Crop Insurance time is upon us?

By Paul Baker, NYSHS Executive Director

Very soon each of you will have to decide to invest or not in the 2017 crop insurance program. In many ways it seems unfair in that we have not even gotten a clear picture of the success or failure of the current year. I would not be honest if I told you that each year is a carbon copy of the previous. Weather is a challenge regardless of your personal views on the topic of global warming.  I want to give some fresh perspective to you as to if crop insurance is a good investment (BET) or not.

Baker
Baker

I think we first must be realistic about the current times we are living in. While the economy is not surging people are for the most part doing quite well. We certainly do not want to see anyone go hungry. I have seen many statistics that suggest that here in the USA we waste nearly 40% of the food we produce. It is either not consumed or diverted at harvest or packing times for a multitude of cosmetic reasons. So this tells me that if our food is not virtually perfect it is discarded. Very high expectations.

We live is a fast paced society that only honors the very best. Second place is only famous if you work for Avis. Here are a few examples to illustrate my point. We have played 94 World Series.

Over those 94 years 35 have gone to 7 games. So 37% of the time some team is a loser because they lost one more game over the entire season. We have played 50 Super Bowls and outside of the Buffalo Bills how many fans can tell you the teams that lost those 50 Super Bowls? If you want a non-sport example how many people can name the Presidential candidate’s name that lost in the last ten elections?

I want to take you back to baseball for the last example. If in your major league career you fail to hit safely 65% of the time you will most likely be inducted into the Hall of Fame. That works out to hitting safely at a 350 batting average. Here is where life throws you a curve. As a grower if you were only successful with 35% of your crops you would be out of business,  To produce a product that will evade that already mentioned 40% defect rate you must be striving for returns above 80%. To do less over time will mean a serious decline in your profitability.

The reality is that the bar is set very high. The reasons why a piece of fruit is discarded is enormous. I need not tell you all of them. The returns alone for the inferior product usually do not pay the variable cost of production. Here is where we need to take a fresh look at the wisdom of crop insurance.

One needs to understand that insurance is a calculated gamble. When you take out a fire insurance policy on your home you are hedging against it burning down in the next 365 days. Nearly all of us carry this insurance. Nearly every insurance company will take your policy. I looked it up. You have a .000069% chance that your home will burn down. I am not suggesting that you cancel your fire insurance. I simply want to illustrate the risk factor.

Some growers tell me that they cannot afford to have apple crop insurance. When I see the frequency that apple growers have been compensated for a “sub-par” crop, I tend to think it is a pretty good “BET”. This year for example you may have dodged early frost, hail and wind damage. Who would have thought we would experience the driest summer in 100 years. The expression “size does matter” takes on a whole new meaning.

I think if you are a commercial apple grower you need to seriously evaluate the risk you are taking to not have this insurance. The market place has virtually no interest in anything less than 100%. With so many factors out of your control I think you need to look at crop insurance in 2017 as essential as any other fundamental cost of production. If your risk of not producing that perfect crop were .000069% I would certainly agree you can skip it! The program is set up to assist you in staying in business. It is not here to get you a seat on the beach next winter. If you are serious about being a producer in this market driven economy I think you need to take advantage of this tool.

Paul Baker
NYSHS Executive Director
3568 Saunders Settlement Rd., Sanborn, NY 14132
FAX: (716) 219-4089  |  Cell: (716) 807-6827
E-Mail: pbaker.hort@roadrunner.com

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What if?

By Paul Baker, NYSHS Executive Director

Sept. 1, in my mind, marks the official beginning of our fruit harvest.

Baker
Baker

Nationally and here in New York we are expecting another large crop. For the most part Mother Nature has been rather easy on all of the primary apple regions. No weather t r a g e d y means a big crop. Supply and demand usually tells us big crops drive down our prices. The question here when dealing with supply and demand is “who are our customers and how much do they wish to consume”?

We usually look at a U.S. crop to be marketed to a U.S. customer for the most part. Today with everything still on the tree and much yet to be decided politically by end of harvest I want to play the “what if” card.

Today the U.S. population is about 325 million. Our numbers are fairly steady as our birth rates have actually deceased over the last decade. We represent about 4.4 percent of the world’s population. China for example, the largest in population, is at 1.4 billion and India is close at 1.3 billion. Indonesia is a little shy of our population. Some important bench marks to keep in mind for this discussion are that since 1970 we have doubled the world population. Second in 2005 for the first time in history the urban populations were higher than the rural on the planet. In short more and more people are dependent on commercial agriculture as populations move from the land to the city.

The second area to consider today is what direction are we headed in this nation as far as public policy shifts. If we shift to a much more aggressive global market agenda we could see us seeking to take advantage of the 95 percent of the planet that does not live within our borders. While our domestic population remains quite steady globally we see the birth rates to be over twice the death rate. Combine this with the fact that that for many reasons we all are living longer we have an increased market share every year that needs our food. The end result is the planet needs every day more calories to take care of its increasing population.

So if the planet needs food who is in the best place to provide it? The world is for the most part static as far as land. What is not static is that as urban growth continues it takes farm land and converts it to urban streets of concrete.

Combine this with land that has not been as protected against pollution as our own we see areas of the world having to scramble to find good places to produce crops. Last we know that the most limiting element in crops is water. Fresh water is in high demand everywhere.

So that is table I have set before you in this mind game. While our population domestically is flat the rest of the world is expanding. New lives mean new demands for food. Water is critically short on most regions of the world. Here in the United States we have enormous under used water resources waiting to be put to its most productive usage. If we adapt a much more enlightened public policy that actually encourages agriculture rather than seeks to over regulate it we could see unprecedented growth in our ability to be the world’s bread basket.

The ugly truth is that despite every effort to suppress American farmers they have continued to be successful in delivering record crops. If we had public policy put in place to assist agriculture in labor and production technologies there is no limit to what we could produce. Then once we have the product we establish strong export markets. In short we have the land, water and technology to help feed the planet. We are in the best position to do this over any other country.

So I remain optimistic about agriculture. Food will never be set aside as out dated. Food will never go the route of the chariot. If we as a nation can organize our efforts, I think the future is very bright. We can easily market the crops of 2016 and beyond. We must continue to educate the public and private sectors of the land as to the potential that awaits us. It would be a great tragedy if short sighted public opinions and public policy saw American agriculture be down sized. Opportunity is knocking. The question will be as a nation are we prepared to respond?

Paul Baker
NYSHS Executive Director
3568 Saunders Settlement Rd., Sanborn, NY 14132
FAX: (716) 219-4089  |  Cell: (716) 807-6827
E-Mail: pbaker.hort@roadrunner.com

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Are You Ready?

Three days ago the calendar suggested that spring was here. We have already changed the clocks to allow us the maximum sun time. The question is, as you trade in your winter gear for short sleeves, are we ready for this season? Perhaps a better question is are we any better prepared to face the risks associated with growing the 2011 crop? I think we are and I will attempt to explain why in this report.

NYS Board of Directors from the Horticultural Society on February 10 traveled in unison to Capitol Hill to tell their Congressional members, in person, exactly how upset they were that there has been zero positive movement to relieve the guest worker issue back home. In fact, it could be actually stated, and they did, that because of the interference of the Federal Government it is now even more difficult to place legal farm workers on the land in New York State. Growers quoted financial costs that they were absorbing due to the failure of the Federal DOL to process their H2A documents in an efficient manner. They made this message on this day in both Senate offices and eight up-state Congressional offices. The message was loud and it was heard. How do I know it was heard? Two offices in particular were prompted into action directly as a result of these visits. Congresswoman Louise Slaughter and Congressman Bill Owens have been actively involved to set the process in a corrective mode. They are currently both leading efforts to streamline the H2A process, if for no other area than the growers of New York State. Senator Schumer is working in the Senate to deliver a package to move the immigration issue to a vote. Senator Gillibrand has been very active in setting up contacts for all growers to contact her office if they require assistance in this process. She has gathered and delivered a strong voice of protest to DOL and encouraged Homeland Security to find a quick solution to the Jamaican deductions issue so that we will not have a repeat of 2010. These actions would not have been taken if it were not for efforts made by your Board of Directors to travel to DC to make not only their case but that of all growers.

Congresswoman Slaughter is holding a question and answer for growers in her region to directly pose to the Federal DOL. Her insistence on this issue on March 30, 2011 will leave no doubt in the minds of those in the DOL offices that they are on the clock and expected to perform in a judicious and timely manner.

Beware A Strong Southerly Wind

On February 16, 2011, I was in Kearneysville, West Virginia to chair a meeting to encourage research to counter the brown Marmorated stink bug (BMSB). Last season this pest reached levels of destruction that totally destroyed crops and vegetation in the mid-Atlantic regions of West Virginia, Maryland and Virginia. The BMSB did make some movement into Adams County, Pa. but was not at a level there that it was a commercial issue. Fruit growers, however, in all of these regions are concerned as to how they will counter this pest because there is currently no successful treatment to control the BMSB.

Our mission was to encourage continued funding for the USDA station in light of loud cries from Washington to cut spending to such facilities. We joined US Apple and other representatives from the North East to pull out all of the stops to find a suitable program for this pest which arrived here from the Pacific Rim countries less than a decade ago. Since this pest has no known natural enemies and can over winter in our areas it has grown today to a level of commercial risk. I have sent reports to Albany, NY about the possible impact this pest may have on our State’s horticulture. I have asked Commissioner Aubertine to make every effort to encourage DEC to move swiftly to clear passage of any remedy if one does present itself.

Changing of the Guard

On March 14, 2011 we saw Peter Fleckenstein from Beak and Skiff replace Walt Blackler on our Board of Directors. We all want to thank Walt for his years of unselfish service to our industry. Walt will continue to represent the Horticultural Society on the NYS Research Board in Albany, NY. Tom DeMarree will serve his second term as chair of the Board. This is an excellent board that is very engaged in the programs and willing to go the extra mile for the industry. On two occasions when I was needed to be in Washington, DC and Kearneysville, West Virginia, Doug Fox covered the meetings in Syracuse for Council of Agricultural Organizations and later Rod Dressel and Chuck Mead gave a presentation at the Hudson Valley Fruit School. I think it is worthy to note the commitment of this board to represent your needs. We already sited the trip to DC by Rod Dressel, Chuck Mead, Bruce Kirby, John Ivison, Doug Fox and Will Gunnison on February 10. Dan Sievert was with me on February 3 as well to call on the Hill on similar issues.

Adverse Effect Wage rates for 2010 vs. 2011

As of March 1, 2011 the Adverse Effect Wage Rates have been issued. These rates cover every state except Alaska. As is always the case, there is a positive increase to the rates. In NY the rate increased to $10.25 per hour marking a $.09 increase over a year ago. The range in the nation is from $12.01 in Hawaii, where they saw the rate increase $.56 over last year to a low of $8.97 in both Mississippi and Louisiana. In both of these states the rate actually went down $.13 from the previous year. The overall average was an increase $.16 per hour nationally. Other states of interest to New York growers are; California $10.31; Florida $9.50; All New England States $10.25; Michigan $10.62; Ohio $10.84; Pennsylvania $10.60; Texas $9.65; Virginia $9.30 and Washington $10.60.

Executive Directors Report

As each of you return to your orchards I want you to know that the NYS Horticultural Society has only one mission. Our goal is to represent your needs when and where your voice is needed. In 2011 I have already been to Washington, DC four times and to Albany, NY twice on issues that directly impact your operations. I have the pleasure of working with a very unselfish and progressive Board of Directors. They will watch over the issues of the day and direct my efforts to represent you when you cannot afford to be away from your operations.

I honestly believe that, while all of you are disappointed that we have not seen AgJobs passed or a more progressive immigration platform established, in NY you are currently very much the envy of all growers in the US. Only in NY do we have both US Senators on the record in favor of AgJobs. You have had more Congressional co-sponsors to AgJobs over the last two Congresses than any other State. You have Senator Gillibrand seated on the Senate Ag Committee. Congressmen Bill Owens (D-23rd) and Chris Gibson (R-20th) serve on the House Ag Committees. The case has been made and heard that agriculture is a very important business here in New York. With such a strong presence as we currently have we will continue to work with this delegation to deliver positive messaging to Washington.

I want each of you to stop and decide if your source of labor on your operation will be from the H2A venue. If it is, you need to proceed now to secure your orders so that you will be able to contest and adjust to the diverse requests that currently seem to be consistent with this process. I personally used this process for 18 consecutive year’s right up until I retired from commercial farming. It was cumbersome but I do not personally think it was a poor investment. I kept very good cost per unit records and I found that while my wage rates were higher as a result of being in the program, my cost per unit was lower. It can be an excellent way for you to source a dependable labor supply.

If you do decide to go this route than you need to begin to know the local offices of your respective Congressman. Years earlier if I were to have written this report I would never have suggested this as a necessity. The reality is that in order to protect your job order you have a very good chance that you will need to call upon this office for their assistance in securing your papers in a timely fashion. I do believe that our delegation is aware of this and you will be treated with the proper respective you so rightly deserve. After all, you are the farm that is attempting to secure a legal guest worker.

Final thoughts on another topic that may become a news item. There is a very good chance that we will see Congress pass E-Verify. If they do and you will be forced to comply, do not feel that you are safe. Currently all this will do is verify that the names you have are associated with those social security numbers. If you are subject to a close audit, even if you are under E-Verify, you may find that those people are not valid. Thus, if this occurs on your operation in a critical time of need, such as peak of harvest you may be faced with terminating your current staff. Companies that have voluntarily gone into E-Verify have already been subject to this and lost their staffs. We have voiced our objection to this in both Senate offices and asked that agriculture be given some form of protection.