ACA will raise cost of farm labor--and therefore food

The New York Times reported today about the consequences of the Affordable Care Act (ACA) for the cost of farm labor and, in turn, the cost of food.  Sarah Varney's story is set in California, where farm laborers are typically employed year round rather than seasonally, as the case in many other places.  (Another post about year-round ag workers is here).  This means farm labor contractors cannot easily put the "workers on a 28-hour workweek like Starbucks, Denny's and Walmart are considering" doing to avoid the ACA mandate.  It also means that the contractors, who operate on very small margins--around 2%--will have to raise the prices they charge farms, which will in turn push up food prices.

Varney writes:  

Insurance brokers and health providers familiar with California's $43.5 billion agricultural industry estimate that meeting the law's minimum health plan requirement will cost about $1 per hour employee worked in the field.     

The minimum health plan under the new law will is expected cost about $250 a month in California’s growing regions, a premium which includes a high deductible--$5K a year.  With the following vignette, Varney explains why it is not feasible to pass this insurance costs onto the workers:  

On a recent morning, Jose Romero pulled weeds from a row of lush tomato plants. Mr. Romero, 36, arrived at the field around 5 a.m. and worked until sunset. Like many of the other workers in the tomato field, he was surprised to learn that his employer, Mr. Herrin at Sunrise Farm Labor, would have to offer him health coverage, and that he could be asked to contribute up to 9.5 percent of his wages to cover the costs. 

“We eat, we pay rent and no more,” Mr. Romero said in Spanish. “The salary that they give you here, to pay insurance for the family, it wouldn’t be enough.” 

There seems to be widespread agreement among agricultural employers, insurance brokers and health plans in California that low-wage farmworkers cannot be asked to pay health insurance premiums. 

On this point, Varney quotes a labor contractor, Chuck Herrin, the owner of Sunrise Farm Labor in Huron, California:  

He’s making $8 to $9 an hour, and you’re asking him to pay for something that’s he’s not going to use? 

The most intriguing part of this quote is the "something that he's not going to use" part.  Are Mr. Herrin's assumptions based on perceived cultural issues?  on the age and perceived health of the workers and their families?

Varney also notes the complication that immigration status poses for many of the workers because they may be in the country without papers.  As one farm labor contractor in Napa Valley noted, the workers are 

Nervous they’ll be tracked and then somehow the possibility of being identified, and the fear of being deported or not being allowed to work. It comes up all the time in conversations when we outline the choices.

Cross-posted to Legal Ruralism.

Farmers: Beware The Wind (Prospector)

With the prospect of carbon emissions legislation and renewable portfolio standards in place in more the half the United States, interest in wind energy continues to increase. Although the recent drastic reduction in oil prices seems to have tempered some enthusiasm, wind energy will have a significant role in the new energy mix.

As the need for wind energy and related transmission infrastructure projects increases, the need for rights of way in key areas will become paramount. Wind “prospectors” have begun the process of gathering rights to land in wind-rich areas, which usually means contracting with farmers in rural areas in states like North Dakota, Iowa, and Wyoming. Anecdotally, I have heard of several farmers who have had such offers. Some of these offers border on the absurd: as low as $40 per year for 8 to 10 years to put between 10 and 15 wind towers on the farmer’s land.

The New York Times recently reported that farmers in Wyoming have begun setting up cooperative associations to help the farmers to bargain as a group for a better price and provides the members with information and support in the face of aggressive offers. These tactics almost always include “pay now” offers and confidentiality agreements that prevent farmers from discussing (and comparing) their lease deals with one another. The article notes that

as developers descend upon the area, drawing comparisons to the oil patch “land men” in the movie “There Will Be Blood,” the ranchers of Albany, Converse and Platte Counties are rewriting the old script.

Cooperatives are one way for farmers to protect themselves, and such cooperatives could help facilitate wind development by providing larger, contiguous rights of way. Whether it is through cooperatives or other processes, farmers need to educate themselves about the risks and opportunities related to wind leases. A number of resources are available, including information from the Wind Farmers Network, the Agricultural Law Center at Drake University, Center for Agricultural Law and Taxation at Iowa State University, and the American Wind Energy Association.

As with any contract, and especially property-related contracts, good advice can help ensure a fair deal for all involved. Wind energy can be a great resource for farmers and the country, but good information, on both sides of the transaction, is essential to ensure equitable and efficient development.