Farm Safety Net Programs for Specialty Crops

1. Farm Safety Net Programs for Specialty Crops John J. VanSickle, Executive Director International Agricultural Trade & Policy Center FRED/IFAS/University of Florida

2. Specialty Crop Planting Restriction 2002 Farm Bill – prevented planting of specialty crops on program crop base. WTO case brought by Brazil called this provision into question within WTO rules for planting flexibility. Removal of this restriction could bring additional production of specialty crops on this land, putting price pressure on current specialty crop producers. Researchable question – Could Farm Programs Be designed to offset the loss growers will sustain from the loss of the planting restriction

3. Methodology Estimate a baseline model using representative farms and no price impacts or farm program changes. Estimate impacts from assumed 2% and 5% impacts on price for citrus and 5% and 10% impacts on prices for other fruit and vegetables, resulting from loss of the planting restriction. Apply various flex payment programs to estimate the protection afforded growers from Flex Payments with loss of the planting restriction.. Apply various CCP price values to determine the protection afforded growers from a CCP Program with loss of the planting restriction.

4. Representative Farm Models Estimated from budgets published by the University of Florida and with data published by the USDA NASS. Simulate out 10 years and estimate the Net Present Value of returns to growing these crops on a representative farm. Representative farm crop acreage used in these analyses the same as those in Critical Use Exemption applications for methyl bromide for tomatoes, bell peppers, eggplant and strawberries. Citrus crop acreage was estimated at 250 acres for oranges and 100 acres for grapefruit.

5. Analyzing Farm Program Alternatives Using 14 Representative Farm Models Tomatoes – Dade County (350 Acres); SW FL SC & DC (272 Acres); Ruskin Fall SC & DC (144 Acres); Ruskin Spring SC (240 Acres) Bell Peppers – Palm Beach SC & DC (400 Acres); SW FL SC & DC (400 Acres) Strawberries – Plant City (53 Acres) Eggplant – Palm Beach County (200 Acres) Valencia Oranges (250 Acres) Grapefruit (100 Acres)

6. Valencia Orange Producers – 250 acres Baseline NPV of 10 year income stream - $480,888. Average price $3.44/box A 2% decline in price translates into a decline to $440,853 in NPV. A flex payment of $25/acre restores NPV to $488,979. A CCP On-Tree price of $2.80/box restores NPV to $485,188 A 5% decline in price translates into a decline to $380,475 in NPV. A flex payment of $50/acre restores NPV to $476,691. A CCP on-tree price of $3.00/box restores NPV to $485,374.

7. Valencia Oranges – 250 Acre Representative Farm with 2% and 5% Price Reductions

8. Valencia Oranges – 250 Acre Representative Farm with 2% and 5% Price Reductions

9. Strawberries – 53 Acre Representative Farm NPV with 5% and 10% Price Reduction

10. Strawberries– 53 Acre Representative Farm with 5% and 10% Price Reductions

11. Flex Payments Necessary to Restore NPV with 5% and 10% Reductions in Price

12. CCP Price Necessary to Restore NPV with 5% and 10% Reductions in Price

13. Conclusions Flex Program Payments and CCP Programs can restore net present value of fruit and vegetable growers if the planting restriction is lost, but the cost could be significant. Further study of program crop alternatives would be necessary to understand the implications they may have to Specialty Crop producers.

14. Farm Safety Net Programs for Specialty Crops John J. VanSickle, Executive Director International Agricultural Trade & Policy Center FRED/IFAS/University of Florida