Planting Restrictions on Commodity Base Acres Just an Afterthought for Most Commodity Growers in the United States

Rebecca NemecMarch 31, 2012

Friedman School of Nutrition Science and PolicyStudent Research Conference

so what?

2Source: The New York Times online, March 1, 2011.

….but….

3Source: Lucier et al., 2006.

so what else?

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Nationally….

Only 14% of U.S. adults consume recommended fruit and vegetable servings per day

Only 9.5% of adolescents do (5 to 19 years old), too.

Source: Center for Disease Control and Prevention website. http://www.fruitsandveggiesmatter.gov/health_professionals/statereport.html

…so the BIG question is…

…do we need to grow more fruits and vegetables?

what is the planting restriction?

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Passed in the 1990 Farm Bill

It says…..

“…if fruits, vegetables or wild rice are planted on base acres and the farm does not have a history of planting these crops, the farm incurs an acre-for-acre loss of payment on base acres and is assessed a penalty equal to the market value of vegetables/fruits/nuts.”

(Lobbied for by the fruit and vegetable industry)

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Planting flexibility provisions on commodity base acres probably will not increase the supply of fruits and

vegetables in the U.S.

my thesis

the methodologySystematic literature review

• USDA Economic Research Service

• Congressional Research Service

• Some academic publications (very little available)

• Policy advocacy position papers from NGOs

• …..it should be noted that much of the information on the fruit and vegetable industry is proprietary

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the evidence

1. There are significant barriers to entry for commodity growers to switch to fruit and vegetable production

2. Competition from imports reduces potential economic gains for U.S. commodity growers

3. Pilot programs have proven ineffective

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a bit on fruit and vegetable supply in the U.S.

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the fruit and vegetable industry in the U.S.

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1. Produces 29% of total farm receipts

2. 3% of total cropland

3. Total value of these crops in 2007 was $36.3 billion

4. Concentrated in California, Florida, upper Midwest, Texas, eastern seaboard

5. Some fruit production in New York, Michigan, Washington, Oregon and Pennsylvania

6. 5% of fruit and vegetable production in the U.S. was on base acreage in 2004

Source: Johnson et al., 2006

1 dot = 5,000 harvested acres

trends in the industry

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• Production of fruits and vegetables increased by 7% and 12%, respectively, between 1992 and 2002

• Production of fresh vegetables increased by 26% between 1992 and 2007

• Total acres harvested of vegetables declined by 5% between 1990 and 2007

• ….and we have a trade deficit... Source: Johnson, 2010.

trends in U.S. supply

13Source: United States Department of Agriculture Economic Research Service Food Availability Data System.

FRUITS

VEGETABLES

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overall, the evidence suggests that planting restrictions have little impact on commodity growers switching to fruit and vegetable production…..

….but why?

1. barriers to entry

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• Agronomic conditions

• Constrained seasonal labor

• High information and knowledge requirements

• Upfront capital investments

• Supply chains/market guarantees for perishable goods

• For corn, soy and wheat growers – prices are great right now!

Source: Johnson et al., 2006; Young et al., 2007; Schnepf, 2008; Mercer-Blackman et al., 2007; Effland and Stout et al., 2011.

2. competition from imports

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• Imports of fruits and vegetables (fresh, processed and frozen) to the U.S. have increased 6% annually since 1990

• Almost 50% of fresh fruit consumed in the U.S. was imported in 2005

• 15% of fresh vegetables consumed in the U.S. was imported in 2005

• Result from relaxed trade agreements, increased domestic consumption year round, and overall increase of global trade

Source: Jerardo, 2004; Johnson, 2010; Huang and Huang, 2007; Huang 2004.

3. pilot programs have proved unsuccessful

17Source: Jerardo, 2004; Johnson, 2010; Huang and Huang, 2007; Huang 2004.)

Planting Transferability Pilot Program in 2008 Farm Bill• Limited number of commodity growers allowed to enroll

• Allowed to grow: peas, lima beans, pumpkins, snap beans, sweet corn, tomatoes and cucumbers

• State included: Illinois, Indiana, Iowa, Michigan, Minnesota, Ohio and Wisconsin

• Must have a contract in place with a processor

• Up to 75,000 acres can be enrolled

(cont’d) 3. pilot programs have proved unsuccessful

18Source: Krissoff et al., 2011a and 2011b.

Key outcomes1. Only 14% of total acres were planted under PTPP

2. Only 155 farms enrolled

3. Fewer farms participated in the second year than the first

Important considerations• The majority of growers who participated in the program

were those without a prior history growing these products

• Program has only had two sign-up periods

4. modeling results

19Source: Lei et al. 2011.

Lei and colleagues

• Used modeling techniques and found that removing planting restrictions in states not included in the PTPP would only marginally increase fruit and vegetable production

• Also found that processing vegetable production would increase MORE than fresh vegetables production

• Important implication: suggests that planting flexibility will have varying impact by state or region

5. conclusions & policy implications

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1. Planting restrictions appear to be only a minor impediment to the production of fruits and vegetables on commodity base acres

2. There are significant barriers to entry for commodity growers to switch to fruits and vegetable production

3. Imports are a major competitor for fruit and vegetable growers in the U.S.

….but….

6. recommendations

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1. More research

2. Pilot program changes• Different states/regions• Different crops• Fresh versus processed

3. Is it a silly policy in the first place?

4. For advocates - If the goal of public health and sustainable agriculture advocates is to increase consumption in the U.S., this may not be the best policy target

Questions?

Alston, J., Sumner, D.A., Vosti, S.A., 2006. Are Agricultural Policies Making Us Fat? Likely Links between Agricultural Policies and Human Nutrition and Obesity, and Their Policy Implications. Review of Agricultural Economics 28(3), 313 – 322.  Bittman, M. 2011. Don’t End Agricultural Subsidies, Fix Them. The New York Times Online. Available online at: http://opinionator.blogs.nytimes.com/2011/03/01/dont-end-agricultural-subsidies-fix-them/. Accessed December 1, 2011.  Calvin, L. and Martin, P. 2010. The U.S. Produce Industry and Labor: Facing the Future in a Global Economy. United States Department of Agriculture Economic Research Service, report number 106.  Economic Research Service United States Department of Agriculture. Food Availability (Per Capita) Data System. http://www.ers.usda.gov/Data/FoodConsumption. Effland, A. and Stout, J. 2011. Farm and Commodity Policy: Government Payments and the Farm Sector. Economic Research Service United States Department of Agriculture. Available online at: http://www.ers.usda.gov/Briefing/FarmPolicy/gov-pay.htm. Accessed December 16, 2011.  Food, Agriculture, Conservation, and Trade Act of 1990, P.L. 101-624.  Guenther, P.M., Dodd, K.W., Reedy, J., Krebs-Smith, S.M. 2007. Most Americans Eat Much Less than Recommended Amounts of Fruits and Vegetables. Journal of the American Dietetics Association 106(9), 1371 – 1379.  Huang, S. 2004. Global Trade Patterns in Fruits and Vegetables. United States Department of Agriculture Economic Research Service, report number WRS-04-06.  Huang, S. and Huang, K. 2007. Increased Imports of Fresh Fruits and Vegetables. United States Department of Agriculture Economic Research Service, report number FTS-328-01.  

references

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Jerardo, A. 2004. The U.S. Ag Trade Balance…More Than Just a Number. Amber Waves. Available online at: http://www.ers.usda.gov/amberwaves/February04/Features/USTradeBalance.htm. Accessed December 16, 2011.  Kimmons, J., Gillespie, C., Seymor, J., Serdula, M., Blanck, H.M. 2009. Fruit and vegetable intake among adolescents and adults in the United States: Percentage meeting individualized recommendations. Medscape – Journal of Medicine 11(1), 26.

Krissoff, B., Lucier, G., Motamed, M., Young, E. 2011a. An Analysis of the Planting Transferability Pilot Program’s First Year, 2009. United States Department of Agriculture Economic Research Service and the Farm Service Agency. Available online at: http://www.fsa.usda.gov/Internet/FSA_File/fv_plantg_rstricts_rpt_120210.pdf. Accessed November 12, 2011.  Krissoff, B., Motamed, M., Young, E., You, C. 2011b. Fruit and Vegetable Planting Restrictions: Analyzing the Processing Cucumber Market. United States Department of Agriculture Economic Research Service, report number VGS-342-02.  Krueger, J.E., Krub, K.R., Hayes, L.A. 2010. Planting the Seeds for Public Health: How the Farm Bill Can Help Farmers to Produce and Distribute Healthy Food. Farmers’ Legal Action Group, Inc. Available online at: www.flaginc.org/topics/pubs/arts/PlantingTheSeeds.pdf. Accessed December 10, 2011.  Jonhson, D., Hoffman, L., Krissoff, B., Lucier, G., Young, E., Breneman, V. 2006. Eliminating Fruit and Vegetable Planting Restrictions. United States Department of Agriculture Economic Research Service, report number 30.

Johnson, R. and Monke, J. 2007. Eliminating the Planting Restrictions on Fruit and Vegetables in the Farm Commodity Programs. United States Government Congressional Research Service, report number RL 34019.  Johnson, R. 2010. The U.S. Trade Situation For Fruit and Vegetable Products. United States Government Congressional Research Service, report number RL34468.  Lei, L., Rickard, B., Balagtas, J., Krissoff, B. 2011. A closer look at the role of fruit and vegetable planting restriction provisions on land use in the United States. Paper presentation, Agricultural and Applied Economics Association Joint Annual Meeting. Available online at: http://ageconsearch.umn.edu/handle/103992. Accessed December 1, 2011.  Lucier, G. Pollack, S., Ali, M., Perez, A., 2006. Fruit and Vegetable Backgrounder. United States Department of Agriculture Economic Research Service, report number VGS – 31301.  

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 Marlow, S. 2005. The Non-Wonk Guide to Understanding Federal Commodity Payments: 2005 Edition. Rural Advancement Foundation International. Available online at: http://www.rafiusa.org/pubs/nonwonkguide. Accessed December 16, 2011.  Mercer-Blackman, V., Samiei, H., Cheng, K. 2007. Biofuel Demand Pushes Up Food Prices. International Monetary Fund Survey Magazine. Available online at: http://www.imf.org/external/pubs/ft/survey/so/2007/RES1017A.htm. Accessed December 16, 2011.

Perez, A. 2011. Fruit and Tree Nuts: Background. United States Department of Agriculture Economic Research Service Briefing Room. Available online at http://www.ers.usda.gov/Briefing/FruitandTreeNuts/background.htm. Accessed December 15, 2011.  Planting Transferability Pilot Program Fact Sheet. 2011. United States Department of Agriculture Farm Service Agency. Available online at: http://www.fsa.usda.gov/Internet/FSA_File/ptpp.pdf. Accessed November 1, 2011.   Pollan, M., 2003. The (agri)cultural contradictions of obesity. The New York Times. Available online at: http://www.nytimes.com/2003/10/12/magazine/12WWLN.html?pagewanted=all. Accessed December 1, 2011.  Schnepf, R. 2008. High Agricultural Commodity Prices: What are the Issues? United States Government Congressional Research Service, report number RL34474.  State Specific Trends in Fruit and Vegetable Consumption Among Adults – United States, 2000 – 2009. 2010. Centers for Disease Control and Prevention. Morbidity and Mortality Weekly Report, 59(35), 1125 – 1130. Available online at: http://www.cdc.gov/mmwr/preview/mmwrhtml/mm5935a1.htm. Accessed November 29, 2011.  Thomson, C.A., and Ravia, J. 2011. A Systematic Review of Behavioral Interventions to Promote Intake of Fruit and Vegetables. Journal of the American Dietetics Association 111(10), 1556 – 1562.  U.S. Department of Agriculture and US Department of Health and Human Services. 2011. Dietary Guidelines for Americans 2010. Washington, DC: US Government Printing Office, January 2011.

Wallinga, D., Schoonover, H., Muller, M. 2009. Considering the Contribution of US Agricultural Policy to the Obesity Epidemic: Overview and Opportunities. Journal of Hunger and Environmental Nutrition 4(1), 3 – 19.  Young, E., Johnson, D., Krissoff, B., Lucier, G. Relaxing Fruit and Vegetable Planting Restrictions. Amber Waves, February 2007. Available online at: http://www.ers.usda.gov/AmberWaves/February07/Features/RelaxingFruit.htm. Accessed December 10, 2011.