Who’s Picking The Lettuce And Cutting Up Steaks?

U.S. Food Industry on the Brink of Labor Crisis: Deportations and Medicaid Work Rules Causing Operational Complexity. Higher Food Prices and Shortages On The Horizon.

A sharp convergence of immigration enforcement and Medicaid reform is rattling America’s food-processing sector. With plans underway to deport roughly 1 to 1.3 million undocumented workers across agriculture, meatpacking, dairy, and processing plants, businesses are warning of critical labor shortages.

According to USDA data, 42% of U.S. farm laborers lack legal work authorization. In meatpacking, estimates suggest 30–50% of frontline workers are undocumented, totaling 160,000–270,000 individuals . Deporting these workforces could shutter operations, spike costs, and pressure margins across the food supply chain.

Secretary of Agriculture Brooke Rollins has floated an unconventional counterproposal: replace deported migrant labor with “able‑bodied Medicaid recipients.” She noted on July 8 that 34 million adults are on Medicaid, implying it could serve as a domestic labor pool . But food business insiders and policy analysts are not only skeptical but consider such a thesis laughable. Further demonstrating the ignorance of policy makers and the effects of their actions on businesses.

Real-world data underscores the disconnect: of the 34 million Medicaid recipients, only 5.6 million are unemployed, and fewer are fit for rural, physically demanding jobs—leading analysts to estimate 500,000–750,000 could realistically transition into ag roles.

The math reveals a looming shortfall:

Even the most optimistic recycling scenario leaves a half‑million plus deficit—with concentrated vulnerability in labor‑intensive fresh produce and red-meat sectors.

Factory owners and farm leaders say U.S. workers won’t easily fill the gap. Andrew Mickelsen, a seventh-generation Idaho potato farmer, told WBUR: “We… offer $17 an hour… but… we rarely get local responses. The unemployment rate is basically zero.”

Businesses are exploring alternatives:

Automation, though costly and slow in deployment.

• Ryan Jacobsen, CEO of Fresno County Farm Bureau, said, “A fresh peach still requires a pair of hands to cut that off of a tree… automation has limits.”
• Juan Proaño, chief executive of LULAC,(League of United Latin American Citizens) added: “If they could have automated picking strawberries and oranges, they would have already.”

Expansion of H‑2A visas, a guest‑worker program already encumbered by administrative hurdles and capacity limits could be a solution if more attention was paid to solving the processing complexity with applications.

Business implications are acute. Expect higher labor costs, supply-chain bottlenecks, and increased margin pressure in consumer-facing food companies. Investors should monitor CapEx dynamics, especially in automation and workforce integration, as firms pivot to fill structural labor gaps.

Chobani CEO Hamdi Ulukaya, said the Trump administration’s aggressive immigration enforcement practices pose risks to the food supply chain – “we need to be very realistic” Ulukaya said at the WSJ Global Food Forum in Chicago last month. “We need immigration, and we need workers for our food system to work”.

Absent swift policy pivot—whether expanding visa programs, easing deportations in essential sectors, or investing heavily in rural labor pipelines—the industry risks economic disruption at both regional and national levels.

The combined impact of immigration enforcement and Medicaid policy shifts creates a high-risk labor environment for the U.S. food industry. For companies across the value chain—from agtech startups to multinational processors—the imperative is clear: reassess workforce strategies, re-evaluate risk exposure, and prepare for tighter labor markets.

If policymakers don’t resolve the growing disconnect between political rhetoric and labor market realities, the result may not just be higher wages—but higher prices, supply instability, and margin pressure industry-wide. The pain of on going deportations and aggressive immigration actions will ultimately be felt by consumers through shortages of basic daily foods and much higher food prices.