Breaking down labor challenges in the agriculture and food industry
Labor challenges in the agriculture and food industry are multi-dimensional and complex. One of the main challenges is labor shortage.
Labor challenges in the agriculture and food industry are multi-dimensional and complex. One of the main challenges is labor shortage. Many countries are facing a shortage of workers in the agriculture sector due to several factors such as the aging of the population, rural-urban migration, and a lack of interest among younger generations to pursue agricultural careers. This shortage of labor can lead to delays in crop harvesting, increased crop loss due to untimely harvesting, and higher labor costs for all segments of this value chain.
The National Agriculture Statistical Service’s Farm Labor Survey (NASS FLS) reported a 73 percent decline in self-employed and family farmworkers from 1950 to 2000. The number of hired farmhands declined 52 percent within the same time period (Figure 1).This downward trend is translating into higher labor wages for these workers. For instance, in 2018 alone the agriculture industry experienced a 7 percent decline in hired help and a 5 percent increase in labor wages.
Figure 1 – The shrinkage of US agricultural workforce.
Another challenge is high turnover rates. Many agricultural jobs are seasonal, and workers often move from one employer to another depending on the season and crop cycle. This high turnover can result in productivity losses, as new workers take time to learn the job and may not be as efficient as experienced workers. Additionally, high turnover can lead to a lack of continuity in operations and reduced quality control. This is also seen in many businesses, in which workers move away from agriculture and food companies for better wages and conditions in other industries.
Another way the labor issue can be seen in the agriculture and food industry is related to training people to have the right capabilities and skill sets for modern agriculture and food production. This can be observed at all levels in our industry, from high managers to manual labor, in all segments of this value chain. Much is discussed about manual labor at the farm level, but salespeople at the input distribution channels, for example, are being impacted just as hard or even harder. These professionals are being put in a position where just selling products is not enough, they need to become data literate to be able to translate to their customers what the vast amounts of data generated at the farm truly mean for a better decision-making process.
The COVID-19 pandemic has also highlighted the vulnerability of the agriculture and food industry to labor challenges. The pandemic has disrupted labor markets, restricted the movement of people, and created health and safety concerns for workers. This has led to further labor shortages and increased labor costs for agricultural businesses.
Finally, the immigration context, with the H2A and H2B visas program, has played a very important role in the labor issue for American agriculture. In 1952, the H-2 category was introduced through the Immigration and Nationality Act to allow U.S. employers who meet specific requirements to bring foreign laborers in for temporary work (Figure 2). The agricultural subcategory, H-2A, was created in 1986 under the Immigration Reform and Control Act to allow for an uncapped number of temporary agricultural workers. Since then, the use of this program has skyrocketed. One of the clearest indicators of the scarcity of farm labor is the fact that the number of H-2A positions requested and approved has increased more than sevenfold in the past 17 years, from just over 48,000 positions certified in fiscal 2005 to around 371,000 in the fiscal year 2022 (Figure 3).
Figure 2 – The H2 program
Figure 3 – US H2A positions by State
Startups can help address labor challenges in the agriculture and food industry by developing innovative solutions that optimize operations, reduce labor costs, and enhance worker safety and productivity. For instance, startups can leverage technology to automate tasks that are labor-intensive, such as crop harvesting, packing, and sorting. This can reduce the need for manual labor, increase productivity, and lower labor costs. Startups can also develop new business models that offer more attractive working conditions, such as flexible work arrangements, higher wages, and benefits, and opportunities for skills development and career growth.
The Internet of Things (IoT) industry has exploded as farmers use innovative technology to keep up with demand and remain competitive in the global market. The American Farm Bureau Federation (AFBF) reported that 56 percent of U.S. farms have begun using some form of new ag tech with more than half stating labor shortage as the reason. This has created an interesting space for automation and robotics, something relatively new to this industry (Figure 4).
Figure 4 – 2022 Crop robotics landscape
Smart farming technology allows farmers to work at full or near-full capacity with fewer workers, but not without certain drawbacks. On the other hand, this is creating a completely new space for companies that serve those farmers, providing products and services ranging from data collection, data management, personnel training, all the way to actionable insights. Transitioning to smart farming technology may also require a high initial cost investment. In these cases, adoption is very closely related to the capacity to prove a return on those investments. Despite these drawbacks, many U.S. farmers are realizing the investment is worth the initial cost to enhance crop quality and quantity through precision automation, pest control, and crop-health monitoring.
The vast amount of new technologies being adopted in our industry and the speed at which this is happening are creating a skill gap inside and surrounding the farming sector. Across the entire value chain companies are seeing an increased demand for data-literate professionals, that are capable not only of leveraging these amazing new technologies but also of understanding and using the data generated by them for better prescriptive decision-making processes. These companies are not finding these professionals in the market (and since those that exist are highly sought after, this potentially increases turnover) so training them becomes a fundamental part of their business models. Startups that are in the human development space, with services like e-learning, training and overall capacitation have been finding more space than ever. Some interesting examples can be observed in developing and underdeveloped countries, but the same concepts can be applied to the North American market, with some adjustments.
Challenges regarding the labor issue in the Agriculture and Food industry: A Jobs to be Done perspective:
Below we explore some opportunities regarding the labor issue in agriculture and food from a number of different angles. We use the lens of the Jobs-to-be-done framework conceived by Clayton Christensen and popularized by Alexander Osterwalder in his Value Proposition Canvas framework. The Jobs-to-be-Done (JTBD) framework can help identify the emerging challenges and guide labor-focused startups to develop innovative solutions to address the needs of the future.
One way to organize the overarching jobs in this space is to organize it around the journey of hiring and retaining workers and adapting with them over time. By breaking the needs of an employer and employee into these stages, we can ask more specific questions about the progress they are trying to make.
Using that lens, we can propose several “meta-jobs” under which we can find many specific jobs across various customers:
1. Job: Access the right workforce
The needs of agribusiness and the state of the labor market are both always evolving. In that environment, many employers in agri-food struggle to find and recruit the workforce they need. In a world with increasingly flexible work, there are also emerging models of fractional, gig-based, and remote jobs. These firms have needs in job design, candidate sourcing, evaluation, and recruiting workers who have the right skills and experience for the role.
Ask: If a firm is struggling to get the workforce it needs, where is the most specific breakdown in hiring?
2. Job: Onboard / equip workers
From seasonal workers in food retail to Ph.D. scientists in ag biotech labs, every worker needs to be equipped to do their work. Placing new workers onto a farm, into a plant, or behind the wheel of a truck is just a first step, but an employer also needs to help them succeed and deliver. Whether the worker is a picker transitioning to blueberries for the first time or a salesperson seeking nuanced understanding of a customer's personal history, workers cannot succeed without being well-equipped.
Ask: What is the hardest thing about making your workers successful?
3. Job: Optimize workforce activity
The pace of operations in agri-food demands that sprawling teams within and across organizations collaborate effectively. Having the right people in the right place at the right time is essential and often extremely difficult to achieve. The right team composition might make a team much more productive, but the wrong one may halve output. Workers want to be part of effective and well-functioning teams.
Ask: How do you know if your workforce is working effectively? What makes the ineffective?
4. Job: Develop workforce over time
The skillset needed in the agribusiness workforce is undergoing rapid changes. New talents and experience are becoming indispensable, but they are not yet distributed throughout the existing workforce. The sector cannot wait for natural churn, but needs to evolve its existing workforce today. At the same time, workers in the industry are looking for new and better opportunities, which they might find in the future of agribusiness.
Ask: Where are the biggest skill gaps? What would it take to bridge those gaps?
5. Job: Retain workforce
The agri-food workforce has many options – in competing firms, new geographies, or outside of the industry altogether. Employers face a challenge competing to keep their existing talent in the present environment, and workers have increased bargaining power and new options.
Ask: Why do workers take alternative options? What are they optimizing for? Why are retention efforts unsuccessful?
6. Job: Integrate technology into workforce
Technological systems are everywhere in agri-food, from sensors used in test greenhouses to self-driving combine to software guiding warehouse workers. However, their adoption is not uniform or comes with new problems. Even when these technological solutions reduce the total size of the workforce, the roles of the workers who remain are significantly changed and can be even more effective. But workers need support to adapt to these systems and help their firms to realize the full value of new systems.
Ask: What is hard about adopting more technology in a particular operation? What was the experience of workers when they added new tools?
DIAL Ventures, the innovation arm of the Purdue Applied Research Institute, tackles big problems facing the U.S. and the world such as food safety, supply chain efficiency, sustainability, and environmental impact. DIAL Ventures creates new companies that drive innovation in the agri-food industry which, in turn, makes a positive impact on our lives and lifestyles for years to come.
If you are interested in becoming a DIAL Ventures Fellow or Corporate Partner, contact us at info@dialventures.com.
Labor challenges in the agriculture and food industry are multi-dimensional and complex. One of the main challenges is labor shortage. Many countries are facing a shortage of workers in the agriculture sector due to several factors such as the aging of the population, rural-urban migration, and a lack of interest among younger generations to pursue agricultural careers. This shortage of labor can lead to delays in crop harvesting, increased crop loss due to untimely harvesting, and higher labor costs for all segments of this value chain.
The National Agriculture Statistical Service’s Farm Labor Survey (NASS FLS) reported a 73 percent decline in self-employed and family farmworkers from 1950 to 2000. The number of hired farmhands declined 52 percent within the same time period (Figure 1).This downward trend is translating into higher labor wages for these workers. For instance, in 2018 alone the agriculture industry experienced a 7 percent decline in hired help and a 5 percent increase in labor wages.
Figure 1 – The shrinkage of US agricultural workforce.
Another challenge is high turnover rates. Many agricultural jobs are seasonal, and workers often move from one employer to another depending on the season and crop cycle. This high turnover can result in productivity losses, as new workers take time to learn the job and may not be as efficient as experienced workers. Additionally, high turnover can lead to a lack of continuity in operations and reduced quality control. This is also seen in many businesses, in which workers move away from agriculture and food companies for better wages and conditions in other industries.
Another way the labor issue can be seen in the agriculture and food industry is related to training people to have the right capabilities and skill sets for modern agriculture and food production. This can be observed at all levels in our industry, from high managers to manual labor, in all segments of this value chain. Much is discussed about manual labor at the farm level, but salespeople at the input distribution channels, for example, are being impacted just as hard or even harder. These professionals are being put in a position where just selling products is not enough, they need to become data literate to be able to translate to their customers what the vast amounts of data generated at the farm truly mean for a better decision-making process.
The COVID-19 pandemic has also highlighted the vulnerability of the agriculture and food industry to labor challenges. The pandemic has disrupted labor markets, restricted the movement of people, and created health and safety concerns for workers. This has led to further labor shortages and increased labor costs for agricultural businesses.
Finally, the immigration context, with the H2A and H2B visas program, has played a very important role in the labor issue for American agriculture. In 1952, the H-2 category was introduced through the Immigration and Nationality Act to allow U.S. employers who meet specific requirements to bring foreign laborers in for temporary work (Figure 2). The agricultural subcategory, H-2A, was created in 1986 under the Immigration Reform and Control Act to allow for an uncapped number of temporary agricultural workers. Since then, the use of this program has skyrocketed. One of the clearest indicators of the scarcity of farm labor is the fact that the number of H-2A positions requested and approved has increased more than sevenfold in the past 17 years, from just over 48,000 positions certified in fiscal 2005 to around 371,000 in the fiscal year 2022 (Figure 3).
Figure 2 – The H2 program
Figure 3 – US H2A positions by State
Startups can help address labor challenges in the agriculture and food industry by developing innovative solutions that optimize operations, reduce labor costs, and enhance worker safety and productivity. For instance, startups can leverage technology to automate tasks that are labor-intensive, such as crop harvesting, packing, and sorting. This can reduce the need for manual labor, increase productivity, and lower labor costs. Startups can also develop new business models that offer more attractive working conditions, such as flexible work arrangements, higher wages, and benefits, and opportunities for skills development and career growth.
The Internet of Things (IoT) industry has exploded as farmers use innovative technology to keep up with demand and remain competitive in the global market. The American Farm Bureau Federation (AFBF) reported that 56 percent of U.S. farms have begun using some form of new ag tech with more than half stating labor shortage as the reason. This has created an interesting space for automation and robotics, something relatively new to this industry (Figure 4).
Figure 4 – 2022 Crop robotics landscape
Smart farming technology allows farmers to work at full or near-full capacity with fewer workers, but not without certain drawbacks. On the other hand, this is creating a completely new space for companies that serve those farmers, providing products and services ranging from data collection, data management, personnel training, all the way to actionable insights. Transitioning to smart farming technology may also require a high initial cost investment. In these cases, adoption is very closely related to the capacity to prove a return on those investments. Despite these drawbacks, many U.S. farmers are realizing the investment is worth the initial cost to enhance crop quality and quantity through precision automation, pest control, and crop-health monitoring.
The vast amount of new technologies being adopted in our industry and the speed at which this is happening are creating a skill gap inside and surrounding the farming sector. Across the entire value chain companies are seeing an increased demand for data-literate professionals, that are capable not only of leveraging these amazing new technologies but also of understanding and using the data generated by them for better prescriptive decision-making processes. These companies are not finding these professionals in the market (and since those that exist are highly sought after, this potentially increases turnover) so training them becomes a fundamental part of their business models. Startups that are in the human development space, with services like e-learning, training and overall capacitation have been finding more space than ever. Some interesting examples can be observed in developing and underdeveloped countries, but the same concepts can be applied to the North American market, with some adjustments.
Challenges regarding the labor issue in the Agriculture and Food industry: A Jobs to be Done perspective:
Below we explore some opportunities regarding the labor issue in agriculture and food from a number of different angles. We use the lens of the Jobs-to-be-done framework conceived by Clayton Christensen and popularized by Alexander Osterwalder in his Value Proposition Canvas framework. The Jobs-to-be-Done (JTBD) framework can help identify the emerging challenges and guide labor-focused startups to develop innovative solutions to address the needs of the future.
One way to organize the overarching jobs in this space is to organize it around the journey of hiring and retaining workers and adapting with them over time. By breaking the needs of an employer and employee into these stages, we can ask more specific questions about the progress they are trying to make.
Using that lens, we can propose several “meta-jobs” under which we can find many specific jobs across various customers:
1. Job: Access the right workforce
The needs of agribusiness and the state of the labor market are both always evolving. In that environment, many employers in agri-food struggle to find and recruit the workforce they need. In a world with increasingly flexible work, there are also emerging models of fractional, gig-based, and remote jobs. These firms have needs in job design, candidate sourcing, evaluation, and recruiting workers who have the right skills and experience for the role.
Ask: If a firm is struggling to get the workforce it needs, where is the most specific breakdown in hiring?
2. Job: Onboard / equip workers
From seasonal workers in food retail to Ph.D. scientists in ag biotech labs, every worker needs to be equipped to do their work. Placing new workers onto a farm, into a plant, or behind the wheel of a truck is just a first step, but an employer also needs to help them succeed and deliver. Whether the worker is a picker transitioning to blueberries for the first time or a salesperson seeking nuanced understanding of a customer's personal history, workers cannot succeed without being well-equipped.
Ask: What is the hardest thing about making your workers successful?
3. Job: Optimize workforce activity
The pace of operations in agri-food demands that sprawling teams within and across organizations collaborate effectively. Having the right people in the right place at the right time is essential and often extremely difficult to achieve. The right team composition might make a team much more productive, but the wrong one may halve output. Workers want to be part of effective and well-functioning teams.
Ask: How do you know if your workforce is working effectively? What makes the ineffective?
4. Job: Develop workforce over time
The skillset needed in the agribusiness workforce is undergoing rapid changes. New talents and experience are becoming indispensable, but they are not yet distributed throughout the existing workforce. The sector cannot wait for natural churn, but needs to evolve its existing workforce today. At the same time, workers in the industry are looking for new and better opportunities, which they might find in the future of agribusiness.
Ask: Where are the biggest skill gaps? What would it take to bridge those gaps?
5. Job: Retain workforce
The agri-food workforce has many options – in competing firms, new geographies, or outside of the industry altogether. Employers face a challenge competing to keep their existing talent in the present environment, and workers have increased bargaining power and new options.
Ask: Why do workers take alternative options? What are they optimizing for? Why are retention efforts unsuccessful?
6. Job: Integrate technology into workforce
Technological systems are everywhere in agri-food, from sensors used in test greenhouses to self-driving combine to software guiding warehouse workers. However, their adoption is not uniform or comes with new problems. Even when these technological solutions reduce the total size of the workforce, the roles of the workers who remain are significantly changed and can be even more effective. But workers need support to adapt to these systems and help their firms to realize the full value of new systems.
Ask: What is hard about adopting more technology in a particular operation? What was the experience of workers when they added new tools?
DIAL Ventures, the innovation arm of the Purdue Applied Research Institute, tackles big problems facing the U.S. and the world such as food safety, supply chain efficiency, sustainability, and environmental impact. DIAL Ventures creates new companies that drive innovation in the agri-food industry which, in turn, makes a positive impact on our lives and lifestyles for years to come.
If you are interested in becoming a DIAL Ventures Fellow or Corporate Partner, contact us at info@dialventures.com.