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Compromise Reached On Immigration Reform, But The Battle Is Far From Over

High-Fives were being passed around the ag community in D.C. today as key Senators announced an agreement on a comprehensive immigration reform package.

Autumn L. Veazey from United Fresh sent out this notice to those who had played a part in this battle:

Dear Participants of Agriculture Supporting Immigration Reform,

Today, the Senate Democrat and Republican leadership announced at 1:30 p.m. that a bipartisan agreement on comprehensive immigration reform, including AgJOBs, has been reached in the Senate. This is a tremendous accomplishment and leaders from both parties who have been so far apart on many issues just stood together at 1:30 p.m. press conference giving strong support to the compromise.

For those of you who have worked so hard on this issue for so long, congratulations and thank you. In essence, your sacrifice and hard work has paid off. Most importantly, this could not have been achieved without your presence on Capitol Hill yesterday. Having more than 150 agricultural leaders in Washington this week, urging their Members of Congress to support AgJOBS and immigration reform for our industry was critical to making today’s compromise happen. In addition, the combined efforts of the agricultural organizations were critical to making today’s compromise happen.

Additional details will be forthcoming on specifics of the Senate compromise. As in most cases, the devil is in the details, and we understand that some of the details have yet to be worked out. However, we will keep you informed as we receive up-to-date information.

Finally, all must recognize that this is not the end of the battle. Senate leadership will be critical, but the action will soon turn toward the House of Representatives, where further debate will take place. This will require our constant diligence and hard work until a law is finally signed by the President.

Once again, thank you for your hard work!

Autumn L. Veazey
Director of Legislative Affairs, Associate Counsel
United Fresh Produce Association
Washington, D.C
.

Robert Guenther, United’s Senior Vice President for Public Policy, was especially encouraged because of who was part of the process, as Robert told us in an e-mail:

Every significant Senator who has been involved with this issue over the last several years participated in the press conference announcing the deal. This would include: Sen. Dianne Feinstein, Sen. Kennedy, Sen. Larry Craig, Sen. John Kyl, Sen. Saxby Chambliss, Sen. Mel Martinez, Sen. Arlen Specter, Sen. Lindsay Graham, Sen. Ken Alazar. There may have been others that did not speak but also participated.

Yet, although lauding the compromise as a “tremendous accomplishment” United Fresh acknowledged in an alert sent to its members:

Additional details will be forthcoming on specifics of the Senate compromise. And, all must recognize that this is not the end of the battle. Senate leadership will be critical, but the action will soon turn toward the House of Representatives, where further debate will take place. This will require our constant diligence and hard work until a law is finally signed by the President.

We understand that the compromise does not settle all the issues and that the Senators “agreed to disagree” on many important issues, leaving them to be determined by a floor vote.

The news reports such as this one from the Associated Press certainly imply some pretty important Senators are not fully on board:

Senate Majority Leader Harry Reid, D-Nev., called the proposal a “starting point” for that debate, but added that it needs improvement.

“I have serious concerns about some aspects of this proposal, including the structure of the temporary worker program and undue limitations on family immigration,” Reid said in a statement.

The compromise seems complicated:

The key breakthrough came when negotiators struck a bargain on a so-called “point system” that prioritizes immigrants’ education and skill level over family connections in deciding how to award green cards….

The proposed agreement would allow illegal immigrants to come forward and obtain a “Z visa” and — after paying fees and a $5,000 fine — ultimately get on track for permanent residency, which could take between eight and 13 years. Heads of household would have to return to their home countries first.

They could come forward right away to claim a probationary card that would let them live and work legally in the U.S., but could not begin the path to permanent residency or citizenship until border security improvements and the high-tech worker identification program were completed.

The guest worker program is also contingent on the border security improvements and a high-tech worker ID program although we understand that ag labor is exempt from this provision:

A new temporary guest worker program would also have to wait until those so-called “triggers” had been activated.

Those workers would have to return home after work stints of two years, with little opportunity to gain permanent legal status or ever become U.S. citizens. They could renew their guest worker visas twice, but would be required to leave for a year in between each time.

The most significant change in future immigration policy would be the restricting of “family ties” preferences to spouses and minor children. Instead legal immigration would move toward preferences based on skills and education, though this change would be years in the future, as the compromise anticipates getting through all existing waiting lists.

The compromise will probably have very broad support in the Senate but conservatives will give it a fight. The National Review, a conservative publication, editorialized against the compromise:

“The fight over legalization, or ‘amnesty,’ is all but over,” exults the Manhattan Institute’s Tamar Jacoby, and the “yahoos” who oppose it have been routed. She is right about who has won, at least as far as the Senate is concerned. The Bush-Kennedy immigration “reform,” which is now expected to win broad bipartisan support in that chamber, provides legal status for an estimated 12 million illegal aliens. In exchange for the massive, unpopular amnesty, Senator Kennedy is willing to engage in a little “border dressing” that purports to beef up enforcement of current laws barring illegal entry and the employment of illegal workers. As in the past, supporters of border and workplace enforcement will get the rhetoric, illegal aliens the prize, and taxpayers the huge tab…

Bush-Kennedy includes some enforcement “triggers” that increase resources at the border and establish an employment-verification program before amnesty or the new temporary-worker program can take effect. But there is no requirement that these measures be proved effective before the full implementation of Kennedy’s wish list, and the reform does not include critical provisions to prevent identity theft and the use of fraudulent documents….

…the enormous cost of granting legal status to millions of illegal aliens is being wholly ignored. Nearly two-thirds of illegal immigrants are low-skilled workers. Based on a detailed analysis of the net cost of low-skill households, Robert Rector of the Heritage Foundation estimates that the typical illegal-alien household receives $19,588 more in benefits than it pays in taxes each year. He explains that these costs would increase dramatically when an illegal alien reached retirement. Rector estimates that if all current illegal aliens were granted amnesty, the net retirement costs (benefits minus taxes) could be over $2.5 trillion.

Nobody has had a chance to really study the compromise but Human Events, another conservative publication, posted a summary of the details of the Border Security and Immigration Reform Act that you can read here. It is, however, a fair bet that they won’t be supporting the compromise. Jed Babbin, the Editor of Human Events who previously had served as a deputy undersecretary of defense in President George H.W. Bush’s administration, had this to say about the compromise: We haven’t had the time to analyze it yet, but we’ll be back with the fast, concise and hard details on what appears to be an horrifically bad deal.

There is no question that industry members who flew into DC to lobby had a real effect keeping the issue of ag workers highly visible. So thanks are due and satisfaction for something achieved well merited. However, this is far from over.

We have Senator Reid, the Democratic majority leader, saying he has problems with the bill and most of the conservative voices going ballistic. This means we ought to keep the Champagne corked for a bit for as Poppa Pundit often said when his son had expressed an expectation: Tis many a slip twixt the cup and the lip.




Calls On Wal-Mart Point To More Vendor Negativity

Our piece Wal-Mart’s Changing Treatment Of Suppliers brought forth a large number of phone calls from executives at the highest level of sell side organizations.

If Wal-Mart executives care about Wal-Mart’s image in the supply community, the news was pretty bad.

The distinction between Wal-Mart’s “defenders” and those who were on the “attack” basically came down to the strength of the vendor organization.

The key issue at stake really is the timing of the orders. When we reminisced about Bruce Peterson setting up the Wal-Mart produce procurement system over 15 years-ago we pointed out that Bruce had come to a basic viewpoint on what a contract is, as we wrote:

In the end, Bruce had an epiphany. It wasn’t that hard, a contract required two basic things:

1. An agreement to a price

2. An agreement to a minimum quantity

Bruce recognized that this was the only way a grower could gain an advantage in a soft market to make up for opportunities he had foregone in a tight market.

Of course implicit in this kind of thinking was that the vendor would have the business every week. Sure, volume might have normal fluctuations with more product needed for Thanksgiving week than the week after Thanksgiving, but the whole idea, the whole point, was that roughly steady sales would:

  1. Allow growers to do fine at the contract price with weeks where the contract price was low balanced by weeks where the contract price was high.
  2. Allow growers and shippers to invest in the “process” — acquiring everything from data analysis capabilities to building repacking facilities near their DC assignments.
  3. Drive costs out of the system by allowing growers and packers to plan for a high degree of utilization of land, labor, facilities, etc. because of the steady and predictable nature of the orders.

Now, Wal-Mart would like to contract for dollar volumes instead of giving out DC assignments. But here the devil is in the details. Is it an equal dollar volume each week, or is it three dead weeks and then it takes four times the volume?

The basic distinction between the calls we received after our piece appeared was between those vendors who felt that their contracts were being violated by Wal-Mart and those who said that they had resisted signing Wal-Mart’s proposed contracts and eventually had gotten more acceptable agreements.

Our thoughts are that we can leave the legalities to the lawyers. It is doubtful that Wal-Mart is, in a “legal sense,” breaking contracts. After all, it is the largest buyer in the world, it doesn’t have to break any agreements, it just have to ask vendors to go along and if they ask in the right tone — you know that tone that says you really don’t have a choice in this matter if you want our business next year — most vendors will go along because they are still making money on the Wal-Mart business and want to keep it.

It is also important to note that Wal-Mart is a for profit corporation, and it is perfectly entitled to change its procurement systems to maximize its profits. Wal-Mart does not owe suppliers a living.

The question is whether Wal-Mart is actually acting in its own interest by making all the changes we referenced yesterday as well as in our earlier pieces Wal-Mart Continues To Change Its Buying Practices and Ron McCormick Of Wal-Mart Elaborates On Its Procurement Reorganization.

We think it is not. The DC assignment system really did encourage efficiency as it gave vendors regular volume and a geographical reference point. These are the two keys to reducing costs. As a practical matter you can’t both depend on Wal-Mart for a substantial share of business and just be out of the game for two weeks because of an “opportunity buy” or “local buy” or a “global sourcing” buy without putting resources to waste. Inevitably this will raise costs. You also can’t evaluate if you should buy a particular farm or ranch or build a particular repacking facility without knowing where your business is going to be.

Beyond this, Wal-Mart is losing priceless equity with the vending community. The Pundit was but a boy at the knee of his grandfather when he was taught that his family had given the Pundit the most valuable asset of all: A good name. Wal-Mart is allowing this asset to waste away.

This Pundit has always defended Wal-Mart. Most recently right here and here. We have had no patience with the snobbery of those who would keep Wal-Mart from competing in neighborhoods around the world. Wal-Mart is a priceless blessing to millions and a valuable national asset.

Yet there is a sense that Wal-Mart is now a ship without a rudder. You get the feeling merchandising wise that there are no longer core values such as EDLP to reference in making decisions. And you get the sense that procurement decisions are increasingly short-term oriented, all focused on increasing margins this quarter.

In the long-term there will be a substantial price to pay for that line of thinking.




Horsfall To Head California Leafy Greens Marketing Agreement

After an exhaustive search Scott Horsfall has been named CEO of the California Leafy Greens Marketing Agreement:

SACRAMENTO, May 17, 2008 — Former California Grown CEO Scott Horsfall has been named to head the new Leafy Greens Marketing Agreement, LGMA Chairman Joe Pezzini announced to the group’s board of directors on Friday, May 11th. Horsfall previously headed up the statewide California Grown promotion program from 2003 through 2006. He will assume the position of CEO of the Leafy Greens Marketing Agreement on May 29th.

“We are very pleased to have someone with Scott’s experience and abilities to lead our new marketing agreement,” said Pezzini. “Our industry’s objective is to advance safe growing and handling practices, and we know that Scott can help us achieve that goal.”

“I am honored to have the opportunity to join the leafy greens industry,” said Horsfall. “This industry has taken a proactive approach to ensuring a safe and reliable food supply, and I look forward to being part of that effort.”

Prior to working with California Grown Horsfall served as President of the California Kiwifruit Commission and Vice President/International Marketing of the California Table Grape Commission. For the last year Horsfall has been a management supervisor at Sacramento-based MeringCarson Advertising.

The Leafy Greens Marketing Agreement was formed in response to the E. coli outbreak that was linked to California spinach last year. The marketing agreement represents approximately 99 percent of the leafy greens industry in California, and requires of signatories that they implement and maintain the highest standards of safety in growing and handling spinach, lettuce and other leafy greens.

What was needed was someone who knew how to run an organization established under California authority — between the California Table Grape Commission, the California Kiwifruit Commission and the California Grown campaign they really found their man.

In fact the “California Grown” campaign is funded by the “Buy California Initiative” and the whole thing worked under the “Buy California Marketing Agreement” so they managed to find one of the very few people alive who has both run a California Marketing Agreement and a California Marketing Order.

That makes the Marketing Agreement ready to move right away and also prepares them for what the future might bring.

Best of luck to Scott in his new role.




FDA Indicates Guarded Willingness To Regulate Produce

Several articles, including this one entitled FDA Stymied In Push to Boost Safety of Produce, which ran in The Wall Street Journal, claim that February of this year, the FDA proposed a substantial regulatory regime for fresh produce, but higher-ups at the Department of Health and Human Services rejected the plan:

The Food and Drug Administration, under fire for a string of illnesses caused by contaminated vegetables, earlier this year came up with an ambitious, industry-endorsed plan calling for tough new regulations on the handling of fresh produce.

But the plan went nowhere after it got a cold reception from FDA’s parent agency, the Department of Health and Human Services. And even today, amid continuing concern about the safety of the nation’s food supply, efforts to address the problem remain in limbo.

people close to the FDA say HHS officials led by acting Deputy Secretary Eric Hargan rejected the FDA plan, which was presented in February at HHS headquarters. At the meeting, the FDA warned that its current approach to protecting the safety of fruits and vegetables, which relies on the industry following voluntary guidelines, was failing to stop an increase in foodborne illnesses, according to people familiar with the matter. Those in attendance included Robert Brackett, director of the FDA’s Center for Food Safety and Applied Nutrition.

Among other things, the FDA outlined a three-year effort that would pump $76 million into its coffers to monitor produce safety and impose stringent rules on growers and processors to prevent contamination. Such a campaign could cut produce-related outbreaks of illness in half, the FDA officials said.

Spokesmen for the Department of Health and Human Services say the meeting is being correctly characterized:

HHS spokeswoman Christina Pearson said that the February meeting was just a background session, with the FDA presenting "a wide variety of options available to us in our efforts to improve food safety," and didn’t require a policy or regulatory decision.

In any case the regulations being proposed didn’t seem to conform to what United Fresh had in mind in its call for Federal regulation, which we discussed here:

A preventive-control regulation, the type proposed by the FDA at the February meeting, is tailored to each industry and company, and the government’s cost stems mainly from auditing companies for compliance. For example, a processor would identify the hazards and take measures to reduce them at critical points, such as ensuring the correct chlorine level in washing water.

This seems to imply that everyone will have to prepare a HACCP plan and the government will audit it. That almost seems to be avoiding the issue. Natural Selection Foods and Ready Pac both had HACCP plans, and they were audited. Isn’t the real question a substantive one of what should be in the HACCP plan?

And isn’t FDA providing an answer to that question the key way FDA can help the industry?

The article is interesting because it is the first hint that FDA might actually be interested in regulating the produce industry. The approach, however, that the article says the FDA proposed, implies that FDA will not put itself in a position of promulgating a regulation that could then be found faulty.

In other words in our discussions with growers, what they really want is clear rules. They want the FDA to say that a field must be fenced with a wire mesh fence with an aperture of no more than 2 inches extending underground for two feet and in the air for six feet.

The growers want this so that if there is another outbreak, the growers can point to the FDA and say “We did what we were told.”

The FDA is signaling that it will never regulate with a sufficient degree of specificity to let anyone say that it is the FDA’s fault we had an outbreak.




Pundit’s Mailbag — Green Acres Is The Place To Be?!?

Our piece pesticide Spraying Gets More Attention brought much response from growers including this note:

It is all about money.

Here in Florida the developers own the politicians and as we know the politicians are greedy for money and power.

In our area of Florida farming has been a way of life since America was discovered and we started out close to the ocean or gulf and are now 25-50 miles inland and now have 5000 homes surrounding us.

Just Tuesday of this week the EPA called and told us a homeowner was complaining that the wind was blowing dirt from the farm into their pool and wanted something done about it.

So it is not just pesticides. It is people wanting to live in the country and then complain that the farms are too close.

Rumor now is that the school board in our area is buying property next to our farm for a future school.

Our country is losing its roots. No country has ever survived as a democracy without being able to feed itself.

We are in for a battle.

— Tom O’Brien,
C&D Fruit & Vegetable Company
Bradenton, Florida

There is something poignant about a farmer, a last holdout amidst sprawl and development, trying desperately to maintain a family legacy.

The various efforts to maintain farmland such as easements and bond issues are like a finger in the dike. They can barely hold back the flood.

How can it be otherwise? Consumers may dream of living in a rural idyll but they don’t actually want to smell an animal.

In fact the only farms likely to survive long-term in those areas where there is suburban sprawl are a kind of Potemkin Village. By coincidence The Wall Street Journal just ran a piece entitled For Sale: Condo W/Chicken Coop that profiled a new kind of development in which farms are sold as amenities much like swimming pools or golf courses:

Catering to Americans’ desire to live “green,” developers around the country are creating communities on or adjoining farms, pitching views of sorghum fields, grazing livestock, and local — very local — food, such as eggs residents collect from the property’s henhouse. The communities, however, aren’t necessarily in the boondocks. Some are in suburbs or near cities.

Bundoran Farm, a community under development in Albemarle County, Va., is offering 100 home sites on a working cattle farm and apple orchard at the foot of the Blue Ridge Mountains. South Village, a project in suburban South Burlington, Vt., was recently approved for 334 homes surrounding a 40-acre farm that will grow corn and other organic produce; Babcock Ranch, in southwestern Florida, is building nearly 20,000 homes surrounded by 73,000 acres that include a cattle ranch and a vegetable farm.

The article claims that the home buyers do have to get used to things:

For city folks, moving to a farm can require some adjustment. Such projects generally have small-scale organic agriculture, such as vegetable fields, chicken coops or a limited number of cattle. Residents must be willing to accept the rumble of tractors, natural grasses instead of a manicured front lawn and land-management activities, such as an annual “prairie burn” in which surrounding fields are set afire to rid them of nonnative species. They may also have to deal with the smells from the chicken coop.

Many homebuyers don’t know what they are getting into:

David Coldren, a 65-year-old retiree, moved to a home on Tryon Farm from a downtown Chicago high-rise several years ago, drawn to the idea of “little houses on the prairie,” he says. But It’s not always the quiet existence of his childhood on a Kansas farm. He was recently hit with a barrage of requests to attend meetings on the most environmentally sensitive way to rid the grounds of phragmites, an invasive plant. When he had guests over recently, he was interrupted by a resident at his door urgently asking for help to free snakes trapped near the community swimming hole.

“If you were planning to come here and sort of hibernate, It’s not easy to do,” Mr. Coldren says.

Many like that these communities are not truly rural:

Developers are also hoping the communities will appeal to buyers because of their location. Even though the farms offer a rural feel, residents won’t have to give up the services of urban life, such as shopping or good medical care. Bundoran Farm is 20 minutes outside of Charlottesville, Va., and Prairie Crossing is within walking distance of commuter lines into Chicago. Mike Sands, Prairie Crossing’s environmental team leader, says the location has appeal for the farmers and homeowners alike.

“Where else can you farm and still get take-out Chinese?” he says.

It appears that this is where we have wound up. It is hard to be optimistic about the future of true farming going on near where there are large numbers of residents.

Many thanks to Tom for his poignant letter.

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