While the pending International Trade Commission decision regarding the case of serious injury that imports have had against blueberry growers will be pivotal for producers in Florida and Georgia, another marketing opportunity may lie with producers capitalizing on exports to China.
Greg Fonsah, University of Georgia Agribusiness Extension economist, said during Friday’s Ag Forecast meeting there is a real opportunity for blueberry growers to capitalize on an exports market, especially as Chinese consumption of blueberries has increased dramatically; from 28 million pounds in 2012 to 360 million pounds in 2018.
Historic Agreement
Because of the U.S.-China Economic Trade Agreement, the U.S. was granted access to export blueberries to China, as of May 2020.
“It is about time for the U.S. to also penetrate that market and get a share of the market especially in that May 2020 we had this agreement with the Chinese government,” Fonsah said. “It is going to be an opportunity for the U.S. blueberry industry to start looking at the Chinese market and try to capture a huge market share, just like Chile, Peru, Argentina and Mexico.”
Flooded Market
The region’s blueberry growers need every market source they can get at this point. Increased domestic production of blueberries combined with increased imports have flooded the U.S. market. Unfortunately, when markets flood, prices plunge. This is a focal point of the American Blueberry Growers Alliance case to the International Trade Commission that a serious injury has occurred.
“The market has totally changed in 10 years, totally changed,” Fonsah said. “We have also doubled the production. The domestic production plus imports coming from Mexico, guess what, we have flooded the market.”
Imports from Latin America remains the primary challenge to Southeastern blueberry producers’ production. From 2010 to 2019, Peru’s export production to the United States exploded from almost nothing to 140 million pounds. Mexico’s production soared to almost 80 million pounds, according to the U.S. Department of Commerce, Bureau of the Census.
Exports from Mexico soared to around 23 million pounds in April 2020 compared to 16 million in 2019 and 13 million in 2018.
The domestic FOB (freight on board) price in October 2010 neared $35 per flat. In September 2019, the price plunged to $15 per flat, according to the USDA Agricultural Marketing Service.
“The huge production from Mexico and the huge production domestically has helped flood the U.S. market and helped depress the prices,” Fonsah reiterated.
U.S. fresh-market production of blueberries increased from about 250 million pounds in 2010 to about 370 million pounds in 2019, according to the USDA National Agricultural Statistics Service.
Florida blueberries are normally in peak pollination season this time of the year. But that isn’t the case this season, however, says Ryan Atwood, who lives in Mount Dora, Florida and is one of the state’s blueberry leaders.
“We’re starting to get some flower emergence. Normally by now we’re in peak pollination season. I don’t think we’re there yet in Central Florida, definitely not there yet in north Florida,” Atwood said. “I was down in south Florida (recently) and those guys do have bees actively in their fields pollinating.”
Atwood farms 56 acres of blueberries, manages another 350 acres and is part-owner of the largest packing house in the Southeast United States.
The cooler temperatures being felt across Florida have played an integral part in the slow growth of this year’s blueberry crop.
“We’re I think on pace, we might be a little bit later than what we historically are on the crop cycle,” Atwood said. “That’s hard to say yet because you don’t know what February and March weather patterns have to offer. But definitely consistently cooler in December and January than we typically get, and it slowed us down a little bit.”
Insect pressure is currently quiet in Alabama. But infestations could increase dramatically if producers don’t take the proper precautions, says Ayanava Majumdar, Extension Professor in Entomology and Plant Pathology at Auburn University.
“At this point, things are kind of calm and quiet, except perhaps for people who have greenhouse crops or are trying to start their seedlings or trying to get them. I just want to caution and bring those prevention points again to focus; how to prevent some things,” Majumdar said. “Always get transplants from good sources. If they’re being bought from out of state or a store, check for small insects like aphids. That’s the one that comes to mind that hitchhikes a lot on transplants that are bought outside.
Armyworms are also an insect to look out for.
“For the conventional farmers, they have to look at their systemic drench insecticides, make sure they have those. There might be some areas down south where they still have maybe armyworms. Watch out for caterpillars. They may show up if someone’s having a particularly warm winter,” Majumdar said.
Florida strawberry production has been slower than normal this season. But don’t expect that to too last much longer.
File photo shows strawberries.
“I think that volume’s going to be coming pretty powerfully here whether we’re ready for it or not over the next couple of weeks,” said Vance Whitaker, strawberry breeder at the University of Florida Gulf Coast Research and Education Center.
“We’ve had an explosion of bloom over the last couple of weeks. We’re just sort of at the beginning, I think, of a really large uptick in volume. I think that we’re looking at increasing volume pretty dramatically from where we are right now as we’re heading into Valentine’s Day.”
Slower Production So Far
Florida producers have been harvesting consistently since around Thanksgiving, but the volume has lagged compared to previous years. Whitaker talked to growers in December. They estimated they were somewhere between 20% and 25% behind the production numbers they were at the same time last year.
“We’re not talking like a major, major deficit. But it’s been a little tight. I think berries have been a little bit tight on the U.S. market from wherever they’re coming from, whether it be southern California or Mexico, due to the colder weather,” Whitaker said. “That’s probably been a fairly good thing since I think demand has not been super high with the lockdowns and COVID situation that we’ve been dealing with. It’s probably been a good thing, in the end, not to have any record volume so far.”
Weather Factor
Weather was the main culprit in decreased volume so far.
“We’ve definitely been a little bit shy, up ’til now on volume, a little bit behind. It’s due to two things. One, we had the hottest November on record as far as average temperatures. That kind of slowed down the initiation of the blooms and the crown,” Whitaker said.
“Once we got those flowers initiated a little bit on the late side, then we got this really nice stretch of weather; no major freezes but plenty of cold nights… nice cool weather through December and January. There was fantastic fruit quality, but it’s just slowing down the arrival of that yield.”
A sporadic blueberry disease caused significant problems for Georgia producers in 2020.
Though management options are non-existent with yeast rot, Jonathan Oliver, University of Georgia (UGA) assistant professor and small fruits pathologist, believes timely harvesting and handling of ripe fruit will help minimize instances in 2021.
Photo by Clint Thompson/Shows Jonathan Oliver talking about yeast rot during the virtual Southeast Regional Fruit and Vegetable Conference.
“It was a major problem for our rabbiteye growers. Kind of the last half, maybe the last three-quarters of the rabbiteye harvest, at least in southern Georgia, seemed to be affected by it significantly. It probably is weather and condition dependent,” Oliver said.
“We had a lot of warmer weather right before we had the problem, and we had a lot of rainfall. It seems to be something of a problem when fruit is already either overripe or damaged in some way. Some of the weather conditions I think led to some of those problems. That’s why it was kind of an issue last year.
“It sporadically can be an issue in other years as well. It was a real big issue right at that one critical time last year, unfortunately, for our growers.”
Environmental Conditions
Warm, wet or humid conditions likely favor the growth of the fungus. There was a rapid shift to warmer overnight temperatures in Georgia in mid-to-late May. It went from the mid-50s to mid-70s very quickly. Also, there was a huge rain event that contributed as well. Alma, Georgia received 2.3 inches on May 22.
It is a secondary or weak pathogen that colonizes fruit surfaces and wounds. This causes the fruit to collapse and take on a wet, slimy appearance. Soft, splitting rot were common, and samples that were sent to the diagnostic lab were infested with yeasts.
Economic losses were significant. Harvested fruit was rejected and packing lines shut down early.
In nearly all introductory economics courses, the agricultural industry serves as the primary example of a “perfectly competitive” market structure. In theory, farmers are not able to set prices for their products, and instead “take the price” offered by market buyers. To achieve profitability, a grower works year-round to find ways to reduce costs, such as growing a single crop or renting more land, to take advantage of management expertise and investment in equipment.
Let’s look at the other side of the profit equation to explore opportunities for Florida’s small- and medium-sized farmers to find ways to improve revenues. We can do this by identifying markets where they have some measure of influence on market prices.
We describe markets in which firms may offer their products by setting their own prices as “imperfectly competitive.” Why are markets considered imperfect? What does this mean to farmers and buyers? What are the added costs and benefits related to stepping into imperfect markets?
Successful ventures into imperfect markets are motivated by the farm manager’s decision to intentionally focus on solving the why lurking behind a customer’s buying decision. For example, why do we eat turkey on Thanksgiving, and maybe Christmas, but rarely during the rest of the year? Are there a lack of turkeys at other times of the year? Why can my class of college freshman rattle off the names of more than 10 apple varieties, but struggle to identify which nuts are picked off trees versus harvested from the ground? In this article, we highlight the power of marketing management to communicate and deliver added value to customers, which can result in higher farm revenues.
DEFENSIBLY DIFFERENTIATE
When farmers find ways to invest in marketing activities, intentionally carve out a targeted segment of buyers, and invest effort in building long-term relationships with customers, they become “defensibly differentiable.” The defensibility results from the ability of the farmer and the customer to nurture this relationship over time. The differentiation is built around the needs and wants unique to the target market and known only to involved parties. Higher profits are driven by tracking the marketing costs and setting prices to capture improved revenues that reflect the value of this shared information.
To make money, farmers need to track customer data because it serves as the market feedback needed to make decisions to build their defensible market strategy. Prices tell the buyer what the farmer has invested in supplying the food and communicate why the food serves as the best choice to meet the buyer’s needs.
The consumers’ actions up to and including the decision to buy the food informs the farmer about why that item is their preferred choice. Armed with this data, the farmer discovers the answers to the economic questions of what to produce, for whom, how much and when. This keeps customers returning to the farmer while also attracting others with similar demands. Empowered with market intelligence, farmers can make annual production and marketing decisions to protect their clients from competitors and cultivate their share of the target market.
Why would a farmer be willing to invest in understanding individual food buyers’ wants and needs and setting their own prices? The food system works the way it does because it has proven to be efficient and effective over time. Keeping up with every person’s tastes and preferences is an impossible task for a single farmer. Identifying a market segment of buyers who are willing and able to spend their food dollars on a specific set of food products requires committed effort and the ability to react quickly in response to dynamic situations and unexpected events.
As experienced farmers know, acquiring the necessary knowledge of market trends to communicate a “price story” requires time, effort, and perhaps, additional risk to the farm business. Added marketing costs and regulatory requirements beyond the farm gate, which include packing, storage, distribution, shipping, etc., must be factored into the pricing strategy.
BUILD CONNECTIONS ONLINE
The Southwest Florida Fresh website helps consumers find local producers.
The key element that is driving opportunities for farmers to compete in imperfect markets is access to relatively cheap technology. Online platforms such as Facebook, YouTube and Instagram are useful to build connections that shrink the distance between farm and customers. Farmers can use these platforms to position their farm story and attract the attention of key influencers.
Farmers can also share their relationships with their extended networks, which capitalizes on their investment in these promotional tools. Once a marketing campaign has begun, marketing managers can collect data generated by social media platforms, internet orders and mobile purchasing apps. This can capture real-time market reactions to messages aimed at communicating the value of product offerings.
The Southwest Florida Fresh (swflfresh.com) website was created by the University of Florida Institute of Food and Agricultural Sciences in response to the devasting impacts of Hurricane Irma (2017), and more recently, the COVID-19 pandemic, on Florida’s southwestern farmers. The platform reduces distribution complexities and provides a regional brand for local producers, while meeting customer expectations for fresh local produce available at convenient venues. With consistent branding aimed at sharing each individual farm story, customers will continue to recognize and seek out your farm products across market outlets.
SUMMARY
Imperfect markets offer farmers improved profit margins, driven by the ability to set prices, based on knowing why people buy. Remember, that first customer costs a lot of money and time to attract, and data gathered along the way is valuable information. Long-term profitability for farmers who defensibly differentiate their food offerings is reliant on building loyalty and trust with customers, finding ways to encourage them to spend more at each visit, and incentivizing them to share their experiences with their friends and family networks.
Insecticides are available for growers managing whitefly populations. But they need to be applied early in the season when whiteflies are young and immature.
“Most of the things we use primarily target immatures. That’s where our best control is. We’ve only got a couple of products that are really good on adults,” said Stormy Sparks, University of Georgia Cooperative Extension vegetable entomologist. “Most of them, I can’t say for certain, but most of them probably are most efficacious on very little N-star immatures.”
Managing whiteflies when they’re young is a producer’s best management strategy considering how quickly they will reproduce.
Whiteflies can grow by a generation in just two weeks in the heat of the summer when temperatures routinely exceed 90 degrees Fahrenheit. The time for these insects to develop is related to temperature. When temperatures are cooler, development takes longer.
During hot and muggy conditions, which are common in Georgia and Alabama in July and August, development time for whiteflies decreases.
“Whiteflies are one of those things you don’t want to get behind on,” Sparks said.
Southeast producers grow cole crops, like broccoli, kale and cabbage, from September through May. Cucurbits grow in the summer, and cotton grows in the early fall. All of these crops serve as host plants for whiteflies.
Whiteflies can also transmit cucurbit leaf crumple virus and cucurbit yellow stunting disorder virus.
As vegetable and specialty crop producers near another spring harvest season, marketing their product remains a focal point of their farming operations.
Adam Rabinowitz, Assistant Professor and Extension Economist at Auburn University, implores producers to be better prepared this year amid the ongoing coronavirus pandemic.
“I really recommend producers think about their marketing and distribution earlier and really at the forefront. That was one of the things that really caught a lot of people off guard (last year) when large institutions started closing down, and restaurants were closing down. It became more and more difficult to market through those channels,” Rabinowitz said.
“Knowing that, seeing these opportunities, seeing where we are right now, just planning ahead and having contingency plans will be highly recommended.”
Pandemic’s Impact
When the pandemic first impacted the United States last March, it shut down the country, in particular, restaurants. A lot of which, southeast producers sell their produce to.
The lack of a food service option crippled certain sectors of the agriculture industry, including tomatoes. Bob Spencer, President of West Coast Tomato in Palmetto, Florida, said last April that his company farms between 3,500 and 4,000 acres every year. But he was losing 90% of his business. About 70% to 75% of the state’s tomato crop is designated for the food service market.
Florida farmer Paul Allen said in early April that they had left about 2 million pounds of green beans and 5 million pounds of cabbage in the field just because the demand had diminished.
As the pandemic continues to be problematic across the country, producers should be better prepared for what to expect and know what worked and what didn’t work.
Farmers like Bill Brim in Georgia boxed their produce and sold direct to consumers to offset decreased demand. While it did not completely offset the decreased demand, it provided consumers a chance to buy local and raise awareness about buying local especially during a time of crisis. Community Supported Agriculture (CSA) was another option that paid off for some producers.
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PhycoTerra® ST has a unique formulation that allows growers to tap into the potential of this product with lower user rates without sacrificing performance, providing a more consistent return on investment. The product is aimed at providing a quality carbon source to the seed/microbe interaction, which is the first “real world” point of contact for a seedling. This carbon source drives optimal microbiome around the seed, improving grower results in the field.
“Our goal at Heliae® Agriculture is to provide growers with the most effective tools to get the job done, and that means offering a seed treatment product that best fits their needs,” said Norm Davy, Chief Revenue Officer at Heliae® Agriculture. “PhycoTerra® ST is an effective product that offers growers a proven increase in yield and return on investment.”
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The Blueberry Coalition of Progress and Health contends that imports of blueberries do not take away markets from southeastern growers but complements their production.
It made its case to the International Trade Commission (ITC) on Jan. 12 during a virtual hearing and continues to believe there is a big enough “blueberry pie” for all parties to benefit from.
“That’s why the coalition was formed. We wanted to continue the momentum that the blueberry industry has done over the last few years and the growth and the demand,” said Joe Barsi, President of California Giant, which is a member of the coalition. “The average consumer eats 1.79 pounds of blueberries per year. That’s up significantly. It’s still pales in comparison to a category likes strawberries where consumers eat seven pounds a year of strawberries.
“We wanted to continue the momentum and we feel like limiting imports will raise prices to the U.S. consumer. It will decrease demand and we’ll lose the momentum the industry has realized. I think the domestic industry has really benefited from the imports in having a consistent supply at retail year-round that’s fairly priced.”
Section 201 Investigation
Blueberry imports have been a struggle for growers in the southeast to compete with every year. It was the focus of a Section 201 investigation where the American Blueberry Growers Alliance presented data to the ITC during the Jan. 12 hearing that outlined the imports’ impact on southeast blueberry production, which it believes has resulted in serious injury.
Statistically Speaking
According to the American Blueberry Growers Alliance, the U.S. Department of Agriculture Marketing Service reported a 68% increase in imported fruit from Mexico from 2019 to 2020, amounting to more than 15 million pounds of fresh blueberries during a 14-week period. Mexico, along with Peru, Chile, Canada and Argentina account for more than 98% of total U.S. imports. Import values increased from $530 million in 2014 to $1.2 billion in 2019.
Barsi believes that the blueberry demand requires the consistent imports that are coming from places like Mexico and Peru.
“There’s such a demand in the marketplace for fruit, say in the spring window when Florida is producing, there’s such a demand for fruit that Florida and southern California wouldn’t be able to supply the market for the demand that it requires. That’s why we feel like imports have been a really good complement to that,” Barsi said.
“For someone like California Giant or another company like ourselves, we’re in the market 52 weeks out of the year. To be able to supply our customers with a supply of blueberries year-round, we have to be able to have both, domestic and imports, to be able to supply those requirements.”
Who Makes Up the Blueberry Coalition of Progress and Health?
The Blueberry Coalition of Progress and Health is compromised of a broad range of domestic and international producers as well as distributors. Some retailers are on the coalition as well.
“It was basically formed, we wanted to continue the progress that the blueberry market has continued to have over the last 15 to 20 years. I’ve been involved in blueberries for 15 years, and there’s been significant growth in the marketplace,” Barsi said. “The coalition was formed to be able to provide data to the International Trade Commission on why we think that imports haven’t been a serious injury to the domestic industry.”
ITC Investigation Timeline
Important dates
January 12th – Public hearing
January 19th – Post-hearing briefs
February 3rd – Staff report (internal)
February 11th – Injury public vote (scheduled)
For the remedy phase (if affirmative injury is determined):
February 18th – Prehearing briefs
February 25th – Public hearing
March 3rd – Post-hearing briefs
March 19th – Remedy public vote (scheduled)
March 29th – Determination, views and report delivered to the President
May 27 as the deadline for the President’s decision
