Can We Do Anything About Fruit and Vegetable Crop Prices? [Opinion]

Vegetable-market-pricesTwo weeks ago, U.S. Senator Kirsten Gillibrand (D, NY) called on Ag. Sec. Sonny Perdue and USDA to investigate why prices paid to fruit and vegetable farmers aren’t keeping up with the market.

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“We have seen transformational change in farming technologies, nutrition science, market structures, and consumer behavior,” Sen. Gillibrand writes in her open letter. “What has changed far less are the prices paid to specialty crop farmers at the farm gate.”

She points out that persistent, low prices are unsustainable and pose a risk to U.S. food security.

“We rely more on the production to foreign nations, leading to our current $2.1 billion dollar fruit and vegetable trade deficit,” she writes.

The last systemic study of specialty crop prices took place 30 years ago, she claims.

There hasn’t been much news on the topic since Sen. Gillibrand published her open letter to Sec. Perdue. Politics being what they are in 2019, a Democratic senator’s request will need an industry boost and a few Republican Congressmen endorsing her stance if we want to see any action.

To me, this isn’t a political issue. Stagnant prices are a threat to the future of our industry. We need to figure out a way to address the issue fairly and within our capitalist system. So this is an issue I think the industry should take up as its own.

“New York has a significant amount of fruit and vegetable farms and all that they ask is to receive a fair price for the quality food that they produce,” says Steve Ammerman, New York Farm Bureau Public Affairs Manager

Low Prices Meet Increased Costs

The inflation rate from 2008 to 2018 rose 17.5%, according to government figures. In that same time period, only about a fourth of vegetable growers increased their crop prices by more than 10%, according to our 2019 State of the Vegetable Industry. Unfortunately, we didn’t offer growers a higher category for crop price increases, so this isn’t an apples to apples comparison. But it’s close enough that we can all agree our industry has a problem to solve.

If crop prices stagnated, costs certainly didn’t. Nor did regulations, which have their own price tag.

“Keep in mind, a significant challenge in New York for fruit and vegetable farms is the higher cost of labor in our state,” Ammerman says.

He points out that since 2007, total production expenses on farms increased by nearly 24% in New York. Labor was one of the largest contributors to that increase. (He gets his data from a recent NY State Comptroller report, which uses USDA data.)

“With the additional overtime requirements in the new farm labor regulations, those costs will continue to rise and make New York farmers even less competitive on the national and world markets,” Ammerman says.

So How Can You Get Better Prices for Vegetable Crops?

The biggest barrier to earning prices for your crops that reflect the cost of growing produce? Others set prices.

But brokers, distributors, and retailers aren’t the bad guys in this. If they can get lower priced tomatoes or sweet corn from another source, why wouldn’t they snap up what’s offered? They have bills to pay and strive to make a profit on fairly low margins.

So the more strategic operations found ways to demand higher prices. Some have developed a reputation for reliably delivering high quality produce in a timely manner, allowing for some wiggle room in their contract negotiations. Others jump on consumer trends, supply crops that they want but aren’t in wide production yet. And others go through the patience-testing certification process to gain organic labeling.

These are great ways to earn better prices. But they all rely on being uncommon. What about the rest?

To find that answer, we’ll need a lot more information. The kind that Sen. Gillibrand is advocating.

“Farmers face multiple hurdles in a competitive environment,” Ammerman says. “The more information we have about production, distribution and regulatory challenges, the better it will be for USDA to direct resources that support agricultural needs for specialty crop producers.”

How Do Prices Compare to 10 Years Ago?

Last January, we created an infographic showing how growers prices have changed in a 10-year period. We filter the responses to show how who growers sell to affect price trends.

How veg prices compare to 10 years ago AVG SOI 2019

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My name is Michael Everson and I work for Seedway. We sell vegetable seed all over the US, Canada and Mexico. I love in Moultrie Ga, where we have a huge vegetable industry, and my sales territory cover SW Ga, NW Fl, Alabama and Mississippi. I’ve worked in my sales position for 22 years.

Over my career I’ve seen a lot of changes. None of the changes are more detrimental to our Ag industry than the unfair pricing we are seeing from Mexican produce crossing our border and the terribly unfair market prices this issue, and others, impose on my customers. I have small grower customers and very large, corporate type customers that are in real trouble.

The rising cost of seed, chemicals, fertilizer and basically all other inputs a farmers must buy to grow their crops, is making their farming business unsustainable. There are also other issues that contribute to this as well. Although your article says it isn’t brokers and stores fault for the plight in our Ag industry, they do share some responsibility.

I’ve witnessed many farmers brokers sell a growers crop to another broker and then that broker sells to another broker, all before it ever reaches the store shelf. That product literally changes hands 3 times before it ever reaches the store shelf. I recently had a customer tell me his story of shipping out bell pepper with a price tag of 15.00/box. That product changed hands 3 times before it got to the store. He was paid 1.00/box for that pepper. His cost was probably 9.00/box. Of course he protested this to the people he sold it to and they ultimately paid him another 5.50/box. He still lost money in this deal. I’ve heard countless stories such as this.

The seed that I sell is usually the smallest I put cost to my customers. In my opinion, from where I sit, the brokers and stores are the ones making all the dollars while our growers get paid pennies.

My heartfelt prayer is that something can be done to help ensure the future of our industry. Without our farmers, we all suffer!

Avatar for martin mason martin mason says:

The industry–needs to market–have 40 acres of great seedless tangerines—-can not sell because of market conditions do to imported fruit—what a sad situation—-Florida must market Florida fresh—

Avatar for Matti Matti says:

You answered the question yourself. Foreign grown produce that does not have the same regulatory requirements. Lower labor costs, lower land rent, lower environmental regulations, etc.

The Government in this country is happy to allow local producers to go out of business due to regulatory pressure.

How about a fruit and veggie tariff that is applied to imported produce that was produced without meeting the same us regulations that apply to local producers? Without something like this the problem will only get worse. It’s very simple capitalist economics. Buy low, sell high. If buy low means buy foreign grown then that is exactly what will happen.

The same thing happened to the electronics, automotive, steel, etc. industries. Once government regulates a sector too heavily it shifts overseas and it almost never comes back unless it becomes unprofitable to produce overseas. Simple macro economics.