[Scpg] Small farms biting the dust As food industry goes global, small farmers have few buyers for produce

[Wesley Roe and Marjorie Lakin Erickson]

Worth reading.
Sunday, January 25, 2004 8:27AM EST
Small farms biting the dust as food industry goes global, small farmers 
have few buyers for produce
By KRISTIN COLLINS, Staff Writer
http://newsobserver.com/front/story/3272021p-2923647c.html
.... and a related article:
Sunday, January 25, 2004 7:53AM EST
What is the future of the family farm?
Contracting frees farmers from the whims of weather but shackles them to 
big business
By KRISTIN COLLINS, Staff Writer
http://newsobserver.com/front/story/3272021p-2923657c.html



Sunday, January 25, 2004 8:27AM EST

Small farms biting the dust
As food industry goes global, small farmers have few buyers for produce

By KRISTIN COLLINS, Staff Writer

The grocery store's faux wood produce bins overflow with shiny red 
tomatoes, leafy green lettuce and deep orange sweet potatoes -- all 
displayed to evoke the feel of a folksy farm stand. But even in summer, 
those tomatoes are more likely to come from Mexico than from North 
Carolina. The lettuce is almost surely from California.

And the sweet potatoes? They probably didn't come from the hundreds of 
small North Carolina farmers who dig heaps of them out of the soil each fall.


"This is the world system," says Bob Myers, who spent two years trying to 
sell produce for a cooperative of small farmers in Stokes County. "We have 
decided in this country that we don't care about the family farm."

Increasingly, food is churned out all over the world by vast industrialized 
farms that harvest hundreds of thousands of pounds of fruits and vegetables 
every week. This new system is convenient for shoppers, who can have fresh 
tomatoes in the dead of winter, strawberries in the heat of late summer -- 
and still spend less on food than a generation ago.

But North Carolina's small farmers, already hurt by a dwindling market for 
tobacco and looking to diversify, are largely left out of the distribution 
system that feeds the country. And they are rapidly disappearing.

Since 1982, the number of North Carolina farms under 1,000 acres has shrunk 
by a third, from nearly 72,000 to less than 48,000, according to the U.S. 
Department of Agriculture's census, which includes an estimated 84 percent 
of the state's farms. At the same time, the number of farms over 1,000 
acres has risen by the same factor, from 1,100 to more than 1,600.

"Everything seems like a dead end, every route we try to go," says Ryan 
Patterson, who farms with his father and grandfather in Harnett County.

Patterson, 28, built a greenhouse and planted tomatoes six years ago to 
supplement his family's dwindling tobacco income. He grows more than 18,000 
pounds a year of sweet, juicy tomatoes, but he says his operation is far 
too small to sell to any of the large groceries in his area. He struggles 
to sell his tomatoes, box by box, from his house.

"I wouldn't be a millionaire, but I could make a pretty good living if I 
could sell to grocery stores within a 20-mile radius of my home," he says. 
"There's a big market out there, but they're just not buying local stuff."

The loss of small farms will likely accelerate as foreign trade barriers 
continue to fall. Twenty-three percent of the fruits Americans ate in 2001 
and 17 percent of the vegetables were imported, up from about 9 percent 
each in 1985, USDA statistics show.

For small farmers who remain, two options are emerging. Some can sign 
contracts to grow for corporations -- as many chicken, hog and tobacco 
farmers do -- and give up a measure of control over their farms.

They can also move into new niche markets that are gaining popularity in 
urban areas: farmers markets, organic meat and produce, medicinal herbs. 
The success of those markets has led many North Carolina farmers to start 
small produce-growing operations, and persuaded a few large grocery chains 
to stock more local produce.

But studies show that many consumers care more about saving money than 
saving the farmer down the road. The share of disposable income that 
Americans spend on food has been halved since 1950 and it is still falling.

And most consumers now expect to find cilantro, pineapples, persimmons and 
other exotic foods any day of the year.

"I really don't care where it comes from, as long as it's fresh and safe 
and available -- and not too expensive," says Cathy Campbell, a 
schoolteacher who was filling up her cart a few weeks ago at a Cary Food 
Lion. "It would be great if it was grown in North Carolina, but we couldn't 
afford it. I have three kids in college and one in private school. These 
mass producers are able to do it much more cheaply, and that's what we need."

Ruled by food industry

Myers understands that consumers want inexpensive food. As marketing 
director for the Stokes County Growers Cooperative, he made $24,000 a year 
-- hardly enough to pay his mortgage, let alone pay extra for local produce.

Still, he had faith that, in one of the richest nations in the world, he 
could sell 65 acres' worth of local produce -- and help save a few small 
farmers along the way.

But in the shadow of the Sauratown Mountains, as in many of North 
Carolina's rural areas, farms are disappearing by the hundreds. Farmers in 
central and Western North Carolina are finding it particularly hard to 
compete in a food system that favors large farms, because the mountainous 
terrain limits them to small plots of land.

In the past 20 years, the number of farms in Stokes County has slipped from 
more than 1,500 to roughly 600. Today, most residents drive to office jobs 
in other counties.

Soon after taking the marketing job, Myers realized his mission was to 
conquer the global marketplace. And his farmers had few resources to keep 
up with companies that could supply hundreds of thousands of pounds of 
produce every week at rock-bottom prices.

The cooperative's members, for the most part, are tobacco farmers looking 
for a new way to survive on small acreage. Tobacco had supported their 
families for generations, but today American tobacco farmers are threatened 
by cheaper leaf imported from China and Brazil.

They are men such as Ricky Fulk, the cooperative president, who laughs at 
the notion of leaving his farm to do "public work." Men such as Tommy 
Collins, who has seen all five of his children take jobs off the farm 
because there wasn't enough income to go around.

In the late 1990s, as their tobacco crops began to shrink, they decided to 
plant sweet potatoes and a few summer vegetables. Produce would bring in 
almost as much an acre as tobacco if they could sell it. By the fall of 
2001, they scraped together enough money to hire a marketing director. They 
gave the job to Myers, who had grown up picking tobacco in the Stokes 
County hills.

Myers, a part-time preacher, poured his faith into selling their produce. 
But in the summer of 2002, he watched 24,000 pounds of Stokes County sweet 
potatoes rot because the cooperative was too small to provide the cheap, 
uniform foods that major grocery chains demand.

Cheap trumps local

Grocery chains say it simply isn't good business to buy from small farmers. 
The stores want produce that looks the same from store to store and from 
month to month, and they want it at bargain prices.

Food Lion, for example, is North Carolina's largest grocer, with 462 
stores. Produce buying for all its 1,200 stores in 11 states is handled 
through a central office in Salisbury. In North Carolina, the company 
typically does business only with growers big enough to supply half the state.

That amounts to between 150,000 and 180,000 pounds of sweet potatoes a 
week, for example. In its biggest year, the Stokes County co-op produced 
240,000 pounds in an entire season.

The store also wants vegetables of a uniform size and shape, and it wants 
them year-round. Company officials say they look to North Carolina farms 
first, but they often have to work with corporate farms that own land in 
other states or countries.

Jeff Lowrance, a Food Lion spokesman, said shoppers want produce that is 
plentiful, blemish-free and as cheap as or cheaper than any other store's. 
If they don't find it, they'll go elsewhere.

"The best way we can provide quality, in the quantity we need, is working 
with growers that can supply us in large quantity," Lowrance says.

Bob Usry, an N.C. State University agricultural economist, says the 
American food industry is following well-established free-market 
principles. Consumers demand low prices, and companies supply them by 
becoming larger and more efficient.

The shift toward industrialized food production started after World War II, 
when refrigeration allowed fresh foods to be shipped over long distances. 
But it has picked up in the past decade as corporations have grown larger, 
shoppers have demanded a more diverse mix of products and trade barriers 
have fallen.

"Food is not exempt from the global marketplace," Usry says. "If they can 
produce it more efficiently in another country and ship it wherever it's 
needed in the world, that's going to happen. And if someone can produce 
asparagus in Chile, and do it better than we can here, what's the problem 
with producing asparagus in Chile?"

Lesser wages, rules

Some of Usry's colleagues do see problems.

American groceries are increasingly importing produce from Mexico and 
Central and South America and beyond -- countries where farm laborers are 
paid one-tenth what their American counterparts make and pesticide 
regulations are less stringent, says Bob Patterson, a professor of crop 
science at NCSU.

And because the journey from farm to warehouse can take weeks, produce in 
grocery stores isn't as fresh or flavorful as local produce, says Doug 
Sanders, an NCSU vegetable specialist.

Most commercially grown varieties of tomatoes, for instance, have been bred 
for their thick skin, which holds up better for shipping and gives the 
tomato a longer shelf life. They are picked green and ripened with gas, a 
process that doesn't allow the fruit's natural sugars to develop, Sanders said.

And North Carolina's sweet, deep-red strawberries are almost never seen on 
grocery store shelves because the state's warm climate gives them a short 
shelf life. Most grocery store strawberries are a large, white-centered 
variety grown in the cool climes of central California, which can survive 
up to a week longer than local strawberries, Sanders said.

"Ultimately, the consumer decides what's in a supermarket," says Todd 
Hultquist of the national Food Marketing Institute, a supermarket trade 
group. "If it's not selling, it's not going to be there."

On a recent weekday, nearly every shopper in the produce section of a Cary 
Food Lion went straight to the sale items: clementines from Spain that cost 
$3.98 for 5 pounds, and Granny Smith apples from Washington state on sale 
for 49 cents a pound.

Sandy Gerardis, a part-time merchandiser from Cary, said she looks first to 
see if the produce appears fresh and has no bruises or bugs. Next, she 
looks at the prices. She would prefer local, but she doesn't demand it.

"The green beans are on sale this week, and I need 4 pounds," Gerardis 
says, filling up a plastic bag. "So I don't care if they come from Chile."

Old days are gone

When Myers started, it seemed as if the Stokes County cooperative had found 
a way around the system.

Food Lion had made a deal with the co-op growers that allowed them to skip 
the company warehouses that large suppliers deal with and deliver their 
produce to local stores. They displayed sweet potatoes, tomatoes, peppers, 
corn, squash, zucchini, cucumbers and watermelons in a dedicated kiosk. And 
at Myers' urging, the farmers started spending time in the stores, talking 
to shoppers and distributing recipes.

Before long, the co-op was delivering produce to more than 50 stores in 10 
counties.

It felt for a while like a slice of the old days, when farmers harvested a 
crop and drove it to the back of the local grocery. The customers, store 
managers told Myers, would wait for the co-op's delivery rather than buy 
the regular produce that had come from the corporate warehouse.

In January 2002, with the co-op warehouse full of sweet potatoes, Myers got 
an e-mail message from a Food Lion executive.

Food Lion, the message said, would no longer accept food that did not go 
through its distribution warehouses. And the Stokes County Growers 
Cooperative, Myers knew, was far too small to become a supplier at a warehouse.

The deal was off.

Lowrance confirmed that in early 2002, the company began eliminating small 
growers that couldn't supply at least half the state. Myers said he got the 
same message from other large groceries in the area. And when the summer 
heat arrived in June, the co-op's potatoes rotted.

A constant battle

To make things worse, another fall harvest loomed.

In May, only a month before, the growers had planted their next crop: 45 
acres of sweet potatoes and 10 acres of summer produce, on the hope that 
the grocery stores would reconsider. When Myers told them the grocery 
stores weren't budging, some of the farmers got angry.

They started to think it was Myers who had failed them, and they called for 
his resignation.

Myers desperately combed the county and the state for buyers. He spent days 
racing across the county and the state, seeking advice from the state 
Department of Agriculture and other produce growers, meeting with produce 
buyers at grocery stores, selling one or two boxes of sweet potatoes at a 
time to roadside stores.

But when March 2003 arrived, the warehouse was again full of sweet potatoes 
and he had no sure buyer. He prayed for a savior.

"I was sweating bullets," says Myers, 43. "Frankly, I was worried about my 
job and my mortgage."

In April, the answer to his prayer arrived. A major Eastern North Carolina 
sweet potato grower, who sells most of his crop to European countries where 
sweet potatoes don't grow, agreed to buy the rest of his new crop of potatoes.

Since then, Myers has also made a deal to sell the co-op's potatoes to a 
handful of Bi-Lo grocery stores, but the majority are still sold to an 
overseas distributor at a lower price, he said. In December, discouraged by 
the long fight he knew was still ahead of him, Myers resigned.

"I knew I was doing all I could," Myers says. "And I knew it wasn't enough."

After all that work to grow local produce, most of the co-op's potatoes are 
thrown in with thousands of pounds of other anonymous potatoes and shipped 
across the ocean.

The people who eat them will never know that they came from the hills of 
Stokes County, from the fields of a few small farmers trying to survive.


Staff writer Kristin Collins can be reached at 829-4881 or 
kcollins at newsobserver.com.

Sunday, January 25, 2004 7:53AM EST

What is the future of the family farm?
Contracting frees farmers from the whims of weather but shackles them to 
big business

By KRISTIN COLLINS, Staff Writer

Five days a week for three decades, Mike Belch's father left his 
Northampton County home and drove 35 miles to a paper mill in Franklin, 
Va., where he oversaw the loading of giant paper rolls onto trucks and boxcars.

The paycheck was enough to make a man upper-middle class in northeast North 
Carolina, where peanut fields stretch to the horizon and more than 
one-fifth of the population lives in poverty.


But Belch didn't want his father's life. As soon as he got his community 
college degree in 1978, he started growing peanuts.

"I didn't want to have to work shift work or punch a time clock," Belch said.

He believed that with courage and hard work, he could shape his destiny. 
But he and many North Carolina farmers find today that their fates depend 
not on the health of their crops but on the interests of corporations, 
which seek to control their products from field to grocery shelf.

For consumers, the modern industrialized food system means unlimited 
supplies of foods that a generation ago were luxuries. In any season in any 
city in America, consumers can find huge trays of skinless, boneless 
chicken breasts, piles of tropical fruits, jar upon jar of peanuts 
pre-shelled, pre-roasted and pre-salted.

All that cheap food has changed the landscape of North Carolina farm 
country. Farmers are signing up in droves to grow on contract for 
corporations. Many say contracting has given them the financial security 
they need to stay on their family land. But some say that security comes 
with a price: Corporations dictate how a crop is grown, force farmers into 
debt and chip away at their profits.

In many ways, today's small farmers are becoming corporate employees, as 
vulnerable and expendable as their counterparts in manufacturing, critics say.

Good or bad, the contracting wave is picking up speed. Chickens, turkeys, 
hogs and tobacco -- four of North Carolina's five top commodities -- are 
now grown almost exclusively by farmers on contract to corporations that 
process their goods.

More than 80 percent of the state's tobacco is grown on contract, up from 
10 percent in 2000. And in 2003, after federal price supports were 
drastically lowered, nearly every peanut grown in the state was contracted 
to a company that shells and sorts them.

After more than 20 years of selling his crop with federal price support, 
Belch grew last year's entire peanut crop under contract. He says that 
nearly every peanut sheller offered a similar contract price, and that his 
peanut income was cut in half. He signed the contract because it was the 
only way he could keep growing peanuts.

What bothered him more than the pay cut was the realization that he still 
hadn't escaped his father's fate.

"I'm totally at risk at all times," he said. "I could lose that contract at 
any time. And there's no system in place to give me an alternative."

A hold on tradition

Thousands of North Carolina farmers -- who raised $1.4 billion worth of 
hogs, $1.3 billion worth of chickens and $44 million worth of peanuts in 
2002 -- say contracting has kept them on their family land.

Hog and chicken barns have boosted income as prices for such commodities as 
cotton, corn and beans have sunk to historic lows. In peanuts, hundreds of 
new farmers have jumped in since contracting took over.

Doug Roberts, 44, lives in the tiny Bladen County town of Tar Heel. He 
hadn't worked on his family farm full-time since graduating from college, 
until he got a contract in 2003 with Southern Peanut Co. to grow 400 acres. 
That gave him the security to invest thousands in equipment and supplies.

"I never could see my way clear to come back home and farm growing corn and 
beans," Roberts said. "I didn't see where I could make enough money to live 
on. This opened the door for me to come back home."

Contracts promise farmers a set price even before they begin raising their 
crops. They guarantee a market and help farmers get needed loans. And they 
assure that farmers are growing exactly what their buyers want.

The process encourages farmers to grow more efficiently. Experts say that 
is key to the survival of American agriculture as discount stores such as 
Wal-Mart demand lower prices and as China and Brazil sell peanuts, tobacco 
and produce at half the cost of their U.S. counterparts.

"Our competition is not California, it's China," said Larry Wooten, 
president of the N.C. Farm Bureau. "If we don't produce it in an efficient 
manner, they will. Stand in a Food Lion or a Harris Teeter and preach, 'Pay 
more because it's grown in America,' and see how many people push their 
cart around you."

Jeff Johnson, president of Suffolk, Va.-based Birdsong Peanut Co., the 
nation's second-largest sheller, said Wal-Mart is the biggest customer for 
nearly every candy maker who buys his peanuts. He said reduced price 
supports and lower contract prices have helped U.S. farmers compete.

"The price reduction has gone straight from us to the manufacturer," 
Johnson said. "And we're still getting pressure to lower our prices."

Too much control?

But many experts say contracting goes beyond increasing efficiency. In many 
cases, they say, it amounts to a hostile takeover of the family farm.

Laura Klauke, an advocate for contract reform with the non-profit Rural 
Advancement Foundation International, based in Pittsboro, has met with 
contract farmers across the country. From olive growers in California to 
chicken farmers in North Carolina, Klauke hears the same stories everywhere 
she goes.

When contracting begins in a commodity, such as peanuts, there are dozens 
of processors and manufacturers. Farmers can shop for the best contract. 
But, she said, the industry invariably begins to consolidate. Processors 
merge, then join with manufacturers to control broad territories.

Single companies sell the seed, the fertilizer and the pesticides. They 
have contractors who sell the equipment needed to grow. They control the 
plants that process the food, package it and ship it to grocers.

Eventually, farmers are left with only a handful of companies offering 
contracts, and the terms often look nearly identical.

"I talk to farmers all the time who say they've never read their 
contracts," Klauke said. "They say to me, 'Why should I read it? I don't 
have any choice.' "

Jimmy Randolph, president of the N.C. Poultry Federation, which represents 
growers and processors, said the benefits of contracting outweigh the 
risks. For instance, when the price of chicken suddenly drops 10 cents a 
pound, as it did two years ago, the company eats the loss and continues to 
pay farmers the contracted price, he said.

Without that buffer, thousands of independent farmers would go out of 
business with each price drop, Randolph said. And, ultimately, no farmer is 
forced to sign a contract.

"It's a free marketplace," he said, "and folks do have the choice."

But farmers who opt out of contracting risk not being able to sell their 
crops. In some commodities, including hogs and chickens, companies don't 
buy from farmers who don't sign contracts. Tobacco and peanut companies are 
headed the same way.

Philip Morris, the nation's largest cigarette manufacturer, bought all its 
American tobacco on contract and skipped public auctions for the first time 
last fall. Other companies went to auctions but bought virtually nothing. 
The government price support program, not cigarette makers, bought 72 
percent of the tobacco auctioned last year.

Many farmers at Brightleaf Riverside warehouse in Smithfield said they were 
selling at auction for one reason: No one would give them contracts. The 
farmers stood around, twisting tobacco leaves, avoiding the obvious 
question: What would happen without price support? The program is almost 
certainly on its way out.

"It's like going to a funeral," said Keith Parrish, a Harnett County 
tobacco farmer. "The independence of the family farm is almost over. With 
that, a way of life is almost over."

A cautionary tale

The poultry industry pioneered contracting in the 1960s. Today, nearly all 
16 million chickens raised on North Carolina farms are owned from 
conception to slaughter by companies such as Perdue and Tyson.

This system has churned out unprecedented volumes of cheap chicken and 
turned what was once a luxury meat into a staple. On average, Americans 
each ate more than 52 pounds of chicken in 2001, up from less than 15 
pounds in 1950.

Jimmy and Sheralyn Johnson once helped feed that demand. They spent more 
than $500,000 building chicken houses at their Chatham County farm, and for 
16 years, they cared for as many as 100,000 chickens at a time.

When the Johnsons signed their first contract in 1986, with a local company 
that has long since been gobbled up by larger processors, it seemed a 
nearly risk-free proposition. They never thought about the fact that would 
later come to haunt them: Their debt was financed over more than a decade, 
but their contract could be terminated at any time.

A few years later, the company they grew for was sold. The new company told 
the Johnsons their barns were outdated and insisted that they buy new 
feeders and waterers, new heaters, new fans, more foggers to keep the air 
moist, Sheralyn Johnson remembers. Their choice was to spend tens of 
thousands of dollars on the upgrades or risk losing their contract and 
being left with five worthless chicken houses years from being paid off. 
They did what the company asked.

That was only the first buyout. New companies required more upgrades, 
Sheralyn Johnson said. Each year the Johnsons dug deeper into debt.

Benny Bunting, who provides financial counsel to farmers for the Rural 
Advancement Foundation, said he sees dozens of chicken farmers a year in 
the same situation.

"If you spend all the money they ask you to in those houses, you would make 
a whole lot more money at McDonald's," Bunting said. "But when you've got 
your home up as security, and you've got a building that's not good for 
anything else but raising poultry, you don't have much choice."

In 2002, Delaware-based Mountaire started pressuring the Johnsons to 
install a $50,000 ventilation system.

Jim Shepard, a North Carolina director for Mountaire, said the company 
didn't require the upgrade, but he said that it increases efficiency and 
that 95 percent of Mountaire growers have done it. And Shepard said the 
suggestion to the Johnsons came with a warning that, if their performance 
didn't improve, they could lose their contract.

Jimmy Johnson put a parcel of family land on the market to cover the cost 
of the upgrades.

And then, on a Saturday morning in October 2002, he took his wife to the 
land they had for sale. Under the guise of fixing a fence, he took her to a 
spot beside a creek and told her, with tears in his eyes, that he had 
always loved this place.

The next morning, as Sheralyn Johnson was getting ready for church, a feed 
truck driver found Jimmy Johnson in house No. 4. He had put a shotgun in 
his mouth and pulled the trigger.

His life insurance, Sheralyn Johnson said, was all he had to ensure that 
his two sons could grow up on the land he loved.

Fewer choices now

Abuses in poultry contracting have been well-documented, said Donald Stull, 
a University of Kansas anthropologist and expert on meat production, but 
they have failed to spark public outrage. As a result, he said, similar 
practices are spreading into nearly all sectors of farming.

"Eating is a political act. It's a moral act," Stull said. "When you put 
something in your mouth, you're supporting the production system that 
produced it. But most people really don't care where their food comes from, 
as long as it's there and it's cheap."

In peanut country, the word is out that shellers are talking about cutting 
the price to farmers to $450 a ton, $50 less than last year. Two years ago, 
with the full federal price support in place, companies paid $610 a ton.

In the handful of North Carolina counties where the soil produces high 
peanut yields, the farmers could still turn a profit at the lower price. 
But in Belch's area, where the soil isn't as fertile, it could put hundreds 
of lifelong peanut farmers out of business.

After a quarter century of growing peanuts, Belch realizes that all his 
expertise means little in the new world of farming. Today, he must grow 
cheap or be replaced by a farmer who will. He says he will hang on as long 
as he can.

"I'm here," he explained. "I have all the equipment. I have the know-how. 
It's either this or do something else. And in northeastern North Carolina, 
what else do you do?"

The question echoes over the barren winter fields.

In today's economy, the mills of the rural South are closing as fast as the 
family farms are disappearing, and Belch has fewer options than his father did.


Staff writer Kristin Collins can be reached at 829-4881 or 
kcollins at newsobserver.com.