Economic Tidbits

Agriculture & Labor Shortages

The Federal Reserve Bank in Kansas City held its annual Agriculture Symposium in May focusing on the topic of labor shortages in agriculture. Presentations highlighted labor shortages on the farm or ranch and in sectors closely linked to agriculture like transportation, processing, inputs, and manufacturing. It’s no surprise to say there are critical shortages for skilled labor up and down agricultural supply and food chains. The number of jobs available in the U.S. exceed the number of unemployed persons by nearly two to one. In Nebraska, jobs available exceed unemployed by three to one according to the U.S. Chamber of Commerce.

Farmers and ranchers are finding fewer workers are available for hire and are paying higher wages when they can secure labor. USDA National Agricultural Statistics Service reports in April workers hired by farm operators were down 6 percent in the Northern Plains Region (Nebraska, Kansas, North Dakota, and South Dakota) compared to last year. The survey doesn’t report on why the number of workers are down, but the lack of available workers has to be a factor. Wages paid this year were 7 percent higher than last year, further evidence of a tighter labor market.

Producers are also impacted indirectly by labor shortages. Examples mentioned during the Symposium included a grain company which operated a fully-automated elevator remotely in western Kansas during wheat harvest and coops and grain companies shuttering smaller elevators due to lack of workers. The indirect impacts can influence prices received by producers, input costs, and the nature and timeliness of services provided. The labor shortages could lead to more vertical integration in agriculture, more partnerships to scale across the existing labor pool, greater concentration, and the adoption of more technology and automation.

The Symposium highlighted a complex problem agriculture and rural communities are going to wrestle with for many years to come. Producers and rural communities need to work with related industries on ways to overcome labor shortages in their regions. Unless something is done to overcome labor shortages, it will continue to be a drag on economic growth in rural areas.

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