Editor’s note: This is the second story in a series exploring the current state of labor in the fresh produce industry.
This spring, Owyhee Produce will pick its last crop of asparagus — ever — said its CEO, Shay Myers.
“It just doesn’t make [financial] sense anymore,” he said.
Myers said the rising cost of his H-2A labor is in part due to the rising Adverse Effect Wage Rate, or AEWR. The Parma, Idaho-based company, which grows asparagus, onions, watermelon and more, employs 90 H-2A workers. He estimates it costs the company about 25% more to use H-2A workers, but they’re necessary to keep his farm in production.
“Our year-over-year cost for labor is significantly higher than what inflation is — what the cost of living is — and that’s why farmers are frustrated, because there aren’t other solutions,” Myers said. “Everyone wants us to [find] other solutions … or to automate. They want us to do this or that, and they want us to not complain about labor. But [the reality is] labor is eating into our margins.”
Myers estimates his payroll doubled from 2020 to 2025.
“The worst I’ve seen is an 18% increase year over year in AEWR, and then you add the AEWR on top of inflation — it’s just a massive impact,” he said.
Myers isn’t alone. Those in the fresh produce industry say rising costs of labor, exacerbated by high AEWR rates and overtime laws in some states, have made it almost impossible to grow labor-intensive crops. (The Packer will explore the impacts of overtime laws in a future report.)
In fact, “untenable” is the word most often used by those in the fresh produce industry to describe the current state of the H-2A program.
Yes, fresh produce growers understand the program is the only legal avenue to access the necessary workers to harvest the fruits and vegetables U.S. consumers have come to expect, but it’s not without its flaws.
“I don’t think anybody wakes up one day and says, ‘I would love to participate in a highly regulated federal visa program,’” said Megan Wright, senior director of business expansion at másLabor, a business-to-business consulting firm specializing in employment-based visa programs. “They have absolutely exhausted all local labor market pools. They’ve tried throwing money at the problem. [H-2A] is a solution to provide legal, reliable labor.”
It’s also no secret that there aren’t U.S. citizens lining up to fill open vacancies.
“There’s zero chance that we would ever fill these positions locally, no matter what the price is,” said Caleb Herrygers, a fourth-generation farmer growing tart cherries, apples and asparagus at Herrygers Farms in Oceana County, Mich., “What’s unfortunate is our area has a high unemployment rate as well, so there are a lot of locals that could be doing the work that don’t.”
Not keeping up with the times
National Council of Agricultural Employers President and CEO Michael Marsh said not much has changed with the H-2A program since its introduction as part of the 1986 Immigration Reform and Control Act. NCAE represents about 95% of ag employers using H-2A.
“Because [H-2A] hasn’t kept up with the times, we’ve ended up with some really severe unintended consequences,” he said.
Consequences include production moving from the U.S. to Mexico, Canada or other offshore locations.
“According to USDA, more than 60% of our fresh fruit and more than 40% of our fresh vegetables are produced by foreign competition, which is making us increasingly dependent on somebody else to feed our nation,” Marsh said.
Marsh said data from the Census of Agriculture shows that, from 2017 to 2022, the U.S. lost 140,000 farms and more than 20 million acres went fallow.
“We’re the most productive agricultural place on the planet, and we’re losing our farmers, and we’re losing our farms, and the cost is a driver,” he said.
Marsh said a good example of the discrepancies facing U.S. growers is in pay to their Mexican and Canadian counterparts, often only miles apart.
“In Mexico, for a worker in-season working 11 hours a day, he would receive about 300 pesos a day, which is about $1.50 an hour,” Marsh said. “But if you go just across the border into California, that employer is going to be required to pay $19.97 an hour. In British Columbia, you’d be paying about $12.50 an hour — after you make the conversion to U.S. dollars — versus right across the border in Skagit, Wash., you’re going to be paying $19.82 an hour.”
Marsh said an NCAE member wants to move a tomato process production from California to Mexico and another in Washington state looks to purchase land to farm in British Columbia.
“That’s a pity, because the regulatory scheme should not be one that so clearly pushes out the farm and ranch families who are today trying to nurture those legacy family operations and keep them sustainable,” he said.
Mark Powers, president of the Northwest Horticultural Council, said USDA National Agriculture Statistics Service data has shown the number of apple orchards in the Pacific Northwest decreased 27% from 2017 to 2022; the number of cherry orchards is down by 29%.
“We know that these wage rates are affecting all farms, and the margin squeeze is affecting it doesn’t matter whether you’re big or small,” he said. “It’s squeezing everybody in our region of the country.”
John DeVaney, president of the Washington State Tree Fruit Association, said the AEWR has been increasing steadily in the past few years, with an average of about a 6% increase a year.
Marsh said the way the Department of Labor uses the data to calculate the AEWR is flawed.
“That wage includes not only H-2A wages that will be picked up on the farmer’s payroll, but also we have an echo effect in the data,” he said. “It picks up overtime and bonuses and piece rate and everything else versus just a base wage rate for wages that are paid for agricultural workers in the United States. And as a consequence of that, you’ve seen the spiraling effect with regard to the wage rates going up ... until it just crushes the family farm and puts them out of business. And that’s not sustainable.”
Marsh said an NCAE member in western Nebraska pays about $19.21 an hour in an area with a 2.8% unemployment rate. He said when he annualized that hourly rate, it is higher than what a public school teacher makes in that same area.
"[The farmworker is] making far more than the teacher is at the local school, and somehow or another [that] just doesn’t make a lot of sense,” he said.
And Wright of másLabor points to new methodology introduced in 2022 that directly impacted AEWR and exacerbated the already cumbersome guestworker program. There’s also been changes to sharing workers under a joint application if a farm might only have part-time work during part of the season.
Wright said the regulations also impacted third-party farm labor contractors who now have to hold onto a three-year surety bond, which means the contractor has sufficient funds to pay workers if there was a loss of contract.
Another change, Wright said, is that AEWR usually goes into effect Jan. 1, but regulations made the AEWR increase go into effect immediately, even if a grower was in the middle of an H-2A contract.
“That means that, yes, not only did you probably not budget for that, but now you’ve got to up and change your wage rate midseason as well,” she said. “If the AEWR goes up mid-season, you have to make that change. But if it goes down, you have to stay at the higher wage if that happens midseason.”
Mark Russell, co-owner of Two of Clubs Orchard in Appleton, N.Y., who has used H-2A workers for the last nine years, said he noticed the cost of his trees going up about $2 to $3 a piece for replanting, a direct result of higher labor costs incurred by the nurseries — and a cost that was passed to apple growers.
“Now, shame on us for not being able to pass on our costs [to the consumer],” Russell said. “That’s a broken economic system if you can’t just charge more for your product. That’s a deeper problem of the produce industry that it needs to come to grips with.”
But the thing that keeps him up at night when it comes to H-2A?
“Three different departments — state, labor, homeland security — have their own paperwork to fill out just so one H-2A worker can come in,” Russell said. “It’s a single point of failure for any one of those three departments.”
Price of participation
The true cost of using the H-2A program isn’t just the pay rate, which is higher than the state’s minimum wage. Growers participating in the H-2A program must first provide a critical need for labor.
Growers must post seasonal job openings on the Department of Labor’s website, and from there, they must interview any domestic applicant and hire domestic any worker who meets the job requirements, which most growers say is few and far between.
“If somebody comes during the initial paperwork recruitment process, that would mean, in theory, that you would have to reduce down an H-2A spot,” Wright said. “The one benefit of if they come midseason is you, in the back of your mind, know that they might not last very long. So, you can have a little bit of a more-the-merrier mentality.”
Myers estimates it costs him about 25% more to use H-2A workers. This includes transportation to and from his farm — from bus stops to layovers, visa and application processing — and room and board.
“When I say room and board, we fly in their bed, their mattress, their mattress cover, their sheets, their comforters, their pillows, their pillowcases, their pots, their pans, their spoons, their forks,” he said. “Everything is supplied for them. They don’t have to buy a single thing when they come here. We will also provide the transportation for them to go to the grocery store, to go to church, to go to town, to do whatever they’re doing on a scheduled basis.”
Wright said the H-2A prevailing wage rate is one of the most challenging parts for growers using the program.
“Anyone who’s a non-H-2A worker that shares any of the job duties listed out on the H-2A a job order, they too, have to make whatever the H-2A worker is making, or more,” she said.
Even worse, if a worker drives a heavy tractor-trailer even as little as five minutes down the road and the equipment weighs more than 13 tons, that worker (and any domestic workers in a similar role) now earns a truck driver wage.
Usage this year
Marsh said H-2A applications are up 19.7% for the first quarter of fiscal year 2025, and the total number of positions available in H-2A also are up about 20% this year.
Western Growers Association, which represents about 2,400 farmers growing fresh produce in California, Arizona, Colorado and New Mexico, also serves as an agent to help its members file H-2A applications. Jason Resnick, WGA senior vice president and general counsel, said the association continues to see an increase in the number of H-2A applications for its members. However, it did see a dip in the number of applications from its members in California in 2024, which he said is likely due to that high AEWR rate.
“It’s simply more of our members deciding that it’s not worth it anymore to continue to take losses and have to compete with other states and other countries that can produce a crop and get it to market at a much lower cost point,” he said. “They decide it just simply doesn’t pencil out anymore, and they sell out — there’s more consolidation, or they simply sell their land and take it out of production, whether it becomes a housing development or low-margin crops, like commodity crops, instead of fresh fruits and vegetables.”
Herrygers of Herrygers Farms said the rising AEWR rate has caused his family to reconsider its growth plans. And he said his H-2A workers, which are secured through two different petitions through a farm labor contractor, have noticed.
“The workers are happy to be here. They do an excellent job. They’re excited to show up at your farm, and they’re excited to have your name on their product, and everybody’s having a good time doing it,” he said. “We’ve had people come to us — the workers understand the scenario, and they’re afraid that they’re going to lose their jobs because of this rate going up.”
Herrygers said his family’s workers see other farms in the area going out of business. He said his workers will ask why his family took a field out of asparagus production.
“They’re wondering, ‘Why is this field gone?’” he said. “It’s gone because we can’t afford to pick it anymore. Five years ago, we would have picked it a few more years, but now we can’t afford to.”
Your next read in this series:
- What Does the Future Hold for Labor in an Ag Tech World?
- Will Autonomous Harvest Reach the Goal Line?
- What You Need to Know About the DOL’s New H-2A Updates
- What Workers Think of the Dignity Act
- Farmworkers Say Their Role Is Essential ‘All the Time’
- ‘Crisis’ Point: Urgency Builds for Immigration Reform in Agriculture
- Overtime laws make it almost impossible to farm, growers say
- Much work remains to solve ag labor issues
