labor for pruning and thinning, etc.) they have already sunk into the orchard that season.”
Extended producer responsibility, or EPR, laws introduce similar financial ambiguity, with current rates tied to usage three years prior.
“How do you expense this? How do you show the liability on your balance sheet and project the expense budget for it when you have no idea what it’s going to be?” says Kevin Kelly, CEO of Emerald Packaging.
Nationwide, growers face further volatility following a California federal court ruling striking down the Department of Labor’s interim final rule on the H-2A adverse effect wage rate — a decision that leaves growers potentially liable for retroactive back pay.
“This ruling further exemplifies how difficult it can be for employers to effectively operate and make business decisions when simple things like wage determinations are unpredictable from season to season,” says Misty DeBoer, operations manager for Great Lakes Ag Labor Services.
John Hollay, president and CEO of the National Council of Agricultural Employers, says that while the interim final rule had hoped to save growers about $2.4 billion in the first year and roughly $17.3 billion over 10 years, much of the savings growers hoped to realize had been eaten up by bureaucratic snafus and delayed efforts at the different departments that oversee the H-2A program.
“Producers were already kind of struggling with that reality and trying to hold on to those savings,” he says. “And the idea that, No. 1, they may be stuck again with an unmanageable, unworkable wage going forward, but it would also be on the hook potentially for back pay is just a gut punch.”
Mike Wenkel, chief operating officer of the National Potato Council, agrees, noting the ruling has removed short-term and long-term stability for growers.
“It really just creates chaos throughout the system for all of our growers of what their cost of production at this point is going to be for this year. … Adding more unpredictability in the balance sheet just makes it that much harder for them to stay in business and to stay afloat,” he says.
The Rising Cost of Administrative Compliance
DeVaney says there are essentially two costs growers see with regulations: the direct cost of compliance and then the associated cost of understanding the regulations in question.
“The amount of time and confusion and frustration [from] just understanding the constantly changing regulatory environment is probably equally burdensome to the actual cost of doing whatever it is that’s being required,” he says.
Fully loaded H-2A labor costs, including wage rates, administrative overhead, housing and legal fees, now reach $20 to $30 an hour. Upfront filing costs spiked further after U.S. Citizenship and Immigration Services raised the base Form I-129 fee by 137% (from $460 to $1,090) for employers with 25 or more workers, with additional mandatory asylum fees pushing total application costs up to 267% higher.
“The H-2A program imposes a staggering financial and administrative burden on agricultural employers,” DeBoer says. “Upfront logistics can cost thousands of dollars per worker before planting even begins — driven by agency recruitment, mandatory transportation, legal reviews and government processing costs.”
Smith agrees, noting Washington’s regulations around labor, pointedly the overtime laws and prevailing wage, that “take what’s already a complex and costly program and make it even more complex and more costly.”
DeBoer also says growers must meticulously maintain worklogs, which adds an additional workload to farm managers already wearing several hats.
“Because many agricultural operations lack electronic timekeeping systems, growers frequently spend hours each week managing manual spreadsheets or must hire additional administrative support,” she says. “Ultimately, this diverts valuable time away from monitoring crop health and managing essential field logistics.”
Hamilton says state-level mandates like California’s Sustainable Groundwater Management Act and its SB 54 packaging law compound these pressures unevenly across operations.
“While there is a layering effect, SGMA and SB 54 will not affect growers equally — it depends on their water resource, water district and how much packaging their final products use,” she says. “Those costs will only exacerbate the regulatory burden and put California growers at a disadvantage compared to other states — unless the other states have adopted similar laws.”
The cost of compliance for growers also includes food safety management, Hamilton notes.
“Our lettuce study showed that as food safety compliance tasks ballooned, the large grower was able to hire staff to handle those additional requirements,” she says. “Small and midsize growers are less likely to be able to afford to staff up, and thus either spend more of their own time in compliance or have to pay expensive consulting firms to handle the compliance.”
Wenkel says compliance with EPA’s Endangered Species Act rules illustrates the administrative complexity growers face. Rules already finalized for rodenticides, herbicides and insecticides require monthly location checks and point-based mitigation calculations for active ingredients. Growers also must configure a spray drift reduction calculation based on wind speed, direction of the wind and more.
“They have to go to a website for each month that they’re going to apply and determine if they’re in a restricted use area for that product or not for the month,” he says. “In addition to that, they have to calculate a point system to use the product; they have to achieve different levels for each active ingredient. That includes in-field mitigations, edge-of-field mitigations and application mitigations.”
While this sounds onerous, Wenkel says a bright spot has been that these forms have become more standardized, in part as EPA has conducted field visits and filled out these forms.
“We’ve had them going through the exercise in the field of that calculation so that they understand the complexities of not only being a farmer now, but being a biologist, a hydrologist and an ecologist, trying to calculate all of these aspects of it,” he says.
DeVaney likens this burden of compliance to filing taxes: “No one likes to pay taxes, but what they really hate and find almost as oppressive is actually filling out their tax forms.”
Political Disconnects Leave Specialty Crop Farmers Behind
Smith says he feels a deep disconnect with those representing growers in Washington, D.C., and at the statehouse, noting that elected officials seem unconcerned with the struggles facing American farmers.
“They can say they do, but when it comes down to it, the policy choices don’t reflect that. I can similarly look at Olympia, Wash., and say that the party in power there doesn’t seem to care about the plight of the Washington farmer, and even though they say they do, their policy choices and policy decisions don’t reflect that,” he says.
Smith says major specialty crop states such as Washington, Oregon and California often face unique policy challenges due to political dynamics at both the federal and state levels. Federal lawmakers may overlook the specific agricultural needs of these states due to their overall “blue state” political leanings. Simultaneously, rural farming communities within these states frequently lean conservative, leading producers to feel that their state-level leadership prioritizes urban constituencies over rural agricultural interests.
That disconnect widens as industry experts say lawmakers often mistakenly assume growers can pass along compliance costs.
“They can’t,” Hamilton says. “It comes off of their bottom line. Fresh produce growers operate as price-takers in a global market.”
She points to foreign competitors like Peru, where reports show “the government is actively subsidizing high-value production by way of investing in irrigation systems and infrastructure,” eroding the traditional quality advantage held by domestic growers.
Hamilton also says another challenge is that lawmakers “don’t understand the cumulative effect or the unintended side effects” of the regulations implemented.
She points to a regulatory compliance study in the San Joaquin Valley funded by the California Air Resources Board, which, during a severe drought, “we found growers who were compelled to use millions (literally) of gallons of water to spray farm roads for required dust control.”
Kelly, too, says that while he and others have advocated for commonsense packaging regulations, he’s been told, “This is what all industry always says. You guys are always complaining.” He says the hostility toward the basic economic impact of state regulations has been maddening.
Wenkel also points to what he says is the costly impact of EPA’s flawed potato seed-treatment models.
“We discovered that the standard assumptions that the agency is using are highly, highly inaccurate,” he says. “Their data set uses 7,800 weight per acre of seed being planted. As we went out across the industry and compiled information from universities, etc., we’re somewhere around 25 [cwt]. Even on the high end, you might be up to 30 [cwt].”
He says regulators also underestimated how many workers are needed to handle seeding tasks and by multiplying the assumed application rates by two to three times, the model dramatically inflates the calculated amount of active chemical ingredient applied per worker and acre, which has a significant economic impact.
Shifting Industry Advocacy From Resistance to Solutions
With all of these regulatory headwinds, a common theme continues to emerge: Growers need to become better advocates for their interests and the economic impact of these regulations.
Smith says whether it’s trade, food safety or any other of the number of regulations that have become burdensome, the industry needs to do more: “We haven’t been as successful as an industry as some other industries have been at getting things their way.
“We’ve got to work with Republicans better. We’ve got to work with Democrats better,” he adds. “We have to work with everybody at all levels of government better in order to get what we need to fix some of the issues. It feels like we haven’t done as good of a job with some of that stuff as maybe we could have.”
Kelly says that in the case of California’s SB 54, growers became more vocal once the final draft of the regulation had been released, but it’s unfortunately often too late.
“The growers are their own worst enemies here in some ways because they don’t get involved in the process,” Kelly says. “They’ve got to get involved and not just with a pocketbook and not just supporting WGA [Western Growers Association]. They have to get personally involved. … They’re going to be able to tell their story far better.”
Hollay, too, says that growers are often a vocal lot among themselves but not as vocal when it comes to conversations with lawmakers. He says, with the latest court case striking down the relief from the interim final rule, it’s time for Congress to act.
“This is a clear opportunity for them to make sure that the producer community is protected from being on the hook for another price gouging,” he says. “That’s the message that producers, farmers need to send, and they need to do it loudly.”
DeVaney says that along with the number of voices speaking out against some sort of regulation, it’s also about the quality of the message.
“If the only thing elected officials or agencies hear from you as an industry is ‘no,’ they’re likely to just assume that you’re one of their opponents or are just a difficult group of people,” he says. “But if you are offering constructive suggestions instead, which needs to happen earlier in the process, then you’re not going to be tagged as the enemy as likely. And you’re likely to be listened to more as well.”
More Stories from This Series
- Input Squeeze Forcing Produce Growers to Retool Farm Operations
- Why Specialty Crop Economics Has Become an Endurance Game
- Are Fresh Produce Growers Price Takers in a Consolidated Retail Market?
- Is Global Trade Volatility Putting the U.S. Fresh Produce Industry at Risk?
- Rising Labor Costs Are Pushing Specialty Crop Growers Out of Business
