(Nov. 6) Fruit and vegetables got the deal in 1996 and 2002, but it may be no deal in 2007 — a change that could cost growers more than $1 billion in lower prices, according to a recent study.

Fresh produce growers were given protection from subsidized competition on so called flex acres in the 1996 and 2002 farm bills.

In 1995, then-chairman of the Senate Agriculture Committee, Richard Lugar, R-Ind., had opposed extending protection to the fruit and vegetable industry on flex acres, said John McClung, president of the Texas Produce Association, Mission.

Lugar was one of the architects of the “freedom to farm” provision in the farm bill, designed as a market-responsive plan allowing growers to plant any crop on program crop land and still receive government payments.

At the time McClung was vice president of the United Fresh Fruit & Vegetable Association and lobbied hard to prevent the freedom to farm provision from harming fresh produce growers, who received no subsidies then and still don’t today.

Because of a World Trade Organization ruling on U.S. cotton subsidies, there is widespread uncertainty whether the planting prohibition can be retained.

If Congress strikes the fruit and vegetable planting prohibition on program crop acres from the 2007 farm bill, fruit and vegetable producers would absorb a hit of more than $1.3 billion in lower commodity prices, according to one recent study conducted by Paul Patterson and Timothy Richards, economists at Arizona State University.

The research, released earlier this year, examined the loss of the farm bill protection on 10 vegetable and melon crops. The project was funded by a grant provided to the California Institute for the Study of Specialty Crops, California Polytechnic State University at San Luis Obispo, the Buy California Initiative, the California Department of Food and Agriculture and the U.S. Department of Agriculture.

Other studies are scheduled to be released in coming weeks, including one from the U.S. Department of Agriculture’s Economic Research Service on Nov. 6 to industry and government officials in Washington, D.C., according to ERS economist Gary Lucier.

Lucier said the ERS report won’t provide a bottom line number that defines the impact of the provision.

Michigan State University and the specialty crops farm bill coalition — a broad alliance of leading industry associations — are also working on studies.

That specialty crops coalition study, which might be released sometime late this year, could show an economic impact to the produce industry of close to $3 billion, said Robert Guenther, senior vice president of public policy for the United Fresh Produce Association, Washington, D.C.

UNDER PRESSURE

The farm bill’s planting restriction on fruits and vegetables on program crop acreage is under pressure because of a 2004 World Trade Organization ruling on cotton subsidies. The WTO said the restriction shows direct and countercyclical payments are tied to production decisions and are not allowable. Produce industry lobbyists successfully argued in the 1996 and 2002 farm bills that flexibility given to program crop farmers should not be extended to planting fruits and vegetables.

“To allow the program crop guys to play in our sandbox … would be an economic blow to the produce industry that is absolutely unnecessary,” McClung said.

If the restriction is lost, industry focus would turn to how Congress might compensate the industry for the loss of the provision. Michigan Farm Bureau officials earlier this year suggested a flat $37 per acre direct payment annually to specialty crop growers as compensation. That proposal was received coolly by industry lobbyists.

The Michigan plan would give direct subsidies of just less than $400 million annually based on 10 million acres of fruit and vegetable production in the U.S.