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Industry prepares for possible labor shortage at packing plants

Amy Schutte for Progressive Cattleman Published on 22 December 2017
Beef production

Meat packing plant jobs are labor-intensive.

Even with sophisticated technology that helps with the slicing and dicing, there is a certain expertise required to run the equipment. It’s a physical and mental job, not suited for just anyone.

“You can’t just pick someone off the street and hope they will quickly master it,” said Ted Schroeder, professor and director of the Center for Risk Management and Education at Kansas State University. “It takes subjective human decision-making at every stage when you are working with equipment and meat products.”

Like many jobs in agriculture, packing plants employ a large number of immigrants. David Anderson, professor and extension economist at Texas A&M University, estimated more than 50 percent of packing plant workers are immigrants, based on a survey he conducted with dairy workers that he believes translates to other agriculture industries.

“If we look back historically, the packing plants have always employed immigrants. The nature of their origin has changed over the years but, traditionally, we’ve always relied on immigrants,” Anderson said.

With such a large population of immigrants in the meat packing plants, a mirror of other agriculture industries, it begs the question: Will there be enough labor to perform critical agriculture jobs if the decisions from the White House in 2018 move on the side of stricter regulations?

Beef production continues to rise

The USDA estimates the 2017 calf crop will be 8.3 percent higher than the 2014 drought year, reaching around 36 million head. The demand for beef is far-reaching, domestically and as an export commodity.

“Export demand has been strong,” said Trevor Amen, animal protein economist at CoBank. “Momentum has been building since July 2016, and forecasts continue to adjust upward for the remainder of this year.

Combined with decreased imports, we’re experiencing a more favorable net trade balance and keeping domestic per-capita supplies in check while supporting price levels.”

Not only has beef production grown, Anderson noted the cattle have grown in size too.

“Our beef cow numbers are back to where they were before the drought, and our weights are bigger than they were back then. We are producing more beef with fewer animals,” he said.

Packing plant capacity

Packing plants are producing anywhere from 1,000 to 6,000 head a day depending on the size and scale of the plant, and many plants employee around 2,000 workers, running multiple shifts throughout the week for five to six days a week.

A press release from CoBank quelled concerns about plant capacity in 2018, noting processors are expecting to increase investments in automation and robotics to reduce the risk of skilled labor shortages.

“Plants will add additional slaughter hours to manage the extra supply through 2019,” said Amen. “The biggest potential concerns as the industry drifts closer to maximum packing capacity are labor availability and temporary plant closures for unseen maintenance issues.”

Immigrant regulations

As immigration reform lurks on the horizon, agricultural experts encourage policy-makers to be cautious with legislation and consider the widespread economic impact the loss of millions of foreign workers would have on every layer of agriculture.

“I always feel like reasonableness will prevail as they go through adjustments,” Schroeder said. “If events become antagonistic, then it becomes a problem in a hurry. I don’t envision that because the economic implications or outcomes would be too severe to do things in a reckless way. That doesn’t mean there won’t be industry regulations to document workers closely.”

Allison Cooke, National Cattlemen’s Beef Association (NCBA) executive director of government affairs, said the NCBA has been closely watching the Agricultural Guestworker Act (H.R. 4092) and the Legal Workforce Act (H.R. 3711), both introduced in the fall of 2017.

“NCBA supports meaningful legislative or regulatory reform that creates a non-seasonal, temporary worker program that ensures an adequate workforce for our beef producers,” Cooke said.

If passed, the AG Act would replace the H-2A program, the current framework for foreign workers, which is geared for seasonal or temporary employees. The H-2A program has long been an issue for meat packing plants, whose work may be slower during certain times of the year but is considered a full-time job.

The H-2C visas would be open to 450,000 agricultural workers with 40,000 spots reserved specifically for the meat and poultry processors and would ensure a reliable workforce for the meat industry.

A press release regarding the new legislation was issued by the North American Meat Institute and quoted Mike Brown, president of the National Chicken Council, as follows, “The introduction of this legislation is an important first step for a comprehensive approach to immigration reform.

An effective occupational visa system may be the most important barrier to illegal immigration,” he said. “The creation of the H-2C program would serve the diverse interests of the agriculture and food manufacturing industries and will boost the modern agriculture labor market.”

The Legal Workforce Act, the second bill of interest to the NCBA in regard to immigration reform, would phase in the requirement to use the electronic employment verification system in six-month increments over a two-year period, starting with the largest businesses.

Introduced by Rep. Lamar Smith, R-Texas, whose 1996 bill started the pilot E-Verify system, the bill’s purpose is to put legal workers first.

“Nearly 20 million Americans are unemployed or underemployed. Meanwhile, 7 million people are working in the U.S. illegally. By expanding the E-Verify system to all U.S. employers, this bill will ensure that jobs only go to legal workers,” he said in a September 2017 press release.

Economic impact

While many immigrant workers have legal work status, a study done by the Pew Research Center in 2014 estimated there were 11 million immigrants living illegally in the U.S., which totals about 3.5 percent of the population.

Another study, issued by the National Bureau of Economic Research, showed a loss of immigrant labor would cost the U.S. economy $5 trillion over a decade. The survey also showed illegal immigrants provide $500 billion in output a year.

If, per se, legislation regarding immigration reform changed drastically, the economic impact wouldn’t just rest with the plants. Consumers would see the price of meat driven up at the grocery store. Not just for beef but also poultry and pork.

“How would we produce the meat on the packing side with the record 26 billion pounds of meat if we don’t have labor?” Anderson said. “The packing plants would continue to run, but there would be a logjam in the process.

We would see increases for the cost of producing beef, and the increase would come at the packing side. There would be lower cattle prices to pay producers and higher costs for consumers.”

It’s a big hypothetical, but Anderson noted it could happen.

“We would see the bigger impact at packing plants just because of the sheer number of employees in the packing plants, but it would affect the entire economic structure of America,” Anderson said. “It would have a drastic effect on the cattle industry.”  end mark

PHOTO: Beef production is on the rise, but the number of people wanting to work in the meat packing sector is not. Photo by Getty Images.

Amy Schutte is a freelance writer based in Idaho. Email Amy Schutte

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