Jul 31, 2014

Apple grower stays in the game with H-2A program

Using H-2A labor in the production and harvesting process is a challenge many farms don’t want to tackle due to the burdensome oversight and paperwork they say is required to make the system operate efficiently and economically.

It’s a challenge Cherry Bay Orchards, located in Suttons Bay, near Traverse City, Michigan has taken on full-bore in the past couple of years, and it’s being seen as a way to the keep the traditional northern Michigan cherry growers in the game when it comes time to harvest a profitable apple crop.

Don Gregory has continued to oversee the Leelanau County-based operation with his brother Bob, along with Norm Veliquette. They have been in business since 1971, but they are beginning to give way to a new generation of operators, including farm manager Mark Miezio.

Gregory and Miezio shared their experiences with H-2A in early July during a visit from members of the Michigan Pomesters as part of a RidgeFest 2014 tour in the northern Michigan fruit-growing region.

“We’re primarily cherry growers and we got into apple growing when, as we have grown our tart cherry business, we needed to have key employees here all year round to make it all work,” Gregory said. “On the ground we couldn’t grow cherries on very well, we put in apples. It’s our secondary business, with about 2,500 acres of tart cherries and 300 acres of apples here and in southern Michigan.”

He said the apple side of the business consisted primarily of processed market fruit until about 10 years ago when a move was made into more fresh varieties.

“We’re trying to get out of the process apple market just as fast as we can,” he said.

“We switched over to H-2A labor last year and it’s really changed our cost structure in terms of labor input costs we have during apples. We’re trying to make adjustments so we can survive in the apple business if we’re going to stay in it.”

Miezio outlined how the farm had endured rigorous inspections by immigration and customs’ enforcement personnel.

“Basically, after producing three months’ worth of I-9s and $10,000 in legal fees later, we realized this was going to be a more serious audit,” Miezio said. “They ended up wanting three years worth of I-9s, wanted to interview a lot of us on the management team, really diving into a lot of our records and what we were doing.

“As we came out of that through the winter of 2012 into 2013, we said we can’t do this again. When (workers) come to northern Michigan, there’s nowhere else to go. They’re not on their way from one spot to another. They’re coming to northern Michigan to pick. And we’ve just seen over the years, there’s been a significant decline in the migrant population that was coming to northern Michigan.

“We said we need to do (H-2A) if we’re going to stay in apples, and ensure that we have the labor going we need in order to get our apples picked,” Miezio said.

In 2013, Miezio said, Cherry Bay contracted with International Labor Management, a North Carolina company.

“We utilized their services to bring in 24 guest workers for the H-2A program for the 2013 apple harvest. We ended up bringing in 24 pickers. We had about 50 H-2A pickers, 24 were from out of country; we had 24 domestics.”

He said the cost to do so was significant – representing an increase of $15 a box in 2012, to “probably $19 or $20 a box as we were getting it picked in 2013.”

The Adverse Effect Wage Rate (AEWR) for northern Michigan in 2014 is $11.49 an hour, up from $11.15 an hour in 2013, Miezio said.

AEWR is the minimum wage the U.S. Department of Labor has determined must be paid to U.S. and alien workers by employers of non-immigrant H-2A workers. Where agricultural employers offer employment to non-immigrant foreign workers, payment of at least the AEWR is required.

He said the AEWR effectively raised the previous wage made by pickers from $8 or $9 an hour previously, to $11.15 in 2013 and $11.49 in 2014. The costs per bin increased even more based on piece-rate wages.

Added on to those costs are the requirements that growers provide housing and laundry facilities for workers at no cost and pay the expenses for getting them to the location from whatever foreign country they came. Funding the contract with the labor provider and making sure workers have transportation to nearby shopping opportunities also are cost factors.

“By the end of the season, that probably ended up being another $1 to $1.25 a box in total dollars that we had to pay to get our boxes harvested on piece-rate picking,” Miezio said. “We definitely had increased harvest expenses. But we got all the apples harvested.”

Among challenges in administering H-2A programs is the requirement to hire any domestic worker that is “legally qualified to do the job that you are doing. We required someone to have three months of picking experience that we could verify. That helped if we were hiring domestic workers. They were qualified to do the job.”

Another expense arose when previously acceptable living quarters for workers did not meet new standards.

“One of things we’ve noticed in the state of Michigan, if you’ve had trailers with a 670-square-foot exterior dimensions, some inspectors said it was a seven-person. Now they’re saying it’s a six-person trailer at 100 square feet per person. We started to lose some capacity in that regard.”

He said rooms that had a bunk bed setup also were restricted due to the required square footage per individual enforced under H-2A rules.

“What was a two-bed bedroom was now a one-bed bedroom,” he said. “We started to lose some capacity there as we were transitioning into the H-2A program.

“Four trailers housed 24 workers who came ready to work, wanted to be here and work – that was a positive,” he said. “ We’ve seen a huge increase in our housing efficiency using the program. All 24 wanted to come back. We got the list down to about 17 or 18 people we would like to get back again.”

The flexibility provided in having work crews that can stay from the cherry season into the apple harvest window has made the H-2A program a beneficial investment for Cherry Bay.

“We’re continuing to use the H-2A and used it this spring,” he said. “We brought in 10 workers from Mexico in early spring to stay with us through the end of the cherry season. We have another contract that will start for the fall crops. This year we’re looking at bringing in 35 pickers from out of the country and make up the remainder with domestics and other guys who have been with us before.”

He said the workers are generally efficient employees, although a majority had never picked apples previously and required a significant amount of training. Farm management uses a “thrice” discipline system, issuing a verbal and written warning before terminating the worker on a third occurrence of a violation.

“If you’re firing someone, you’re not required to fulfill that contract if they are violating that contract,” Miezio said. “We document everything and they sign it.”

“Generally, when you sign contracts with these workers, you are guaranteeing them 75 percent of however long you sign the contract for – no matter what,” he said. “So if you bring someone in for six weeks at 40 hours a week, they are going to get six weeks of at least 30 hours a week at 11.40 an hour.

“If for some reason you make a mistake and bring in too many foreign workers, that’s your problem as a farm,” he said. “If your start to get filled up, you are then required to send the foreign workers home and you pay the full contract no matter what. And, you pay for them to go back home, also.”

– Gary Pullano