Fruit and Vegetable Policy Part II - Policy Issues and Outcomes

Last week I discussed some of the key programs that shape fruit and vegetable production policy in the US: marketing orders, market access programs, national purchasing programs, and the Specialty Crops Competitiveness Act. These programs, as well as the absence of other types of programs and restrictions on production, play a major role in shaping production of fruit and vegetables in the US.

As an example of the significance of federal support in shaping agricultural production, we can look at dry peas and lentils. Prior to the 2002 Farm Act, peas and lentils were regulated as vegetables and pulses and did not receive Federal Commodity Support. The Farm Security and Rural Investment Act of 2002 introduced a Marketing Loan Assistance Program for these crops, which provides loan deficiency payments or marketing loan gains to farmers if market prices fall below commodity loan rates. This program reduces revenue risk associated with price variability. In the following three years, dry pea planting area increased by 156% and area planted to lentils doubled.

A USDA Economic Research Service paper comparing the US and Canadian dry pea and lentil sectors further highlights the importance of this change. They explain that since the 2002 Farm Bill was not signed into law until mid-May, it was too late for farmers to know with certainty what the marketing loan rates would be before making planting decisions, so effects of the change are not significant until the following production year. The point is that there is a close connection between policy and planting decisions - farmers were paying a lot of attention to these developments. This is a great example of how policy directly influences what farmers decide to plant, and thus, what is produced and available to consumers in the US and around the world.

Current Fruit and Vegetable Policy Discourages Production

            Current debates on fruit and vegetable policy center on the planting flexibility restrictions that apply to program crop base acres. Here’s what that means: farmers planting land with a history of program crop production (corn, soy, cotton, rice and other plants that are part of commodity support programs) can use that land to plant other crops than those for which they receive government support, without losing the payments. Other crops, that is, except fruit and vegetables: farmers who plant them are no longer eligible for program support (keep in mind that the cost of production for some commodity crops is higher than market prices – no one wants to lose the subsidies). This has the effect of discouraging fruit and vegetable production by limiting available land and discouraging more farmers from entering production, and thus, keeping prices higher. According to an agricultural policy analyst I spoke with a few weeks ago, this arrangement emerged as a compromise with the fruit and vegetable industry to protect their production, since they don’t receive the same kind of supports as program crops.

While this restriction had been in place since 1990, it became more significant in 2002, when soybeans and other oilseeds became program crops. This significantly restricted the land supply and increased financial difficulties for new and expanding fruit growers. According to agricultural economists at Purdue University, “the addition of soybeans as a base eligible crop has unintentionally removed thousands of Midwestern acres previously available for fruit and vegetable production” (Althoff and Gray 2004). If farmers want to plant fruits, vegetables, or tree nuts on program land, they have the choice of removing their farm from subsidy programs, or face penalties for planting fruits and vegetables on subsidized land – permanently losing the direct payments.

It’s understandable why the fruit and vegetable industry would have supported this kind of policy (although many producer growers who want to expand are frustrated too), but it is detrimental to American consumers. Policy analysts have concluded that this policy discourages fruit and vegetable production on a national level. The policy expert I mentioned above spoke in one of my classes on these fruit and vegetable planting restrictions. I asked, “is this policy a major impediment to producing more fruits and vegetables and making them more affordable and accessible to Americans?”

He responded, “Yes, I would say that it is.”

            This is a huge problem! Americans eat less than half of the recommended daily fruit and vegetable intake, and much more sugar, refined grains, saturated fat, and cholesterol than we should. We are not growing what we should be eating: farm policy encourages cheap corn, used primarily for ethanol and animal feed (making meat production cheaper), as well as high-fructose corn syrup (also made artificially cheap), and cheap soy, used almost entirely for animal feed. Planting restrictions on fruits and vegetables should be removed or greatly reduced, and increased federal support should be provided for the fruit, vegetable, and tree nut sectors in the form of marketing programs, increased federal purchasing where demand exists, and more comprehensive crop insurance.

Most “specialty crops,” as they are called, are not eligible for insurance under Title XII of the Farm Bill - 80% of policy premiums go to four commodity crops: corn, soy, wheat, and cotton. Farmers growing eligible commodity crops have 62% of the premium covered for them by the federal government – aka, us. According to the USDA Economic Research Service, 75 to 80% of eligible corn, wheat, soy and cotton acreage is insured, encouraged by premium subsidies, compared with 49% of the harvested area on specialized farms. There is good news though: there are now federally subsidized insurance programs for over 40 different fruit, nut, and vegetable crops. Providing these kinds of programs decreases the financial risk associated with perishable crops and makes them more available and affordable.

There are other positive developments too: the Agricultural Act of 2014, passed in the House and set for a vote in the Senate on Wednesday, increases funding by 55% for produce industry initiatives and programs. This includes maintenance of the Fresh Fruit and Vegetable purchase program and the Market Access Program, support for research and state grants, and a fruit and vegetable incentive program for SNAP recipients (the Supplemental Nutritional Assistance Program, often called food stamps, accounts for two-thirds of farm bill funding and provides assistance to elderly and low-income Americans - funding for it was cut by $8 billion in the 2014 bill). The Specialty Crop Farm Bill Alliance, which represents more than 120 fruit, vegetable and tree nut organizations from across the country, supports the Act and applauded the investment made by Congress in specialty crop production and promotion. The American Farm Bureau Federation also expressed support for the bill, saying, "We are particularly pleased with provisions to provide risk management to fruit and vegetable farmers..."
We can hope to see more developments like this in coming years.

And now, some more fruit and vegetable recipes!

Green Mango Salad

·      Two very firm green mangos

·      Juice of one lime

·      ½ cup toasted cashews

·      2 green chilies, minced

·      Cilantro, roughly chopped

·      Salt to taste

Directions

1. Peel the mangos and grate them on the largest holes of a box grater.

2. Add to a bowl and toss with the lime juice and chilies. Sprinkle the cashews and cilantro over the top, and add salt to taste. Serve.

Caramelized Figs

Slice fresh figs in half and place cut side down in olive oil heated over medium heat. Allow to cook, shaking gently every minute or so, until they turn golden brown. Flip over and continue cooking until the back side is slightly browned and wrinkled. Serve with shavings of manchego or another aged Spanish cheese or over ice cream.

Fruit and Vegetable Policy Part I - Background and Existing Federal Programs

Background

Production

Fruits, tree nuts, vegetables and pulses are grown on less than 4% of all US agricultural land, with the rest devoted to corn, soy, wheat, and other grains and oilseeds. However, these “specialty crops” make up about 50% of all crop revenue. Production in this part of the agricultural sector is highly concentrated: The USDA notes that while “Small, family, or individually run farm operations continue to dominate U.S. fruit and tree nut production…Most of the production and revenue…come from the few largest farms.” Similarly, for vegetables, “U.S. vegetable farms are largely individually owned and relatively small… However, relatively few farms account for most commercial sales of vegetables. About 9 percent of operations…accounted for 90 percent of the value of vegetables sold by growers.” Overall, specialized fruit and vegetable farms tend to be better off financially and less dependent on government support than other types of farms.

The largest fruit producing states are California, Florida, and Washington, with California accounting for over half the value of all fresh fruit. Oranges, grapes, apples, bananas, and pineapples are the top fruits consumed in the US; only the first three are produced domestically. California also leads in fresh vegetable production, followed by Florida. There is significant production in the Upper Midwest, the West Coast, and Arizona, New York, and Georgia as well. Over half this land is irrigated; the figure is as high 99% in parts of California.

Unique Challenges 

The fruit and vegetable industry faces unique challenges due to the seasonality and limited growing range of many crops, variable and intensive labor requirements, perishability, expense of shipping, difficulty of storage, high price variability, consumer demands for health and convenience, and consolidation in the retailing sector that has forced down prices. 

Increased Consumption and Cost

Americans are eating more fruit and vegetable than twenty years ago, spending about $224 per person on home consumption. This is partly due to rising incomes. The USDA notes that health initiatives by government groups, including the Centers for Disease Control and the Fresh Fruit and Vegetable Program, have also played a role in increasing fruit and vegetable consumption. Still, few Americans meet the recommended 5-10 servings per day. As a result of increased consumer demand and higher shipping costs, fresh fruit and vegetable prices have risen over the past decade, at a higher rate than other foods.  

Federal Support

“A variety of general, non-crop-specific programs” provide support for fruits and vegetables, including federal purchase programs for school lunch, disaster assistance in cases of extensive crop loss, export supports, federal marketing orders, and some nationally funded research and promotion (this research funding is a tiny fraction of the total supplied by Title VII of the Farm Bill, most is for commodity crops like corn and soy). Below, I describe five of these types of programs.

Market Access Program

 The Market Access Program provides matching grants to marketing boards and cooperatives to fund promotion of their products in overseas markets. The Wine Institute, the Florida Department of Citrus, the National Potato Promotion Board, and the California Walnut and Table Grape Commissions were some of the biggest recipients of these grants in 2005. The USDA also creates National Marketing Boards by appointing board members at the request of various industries. These boards are then funded by the industries, with the goal of promoting research on and expanding the market for particular crops or products. There are seven fruit and vegetable marketing boards, including blueberries, Hass avocados, mangos, mushrooms, potatoes, processed raspberries, and watermelon. The federal government pays the cost of administering and implementing the program, ranging from $1-5 million for mangos, mushrooms, raspberries, and watermelon to $47 million for avocados, and is reimbursed by the industry.

Federal Purchase and Nutritional Assistance Programs

Fruit and vegetable purchases for school breakfast and lunch, emergency relief, donations to homeless shelters, and food stamps, help support the fruit and vegetable industry. In 2004, the Agricultural Marketing Service purchased $447 million worth of fruits and vegetables for these uses. The Secretary of Defense is also allocated $50 million for fruit and vegetable purchases. However, participants in the Women, Infants, and Children Program, unlike SNAP* participants, can only use vouchers for juice, dry beans, and dry peas.

*The Supplemental Nutritional Assistance Program, often called food stamps, accounts for two-thirds of Farm Bill funding and provides food purchasing assistance to elderly and low-income Americans.

Marketing Orders       

Marketing orders, established by the producers themselves and overseen by the Agricultural Marketing Service (a part of the USDA), help regulate markets for fruits and vegetables (as well as other eligible commodities). They use a variety of mechanisms, including enforcing quality standards, regulating flow of product to market, standardizing packaging, and authorizing research and advertising. They essentially help balance supply such that consumers receive quality products and producers receive high enough prices. Once passed, these orders apply to all handlers – everyone involved in receiving the product from producers, transporting, packaging, grading, or placing the product in commercial channels – in a geographic area.

           

Specialty Crops Competitiveness Act

In 2004, Congress passed this act with the goal of increasing specialty crop production, defined as fruits, vegetables, tree nuts, dried fruits, and nursery crops. It authorizes $54 million annually to promote increased consumption and more competitive production of specialty crops, as well as  increased research, analysis of trade issues, and training of fruit and vegetable inspectors. The Act was amended under the 2008 Farm Bill, directing the Secretary of Agriculture to direct grant funds to state agriculture departments for use in promoting these crops.

Crop Insurance

While most fruits and vegetables are not eligible to receive the same kind of insurance and corn, soy, and other commodity crops, there are now federally subsidized insurance programs for over 40 different fruit, nut, and vegetable crops, and 49% of the harvested area on specialized farms is insured. This helps reduce the risk of producing fruits and vegetables, which are often vulnerable to weather, transpiration, labor, and other problems.

In the next post, I’ll talk more about some issues related to fruit and vegetable policy in the US, including how current Farm Bill regulations actually discourage fruit and vegetable production, as well as some recent positive developments.

Thanks for bearing with me through this policy-heavy post! Here is one of my favorite fruit recipes (botanically speaking, avocados and tomatoes are fruit!).

Open-Face Avocado Sandwiches with Tomato and Basil

•           1 avocado
•           1 handful cherry tomatoes, sliced in half
•           coarse sea salt + pepper
•           balsamic vinegar or reduction (optional)
•           4 small slices or 2 large slices whole wheat bread, toasted

Directions

1. Roughly mash the avocado and spread a quarter on each slice of bread.

2. Distribute the tomato halves over the slices and season with salt, pepper, and balsamic vinegar.