By Sarah Salter and Sally Smyth
On Friday 4/17, Senators Dan Coats (R-Ind.), and Joe Donnelly (D-Ind.), introduced legislation that would take nationwide a pilot program that removes restrictions on growing fruits and vegetables from farmers who receive federal subsidies. First implemented in the 2008 Farm Bill, the planting flexibility pilot program allows farmers more freedom to respond to market signals when making planting decisions. However, a big question for the existing specialty crop growers and public health stakeholders remains: will removing these restrictions have a substantial impact on nationwide production or market price of specialty crops?
Specialty crop interests have long maintained that planting restrictions play a key role in protecting current fruit-and-vegetable growers from a sudden price decline that could occur if additional acres of fruits and vegetables suddenly came into production. However, in a thorough review of the literature on planting restrictions and grower practices, we found that lifting restrictions on specialty crop production would have little to no impact on the production or market prices of most specialty crops.
Why won’t full planting flexibility impact production?
Under the current system, farmers who wish to produce fruits and vegetables while continuing to receive commodity subsidies already have several options available to them. First, they may use nonbase acreage to grow fruits and vegetables without penalty. (“Base acreage” is defined as qualifying acreage with an established history of commodity crop growth, used for calculation in subsidy payments.) If no nonbase acreage is available, they may buy or lease nonbase acreage reconstitute the farm, and grow fruits and vegetables on any portion of the farm. If the total acreage used for specialty crops does not exceed the amount of nonbase acreage contained on the farm as a whole, the farmer will not be subject to any penalty.
Because of these existing loopholes, the specialty crop restriction does not result in a significant misallocation of land toward covered commodities compared to specialty crops. During a site visit to Michigan, USDA researchers found that farmers did not view the fruit and vegetable restriction as an obstacle to specialty crop production and could gain access to nonbase acreage land for fruit and vegetable production with relative ease. Furthermore, farmers who cannot gain access to nonbase land appear willing to incur the modest $22-per-acre penalty, since nearly 5% of U.S. fruit and vegetable production occurred on base acreage in 2003 and 2004.
However, restrictions may present a slight barrier for specialty crop production in some areas where base acreage constitutes a large percentage of overall agricultural land available. According to the USDA Economic Research Service, production in the Midwest, Plains states and eastern seaboard may be constrained for this reason. The expansion of base acreage under the 2002 Farm Bill to include historic soybean acreage is seen by many farmers and processors as particularly constraining for Midwest canned vegetable processors. This policy change resulted in a sharp increase in base acreage as a share of total agricultural land available, particularly in upper Midwestern states, where specialty crops for processing were often grown on soybean acres. Many landowners who were not able to take advantage of the change by maximizing their soy base felt penalized, and some landowners now discourage tenant farmers from growing specialty crops to maximize future base acreage calculations.
If restrictions were lifted on specialty crop production, the crops most likely to see an increase in production would be potatoes, sweet corn, dried beans and processing tomatoes. These crops can grow in areas outlined above that may be constrained by a large percentage of base acreage as a share of total agricultural land available. Also, much of these crops are already grown on farms with base acreage, so many of these farmers already have the experience and equipment necessary to grow these crops. Lastly, these crops are all annual crops that, unlike perennials, could be easily removed and replaced with covered commodity crops for future base-acreage calculations.
A study by the USDA Economic Research Service analyzed the market implications of full flexibility on the production of dry beans, one of the crops that would be most affected by the change. The ERS projected a net increase in dry bean production by 27,000 acres in the eighteen states where dry beans are currently produced. Given that 1.4 million acres in these states are currently used for dry bean production, this increase represents a 1.9% increase in production. Since this study analyzed one of the crops expected to be most impacted in the states also expected to be most impacted, this figure represents an upperbound of the expected increase in specialty crop production that would result from full flexibility.
Thus expanding the flexibility pilot won’t result in much change in the production or prices of specialty crops. That’s good news for current specialty crop growers but bad news for public health officials. If health advocates want to see legislation more likely to impact the production, price, and consumption of specialty crops, our report outlines three alternatives they should pursue:
- Increase federal funding to specialty crop research
- Match private funding for “Double-Up”-style Supplemental Nutrition Assistance (SNAP) programs
- Increase funding and introduce competitive grants to the EFNEP nutrition education program
These policy alternatives are explored in greater detail in our report co-written with Jameel Naqvi and TJ Sheehy.
Sarah Salter and Sally Smyth are completing Masters degrees at UC Berkeley’s Goldman School of Public Policy. They expect to graduate next month.