Specialty Agriculture and the Reallocation of Farm Bill Funding

Introduction

Specialty crop producers, researchers, and farmworkers provide our nation with safe and nutritious food. That is an enormous responsibility and requires federal support. Federal support for specialty agriculture research and development not only increases economic prosperity on the farm fields but in every family’s home. Federal funding provides all Americans with economic opportunities, technological innovation, and educational experiences, in addition to putting food on the table. Specialty agriculture must therefore be a permanent priority in the federal budget.

Specialty crops generally consist of plants used by people for food, medicinal purposes, and aesthetic gratification. They are defined by the USDA as “fruits and vegetables, tree nuts, dried fruits, and horticulture and nursery crops (including floriculture).” The diversity of specialty crops and their variety of uses make the task of developing policy in this area particularly challenging. Federal funds can be used to support projects ranging from food safety compliance to distribution systems and marketing.

Federal funds can also provide scientific advances that enable our country to use the most efficient and environmentally sound agriculture technology in the world. Funding this research is imperative due to the industry’s increasing reliance on science and technology to maintain profitable production. Likewise, labor dependency is an ongoing concern regarding specialty agriculture’s profitability in the absence of labor saving technology. Thus, we propose that disproportionate funding for conventional agriculture be reallocated to specialty agriculture in the next farm bill so the specialty crop programs can continue to act as efficient safety nets and effective innovation initiatives.

Specialty Crop Provisions

Every five years or so, Congress passes a “farm bill” specific to American agriculture. The Agricultural Act of 2014, also known as the 2014 farm bill, put permanent programs in place to address the critical needs of the specialty crop industry and enhance the competitiveness of specialty crops. Realizing this goal requires the continuous reform of outdated agriculture policies that do not adequately address the realities of specialty agriculture, modern economies, or their labor challenges. Each year, we rely on our representatives to allocate federal resources to meet the needs of specialty crop producers and specialty agriculture technology on a budget that is realistic and fair to taxpayers.

Unfortunately, federal support for specialty crops still differs in significant ways from commodity crops. Since the 1930s, farm bills have focused on farm commodity program support for the staple, non-perishable, and generally storable commodities such as corn, soybeans, wheat, cotton, rice, and sugar. Federal support for specialty crops is relatively recent and its funding is disproportionately small. Accordingly, policy still weighs commodity crops as being essential or more important than specialty crops. Although the 2014 farm bill provided permanent funding for specialty crops, the programs still account for a small share of total farm bill spending, well below spending levels for commodity crops.

Mandatory funding for the major commodity crops averages about $4.7 billion per year, compared to $773 million for specialty crops.[1]In addition, specialty crop producers do not benefit from the same types of federal commodity price and income support programs that benefit commodity crop producers. Specifically, the specialty crop programs do not provide benefits for individual produce growers directly, but rather for the specialty crop industry as a whole. While the provision of direct benefits and an increase in mandatory funding would give specialty crops equal footing with commodity crops, we instead propose a more efficient allocation of resources as part of next year’s policy reform.

Specialty Crop Block Grant Program

The Specialty Crop Block Grant Program provides federal funding to “enhance the competitiveness of specialty crops.” The 2014 farm bill provides $72.5 million for this program in 2017 and $85 million in all subsequent years. Examples of projects that enhance competitiveness include efforts to enhance food safety, sustainability, developing new and improved seed varieties, pest and disease control, increasing nutritional knowledge and consumption of specialty crops, reducing the costs of distribution systems, and helping businesses to comply with the requirements of the Food Safety Modernization Act.

Application forms are submitted to each state’s department of agriculture which helps manage the competitive grant process. Each state consolidates the applications it receives from interested parties into a single plan to indicate how grant funds will be used. States are eligible to receive an amount that represents the proportion of the value of specialty crop production in the state in relation to the national value of specialty crop production. Specialty crop production is focused in California, Florida, Washington, Oregon, North Dakota, and Michigan.

A majority of specialty crop producers are considered specialized, which means that they receive at least half of their gross value of production from the sale of fruits and vegetables, tree nuts, or other specialty crops. Specialized farms account for 90-95% of the total value of U.S. specialty crop production and are concentrated in the Western states. These states do not have nearly as much representation as Midwestern states where commodity support programs receive substantial support. Specialty crops make up one-fourth of the value of U.S. crop production and receive less than one-fifth of the funding provided to commodity crops.[2] We ask that farm bill funding be increased for specialty crops through a proportionate reallocation from commodity programs based on the U.S. crop production statistics. This allocation is a fair and necessary adjustment to 21st century agriculture policy based on the modern economy as well as the demands of farm innovation and a shrinking labor force.

Specialty Crop Research Initiative Program

The Specialty Crop Research Initiative Program addresses the critical needs of specialty agriculture by awarding grants to support an organization’s research proposal. The 2014 farm bill set aside mandatory funding of $80 million each year for this program. Of that amount, $25 million is set aside for citrus disease research. The remaining funds support projects that address at least one of five legislated focus areas: (1) genetics; (2) pests and diseases; (3) efficiency and profitability; (4) innovation and mechanization; or (5) food safety.

Generally, these research grants are awarded to universities for standard research and extension projects to support problem-solving efforts. The next farm bill creates an excellent opportunity to make it easier for individuals and small businesses to apply for these grants, or even extend these funding opportunities to startups. Relaxing the program’s eligibility requirements would not only facilitate technological innovation in the private sector but support American entrepreneurship and small business.

At the same time, it is imperative that federal policy promote co-innovation. A proactive approach to realizing innovation requires a networking platform to accelerate the exchange of ideas and information across industries. The three main industries involved in the development of agriculture technology are the academic research institutions, the technology startup industry, and the finance industry. Fostering co-innovation among industries provides a platform for entrepreneurs to learn about licensing intellectual property from the universities. Funding UC extensions cannot create new ventures without this bridge to entrepreneurship. Thus, we propose an expansion of the research initiative program’s focus areas to consider additional projects for startup funding and co-innovation platforms.

Resolving Labor Challenges

Specialty agriculture has a completely different cost structure, and a completely different set of policy interests, than conventional agriculture. The latter’s cost structure is based on land while the cost of specialty crops is based on labor. Nearly all specialty crops destined for the fresh market are hand harvested to ensure freshness and a pleasing appearance. Hand-harvesting accounts for 50% of specialty agriculture production costs, and continues to rise as the labor force shrinks. With the decline of labor availability and increasing labor costs, specialty crops are losing their price competitiveness in the world markets.

In the absence of labor saving technology, American specialty crop producers have no safety net. Domestic workers will not accept seasonal agricultural jobs in sufficient numbers and the H-2A visa program is currently too complex and costly to maintain profitability. Federal support is required to compete with cheap imports and modern labor challenges. Federal investment in agriculture technology is the single most promising use of farm bill funds to stabilize prices, reduce manual labor, and create permanent jobs with higher income for domestic workers. Thus, adequate funding for the research and development of agriculture technology is required to protect U.S. crop production and keep specialty crop producers in business.

Conclusion

Congress has made historic investments to support U.S. crop production and keep U.S. growers in business while ending unnecessary subsidies and programs. We can continue to support our nation’s farmers and families by reforming federal agriculture policy in the next farm bill. The reallocation of commodity funds to meet the critical needs of specialty crop producers is a fair and necessary compromise to invest in our future and economic prosperity.

[1] See CRS Report IF00014, The 2014 Farm Bill (Agricultural Act of 2014, P.L. 113-79).

[2] See CRS from USDA, 2012 Census of Agriculture (Table 2, Market Value of Agricultural Products Sold), https://www.agcensus.usda.gov/Publications/2012/Full_Report/Volume_1,_Chapter_1_US/st99_1_002_002.pdf.