Speaking out on behalf of those who oppose limitations on imports of blueberries we have two of the giants of the industry. We asked Pundit Investigator and Special Projects Editor, Mira Slott, to help us understand their perspective:
California Giant Berry Farms
Family Tree Farms
Q: Thank you for coordinating this joint interview as principal members of the Blueberry Coalition for Progress and Health and key industry stakeholders buttressing the reasons for its recent formation.
Dave: I’ve been looking forward to visiting with you.
Joe: I’m happy to be joining the discussion as well.
Q: The Blueberry Coalition presents a considered case, backed by U.S. market data research for opposing restrictions on blueberry imports, amid a contentious U.S. International Trade Commission (ITC) investigation to determine if imports are a substantial cause of serious injury to the domestic blueberry industry, and subsequent remedies, including tariffs. [The investigation was triggered by the U.S.-Mexico-Canada-Agreement, the modified North American trade pact, negotiations]
You argue such barriers, which could spur retaliatory actions from trading partners, would constrict largely counter-seasonal supply and year-round consumer access, but also domestic suppliers’ ability to meet the thriving current consumer demand and a rapidly growing market, which benefits both domestic and international growers/shippers, retailers and consumers.
Yet, not all domestic blueberry suppliers are on board. The American Blueberry Growers Alliance (ABGA) is a vocal proponent of the ITC investigation, testifying on the harmful effects of increased imports to its members’ businesses, during an ITC hearing on Jan 12, 2020.
Could you give us some clarity on all the issues? The dynamics of domestic and global blueberry supply-and-demand windows/competitive overlaps, the pricing effects, and those most impacted by the investigation outcome, etc.
Well, I’ve given you a lot to unfold as we open up this discussion. I’m hoping you can put everything in perspective…
Dave: Let me start off with an introduction about myself and our company, and then we can dig in to where we’re at, and what’s happening with blueberries domestically and in the world.
I’m an eighth-generation farmer in America. I have 3 sons, 21 grandchildren, and 17 great grandchildren now, and they’re all involved in agricultural business around us, and we just love being farmers. Food is one of the four elements of life — air, water, food and shelter — and we take heart that this is a calling for us that we supply food to people. So, we look forward to going to work every day, and that’s who we are.
We got involved in the blueberry business, but first of all, my family started in stone fruit, peaches, plums, nectarines, apricots and cherries in California. We have about 5,000 acres of stone fruit that we still grow. In 2006, we started looking into the blueberry industry so we could have some more crops to grow. And we have expanded that. In California, we have about 1,000 acres of blueberries. In Mexico, we have substantial acres and also in Peru.
What we found in blueberries for the U.S. domestic market is there’s about a 20-week window between March/April and September. So, in California, those April, May, June months were peak times. We saw there was increased prices over on the March side. So, we started in California trying to hit that window. We spent a large sum of money and a lot of time, we put in tunnels, and we put in heaters. We were in an area of a lot of sunshine, but we had inclement weather two years in a row, down to 18 degrees, and we couldn’t save the fruit; it was lost.
We came back and kept planting domestically, and that’s what we still have in California. But we kept looking for that extended timeline, they called the shoulders. Those shoulder months are what we’re really talking about here, and those shoulders are March/April and September.
Joe: Based on An Economic Analysis of the Competitive Dynamics in the U.S. Fresh Blueberry Market by Thomas J. Prusa, PhD, Rutgers University, Dec. 2020: U.S. fresh blueberry production and shipments are heavily concentrated within a 20-week period, running from late-April to early-September. Over 90 percent of U.S. fresh blueberries are sold during the 20-week peak season. Farmers in large growing states, including North Carolina and New Jersey, sell all their blueberries in the peak weeks. Farmers in other large blueberry growing states, including Georgia, California, Oregon, and Washington, sell more than 90 percent of their crop in peak weeks. Farmers in every U.S. state, except Florida, sell at least 80 percent of their fresh blueberry crop within the 20-week peak U.S. season.
Q: According to the USDA-ERS Dec. 2020 report: Fresh Blueberry Supplies Expand as U.S. Consumers Develop a Taste for Year-Round Blueberries: Since 2010, the U.S. blueberry production season has expanded into the spring and late summer/early fall months. The Florida crop now typically arrives on the market beginning in March and ending in May. Georgia enters in mid-to-late April, followed by other major producing states, which come into production through the summer…
In 2010, the USDA-ERS stats show “New Jersey, Georgia and Michigan were the biggest U.S. producers of fresh market blueberries. California, Washington, and Florida were smaller producers. By 2019, the U.S. blueberry sector had expanded as Georgia, California, and Orgon emerged as the largest suppliers, each accounting for roughly 17 percent of U.S. production.” However, despite expansion, U.S. supplies remain lower from fall to early spring, according to the USDA report.
As you note, to meet consumer demand for year-round supply, U.S. fresh blueberry imports grew rapidly over the past decade. In 2010, according to the USDA stats, Chile was the main foreign supplier to the U.S., and Peru and Mexico produced much smaller quantities of blueberries. By 2019, Mexico and Peru began increasing their share of the U.S. market. In an exponential rise, Peru became the leading supplier of U.S. blueberry imports. About 80 percent of U.S. blueberry imports in 2019 were sourced from Peru, Chile and Mexico, with increased varieties and acreage in relatively new producers of blueberries, such as Peru and Mexico, the report says.
[Editor’s note, Dr. Roberta Cook, now Emeritus Cooperative Extension Marketing Economist, Dept. of Agriculture and Resource Economics at UC Davis, aptly predicted this international berry trade penetration into the U.S. market during her in-depth analysis of Mexico’s broadening role in a diversified global market at the 2014 New York Produce Show’s Global Trade Symposium]
Dave: I heard some of the farmers on the East Coast testify (at the Jan. 12 hearing) and they sound like good folks. I wouldn’t mind having them over for lunch. I’d like to have them on my farm.
Q: According to the USDA report: “In 2010, there was little overlap in U.S. and foreign blueberry supplies in the domestic market, and the periods between seasons had higher grower prices. Since 2010, domestic and foreign blueberry seasons have extended. Imports from Mexico in early spring have grown, somewhat offsetting imports from Chile, while Florida and Georgia now harvest more in March and April. About 70 percent of import shipments in September and October 2019 were from Peru, increasing competition for producers in Michigan, Washington, and Oregon, where shipments continue until October.”
Joe: I think Dave describes this well. You know, we all want to see the blueberry market continue to grow and prosper. Just a little bit about us… California Giant is a very integrated company as well. We grow and ship fresh blueberries, raspberries, blackberries and strawberries year-round. We supply all the major retailers and foodservice distributors across the U.S. We’re proud to be one of the largest suppliers of fresh berries in the U.S. market. And we represent growers.
Dave: Yes, Family Tree Farms is a vertically integrated company. We’re a grower/shipper/marketer, and obviously we represent a lot of the growers ourselves, and we want what’s right for the industry to grow.
Joe: We’ve seen big growth in the blueberry market. And, like Dave pointed out, basically we had to go to Mexico and Peru to be able to supply our customers. I think we’re all selling the same retail customers, to be able to provide a year-round supply of food. That is what’s driven both of our companies to source outside of the U.S., which, by the way, 80 percent of (blueberry) imports come in when there is no U.S. production.
Q: I saw that information detailed in the Rutgers study. It shows very little overlap between domestic and imported production windows, and the primary competition occurring between U.S. producers. But in the Jan 12 hearing, ABGA testified that “American blueberry growers across the country, mostly small family run farms, have been devastated by an influx in blueberry imports by 75 percent in the past five years, according to U.S. import data.”
Dave: Well, 90 percent of U.S. blueberry production is in that 20-week period between April and September, and 4 to 6 percent is in the shoulders of that, in March and October. So, really what I’m saying with that is the shoulder production is very insignificant to the production in the U.S. and to the blueberry industry with domestic prices.
Q: In terms of pricing, the increase in U.S. production and imports has led to an increase of supply in the domestic market, and prices in the U.S. off-season are now lower, according to the USDA report. Using data from USDA, AMS, Market News, a dollars-per-flat chart comparison of 2010 and 2019 shows “Increased blueberry supplies are now putting downward pressure on prices in early spring and fall.”
The Rutgers’ research supports your point, though: “My economic metric model takes into account variation in supply volume by source, seasonality in production, variations in yield and acreage planted across the states and countries. The estimates demonstrate that the change in domestic competition is the single largest factor affecting domestic prices over the 2015-2020 period,” says Rutgers’ Prusa.
He argues that price movements over a calendar year are not consistent with a theory of imports being a substantial cause of serious injury. “Over a calendar year, fresh blueberry prices are consistently at their lowest during the peak summer weeks, which is exactly the period when imports are at their lowest level. Conversely, domestic prices are higher during weeks when import volume is higher,” he says.
Joe: So, for example, in the early and late shoulder windows, the March and September windows, there’s overlap in March from Mexico and overlap from Peru in September. However, during those months, there isn’t enough supply in the domestic market to be able to satisfy the market demand.
Q: That’s an important consideration.
Joe: There’s no way the domestic market can supply the demand. U.S. demand has increased 300 percent in per capita consumption since 2005. That’s an average of 1.79 pounds per person now. The blueberry industry is booming.
Q: According to the USDA-ERS report: “Blueberries are the second-most produced berries in the U.S., after strawberries. Over the past 10 years, the total supply of fresh blueberries available for American consumption has increased fivefold,” at a faster pace than that of strawberries over that same time. “U.S. production and imports of blueberries both have been increasing rapidly to meet year-round consumer demand.”
So, the dilemma is that certain U.S. blueberry growing regions, such as Florida and Georgia, are more impacted by imports? And also, those smaller farms that only supply domestically grown crops?
Joe: That’s kind of the crux of the problem. Some of the people have been caught in that. In fact, it was down South and on the East Coast, they had that market to themselves, but they can’t fill the demand, and that’s the market we started looking at to fill.
Q: When did you start presenting this case to the ITC, and do you think you’ve been effective? Could you talk more about the stimulus for forming the Coalition and the timeline for resolution?
Dave: Yes. This initially happened back in the summer, in negotiations related to the U.S.-Mexico-Canada-Agreement, the modified North American trade pact, where there was a hearing basically initiating this Section 201 Safeguard Investigation. We couldn’t just sit back and let it happen. We had to form our Coalition to be able to present the facts, that we believe there has not been serious injury to the industry. We had to build this Coalition to defend ourselves.
Joe: It’s producers like myself, importers, distributors, purchasers… it’s a wide part of the industry that is on the Coalition. [Members include Agroberries S.A.; Alpine Fresh; Aneberries A.C.; Berries Paradise S.A.P.I de C.V.; California Giant Berry Farms; Camposol Fresh USA; Driscoll’s; Family Tree Farms; Fresh Produce Association of the Americas; Giddings Berries; Hortifruit; Andrew & Williamson Fresh Produce; Pro Arandanos; United Exports Ltd.; Reiter Affiliated Companies; Chilean Blueberry Committee; and Chilealimentos.]
Q: Is there a way to reconcile the positions of the American Blueberry Growers Alliance and the Blueberry Coalition for a mutually agreeable resolution to this case?
Joe: Remember, I’m an American blueberry grower. Like Dave mentioned earlier,there are certain windows of the marketplace that have been more negatively impacted than others, as it relates to weather. There are certain places, like Michigan and Georgia, that have had some weather-related issues over the years. It may have impacted volumes.
You know, this was initiated by Florida and Georgia, initially to the U.S.-Mexico-Canada-Agreement negotiations; they were lobbying for seasonality provisions, back when the USMCA was being negotiated, and that did not happen. What ended up coming out of that was a virtual hearing, which was made up mainly of Florida and Georgia growers. A report was issued indicating a request for 201 Safeguard action. So, with that, they solicitated different members from across the U.S. from different regions to participate.
Q: Could you talk more about the issues analyzed in the Rutgers study? For instance, in the Jan. 12 hearing, there was testimony that an influx in imports was driving blueberry prices down. Yet in the Rutgers study, the main pricing competition reportedly occurs during the 20-week peak domestic growing season, not during those import shoulders. Can you help to clarify this discrepancy?
Joe: Yes. As Dave pointed out, 90 percent of the domestic blueberries are sold during that peak period, and that’s when we see the lowest prices in the market. When the imports come in, actually that’s the highest prices of the season, when you have the mountain that curves; that little piece in between is when you see the highest prices.
Q: Could you talk more about how the blueberry category is positioned at retail?
Dave: For retailers, blueberries are one of their highest income-producing fruits in the store. You just can’t find anything bad about them. They’re nutritious, people love them and are eating more. I mentioned there’s been a 300 percent increase in U.S. blueberry consumption since 2005, so the blueberry industry is thriving.
So, if there’s this increasing demand, growers are going to find ways to grow it, and it doesn’t become a seasonality thing anymore. When you have availability 52-weeks a year, it helps the entire industry, because as one country or entity comes in or out, it holds the price steady, which is good for the market. And this shoulder time for the U.S. is really the crux of this Section 201 discussion.
Q: And the shoulder time is not a large percentage of the domestic blueberry market…
Dave: Right. That only leaves 10 percent, and that’s on each shoulder; the first shoulder is about 4 percent, and the back shoulder in the fall is about 6 percent, so it’s very insignificant to the U.S. blueberry industry.
Q: What do you say to those domestic growers that are still adversely affected by these imports and seek remedies, such as tariffs?
Dave: You can’t just turn production on and off like a light switch. There’s a flow of supply to even out that 52-week production. And that’s what we’re doing. And I think it’s good. I believe honestly that it’s good for the total blueberry industry and for the world.
Joe: Continuing on with what Dave was saying in terms of consumption and growth, and the demand we’ve seen in the U.S. marketplace… I know we’ve mentioned earlier, the average consumer in the U.S. consumes less than 2 pounds (1.79 pounds) of blueberries annually per person. We compare that to strawberries, which is almost 7 pounds per person. In the past year, according to PMA Consumer Trends, only 34 percent of consumers have bought blueberries, whereas 48 percent have purchased strawberries. That’s a big difference there, and then the strawberry market is a much more mature category.
Q: So, the blueberry category has ample room to grow.
Joe: Yes. It’s not a mature category, and we’ve seen it evolve with domestic acreage and imports. We’re seeing heavy demand from 18 ounce to 2 pounders. So, we’re sizing up in the category, which should just help grow demand and increase interest with U.S. consumers, because there’s still a big gap between strawberries and blueberries as it relates to consumption.
Q: Could you talk about varietal development, taste and quality dynamics occurring in the blueberry category domestically and internationally, and how this is impacting the competitive environment and future growth? I understand both your companies have invested heavily in varietal programs…
Dave: All industry is after the product that has the consumer saying ‘wow, that’s the best thing I’ve tasted in my life.’ You can see the change from what were considered “regular” items with a proliferation of varieties. Take apples, for instance… once you just had red and green, then Honey Crisp came out, people bit into it and loved the crunch and sweetness… now they don’t say they want a red apple, they’re paying twice and three times as much per pound for taste, texture, size and other product attributes.
If we take that same attitude with blueberries… You must have the genetics and the desire as farmers like myself to pull the varieties that don’t taste as good, aren’t consistent in size and quality, and find and develop genetics that the consumer, who is our boss, loves every time they pick it up.
Quality, flavor and crunchiness in blueberries are of the upmost important attributes for the future of the blueberry market. I think growers are all seeing that. They have breeding programs and they’re upgrading their blueberry programs. For those who don’t, it’s going to be difficult. It’s like only having those regular red and green apples….
Joe: Dave says it right. Family Tree Farms is really invested in the farming aspect and varietal genetics. And obviously we work with farmers that have certain genetics we require, and then at the end of the day, it is quality. That’s the most important thing for the marketplace. And it’s good for everybody. It’s good for our customers and consumers.
It’s even better as we head into online shopping, a whole different subject, where the grocery store has gone right to consumers digitally. The consumers buying online don’t get to choose their blueberries like when they go to the grocery store. It’s important to ensure that same eating experience.
The industry overall can continue to do a better job as an industry. I can’t find California Giant blueberries all the time in my local grocery store, so I tend to try different pack styles and varieties and competitor blueberries. I eat them every day, of course. So, it’s always good to see what else is going on out there in the marketplace.
Q: And what’s your assessment? Are there certain countries that are doing a better job with the quality and variety, for instance? Does it affect consumers on where you’re importing from? How does that work to be able to control the quality coming in, and consumers’ experiences?
Joe: It definitely has created challenges… If you look at industry statistics, we’ve seen a decrease in imports from Argentina and Uruguay because blueberries have been fumigated and airfreighted in, so that’s negatively impacted quality obviously in regions at certain times of the year. Family Tree Farms has been developing new genetics in Peru, for example. There’s some really good genetics out of Mexico that are close to the market that have helped raise consumption. And, of course, we produce really good blueberries in North America too.
Q: From the consumer standpoint, is there preference for local, domestic supply and/or brands? Retailers play to locally grown product when it’s available in those regions, often with big promotions and farm stand displays and signage telling the farmers’ stories… On the East Coast, many consumers look forward to when local blueberries from their state hit retail shelves.
Dave: There is a trend toward locally grown. And that’s the great thing about the blueberry industry in North America when they are producing. There are a lot of good producing areas that have quality fruit. Especially Northern Highbush, new varieties in New Jersey, there are new varieties coming out of Oregon as well… The domestic industry continues to change and plant new varieties. Yes, I think consumers continue to enjoy local. But in talking about this case, we’re looking at six- to eight-week windows. That’s where the challenge is. You know I’d love to buy California blueberries 52-weeks of the year, but I can’t do that.
Q: Retailers can capitalize on the consumer interest in local blueberries, but also create different types of marketing and promotions at all times of the year, perhaps targeting the health benefits or seasonal recipe ideas to keep the momentum going…
Are there retailers adding their voice to the Coalition’s case opposing limitations on imports?
Joe: Generally speaking, the retail industry is in agreement. Like Dave mentioned earlier, blueberries are the fastest growing area in fruit retail sales. So, I think most of the retail industry would support imports.
Dave: Just like Joe’s company, we sell all over the world and, of course, domestically. We call them retail partners, because the consumer is our boss. All of our retail partners desire and really support great blueberries year-round. They’re all saying, “I need a constant supply, it’s the fastest growing category in my grocery store, and if I don’t have it, then I’m losing.”
So, they are all pushing us to have it. And back to that shoulder, the blueberry industry cannot produce enough here domestically, and we need those imports to make that a level 52-weeks-out-of-the-year product.
Q: Where does this ITC case go from here?
Dave: The process is they had the hearing; the ITC will decide in February on injury, if they feel there is serious injury to the domestic industry or not. If they do find injury, then they’ll recommend relief to the President by the end of March, and the President will have to make a decision by the end of May. That’s if they do find injury. But, of course, the Blueberry Coalition does not believe there is significant injury to the domestic market.
Q: For those who want to take action to influence the outcome, what are the key issues you want readers to focus on?
Dave: For the ITC to find serious injury to the domestic industry, there has to be significant reduction in production facilities, but that hasn’t happened. The domestic industry’s acres have actually increased during the period of the investigation, and more acreage is coming on line. There has to be an indication of underemployment within the domestic industry, but we all know that according to domestic producers through the questionnaires produced for the ITC, that’s not the case, because they would have hired more employees if they could find them labor-wise, right?
And the other contention is the industry has been unable to generate adequate capital for investment, and that’s not the case either, because we’ve seen a lot of money going into blueberries over the period of the investigation. So, for ITC to find serious injury, those three things are crucial. And through our research and the questionnaires, we did not find that injury.
Q: Joe, you’ve also pointed out, “The domestic industry has earned double-digit operating margins in every year of the time period included within the U.S. ITC investigation, which compares favorably to broader farm industry benchmarks.”
Joe: If you asked me what I want people to know, it is our desire to give them ample supply of the most flavorful, most nutritious fruit they can have every time they go to the grocery store, and to do that we have to produce on the shoulders. And retailers absolutely want to have that supply.
Dave: We supply that, as that’s our heart’s desire, and what our total effort is. I’m an eight-generation American farmer; my family is American farmers, and I want my grandchildren to be American farmers. We’re trying to supply a fantastic product to the American people 52-weeks a year. I tried to get that shoulder here in California and we failed, so we had to go somewhere else to do it. That’s just what fills the marketplace.
Q: In this instance with blueberries, you argue the overlap between domestic production and imports is relatively slight, and overall supply is rapidly expanding to accommodate year-round consumer demand. Is this applicable to related investigations/hearings underway on import restrictions for other produce commodities, including strawberries, bell peppers, squash and cucumbers. For instance, are there categories facing greater competition from overlap with imported and domestic supply? [Editor’s note: Florida tomato growers’ trade disputes with Mexico are not new.]
Dave: If you go to your grocery store now, you’ll see just about a year-round supply of produce from around the world. The American buyer is demanding quality fruit year-round, and I wouldn’t say the blueberry category is unusual in that way.
Dave: In the world, you have the equator, and if it’s not growing here, it’s growing somewhere on the other side, or, with technology in semi-tropical or tropical climates and people just need to find the spots to fill the timeframes, if it’s blueberries, strawberries, stone fruit, grapes, whatever it is.
Q: From a political standpoint, do you think these import trade issues will change with the Biden Administration?
Dave: Remember who you’re talking to here… I’m a farmer. I don’t think this is a political issue.
Joe: Yes. It doesn’t matter who’s president. It’s a bipartisan committee.
Q: That’s a good point. When it comes to advocating for free trade or trade restrictions, you can usually find bipartisan support and dissent on both sides of the aisle based on one’s interests. The case you put forth ultimately supports increased blueberry consumption…
You’ve been so generous with your time. How would you like to conclude this discussion?
Joe: We’ve talked about how there’s so much more upside on the blueberry category. If we start limiting imports and putting a tariff on imports, so to speak, we’re going to raise the price to the U.S. consumer, which is obviously going to raise the retail price, and decrease consumption, on a category that has had record growth.
And I don’t think it’s the right time. I know this is a long-term play, but why, in the type of environment we’re in now, with COVID. You’ve got a nutritious product like blueberries. Is now the time to increase the prices on a product that is good for the American consumer, for all consumers? And typically, we still have a lot of room to grow in terms of those buying blueberries, with demographics, age, and income… so now is not the time to be raising blueberry prices in the U.S. at retail.
Q: You’ve given our readers much to absorb. Please keep us posted on the latest developments.
Dave: We will. In the meantime, keep eating blueberries and stay healthy!
Advocating on behalf of those who want to see the US government take steps to raise the price of blueberries during the shoulder seasons in order to maintain the viability of US farmers is a Georgia farmer spearheading this effort. We asked Pundit Investigator and Special Projects Editor Mira Slott to find out more:
Chairman of Executive Committee
American Blueberry Growers Alliance (ABGA)
Q: With the conflicting coverage surrounding this U.S. ITC investigation, we want to provide our readers with clarity on the opposing viewpoints and a better understanding of what is at stake. Thank you for tackling a range of questions and keying in on the issues of most contention.
A: We certainly agree this is an incredibly important topic. With time of the essence for this interview, we’ve prioritized what we see as the most critical points distinguishing those who oppose the ITC’s 201 investigation from American growers.
Q: As a leader at the ABGA, could you share some background about your company, and some of the impacts that imports have had on your business?
A: For more than 15 years, I have grown blueberries on my farm in Willacoochee, GA. Over the past five years, we have seen an influx in blueberry imports, which increasingly infringe on U.S. growing and harvesting seasons, and farmers like myself are struggling to stay afloat.
In Georgia, we sell our blueberries during an April to June harvest season. Mexico, in particular, has targeted their imports during our harvest season. For example, from 2019 to 2020, Mexican blueberry imports during the 14-week Georgia harvest window alone grew by 68 percent, or by nearly 16 million pounds. As a result, Georgia lost 25 percent of its market, and sales volumes fell by 10 million pounds.
Q: Could you talk about the formation of the ABGA and the key strategies/goals of the ABGA?
A: ABGA represents growers and farmers across the country, including in California, Florida, Georgia, Michigan, Oregon, and Washington, advocating on behalf of their interests and for the long-term viability of the domestic blueberry industry. ABGA is the only organization that specifically represents the interests of U.S.-based blueberry growers. Unlike other blueberry industry groups, our alliance does not include marketers, producers or suppliers of blueberry imports from foreign markets.
Q: The Alliance’s members include the Georgia Blueberry Commission, Florida Blueberry Growers Association, Michigan Blueberry Advisory Committee, and the California Blueberry Commission. This covers a range of states and growing regions. Are the members’ interests always aligned? For instance, some California-based blueberry suppliers are among those that formed the Blueberry Coalition that opposes restrictions on blueberry imports.
A: Before ABGA was established late last year, there was no organization that solely represented the interests of U.S.-based blueberry growers. We are proud to fill this void. We are also beginning to expand our membership and will continue to serve as a unified voice promoting American blueberry farmers, even after the ITC investigation concludes.
The United States is the world’s largest producer of blueberries, and we want to make sure this indigenous industry remains healthy and robust, so that American families can continue to choose American-grown blueberries.
Q: Why are Blueberry Coalition members on the opposing side? Is it mainly related to U.S. blueberry producers that are vertically integrated to supply blueberries 52-weeks a year? Could you provide context and perspective? How much integration is there with domestic suppliers and international producers/operations in different countries, and how would these import restrictions impact that?
A: The groups opposed to the ITC’s 201 investigation do not represent the interests of American blueberry growers, but rather importers and large U.S.-based companies that have vastly expanded production in foreign countries to take advantage of lower labor costs and more relaxed environmental rules – before importing their fruit back into the United States.
Q: The Blueberry Coalition raises the following points:
1: Import barriers could spur retaliatory actions from trading partners.
2: Limiting imports would constrict predominantly counter-seasonal supply and year-round consumer access.
3: Domestic blueberry producers are unable to fill the supply needed during domestic/import overlap timeframes to meet the thriving current consumer demand and rapidly growing market.
4: The main pricing competition occurs among domestic blueberry suppliers during the peak U.S. production times, an approximate 20-week period, where the great majority of U.S. production takes place, not during the shoulders when there is overlap with imports.
Could you address each of these points and provide counter arguments?
A: Yes, to start, ABGA included a recent economic analysis in its post-hearing brief to the ITC last month: Analysis of Serious Injury and Causation Within Seasons, Months, and Weeks (which was conducted by Capital Trade). It lays out the impact of imports on the volume, market share, prices, revenues and profits of U.S. growers of fresh cultivated blueberries over the POI, and in particular, the impact at different points in the year.
The study targets six points:
1: The spring shoulder (March) and fall shoulder (August-October) periods are of critical importance to the domestic industry, accounting for 28.8 percent of annual volume and 37.1 percent of annual revenue from 2015 to 2019. And that those periods contribute disproportionately to domestic revenues and profits.
2: Import volume grew dramatically during the shoulder periods, increasing by 90 percent in the spring shoulder from 2015 to 2019 and 174 percent in the fall shoulder, far outpacing market growth.
3: The increasing volume and market share of imports resulted in significant declines in U.S. prices. From 2015 to 2019, U.S. prices in the shoulder months declined by an average of 33.5 percent. Price declines were particularly acute in the months with the largest increases in import market share (in April and in September).
4: Declining prices resulted in suppressed revenues and declining profits for U.S. growers. Revenues declined while costs were stable on a per-unit basis, resulting in significant decline in operating and net income earned during the shoulder periods.
5: Imports were the overwhelming cause of these declines in U.S. growers’ prices and other financial performance indicators. Weeks of the year that demonstrate significant increases in import market share also demonstrate significant declines in U.S. prices.
6: “The (Blueberry) Coalition has sought to draw an extremely narrow definition of the U.S. growing season, seeking to exclude periods of the year with significant volumes and even larger revenues. Contrary to the Coalition’s approach, the (report) analysis demonstrates that the injurious effects of imports are apparent no matter how broadly one defines the U.S. season.”
Q: That’s an important point. So, the Blueberry Coalition and the American Blueberry Growers Alliance are defining domestic production windows and import shoulders differently, which alters the analyses… Still, according to the Alliance, no matter how you define the domestic growing season, it has an adverse effect. But the imports are much more injurious if the domestic growing seasons are defined the way they are in the Alliance report.
A: We acknowledge that year-round supply is beneficial to both consumers and ourselves, just as it is clearly beneficial to the foreign producers. But it is important to note that foreign producers benefit greatly from the substantial marketing efforts that U.S. producers have made to promote the health benefits of blueberries. We’ve grown the domestic blueberry market.
That positive factor, however, does not come even close to offsetting the negative factor of imports oversupplying the market during critical portions of our production periods, driving down prices below production costs.
In other words, year-round supply is beneficial, but foreign producers are now aggressively targeting our harvest window. If they drive us out of business, they will largely have the attractive U.S. market for themselves. And the U.S. will lose domestic production of this indigenous fruit.
Q: Are the limitations on blueberry imports you seek specific to particular countries and timeframes? What remedies are you proposing?
A: Imported blueberries used to stop entering the United States just as we began our harvesting season, which can begin as early as February in California and Florida – moving north and west and ending in October in Michigan, Oregon and Washington. But this is no longer reality. Imports from Chile, Peru, Mexico, Argentina and Canada now increasingly enter our market throughout our entire harvesting period and even our shoulder harvesting periods – undercutting our price point and threatening the livelihood of blueberry farmers across the United States.
Our desire is for relief during our production periods, including the full shoulder seasons, not a ban on imports. American farmers just need some temporary relief to help us compete on pricing during our critical growing and harvesting season, in order to stay in business. This can be achieved through a number of measures, including limits on import volumes, tariffs, minimum prices, or some combination.
Q: Are these solutions to alleviate increased pressure from imports viable? How would that work?
A: We’re asking for temporary relief during our production periods to enable family farmers across the United States – many of whom have been around for multiple generations – to be able to stay in business.
Temporary relief will give American blueberry growers the time to invest in new varieties that are better suited to mechanized harvests, the harvesters themselves, and field protection. We will also have time to develop alternatives to the industry structure and other initiatives to make the domestic industry more competitive.
We also want to work with food marketers to agree on a common strategy that enables them to meet their customers’ needs without causing us injury. These measures will provide us with the means to compete fairly once relief measures are lifted and will be critical to the long-term viability of our industry.
Q: How will restrictions on imports impact supply and pricing? Will there be enough supply to fill the increasing demand?
A: The argument that consumers would somehow suffer from trade restraints, or have to pay more, just doesn’t wash. Average prices to the farmer for fresh blueberries have been around $1.25 to $1.50 per pound, so if I buy a pint of fresh blueberries in the store for $3.99, that’s about 8 ounces of blueberries, or around $8 per pound. Even if the store is offering a 2 for 1 special, that is still $4 per pound, an enormous mark-up from my $1.25. The reality is that the price is unlikely to change for consumers.
Simply put, consumers deserve access to fresh, high-quality and safe blueberries. Blueberries also provide millions of dollars of economic benefits to rural communities, from direct full-time and seasonal jobs, to indirect benefits such as the purchasing of farm inputs, packaging, processing and distribution services. If American blueberry growers are forced out of business, entire communities will suffer.
American blueberry growers have the capability to meet demand throughout the domestic production periods. We should be enjoying a boom in sales driven by increased U.S. blueberry consumption as more people appreciate the health benefits of this crop, but, instead, we’re fighting just to get our product on the shelves, given the rapid pace that Argentina, Mexico, Peru, Chile and Canada have ramped up production to sell into the American market, driving down prices. It is critical that American consumers have a choice of whether they want U.S. or foreign-sourced blueberries when they go to their local market.
Q: What happens if the investigation determines there is no serious injury to the domestic blueberry industry? Is there a risk that domestic blueberry producers won’t be able to survive?
A: Without temporary relief to help us compete on pricing during our critical growing and harvesting season, the American blueberry industry will be devastated, as imports will no doubt continue to accelerate. This will cause even greater hardship on family-owned farm operations, as well as on providers of packing and freezing services, and damage to local communities and tax bases.
That said, our Alliance will continue to serve as a unified voice promoting American blueberry farmers even after the ITC investigation concludes.
We have received strong support from members of Congress, state agriculture associations, and other farm interests throughout this investigation, and we plan to work with these groups on other remedies to ensure that American consumers continue to have access to fresh, high-quality, safe, domestically grown blueberries.
Q: Where do you see the biggest competition now and going forward?
A: U.S. imports of blueberries have surged in recent years as foreign growers have deliberately targeted the U.S. growing and harvest periods, in blueberry-growing states across the country. Over the past several years, blueberry imports increased dramatically from Chile, Peru, Mexico, Argentina, and Canada, rising nearly 62 percent – from 423 million pounds in 2015 to 684 million pounds in 2019. Between 2015 to 2019, blueberry imports from Peru rose by 816 percent and from Mexico by 116 percent.
Imports during our shoulder season (early and late) have a huge impact on overall seasonal profitability. Even though shoulder seasons may represent a smaller share of production, sales during these seasons can account for a significant share of revenues and virtually all of the farmers’ profits. Shoulder-season prices establish the starting point of the seasonal price curve, so if prices start out low because of the significant supply in the market from imports, they will only get lower as the season progresses.
The situation with imports is so harmful that some growers are having to leave blueberries on their bushes because it would not be economical to harvest them, given how much grower profits have eroded.
Q: Which U.S. states and U.S. blueberry producers are most affected by the influx of imports, and from what countries?
A: Other blueberry growing regions across the country have seen imports flood in during their growing and harvesting seasons. In states such as Michigan, Oregon and Washington, the growing and harvesting season is during the late summer and fall. In addition to imports from Mexico and South America, there is also rising imports from Canada coming into these markets. In the case of Canada, a favorable exchange rate for Canadian producers, together with government subsidies, are providing them with a competitive price advantage.
Q: In terms of pricing, the increase in U.S. production and imports has led to an increase of supply in the domestic market, and prices in the U.S. off-season are now lower, according to the USDA-ERS Dec. 2020 report: Fresh Blueberry Supplies Expand as U.S. Consumers Develop a Taste for Year-Round Blueberries: “Increased blueberry supplies are now putting downward pressure on prices in early spring and fall,” a dollars-per-flat chart comparison shows:
In a study presented by the Blueberry Coalition, An Economic Analysis of the Competitive Dynamics in the U.S. Fresh Blueberry Market, the author, Thomas J. Prusa, PhD, Rutgers University, says based on his estimates, the change in domestic competition is the single largest factor affecting domestic prices over the 2015-2020 period. He claims that price movements over a calendar year are not consistent with a theory of imports being a substantial cause of serious injury. “Over the calendar year, fresh blueberry prices are consistently at their lowest during the peak summer weeks, which is exactly the period when imports are at their lowest level. Conversely, domestic prices are higher during weeks when import volume is higher,” he says.
Yet, your data tells a different story on overlap windows, and the impact of shoulder season pricing on overall seasonal profitability… In the Analysis of Serious Injury and Causation Within Seasons, Months, and Weeks, it concludes: “Respondents have sought to draw an excessively narrow definition of the shoulders — based on “phases” defined by Dr. Prusa — and claimed that the spring and fall phases account for only nine percent of domestic volume over the year. Their classification seeks to obscure the fact that the months before and after the U.S. peak season account for a significant share of domestic volume and a disproportionately large share of domestic revenue.”
A: Current prices for blueberries are lower than they have been in years, which is attributed to the increase in imports. The main reason imports are able to undersell American growers is that domestic farmers are at a tremendous disadvantage in farm labor and harvesting costs. Many U.S. blueberry farms pay farm workers more in an hour than they can make in a day in countries such as Peru and Mexico. They also have more lax environmental standards, which also creates a disparity in production costs. This price disparity makes it extremely difficult for American growers to compete.
Q: Are domestic producers able to meet the current consumer demand during the shoulders and with the trajectory of increasing consumer demand? Do you find that the blueberry market has ample room to grow?
A: We believe the blueberry market has room to grow as more consumers are focused on eating healthier and appreciate the health benefits of this nutritious fruit. There is capacity to increase U.S. production. Many regions have the ideal climate and soil conditions necessary to grow this crop. But there is a longer production period for blueberry plants to mature and bear fruit than other crops. Farmers must make a multi-year investment before fruit can be harvested.
Q: Is this case applicable to related investigations/hearings underway on import restrictions for other produce commodities, including strawberries, bell peppers, squash and cucumbers? For instance, are there categories facing greater competition from overlap with imported and domestic supply?
A: Other fruit and vegetable commodity groups are also facing import pressures, and no doubt there will be other trade cases that seek to address their situation. We know that many in the U.S. agriculture sector are closely watching the ITC’s investigation into blueberries, and the outcome of this case could guide a future strategy for other farm groups that are concerned about rising food imports.
Q: For those who want to take action to influence the outcome, what can they do, and where does the investigation proceed from here?
A: The ITC is expected to vote on a decision on the injury phase of its investigation on February 11. If the ITC decides that foreign-grown blueberries are a substantial cause of serious injury (or threat thereof) to domestic farmers, the investigation will move to the remedy phase. There will be additional hearings and evidence presented by all sides. At the end of the second phase, the ITC will propose a set of remedies for the Biden Administration to consider.
If the issue is what is best for consumers, there is little question that allowing the freest possible trade in commodities and allowing for the widest variety of product over the most extensive time frame and at the lowest possible cost will result in the greatest benefits for consumers.
If the issue is what will benefit business in a broad stroke, again, there is little question that retailers and foodservice operators both benefit from being able to purchase and sell large quantities of items at inexpensive prices. This cascades down the supply chain to trucks, warehouses, shipping lines, etc.
If the question is what will most increase the consumption of a healthy fruit such as blueberries, well, certainly, lower prices and larger availability tick off that box.
For the broader economy, it is also important that other countries prosper. This way, their citizens can buy US products, come to visit America on business and vacations and avoid the many problems, such as revolutions, terrorism and illegal immigration to America, that are encouraged by poverty and despair in foreign countries.
It is also true that many Americans feel it is extremely important to support American farmers. Allowing imported produce to be brought in at a price with which domestic farmers cannot compete also is, long term, not acceptable. Most do not want to see an America in which its own farmers cannot compete.
To some extent, though, this battle has already played out. It was in 2018 that The New York Times ran a piece titled, Most of America’s Fruit is Now Imported: Is That a Bad Thing? The article’s author, David Karp, explained:
…the proportion of the imported fresh fruit eaten in the United States rose to 53.1 percent in 2016, from 23 percent in 1975, according to the Agriculture Department’s Economic Research Service.
Fresh vegetable imports rose to 31.1 percent from 5.8 percent. (Still, the United States remains a net agricultural exporter, with grains, soybeans, meat and nuts accounting for most of the trade surplus.)
Consumer attitudes toward this situation may be unclear, but actions speak louder than words. After all, nothing stops consumers from buying all Fair Trade Certified product or all domestic product, but there is little evidence that when confronted with a substantial price differential, consumers want to pay more to get domestic product.
Yet, there is no question that domestic growers are being put in an unfair position. The H-2A program is widely seen as very difficult to manage and very expensive. To some extent, the way things are organized now, it is an “out of sight, out of mind” situation. Domestically, because of our government’s minimum wage laws, and requirements of various labor programs, we are forbidden to pay harvest workers at rates that are perfectly acceptable for foreign producers to hire at, and then we expect our domestic farmers to compete.
The same applies to environmental standards. We have often found that the food safety standards used by overseas growers can exceed US standards. This makes sense because foreign growers are selling to the US, Canada, Japan, the UK, Europe and other demanding markets. Rather than segregating the crop to meet specific country standards, they often apply the highest food safety standards to everything grown in order to maintain flexibility when shipping product.
However, where food safety is demanded by buyers in the demanding markets, those same buyers often do not have the same engagement with labor and environmental standards. It is not even clear how they could. A poor country competes in the world market with its resources – typically low cost labor. Demanding that everyone in the producing countries get paid higher wages and that environmental and ethical standards are met would make these countries uncompetitive.
The idea that temporary relief could be provided to US farmers, and that the industry would then thrive is tantalizing to many Americans. This is why Jerome Crosby of the American Blueberry Growers Alliance phrases the request in that way:
“Temporary relief will give American blueberry growers the time to invest in new varieties that are better suited to mechanized harvests, the harvesters themselves, and field protection. We will also have time to develop alternatives to the industry structure and other initiatives to make the domestic industry more competitive.”
Of course, that New York Times article was published three years ago, and the trend to larger import market share goes back decades — so it seems unlikely that all of the sudden domestic growers will find new ways to be competitive.
So here we stand. There are basically three options:
1. Do we support the widespread availability of less expensive, healthy food, much of which will come from overseas?
2. Do we change domestic standards on things such as labor rates to allow US farmers to more effectively compete with foreign producers?
3. Do we “go protectionist” and impose tariffs, import limitations, etc., to keep the domestic price high enough to make farming profitable during the shoulder seasons?
Of course, all of these options have consequences, and, in some cases, they are difficult to quantify. If, however, we impose tariffs and volume limitations to keep other countries out of our market, surely those countries will respond.
This may or may not impact the produce industry. They could restrict produce imports, or they could buy Airbus rather than Boeing. Even if they did nothing overt, these countries would be poorer, and we could expect more illegal immigration from them or just less buying of US products with their diminished income.
Mr. Crosby is articulate, and he voices a real problem that is likely to gain great sympathy among Americans who generally support US farmers and want them to succeed.
It reminds one of the central battle in American politics between Thomas Jefferson, supporter of the yeoman farmer, and Alexander Hamilton, author of the famous Report on Manufacturers. This battle over blueberries, and protecting US farmers, versus providing for consumers, is truly a battle that has echoed through our history.
In the end, though Jefferson won our hearts, Hamilton won our heads and it is his vision that defines the capitalistic, risk-taking, entrepreneurial society in which we live.