DILLON — While the impact of slowing COVID-19 has shuttered Beaverhead Valley restaurants and stores, ranching appears to be business as usual. At least on the surface.
Calves are being born, fields are being dragged and hay is being thrown to livestock — just like any other spring.
But while the ranching industry as a whole marches on, it hasn’t been entirely immune from the fallout of the novel coronavirus. A labor shortage, sparked by a nationwide suspension of new work visas to migrant workers, has left ranches scrambling to shore up their crews. In addition, market uncertainty and a volatile stock market have kept ranchers worried about making profits.
Ranching has been designated a critical business during the coronavirus pandemic, and many farmers and ranchers in southwest Montana rely on workers from other countries.
U.S. consulates in Mexico are closed indefinitely, stranding a labor source that American farms rely on.
Every year, David Schuett brings about 15 employees from Mexico through the H-2A temporary agricultural workers program, which helps American farmers fill employment gaps. For years now, all of Schuett’s laborers have been coming from Mexico.
On Schuett’s ranch, where thousands of cattle are managed, the first round of workers arrives in early spring to help with calving and raising cattle. The rest of the laborers arrive a few months later to help with grain farming, irrigation and harvest.
By now, he was hoping to have six returning workers on the ranch with the rest arriving by early summer. But his first crew came one employee short.
Now, he’s worried more restrictions to curb the pandemic and potential border closures will prevent his remaining employees from returning during peak season.
“If we don’t get all our people, we won’t be able to keep our operation going, so that will have a definite impact on the commodities market in the coming year,” Schuett said.
Instead of having the manpower to help raise calves and irrigate — both labor-intensive chores — Schuett will have to “prioritize things.”
Foreign ranch hands in Montana
In a typical year, more than 250,000 foreigners will get temporary work permits, known as H-2A visas, to work in the U.S. agriculture industry. But after fears of the pandemic soared in recent weeks, the federal government decided on March 16 to close consulates — leaving American farmers scrambling and Mexican workers stranded at one of the busiest times of the season.
For decades, farms and ranches in Montana — from family-run operations to massive, industrial-scale producers — have contracted with foreign laborers for months at a time to raise livestock and grow produce.
The indefinite closure of U.S. consulates is having repercussions on Montana’s ranchers and farmers that have increasingly relied on the H-2A program in recent years.
The program brought in nearly 1,000 guest workers to Montana last year, and growth was expected again this year. Once the Labor Department certifies those positions, farms are then allowed to recruit workers who go through the visa application process in U.S. consulates.
“There’s been a labor shortage in agriculture for years,” Schuett said. “It started in the early ‘90s and it’s gotten worse every year.”
Schuett said he signed up for the H-2A guest worker program in 1987 after struggling to find reliable local laborers. The program requires proof that farmers struggle hiring locally.
Schuett has been posting job ads every year. “We only get one response every other year,” he said. “It was a struggle to find any reliable workers even then.”
He said workers hired locally often didn’t last long on the ranch.
“They leave because it’s hard work and long hours, every day,” Schuett said. “It’s going to be an extremely difficult challenge without people coming from Mexico.”
The bigger picture
Joel Anderson, executive director of Idaho-based Snake River Farmers Association, which helps its members file H-2A applications, said growers and producers have increasingly relied on the program in the last five years. The association includes Montana farmers and ranchers.
“We’ve been growing 10 to 15 percent year over year,” said Anderson. “This year we were on pace to have regular growth rate, until [the coronavirus] put
things on hold.”
The same day U.S. consulates closed doors in Mexico, national agricultural groups urged Secretary of State Mike Pompeo to recognize H-2A and other visa petitions involving agricultural workers as “essential.” They called on U.S. consulates to treat these petitions as “emergency visa services.”
The State Department will continue to process petitions for H-2A visas for agricultural workers at certain consulates, depending on local circumstances, but only if they have been in the U.S. on such visas before and do not require an in-person interview.
“We realize that there are a lot of employers it doesn’t help,” said Anderson.
While this helps farmers who have some returning workers, Anderson said, up to 20 percent of them require additional screening, something the State Department has halted entirely.
“That could be because they received a previous parking ticket before, had a penalty associated with an old immigration violation, or if they had the same name and date of birth as someone who got a hit in the system,” Anderson said.
Anderson said the State Department has been working in conjunction with Homeland Security and the Department of Agriculture to expand the number of individuals allowed for H-2A processing.
With travel restrictions in place in states like Montana and more local workers available due to higher unemployment numbers, Anderson said some farmers have canceled applications to the H-2A program.
“Some said they want to help out those Americans who’ve lost their jobs during the pandemic,” he said, so that’s what the association is encouraging them to do.
Anderson said H-2A farm workers and U.S. workers in corresponding employment in Montana are paid “well above the minimum wage” at $13.64 per hour.
“My hope is that more U.S. workers are interested in these jobs,” he said. “But time will tell.”
He said the majority of association members are saying they still can’t find a sufficient number of workers, so they’re willing to comply with virus-related restrictions including two-week quarantines that come with foreign employees.
“The reality is producers have concerns that the U.S. workers they hire will return to work for their permanent employers when they can and won’t be around to complete their contract,” Anderson said. “The biggest challenge facing farmers is if they relaxed their need for H-2A workers in lieu of U.S. workers, and those workers quit halfway through the season, it would put farmers in a bad spot.”
Anderson said most Montana producers bring in one to four guest workers, mostly from Mexico and Peru.
Back to the ranch
For smaller livestock producers like Tom Paffhausen, who has about 300 cattle, delays in processing H-2A workers will cost him his grain crops and cattle. He was planning to bring in two H-2A workers from Mexico to help with calving, farming grain, irrigating and harvesting. One was supposed to arrive March 1 and stay through Dec. 1.
State Department officials, however, told him he wasn’t going to get his first employee.
“I don’t know the reason and I don’t think I’ve gotten a good explanation yet,” Paffhausen said. “My guy has been coming up every year to work for me for about 24 years now. It’s a big part of his livelihood.”
Without his employee, Paffhausen said, his ranch “can’t really do much.”
“We’ve got miles and miles of fencing to take care of, there’s a lot of repair work that needs to be done during the winter time, feeding cattle and general animal husbandry,” he said.
Paffhausen said finding people willing to do that work and do it well is very difficult.
“I think most Americans just don’t want to do that type of work that’s ag-related,” he said. “But a lot of the H-2A guys have ag backgrounds, so they have knowledge of what they’re doing.”
Paffhausen hopes his employees will be able to get through. Things like drip systems and irrigation need to be taken care of daily. About 300 cattle have to be fed.
“We’re about a month away from the irrigation season, and getting the pumps ready would be our priority,” he said. “But if they’re not here by mid-June, not a lot will get done.”
More storm clouds
The coronavirus pandemic is threatening local agriculture in other ways.
Paffhausen told The Montana Standard that while the daily work hasn’t changed much, concern about cattle prices weighs heavily on the area’s ranchers. He estimated cattle prices have fallen as much as 30 percent, and those prices were already low prior to the pandemic.
Paffhausen said while demand for beef is still high, it is not raising cattle prices and it’s the packing plants making the profit.
Many cattle ranchers blame the “futures market” — an auction market in which participants buy and sell commodities and contract for delivery at a specified future date — for driving down prices.
Last Friday, the Montana Farm Bureau joined its counterparts in 26 other states to ask U.S. Agriculture Secretary Sonny Perdue for relief to cattlemen seeing increasingly volatile markets and to investigate any price manipulation that may be occurring.
“The beef cutout just skyrocketed, and it hit historic levels, the highest increases we’ve seen in just seven days,” said Michael Nepveux, an economist with the American Farm Bureau. “On top of that, you saw live and fed cattle futures decline substantially, and you even saw cash prices drop. There’s a lot of confusion in the beef markers and the cattle markets.
“Looking forward, we’re looking at an economic recession hitting the United States,” he said. “That doesn’t bode too well for beef in the future because beef is one of those luxury goods in terms of animal proteins, and as consumers lose paychecks, you might see a little bit of a tougher environment for beef.”
Paffhausen said he will sell his cattle in the fall, as do most ranchers in the valley. He’s hoping by that time, prices are higher and the volatility of the stock market has evened out.
Hitting the sheep market, too
The pandemic is also having a tremendous impact for those in the wool and sheep industry. Demand for lamb, wool and pelts is tanking and prices are following suit.
John Helle, a fourth-generation sheep rancher based in Dillon, said the pandemic “couldn’t have happened at the worst time” for those selling lamb during the Easter season.
Easter is the largest lamb consumption period of the year and a main event for sales, Helle said, but is also important in defining marketing trends for the summer. The industry gears much of its lamb production for the Easter holiday demand and a large portion of the lamb
market is restaurants and cruise ships. But they aren’t operating.
On top of that, the second-largest U.S. lamb packer, Mountain States Rosen, filed for bankruptcy, and its kill rate is way down.
Mountain States Rosen filed for Chapter 11 bankruptcy protection on March 19 with the U.S. Bankruptcy Court for the District of Wyoming, citing lost sales due to COVID-19 pandemic. Chapter 11 protects a company from creditor lawsuits while it reorganizes its finances.
“There was too much loss in one or a couple of weeks,” said Helle, who markets his company’s lambs through Mountain State.
Helle said he had about 1,000 lambs in a feedlot in Colorado, ready to be slaughtered for Easter week. But with restaurants and hotel closures — the biggest consumers of his lamb product — there’s no market.
“I don’t know how I get them marketed and moved,” Helle said. He said he’s only sold about 350 lamb and has 650 left for Easter week.
On top of that, Helle has another 1,500 lambs ready to be sent to slaughter and his flock is in the middle of lambing.
“We have fresh lamb crop on the ground, so we’re hoping that this thing gets over quickly,” Helle said. He’s apprehensive about the road ahead when it’s time to sell his lambs for finishing in August.
Prices paid to producers are rapidly falling. Fat lambs, which were selling for $1.45 to $1.50 a pound, are now as low as $1.25 — “if you can find somebody who will buy them,” Helle said.
“We’re looking at very poor prices this fall if it continues,” he said.
Helle’s Rambouillet sheep ranch also produces wool for Duckworth Wool, a high-end, outdoor performance clothing line based in Bozeman.
However, wool has become unsaleable because the agency in New Zealand that does commercial testing of U.S. wool has closed due to coronavirus. Trade to major wool buyers in Italy and China has shut down.
In addition, the company’s wool processing operations in the east coast have largely shut down due to social distancing and stay-at-home orders
There’s always a level of uncertainty in ranching, he said, but the pandemic adds a whole other layer.
“Nobody really knows what’s going to happen,” he said.