American Blueberry Growers Alliance
Argues Import Restrictions are Essential
To Preserve Shoulder Season of US
Jim Prevor’s Perishable Pundit, February 11, 2021
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.