Terrorist Attacks Add to Woes of California’s Farm Economy
From the vineyards of the San Joaquin Valley to the vegetable fields of Ventura, farmers say they are feeling the pinch from a post-Sept. 11 slowdown in the travel, hospitality and leisure industries.
Reduced commercial demand has triggered oversupply and lower revenues for a variety of growers, especially those who sell to airlines, amusement parks, restaurants and hotels.
Those industries have been hit hard by the nation’s economic slump and by the lingering effects of the terrorist attacks on the World Trade Center and the Pentagon.
And that has trickled down to growers of everything from celery to spinach, who say prices for some crops have fallen below break-even rates in recent months.
“I think people are eating at home more, and they are looking in their refrigerators to see what they have before running out to the supermarket,” said Oxnard farmer Christopher Deardorff, who grows vegetables, tomatoes and strawberries in Ventura and San Diego counties.
He has been harvesting vegetables for nearly two months, and said prices on many days barely cover the cost of labor and packaging.
“Hotels, restaurants and airlines are just not buying at the pace they normally would be,” Deardorff said. “Granted, the demand from that market might only make up a small percentage [of growers’ revenue], but that percentage day in and day out starts adding up.”
The story is the same throughout the state. Prices of fresh vegetables, for example, dropped 24% in October and November compared with those months last year, according to the California Farm Bureau Federation.
“It’s been a one-two punch, and a lot of growers are still reeling from it,” said cotton farmer Paul Betancourt of Kerman, president of the Fresno County Farm Bureau.
Not every grower has been hurt. Some with less perishable crops--such as citrus and avocados--have been better able to weather the recent flurry of falling prices.
And prices for some winter vegetables have picked up in recent weeks, driven by dwindling supplies and a pre-holiday shopping rush. Many growers, however, are taking a wait-and-see attitude before believing that higher prices are here to stay.
“After the first of the year, once we get through the Christmas buying season, then we’ll really see where pricing stands,” said Ventura farmer Edgar Terry, a part-time instructor at Cal Lutheran University in Thousand Oaks and president of the Ventura County Farm Bureau.
Those affected by recent events find it difficult to quantify their losses. California’s agricultural industry has long been plagued by plummeting prices and rising production costs, and growers say it would be unfair to blame all the current pricing problems on the bad economy and the terrorist attacks.
But there is no question that both factors have played a part in yet another downturn in the farm economy.
Food-Service Slump Hits Farmers Hard
After Sept. 11, Chicago-based restaurant research and consulting firm Technomic Inc. downgraded its projected annual sales growth for major segments of the food-service industry.
James Bogart, president of the 300-member Grower Shipper Assn. of Central California in Salinas, said many farmers in his area rely heavily on sales to the food-service sector and have been struggling with an abundance of produce--and a corresponding drop in prices--because of decreased commercial demand.
“This wasn’t the best of years to begin with,” he said. “But we really took a big-time hit post-Sept. 11.”
UC Davis agricultural economist Daniel A. Sumner wonders whether the hit is as big as some people think.
Though food-service industry demand may have dropped in recent months, he said there has likely been an increase in demand from supermarkets and other retailers as consumers eat at home more.
“Just because I don’t go out to McDonald’s doesn’t mean I don’t eat that day,” said Sumner, director of the University of California’s Agricultural Issues Center. “My guess is we’ve been hurt a little bit, but not that much.”
Numbers Don’t Add Up for Growers
Farmers and ranchers across the state say the trade-off isn’t necessarily equal.
Take California’s wine grape industry, in which prices already were depressed before Sept. 11 and dropped even further after the attacks. Industry officials say it appears that there has been a slight increase in the amount of end product--the wine itself--purchased at grocery stores, but that has not been enough to offset lower sales of high-end products at hotels and restaurants.
The same holds true for the state’s beef industry, which has struggled with a 15% reduction in market-ready cattle prices since mid-September.
Bruce Berven, executive director of the Pleasanton-based California Cattlemen’s Assn., said more people may be buying beef and cooking it at home. But from a price standpoint, he said it doesn’t make up for the business travelers and others who stopped going to restaurants and ordering higher-priced cuts. Nor does it compensate for reduced demand from the convention and other industries in which beef orders are routinely large and more lucrative.
“Our industry was hurt badly following the events of Sept. 11,” Berven said. “Even though now three months have passed, and people’s psyches may be starting to change a little bit, I think we are still seeing the lingering effects of that.”
Edgar Terry knows he has felt the effects.
For several weeks after the terrorist attacks, celery prices on many days were below break-even. The same was true for the big red and yellow bell peppers he grows, a specialty item that was selling well before the attacks.
“The food-service industry really took a big hit, and that’s a major buyer of our peppers,” said Terry, who farms about 1,300 acres of row crops from Ventura to Piru.
“Usually during the month of December there is really good pricing on bell peppers,” he said. “They are basically at break-even or below, because there’s just no demand.”
That doesn’t mean his operation comes to a halt. As a custom grower for larger companies, he said there are always orders to fill and customers to satisfy. He has a crew picking artichokes near Ventura and another planting 77 acres of celery shoots that should be ready to harvest in about 120 days.
He hopes that in that time prices will turn around for his business and agriculture in general.
“Obviously, prices are in a funk, but I’m hopeful that after the first of the year the supply will start to balance itself out,” Terry said. “You’ve always got to stay positive.”
