Crop busters

From feed and fertilizer to land and labor, rising costs
threaten to plow profits under for this growth industry

For many in business, agriculture might seem like a quaint abstraction. But state Agriculture Commissioner Steve Troxler says agriculture and agribusiness, which includes processing, constitute the state’s biggest industry — worth about $70 billion a year. What you pay for your victuals reflects realities faced by Tar Heel farmers and food processors. Spiking food costs pinched pocketbooks early last year, and even as prices of other consumer goods started falling toward the end of 2008, food costs inched up. For producers of poultry and pork, the state’s two biggest agribusiness sectors, high feed and transportation costs, combined with a glut of pigs and chickens, wreaked havoc on bottom lines.

BNC: Will feed and other costs continue to cause problems this year?

Troxler: Yes. If we were a nation, we’d be one of the world’s leading corn importers. That’s how much we ship into the state to feed pork and poultry we raise here. Costs have escalated to the point where you have to make a lot of corn per acre and sell it for a high price just to break even. Fertilizer costs are three times what they were two years ago. All agricultural chemicals have skyrocketed. Input costs are taking some of the shine off these commodities.

What problems do poultry producers face?

High commodity prices are great for row-crop farmers, but when they translate into high feed costs they squeeze poultry houses and processors. We have 44 farmers who lost their contracts when Pilgrim’s Pride cut back in Chatham County in October. Sanderson Farms, which was going to build a $126 million plant in Kinston, hasn’t come through.

Will there be ample farm credit?

That’s a concern. When production costs go up like they have, it takes more money to operate. People with the farm credit system believe they have enough capital to supply regular customers, but farmers that have relied on banks are in trouble. Tight credit always affects the youngest and least-experienced farmers first.

With crackdowns on immigrant labor, how will farmers fare?

People need to realize that North Carolina is the largest employer of legal agricultural labor in the nation. We have a program we have used for years to obtain a legal work force, but it’s outdated and expensive. A legal immigrant work force in agriculture and agribusiness needs to be a priority. Some of the processing work we do depends heavily on it.

How do we fit into the global market?

In the last four years, our agricultural exports have gone from $1.5 billion to $2.1 billion. We’ve got several commodities we export. There’s tobacco, of course, and sweet potatoes are huge now. We lead the nation in production, and we send a good portion to Europe and other places around the world. Pork and poultry are going to Mexico, the other Latin American counties and the rest of the world.

You talked about renewable energy in your re-election campaign.

North Carolina has an excellent opportunity to produce a lot of it. We have biodiesel springing up everywhere. A plant in Pittsboro makes it from chicken fat. We have an enormous amount of biomass — crop residues, poultry, trees, timber — that can be turned into ethanol. We can produce 10% of our energy, and that would make a tremendous difference. Sweet potatoes can be used to make ethanol. There’s work on an insect-resistant tropical sugar beet. We already have soybeans, and we’re experimenting with canola and algae.

Critics say the department focus is shifting from farmers to consumers.

We still focus on agriculture and agribusiness. We do have things to protect consumers, but they’re connected to agriculture. The last few years, we’ve seen that when the public loses confidence in the food supply, the market dries up. Tainted tomatoes and the salmonella scare cost farmers in this country more than $200 million. We’ve got to have traceability, so if there’s a problem in one market, farmers in other markets are spared.

Are we succeeding in protecting farmland?

Not very well. We have about $12 million from the legislature for a preservation trust fund, but we need at least $25 million a year. If we continue to move people into North Carolina at the rate we have in the last several years and reach the projected 4.5 million more people by 2030, we will have lost a lot of the resources we need to feed ourselves. You’ve got a resource that’s providing food and fiber to the public — and now maybe fuel — so it would do the public good to protect it.