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
Flex Payments
8
Valencia Oranges 250 Acre Representative Farm
with 2 and 5 Price Reductions
CCP Program
9
Strawberries 53 Acre Representative Farm NPV
with 5 and 10 Price Reduction
Flex Payments
10
Strawberries 53 Acre Representative Farm with 5
and 10 Price Reductions
CCP Program
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