Spending More on Agricultural Labor
Well we are nearing the end of 2023 and, with that, the total cash labor expenses for the U.S. agriculture sector are forecast to be at $43.35 billion. That’s based on new data from USDA’s Economic Research Service. This would be an increase of $0.78 billion, or 1.8 percent, over the 2022 level of $42.57 billion in inflation-adjusted ’23 money. The projected 2023 level still below the high that was set in 2017.
Labor expenses, of course, are an important component of agricultural production costs. This one was higher than I realized, though, for every $100 spent on production expenses, almost $10 of that does go back to labor.
As we look at the numbers, total labor expenses include contract and hired labor payments. They exclude non-cash employee compensation. Generally, the animal production sector uses less hired and contract labor than the crop sector. In 2021, that breakdown was about a third of total expenses for animal production and the other roughly two-thirds incurred by crop production. This is because some large specialty crops are just much more labor-intensive than most industries in the animal sector.