Farming Labor Shortage: Its effects and what farmers are doing about it

For several years, a tight labor market has been an ongoing challenge, and farming is not immune. In fact, some indications show that labor is a bigger hitch for ag operations in comparison to other sectors.

According to the American Farm Bureau Federation, there are anywhere from 1.5 million to 2 million farm jobs available annually.¹ But in the past five years, operations have encountered increasing difficulties with filling these roles.

A recent report by the Federal Reserve of Minneapolis shows data that supports this. Some 63% of ag bankers within the Fed’s Ninth District, spanning six states from the upper peninsula of Michigan to Montana, cite labor availability as a “major challenge” according to a survey released in December 2023.²

Other findings by the Minneapolis Fed include:

• In the past five years, producers have encountered greater difficulties with filling long-term roles, though farmers have found greater success with filling short-term roles.
• The rising demand for farm workers has fueled an increase in wages that has outpaced inflation over the past decade, with a sharper increase over the past five years.
• Census Bureau data reveals agricultural workers in the upper Midwest are aging more rapidly compared to nationwide averages, with the median age rising from 51 in 2012 to 56 in 2021. (It’s worth pointing out that compared to other agriculture states, Ninth District producers rely less on foreign labor, which would intensify the impact of an aging workforce.)
• Younger Americans are opting out of farming work, citing pay and its physical toll. That’s driving a need for farming operations to turn to immigrant labor. On average, one in five animal operations (18%) and nearly one-third of crop production (32%) employ foreign born workers.

These challenges are likely to continue, given the aging workforce, slower population growth in rural areas and the unlikelihood of increased immigration to areas that need farm laborers, concludes the report. “There are no obvious, easy or quick solutions for farm operators.”

Potential solutions for farm labor challenges

Labor-saving technological advances

Farmers that invest in bigger, faster, AI-enabled machinery can find some relief from the labor shortage. However, as ag bankers pointed out in the Fed survey, farming operations will still need to rely on seasonal help to see them through harvest time.

Agriculture education opportunities

Fewer young people are growing up on the farm, which leads to fewer people choosing it as a career. The National Association of Agricultural Educators Teach Ag campaign points to a lack of knowledge and educational opportunities to learn about agriculture, which is contributing to the labor shortage. To drum up interest in younger workers, the organization calls for increasing ag education classes, along with stepped-up efforts to connect students to internships and mentors — and a willingness to accommodate workers without a farming background.³

Workable guest worker programs

Farming is increasingly reliant on an immigrant workforce, which calls for the need to advocate for workable solutions. The Farm Bureau, for example, warns that if Congress enacts enforcement-only immigration, it would “cripple agriculture production in America,” resulting in a $60 billion drop in production, and 5-6% hikes in food costs for consumers. To counteract the potential harm of expanding requirements to verify documentation with E-Verify, Farm Bureau advocates for the creation of a “workable” guest worker program to maintain a legal pipeline of needed workers for farming operations and processing facilities.⁴

Solving the challenges of ag through the power of partnership

To manage challenges like bridging the labor gap, farmers require cost-effective ways to preserve and grow their operations. Lenders like you have a valuable opportunity to provide innovative financing solutions that meet these needs through participation lending.

At Agri-Access, we’re committed to empowering farmers and lenders with options that make growth and financial stability achievable. Our specialty is ag financing, so you get the depth and expertise you seek.

Learn about our participation loan offerings, and reach out to a relationship manager any time to get started.

Sources

1. Farm Bureau | Agriculture Labor Reform 
2. Federal Reserve Bank of Minneapolis | Farm Hands Needed
3. Journal Courier | How labor shortages are affecting agriculture
4. Farm Bureau | E-Verify