Cheap imported fruit threatens farmers\' livelihood
07/15/01
ALEX PULASKI
American farmers, who once had only nature to contend with, are being crushed between two forces they couldn\'t see coming.
Imports of fresh and processed fruits and vegetables, combined with the massive buying power of rapidly growing supermarket chains, have pushed thousands of farmers to the brink of ruin.
Only federal payments stand as a tenuous wedge between farmer and failure; subsidies have reached their highest level ever, $22.9 billion.
Last year, four years after Congress passed a law designed to phase out such farm payments, 41 cents of every dollar of U.S. farmers\' net income came from Uncle Sam. That was more than double the average of the 1990s.
Just as cheap imports from overseas and Mexico shuttered steel mills in Pennsylvania, car plants in Michigan and textile factories across the South, the global economy has left America\'s farmers wavering in the wind, struggling to keep their roots down.
Change the name and the crop, and the story ends the same way, from Oregon to Florida, Maine to New Mexico. Growers in Oregon and Washington, two of the country\'s top producers of fruits and vegetables, have been especially hard-hit.
In Hood River, grower Camille Hukari wonders whether pear prices will continue to plummet year by year, eating away at her savings and her land\'s value until Social Security is all she has left to retire on.
In Deming, N.M., Cass Keeler has all but given up growing jalapeno peppers, once the backbone of his 1,500-acre farm. Instead, he watches truckload after truckload of Mexican jalapenos rumble past, destined for the processor that once bought Keeler\'s peppers.
In Albion, N.Y., apple grower Bruce Krenning spends sleepless nights searching for salvation. Cheap Chinese juice has flooded international markets, drowning the U.S. apple industry.
Krenning, vice president of the New York Farm Bureau, helped head a farm industry campaign that persuaded Congress last year to give apple growers $100 million in federal subsidies -- the first such payment to fruit growers to fight world market forces.
Since their inception during the Great Depression, such farm payments had before been reserved almost exclusively to compensate for natural disasters and to prop up prices of staple grains such as wheat and corn.
Now farm lobbyists are talking to Congress about sending apple growers another $150 million next year. Fruit and vegetable farmers want $1.5 billion in price supports annually for 10 years.
Companies that pack and process fruits and vegetables, such as Agrifrozen Foods in Woodburn or Bonita Packing in Bonita Springs, Fla., are closing their doors in the face of increasing produce imports from Mexico and other countries.
Processed foods in particular, unlike fresh produce, have an indefinite shelf life and therefore can compete directly with fruits and vegetables grown six months before and half a world away.
Like the Nikes or Levis that we wear, production of the food we consume gravitates to where costs are cheap. In Mexico or Chile, that means pickers make in a day what farmers here pay for an hour, land costs are a fraction of U.S. farmland, and no Environmental Protection Agency dictates what pesticides can be sprayed.
\"Our own government has made us a player in this international chess game,\" says Tom Van Laeken, a Ridgefield, Wash., berry grower. \"And we\'re the ones losing.\" Grown anywhere else Turn over the Statue of Liberty replica you picked up on your visit to New York. The gold label on the green felt underneath reads: Made in China.
Things are no different in the supermarket\'s produce section, except that what you buy there is not required to bear a label disclosing country of origin.
You can buy pears from Argentina in New York, melons from Ecuador in Harrisburg, Penn., squash from Mexico in Salt Lake City.
Beautiful bags of Braeburn apples from New Zealand angle for attention in a Tigard Costco.
This cornucopia carries a cost, though, as visible yet difficult to grasp as an exhaled breath at 34 degrees inside of one of GoldDigger\'s 84 controlled-atmosphere rooms. In Oroville, Wash., just south of the Canadian border, bins are stacked 10 high in the packing house\'s warehouse-size rooms.
The American apples in those bins yearn for a buyer, while imported fruit fills supermarket shelves.
At GoldDigger, the last of what had been a dozen packing houses around Oroville, the bins labeled \"Lot 560\" belong to Duane Ward.
Ward grew up in Oroville, was drafted into the Army, and returned home to a woman he\'d met as a sixth-grader. Joyce and Duane Ward, married Feb. 25, 1961, in Oroville\'s United Methodist Church, have been raising apples on 40 acres since.
The Wards prospered, raised two girls, salted away enough to retire on.
Then came precipitous price drops in 1997, fueled by imports of Chinese apple-juice concentrate and emerging fresh markets for New Zealand and Chilean apples. Some growers were paid as little as a nickel a pound for apples that cost a dime a pound to grow.
By 1998, Ward was carrying a $60,000 debt into the next growing season. The farm began to consume the retirement money. That money is gone now. Ward has mortgaged his equipment.
The optimism of the past Back in the 1960s, when Bruce Krenning was studying economics at Cornell, he learned that America\'s fertile land and its citizens\' nimble minds would combine to feed the world.
That presumption hadn\'t changed much by 1993, when President Clinton signed the North American Free Trade Agreement, linking trade among the United States, Mexico and Canada. The agreement was primarily designed to open up manufacturing opportunities.
But the American Farm Bureau stood behind Nafta as well, betting that it -- and subsequent trade agreements -- would fill barge after barge with good Iowa corn and North Dakota wheat, bound for foreign ports.
Optimism was buoyant enough that Congress in 1996 passed the Freedom to Farm Act, designed to phase out the federal farm price-support program over seven years.
Many employees at the Farm Service Agency, the arm of the U.S. Agriculture Department that administers government payments, gravitated to other jobs. They were looking ahead: The agency, set to run out of dollars, wouldn\'t need people, either.
But it didn\'t work out that way. Although U.S. farmers found new export markets, those gains were outstripped by agricultural imports. The barges were pointed in the wrong direction.
A world oversupply of staple grains drove prices to 25-year lows. Instead of exporting soy to Argentina and Brazil as the United States had in the mid-1990s, America became a net importer of soy from those countries.
The United States imports $2 billion more in fresh and processed fruits and vegetables every year than it exports.
Chains get bigger and bigger As the world kept shrinking in the mid- and late 1990s, market forces at home began to take their toll on U.S. growers.
The biggest U.S. supermarket chains kept getting bigger. Kroger swallowed Fred Meyer and Ralphs. Safeway and Albertson\'s went on buying sprees. Wal-Mart and Costco expanded.
Today, the top 10 grocery store chains control 56 percent of sales. More than 18,000 grocery stores -- nearly 12 percent of the nation\'s total -- went out of business in the 1990s, but the number of chain stores grew by 25 percent, to nearly 21,000.
Size and fewer competitors have given chains and food warehouses greater buying power. New worldwide fruit and vegetable production in China, Peru and New Zealand has given them more buying opportunities. The combination has devastated many U.S. growers and packers.
\"We used to do a lot of business with Kroger,\" says Bill Spencer, a Yuma, Ariz., citrus packer. \"I can\'t even get them to pick up the phone anymore.\"
A year after the Freedom to Farm bill took effect, Congress was enacting \"emergency\" relief. Each year has brought a new emergency. Each year, Congress agrees to pay more money.
Government payments to farmers last year were triple what they were in 1996. But farmers are making less: Net farm income, including those subsidies, is down $2 billion in the same period.
More telling than the raw figure of last year\'s $22.9 billion in farm subsidies is its relation to net farm income. Subsidies vary from year to year, but they tend to make up between 10 percent and 20 percent of farm profit. For three years running in the 1970s, they stood at less than 3 percent.
Since the farm support program began in the 1930s, only once -- in 1987, after a disastrous spike in interest rates -- have subsidies comprised more than 30 percent of net farm income.
Until 1999, that is, when they rose to 37.7 percent of net farm income. Then last year, government payments crossed the 40 percent threshold, reaching 41.3 percent of farmers\' net income of $55.4 billion.
\"Nobody could have imagined that we would spend the amount of money we\'re spending now,\" says Brad Karmen, who has spent 17 years in the Farm Service Agency\'s Washington, D.C., headquarters. \"It was beyond anybody\'s belief.\"
Last month, the House passed another $5.5 billion in emergency subsidies to farmers. If the funding bill passes the Senate and is signed into law, total farm subsidies would likely surpass $20 billion for the third straight year.
Catch-22 in the orchard One day this March, before the apple blossoms had painted the hillsides pink and white around Oroville, Duane Ward and a half dozen other growers sat nursing coffee at Northwest Wholesale, where they buy their pesticides and fertilizers.
As usual, the talk revolved around crop woes, then turned to the novel $100 million Congress had agreed to pay apple growers. Next thing anyone knew, someone was on the phone to the Okanogan County office of the Farm Service Agency, setting up appointments to apply for a payment.
One by one, Ward and the other growers in the room passed the phone to select a date and time to fill out the required paper work.
By May, county Farm Service Agency offices all over the country had electronically forwarded application information to the agency\'s mainframe computer in Kansas City, Mo.
A month later, on June 12, the Wards plumbed a new low. From their revolving crop loan, they had asked their bank to issue $5,000 to pay crews thinning their apples.
The bank says they could have $4,800. Nothing more. They had hit their credit limit.
An \"adjustment\" was necessary, the bank says. The Wards had to pay down their loan.
With no prospects for income until his small cherry crop came in weeks later, Ward felt he had nowhere to turn.
Deliverance arrived in the mail at the end of the month. A note said that the federal government had deposited roughly $31,000 into the Wards\' bank account. It came to a little less than 2 cents a pound for their apples.
Ward is letting the bank keep nearly all of the money -- the \"adjustment\" it required.
It seems as if Ward makes a lot of adjustments these days. The big one -- maybe the necessary one -- is to stop harvesting less-profitable apple varieties on part of his acreage. But that step stumbles over banking requirements every time.
To acquire capital, he needs to demonstrate potential production. Stop growing, and the loan dries up.
Daryll E. Ray, an agricultural economist at the University of Tennessee, told Congress as much in February during hearings before the House Committee on Agriculture.
\"As long as farmers can scrape together enough money to plant crops, they will continue to do that until their equity is gone or until the bank won\'t let them in the field,\" Ray testified. \"Basically, they are out there to produce.\"
Stop producing, Ray explained, and the farmer abandons all hope of keeping the bank at bay. So by night, the farmer punishes himself for deeds done and left undone, but by day he continues the watering, spraying, picking.
Ward plans to keep on for as long as he can.
For as long as the light holds out. You can reach Alex Pulaski at 503-221-8516 or by e-mail at alexpulaski (at) news.oregonian.com.
Copyright 2001 Oregon Live. All Rights Reserved. |
