Consumers need evidence of struggles

Farmers in rural states are filing for bankruptcy at alarming rates, as years of increased input costs and low commodity prices cause these businesses to fail.

The Wall Street Journal reported producers of corn, soybeans, dairy and pork are suffering the most, as these items have been overproduced world-wide, and international trade has been disrupted by various disagreements and tariffs.

In the produce industry, we’ve seen one half of this problem, with growers suffering from rising input costs for years, but the other half hasn’t been as bad, as most fruit and vegetable growers aren’t producing far more than consumers demand.

There has been some consolidation but nothing out of the ordinary.

Produce companies may be struggling with rising production costs, but few are closing shop and/or filing for bankruptcy.

The transportation industry could also see cracks before fruit and vegetable grower-shippers.

As part of my reporting for an upcoming story on the driver shortage, two sources told me many transportation providers are stretched to the breaking point, and it may take some bankruptcies for other parts of the produce trade to adjust business practices.

“Is the driver shortage real?” asks Kevin Small, CEO of Agri-Fresh, a trucking company in Lockport, MB. “Yes, it’s a constraint, but it’s not bad enough that freight still gets moved. When there’s 10 loads of vegetables to ship and only eight go…”

I’ve made a similar argument about the immigration/labor problems growers have had for many years. In the end, fruits and vegetables always get harvested, and consumers never see a shortage from lack of labor.

There’s just no evidence that these problems are keeping product off the market, especially from the consumer point of view.

As for the commodity crop farmers in the journal story, it’s certainly sad that some are going out of business, but it’s also the supply-and-demand system at work.

They are producing too much soybeans, corn, dairy and pork, and it’s different than the agriculture slump of a decade ago, which coincided with a world-wide recession.

There’s no recession this time. It’s just the market at work.

Greg Johnson is Director of Media Development for Blue Book Services