Economic Outlook - August 2007

Tar Heel farmers face bumper crop of woes

Tar Heel farmers never have it easy, but they seem to be facing more threats than usual this year ó drought, high gasoline prices and threats of labor shortages. A freeze Easter weekend caused more than $105 million of losses, causing the U.S. Department of Agriculture to declare 47 counties disaster areas. State Agriculture Commissioner Steve Troxler looks at the lay of the land.

BNC: What's the biggest issue facing North Carolina farmers?

Troxler: The outcome of immigration reform. Some of our crops are labor-intensive and perishable. We have to have a dependable labor supply. Without these workers harvesting them, these crops are not going to last.

Farmers fear crackdowns on illegal aliens?

That could be a real threat. Last year, some of our cucumbers were not harvested because of a labor shortage. People who had been buying North Carolina cucumbers had to go to foreign markets.

Are you saying agriculture depends on illegal activity?

No, it doesnít. We do have a guest-worker program. Farmers look at the identification workers have and follow the law.

Then why worry about a crackdown?

It would affect every business that hires workers that could be illegal. The employer may identify a worker as being eligible to work by their documentation but have no way to know whether that documentation is legal or illegal.

So part of the work force may be illegal, even though farmers donít know it.

Thatís right. If immigration officials determine workers are not legal and take them out of a productive farm and thereís nobody to harvest the crops, itís going to affect agriculture.

What are the components of a farmer-friendly immigration law?

One is control of the border. Another is the guest-worker program. Weíve got to have one that is affordable and workable. All of agriculture wants to have a legal work force. They donít want to be worried about fines. They donít want to be worried about workers being taken away. And the third component is dealing with the estimated 10 million to 12 million illegal workers that we have in this country in every type of business.

How badly did the late frost hurt?

Our peach crop was heavily damaged. The apples in the mountains were almost completely wiped out. There was damage to strawberries, blueberries and early hay crops.

Can those farmers recover this year?

No. Most of the fruit crops are produced by trees that take four years to yield. These farmers are going to be without income for a year. It makes it real tough on them.

How are farmers coping with high gasoline prices?

You have to be as efficient as you can. It takes a lot of energy to farm. Some of the pesticides and chemicals used in crops have also gone up as well. Without an increase in commodity prices to cover that, itís not a good situation.

What can they do during a drought?

Some are turning to irrigation, but that raises the cost of production because you have to use electricity and gas to irrigate.

Is this year unusual?

Part of being a farmer is being a crisis manager. There are always issues to deal with, but a freeze and a drought make it much tougher. You never know how itís going to turn out until itís over and you find out the crop yield.

How do farmers manage the risks?

There is insurance on some crops, but itís minimal. It would help with the production costs. And there is a federal program that would help. But right now, we donít know how much.

Could these problems put farmers out of business?

Profit margin in farming is always an issue. You couple that with the pressure of development in North Carolina and weíre leading the nation in the disappearance of farmland óabout 100,000 acres a year. That is going to change what North Carolina looks like if we donít get serious about farmland preservation.

What other parts of the state economy will be affected by problems on the farm?

Suppliers ó chemicals, fertilizers, equipment. Maybe a farmerís truck has 200,000 miles on it and he needs a new one, but because heís had a disaster he canít do it. So thereís a truck that wonít be sold.

Could crop problems boost the price of livestock feed?

Everything is tied together in agriculture. Weíve seen the interest in renewable fuels. And right now, our ethanol production is based on corn. The livestock industry uses corn and soybeans as major feed components. So on one hand, weíve produced renewable fuels. But the price of corn has risen, so the price of livestock feed has risen.

What are the biggest long-term issues for farmers?

Government policy will be the determining factor. The immigrant population in North Carolina, the disappearance of agricultural resources and the new federal farm bill will determine what agriculture in North Carolina will look like in the next 10 years.

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