U.S. senator asks USDA to investigate grower price disparity

U.S. senator asks USDA to investigate grower price disparity

U.S. Senator Kirsten Gillibrand, D-N.Y., has asked the U.S. Department of Agriculture to investigate why the prices that produce growers receive have stayed stagnant or declined while prices for fresh produce from wholesalers and on retail shelves have increased.

At least three New York state growers said they’d like to know what Gillibrand, who’s on the Senate Agriculture Committee, finds out.

“My state of New York lost nearly 2,100 farms (6%) from 2012 to 2017, and nearly 11,000 acres were taken out of vegetable production,” Gillibrand wrote in a Sept. 24 letter to USDA Secretary Sonny Perdue. “A review of U.S. Bureau of Labor Statistics and National Agriculture Statistics Service data shows that prices paid to farmers for many important (New York) fresh market specialty crops — apples, snap beans, cabbage, and broccoli — have lagged behind the terminal market prices.”

A systemic review of the produce industry was last conducted nearly three decades ago, she wrote. Other types of farmers have benefitted from new tools and expanded market reporting that increased transparency and price discovery in the last 20 years.

“However, the specialty crop industry has lagged behind and an incomplete understanding of structural market forces and limited pricing data has created too much uncertainty for our growers,” Gillibrand wrote. “In short, produce farmers struggle to know if the price offered for their crops is fair and plan for the year ahead.”

The last three decades have seen changes in farming technologies, nutrition science, market structures and consumer behavior — but prices for farmers haven’t changed much, according to the senator.

The United Fresh Produce Association released a statement on the issue.

“The fresh produce industry operates on extremely tight margins, at every stage from grower to wholesaler to retailer,” according to United Fresh. “Our industry is the ultimate supply-and-demand economy, and our real goal must be to increase demand for fresh fruits and vegetables.”

Increasing consumption is key to raising prices paid to farmers, according to the United Fresh statement.

“Transparency in any supply chain is a good thing, and we always welcome USDA’s analysis of our markets,” according to the statement. “It’s important for each sector in our supply chain not to lose sight of our goal to grow fresh produce consumption, while fighting with one another over whose share of a dwindling pie is bigger.”

Ron Myruski, farm manager of Goshen, N.Y.-based Myruski Farms Inc., said he’s watched prices on onions and other vegetables decline for years and is open to Gillibrand’s request for more investigation on the disparity. 

But she’s forgetting a couple other factors, he said: Canadian competition and New York state’s high minimum wages compared to other states and countries. Myruski is also director of the Orange County Vegetable Improvement Association.

“I think one of the biggest factors in the Northeast and New York is Canada. It’s another country, and they shouldn’t be favored over domestic product,” Myruski said, citing the money exchange rate and different rules that enable Canadian growers to offer cheaper prices that are below the cost of production in New York. “I’m happy Gillibrand is trying to find the source of the problem, but it’s more than one source. Sometimes they have to look at themselves.”

Mark Rogowski, owner of nearby S.&S.O. Produce Farms in the black dirt region of New York, has also been affected by the stagnant or declining prices he gets for his onions and mixed vegetables at the terminal market and retail levels.

Besides competition from Canada, Rogowski said another factor is the three-month bidding process that large retailers have been doing the last five or six years.

“Retailers and terminal markets are getting good money on the product, but we’re not seeing it on our end, due to bidding and Canadian competition,” Rogowski said. 

But even when taking those factors away, there’s more to it, he said.

“Gillibrand does have a point; there is still something going on. Why are we getting low prices on our end? Typically, we are always price takers, not price makers,” Rogowski said.

Dylan Dembeck of New Hampton, N.Y.-based Minkus Family Farms Inc., said he has a different perspective as a broker and packer as well as a grower.

“I do agree on the low prices, but I don’t necessarily think it’s for all the reasons mentioned or that the middleman or retailer is making it either,” Dembeck said.

The senator asked the USDA to undertake a comprehensive review of the produce industry at the farm, middle market and retail levels with a specific emphasis on the effects of: 

  • Fewer buyers and brokers at the wholesale market level;
  • Increased concentration and consolidation in the food retail market;
  • Incomplete tools for timely produce price discovery;
  • Changes in consumer demand for new varietals and forms of processing;
  • Complex labor demand and uncertain agricultural visa policy;
  • Limited adoption of automating technologies for planting, weeding, pruning and harvesting;
  • Integration of packing operations into farm businesses;
  • Increasing number of market orders;
  • Expanded food safety and recall notification requirements;
  • Use of new technologies like online auctions by large, integrated retail chains; and
  • Increased production of organic specialty crops.

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