(July 12) WASHINGTON, D.C. —A proposal that has been floated to give $37 per acre per year in direct subsidies to fruit and vegetable growers has little buoyancy so far.

“This concept has not been … embraced by the fruit and vegetable industry,” said Ken Nye, commodity specialist for the Michigan Farm Bureau, Lansing.

Robert Guenther, vice president of public policy for the United Fresh Fruit & Vegetable Association, Washington, D.C., was even blunter.

“It just cannot work for our industry,” Guenther said July 6.

Nye presented the proposal to the June 27 meeting of the U.S. Department of Agriculture’s Fruit and Vegetable Industry Advisory Committee in Washington, D.C.

World Trade Organization decisions against U.S. cotton subsidies have ruled that the fruit and vegetable planting prohibition is a problem for the cotton program, Nye said. The WTO reasons that the planting prohibition is illegal and distorts the market because it restricts the planting of nonprogram crops on base program crop acreage.

While the U.S. Department of Agriculture has begun to change some aspects of the cotton subsidy program that the WTO has objected to, it hasn’t yet addressed the planting prohibition, Nye said.

However, Nye said the prohibition may need to be eliminated or significantly modified or the U.S. will be subjected to additional challenges in the WTO.

Giving fruit and vegetable growers $37 per acre annually (just less than $400 million a year based on 10 million acres of fruit and vegetable production) as compensation for removing the fruit and vegetable planting prohibition is merely a proposal from Michigan Farm Bureau. The American Farm Bureau has yet to consider the specifics of the Michigan proposal, Nye said.

NOT FLYING IN FLORIDA

Fruit and Vegetable Industry Advisory Committee vice chairman Mike Stuart, president of the Florida Fruit & Vegetable Association, Maitland, said the Michigan concept has little support among Florida growers.

What’s more, he said the $36 per acre subsidy is virtually meaningless given the high production costs of fruit and vegetable growers.

Guenther said the Michigan proposal dramatically underestimates the economic effect on the industry if there was true planting flexibility for all program crops.

He noted rice growers receive an average of $110 per acre. That means fruit and vegetable growers in rice producing states would be at a considerable disadvantage if their portion was only $36 per acre.

What’s more, Guenther said farm programs have done little to spark the prosperity of program crop growers. He said the fruit and vegetable industry would benefit more from a “toolbox” approach that would be driven by grower needs at the state and local level.

Guenther said United will continue to argue for maintaining the planting prohibition in the farm bill.

“It is the only safety net in our industry — it is the one thing we have in farm policy that provides a level playing field against program commodities,” he said.

Fruit and Vegetable Industry Advisory Committee member Paul Palmby, vice president of operations for Seneca Foods Corp., a processor located in Jamesville, Wis., said he favors some modification of the planting prohibition to allow flexibility between growers and processors.

“Since 2002, I have been involved in a coalition of Midwest processors trying to get relief from the fruit and vegetable planting restriction,” he said.

However, he said he believes the Michigan Farm Bureau proposal to create a new subsidy program for fruits and vegetables is unrealistic.

“It muddies the water quite a bit,” he said. He said the advisory committee generally favors block grant funding — indirect support — to benefit the priorities of the specialty crop industry.

John Keeling, executive vice president of the National Potato Council, Washington, D.C., said July 5 that he has heard Nye explain the proposal earlier this year to the produce industry’s farm bill steering committee.

It didn’t resonate with the thinking of most industry members, he said.

“We’ve spent a lot of time talking to people about what they think about direct payments, and we had strong feedback from all sectors of the fruit and vegetable industry that it is not where they wanted to be,” Keeling said.

RESISTANCE

Nye admitted direct subsidies are a hard sell.

Because of the high acreage of program crops relative to fruits and vegetables (263 million acres compared with 10 million acres), even a small acreage shift from program crops to those nonprogram commodities would have a big effect on market prices and production of fresh produce.

While the fruit and vegetable industry seems to prefer block grants, research, market development and expanding the USDA’s fruit and vegetable snack program, Nye said that if the planting prohibition is lost, then the fruit and vegetable growers will be at a distinct disadvantage.

Program crop producers could then receive direct payments and counter-cyclical payments while planting produce crops.

Nye said the Michigan proposal arrives at a payment number by creating a history of fruit and vegetable base acres and then making a payment per acre at a rate equal to the direct and countercyclical payments made to the average program crop.

Nye said the amount of compensation per acre would be uniform across all fruit and vegetable crops. Based on the 2002 farm bill, direct and countercyclical payments for all program crops averaged $36.72 per acre per year. With about 10 million acres of fruits and vegetable growing in the U.S., the compensation program would cost about $367 million annually.

Nye said indirect programs like crop insurance or block grants that generally benefit the specialty crop industry would help any grower — whether or not they have been in the industry for any length of time.