I spent two days this week visiting with many of North Carolina’s farmers who work in blueberries, sweet potatoes, and beef.
Labor costs were a common area of concern at both shows. Unless a farmer has made significant investments in machinery, labor costs probably exceed any other cost center within their operation. With new intolerance for immigrants in Washington, farmers were anxious about finding enough labor for their upcoming seasons. Farmers can source work through legal channels, either by hiring local workers from the nearby community or by contracting for H-2A temporary agricultural workers. They can also employ migrant labor, usually with a kind of “don’t ask, don’t tell” approach to labor law.
Using H-2A is not cheap. Contrary to the perceptions of many people outside of the industry, farm workers earn a good living. In 2016, an H-2A worker made about $11.50 per hour. But they also receive other benefits that add to the cost borne by farmers. For example, by the terms of federal laws, farmers must provide housing to any worker who cannot return home by the end of the day. Experts say the all-in cost of an H-2A worker is over $14.50 per hour.
Getting paid on the farm
Some farmers use chips to pay workers. Each time a picker drops off a basket of fruit, the manager exchanges it for a wooden chip. Farmworkers line up with their chips. Each chip is worth a certain amount of pay. The process might occur at an office, but sometimes disbursement is done from the bed of a pickup truck at the end of the workday.
The chip system is decidedly “old school,” but the simplicity of this approach holds a lasting appeal. It survives all language barriers. The worker picks some fruit, he gets a chip, and then he exchanges it
for cash at the end of the day. The farmworker walks home with cash or a check at the end of every day.
At the blueberry show, I met a vendor with a fantastic system that integrated weighing of fruit with contamination containment and payroll processing. Each picker is given a lanyard with a barcode. When the picker has filled a basket, he brings it to the end of the row to submit it to the field manager. The manager runs the lanyard across a barcode machine. The scan captures the picker’s name and the row where the fruit came from. That information is uploaded from the field to the cloud via a cellular transmitter. Once in the cloud, it can later be pulled down. The picker’s account is credited one basket at a time. Later, those funds are integrated into payroll and tax reporting.
Farmers who have gone to electronic payments can easily integrate payroll cards into their system. If they do, they can save a lot of money. According to the American Payroll Association, it costs employers approximately $2 to write a paper paycheck. That sum is almost certainly higher for farmers. For one, if you pay workers with checks, then you have to find the time to drive them into town to cash their check.
Lots of liability in H2A
In rural North Carolina, there are lawyers whose entire practice focuses on providing counsel to farmers who want to hire in the H2A program. Sometimes farmworkers sign up with crew management companies. These firms move H2A workers up and down the coast, delivering labor to farmers when they need workers. Many times, a farm has a surge in work for a short period. These kinds of crews answer that need for a flexible workforce.
Still, when a farmer uses this kind of service, he still wants to pay the farmworkers directly. If they are using h2a labor, the farmer takes on some liability for the integrity of a third-party. If they pay an independent manager of H2A workers and that company subsequently doesn’t make good on honoring the funds due to the workers, then the responsibility falls back to the farmer.