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Agricultural dependence on immigrant labor
September 26, 2019

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U.S. Agriculture is one of the most immigrant dependent industries in the U.S. for its labor force. Immigrants have historically been the labor engine for agriculture over the history of the nation regardless whether the servitude was involuntary or voluntary over that time. Only the ethnic groups and race of immigrants providing that labor force has changed. Today it is dominantly Hispanic with some Eastern European, African and Asian contribution. They tend not to be white.

Immigrants that came here voluntarily have a general vision of wanting to participate in the American dream. They tend to be motivated family people focused on economic opportunity. In other words, little has changed from immigrants of the past. More immigrants start businesses than the average for Americans. The U.S. has had a varied set of rules for what has constituted legal or illegal immigration. Millions of immigrants in this country did not go through the legal process but their families become Americans through birthright citizenship.

As a general statement, illegal immigrants have a better record of social and legal conduct than do the average Americans because they frankly do not want to call attention to themselves. An arrest can lead to deportation. These immigrants work hard and pay taxes. They improve the country's youth demographics which drives GDP growth. They do not receive many of the benefits such as social security, but they contribute payroll taxes to support ours. Agriculture has had the most experience with this modern group of immigrants and are among their biggest supporters. They would make good Americans with the right piece of paper.

The ag sector is slowly coming to realize that its future net worth hinges on the issue of immigration and access to immigrant labor. There have been two recent events that are good examples of how dependent producers are on immigrant labor. The recent fire in the Garden City Tyson plant showed how tight the labor force is for staffing processing plants. Cattle numbers have expanded and no new brick and mortar beef packing plants have been built. They have handled more cattle with longer shifts which requires higher utilization of the existing limited labor force. They need these workers to operate at levels that the industry requires.

IBP used to send busses to Mexico to pick up new workers. They cannot do that anymore. Tyson is paying workers a base wage while the Kansas plant is being repaired as they cannot afford to lose this skilled labor force for which competition between plants is fierce. As kill capacity was reduced because of the temporary loss of the Tyson plant, beef prices initially soared while cattle prices have become depressed.

ICE recently raided food and chicken processing plants in Mississippi taking out over 600 undocumented workers from these plants. If ICE did something similar to that in Nebraska or Kansas and raided beef plants in those states removing undocumented workers it would have the same devastating impact on beef and cattle prices as the Tyson fire. It would reduce kill capacity of the beef industry. Packer margins soared to record $450 head levels so consumers were being gouged, while feedlot losses swelled to $150-200 head.

While the fire was a natural disaster, ICE could have the same or worse impact on the cattle producers and consumers if they pulled a Mississippi in another livestock state. In other words, the net worth's of many livestock producers are dependent on who and where ICE raids next.

U.S. ag producers have consistently asked help from Washington so that legal access to foreign farm workers is expanded and have found a less than supportive attitude rooted in tough, even racist, ideology toward Hispanic immigrants. The industry has argued that visa reform is needed to provide access to sustainable labor and keep U.S. producers, both farms and packing plants, competitive by asking for modernization of the H-2A quest worker program. They want to be legal, hiring a legal workforce. The Trump administration has limited the number of permits allowed far below statutory limits. The cost of the visa program for employers would make it more financially beneficial for them to hire Americans but the universal response from employers is that they would do that if they could find American workers. They cannot.

A majority of the ag workforce is foreign born. The AFBF says that 50-70 percent of these immigrants are unauthorized. Rounding them all up and deporting them would have the same impact on food prices and farm prices and the ag net worth as the Tyson fire had. As immigration is more aggressively restricted, the flow of new immigrants to replace an aging immigrant workforce is no longer adequate. That means that the current immigrant workforce now supporting the food supply chains in the U.S. is shrinking and no one has an answer for where the ag sector will get workers in the next generation without some extensive comprehensive immigration reform.

Another trend is that fewer immigrants are interested in working on farms and are taking other employment options according to USDA ERS. As Mexican workers age, they tend to return to Mexico. According to BEEF magazine, between 2007-2015 the number of unauthorized immigrations coming from Mexico to the U.S. reversed, with more leaving than entering the US. Basis those statistics, a wall would be counter-productive...nothing more than an expensive political tool.

Rural America has also been depopulating and most growth in rural population has been the result of net immigration. Without immigration, rural America and the ag sector atrophy, food prices will increase and farm values will decline.

David Kruse is president of CommStock Investments Inc., author and producer of The CommStock Report, an ag commentary and market analysis available daily by radio and by subscription on DTN/FarmDayta and the Internet.

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