THE CANNED - FROZEN FOOD & GROWER COALITION

FRUIT AND VEGETABLE RESTRICTIONS

THREATEN MIDWEST FARMERS AND FOOD PROCESSORS

The 2002 Farm Bill has significantly limited the ability of Midwest farmers to grow vegetables and tomatoes for processing. Although inadvertent, the Farm Bill penalized vegetable producers by limiting base acreage calculations for subsidized crops without properly accounting for past fruit (generally tomatoes) and vegetable (FAV) production. This has adversely affected the ability of producers to rent farmground. Additionally, by including soybeans as a program crop, the total amount of base acreage increased dramatically but existing restrictions on FAV production on program acres remained in place. These two facts have greatly reduced Midwestern farmers’ ability to initiate or expand vegetable production. As a result, processors are unable to contract for needed production and are required to contract for production farther from their plants. These restraints have limited options for farmers and increased cost for processor, while at the same time making it easier for imports to take greater share of the market and jeopardizing Midwest processing jobs.

Base Acreage

The 2002 Farm Bill base update provisions did not properly account for FAV production on base acreage. As such, farmground used to grow vegetables since 1991 generally qualifies for fewer subsidies than land that was used strictly for program crops and soybeans. Because real estate markets place a premium on a farm’s ability to generate government payments, this has reduced the resale value of that land. It has also made it harder for producers to rent land for FAV production. Landlords are concerned that any FAV production on their land will impair future base acreage calculations. For this reason they routinely prohibit the production of anything other than subsidized program crops, such as soybeans and corn.

Planting Restrictions

The 2002 Farm Bill prohibits farmers from growing FAV on base acreage unless they have a personal or farm history of producing these crops. Unfortunately, there is almost no farmland in the Midwest that is suitable for vegetable production that is not currently being used to grow corn and soybeans. Therefore, the Farm Bill has virtually eliminated the potential for recruiting new growers or allowing existing growers to expand production. Historically, almost all Midwest FAV production has been under contract for processing, so past production has closely matched processing capacity.

As producers retire, new growers cannot enter the industry and existing growers cannot bring new farmground online to take up the slack.

Solution – Farm Flex

Congressman Mike Pence has introduced legislation (H.R. 2045) that would address these problems. Known as “Farm Flex,” this bill would:

  • Permit production of FAV for processing on base acreage, provided that an acre for acre reduction in program payments is made; and
  • Clarify that any future recalculation of base acreage would treat vegetables grown for processing on base acreage to be the same as production of a program crop.

This two-step approach would:

  • Reassure producers and landlords inclined to stop vegetable production out of concern about a future loss of base acreage;
  • Allow for new vegetable producers to replace retiring producers;
  • Eliminate the unintended penalties for use of vegetables for processing in crop rotations, an environmentally commendable practice;
  • Save several million dollars over the life of the Farm Bill.
  • Have no adverse affect on fresh fruit and vegetable producers. Some parts of that industry have opposed this fix on the grounds that anything that helps processed FAV producers must hurt fresh producers. The truth of the matter is that it is not a zero-sum game:
  • Farm Flex would clearly and unequivocally require vegetables grown on base acreage to be under contract processing, thus ensuring that this production would not end up on the fresh market.
  • Moreover, varieties of FAV grown for processing are different from varieties grown for fresh markets. Leakage of production for processing into fresh markets is not a realistic concern.
  • Any suggestion that this change would encourage some dramatic increase in Midwest FAV processing is unfounded. For several decades, the Midwest FAV processing industry has not experienced significant growth.

June 1, 2005

Senator Richard Lugar (R-IN) has introduced similar companion legislation (S. 1038) in the Senate.