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!