Specialty Crops and the Farm Bill

This publication is excerpted from a 2022 article published in Applied Economic Perspectives & Policy, “Specialty Crops and the Farm Bill,” by Sharon Raszap Skorbiansky, Suzanne Thornsbury, and Ann Effland. The findings and conclusions in this publication have not been formally disseminated by the U.S. Department of Agriculture and should not be construed to represent any agency determination or policy. Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the authors and do not necessarily reflect the views of the U.S. Department of Agriculture.

Introduction

The Farm Bill is the primary legislation governing national agriculture and food policy in the United States. Since the first farm bill (The Agriculture Adjustment Act of 1933), negotiations typically occur every five years, and discussions for the next farm bill are already underway. The 1933 Act serves as foundational law (written in US Code) where subsequent “farm bill” legislation sunsets after five years unless it is renewed or amended. If this were to occur, farm policy would revert to the 1933 permanent legislation.

This publication provides Florida specialty crop producers with an overview of major policy approaches in the Farm Bill and a description of how they have evolved over time to address some of the unique characteristics of specialty crops. At a federal level, the Specialty Crops Competitiveness Act of 2004 defines specialty crops as fruits and vegetables, tree nuts, dried fruits, and horticulture and nursery crops (including floriculture). At times, the definition is revisited in farm bill discussions (Thornsbury et al. 2011; SCFBA 2022a). The USDA’s Agricultural Marketing Service regularly updates the list of crops in this category for their programs since the agency receives inquiries about program eligibility (see Raszap Skorbiansky et al. 2022 pp 43–44 for a recent list). The goal of this publication is to help specialty crop growers understand the positioning of their concerns in the context of Farm Bill negotiations. This broad introductory summary reflects the scope of the wide-ranging set of specialty crops issues in the Farm Bill. Additionally, outside of the Farm Bill, many more federal policies have been developed to provide guidance and assistance to producers raising specialty crops. The topic of federal special crops policies is too large and complex for a single publication; therefore this publication is the first of a series dedicated to explaining federal policies developed for specialty crops.

While individual specialty crop sectors can be small in terms of national agriculture value or farm acreage, in aggregate specialty crop production contributed nearly $54 billion in cash receipts to the US agriculture total of $363 billion in 2020 (USDA ERS 2022). Impacts on state economies can be even more significant as production is often regional or even local. For example, according to data from USDA’s Economic Research Service, in 2020 and 2021, Florida accounted for only 2% of all US agriculture cash receipts on average but over 7% of receipts from specialty crops, almost 60% from fresh tomatoes, 45% from oranges, 30% from watermelon, and 20% from floriculture (USDA ERS 2022).

Unique characteristics among the myriad of commodities, markets, and supply chains that comprise “specialty crops” can make finding common policy interests challenging. In addition to regional and emerging sectors, specialty crops also include widely produced and marketed crops such as apples, potatoes, dry beans, and dry peas. Many specialty crops, but not all, have high costs of production compared with field crops. Many, but not all, are highly dependent on seasonal hand labor while some production systems are more mechanized. Some specialty crops require further processing while others are sold fresh. Many, but not all, are highly perishable while storage is possible for others. Some US specialty crop markets are export-oriented while others face robust competition from imports. Specialty crop markets tend to have relatively few buyers and/or sellers and rapid price fluctuations (Hayenga 1979), and available data is often limited.

Provisions addressing the needs of specialty crops under the most recent Farm Bill, the Agriculture Improvement Act of 2018 (2018 Farm Bill), are included in seven different titles: Title I (Commodities), Title III (Trade), Title IV (Nutrition), Title VII (Research, Extension, and Related Matters), Title X (Horticulture), Title XI (Crop Insurance), and Title XII (Miscellaneous). Every policy negotiation is influenced by broader conditions and societal concerns of that time, and funding for these, and indeed all, Farm Bill titles has fluctuated (Table 1). The anticipated 2023 Farm Bill is no exception and will surely reflect impacts on food and agriculture from the war in Ukraine, the COVID-19 pandemic, supply chain disruptions, and major weather events, as well as the overall federal budget and current White House priorities of the economy, equity, and climate.

Commodity Support Programs

Historically few specialty crops have been included under the major commodity support programs, known generally as Title I programs. Access to storage, dependence on a manufacturing process and export markets (Bruton 1934), and a view that supporting these sectors would reach a large number of US producers are characteristics of the commodities covered. None of these factors apply broadly across specialty crops, and the wide variability within the sector (including perishability) limits applicability of traditional programs such as loans that incorporate storage options. There are exceptions for a limited number of specialty crops that share the characteristics of storability and need for further processing (select dry pulses, namely small and large chickpeas, lentils, and dry peas).

Beginning with the Agricultural Adjustment Act of 1933, an alternative Title I policy approach for agricultural commodities was to establish marketing “licenses.” These self-help programs are set up and approved by the commodity groups themselves, and the number of marketing agreements (voluntary) and marketing orders (mandatory) grew steadily over the 20^th century (Powers 1990). However, challenges eventually arose from within the industries themselves as the number of distinct products and marketing strategies increased even among sectors that were already relatively concentrated. By 2022, only 29 marketing orders and agreements continued to operate (USDA AMS, 2022). For Florida, these included marketing orders for citrus (established 1939, last amended 2016), avocados (established 1954, last amended 1987), tomatoes (established 1955, last amended 2020) and pecans (established 2016).

Interest and perishability both remain as limiting factors to specialty crop incorporation in broader Title I programs. Links to historical field crop base production acres make inclusion of specialty crops unlikely going forward, especially without strong support from specialty crop organizations and in the face of high commodity prices. Concerns over sharing required business information and payment limitations for the large-scale, high-value operations of some specialty crop producers are also likely to remain. More recent program experiences, created to address unique situations, do suggest potential for alternative policy approaches. For example, the flat-rate and sales commodity payments under Coronavirus Food Assistance Program Round 2 (CFAP 2) offer an approach for accommodating limitations in data availability and other specialized production and marketing conditions specific to specialty crops.

Trade and Competitiveness

Trade and global competitiveness are exceedingly visible issues for specialty crops, even as many policies are set by statutory provisions outside of the farm bill. Specialty crops are highly diverse with respect to trade, seasonality, and competitiveness. The United States was a net exporter of specialty crops, in aggregate, during the 1970s. By the mid-1990s, however, it became a net importer. However, specialty crop aggregation masks a myriad of individual markets that are export-oriented as well as those that face increasing import or seasonal competition such as domestic winter fruit and vegetable markets (see, for example, CRS 2020).

In the 2018 Farm Bill trade is covered in Title III, which focuses largely on export-oriented programs for international food assistance and market development. The Market Access Program (MAP), first introduced in the Agricultural Trade Act of 1978, has long provided support for international marketing of US agricultural commodities. About a third ($60 million) of allocated MAP funds per fiscal year has gone to specialty crop groups (Johnson 2014), and MAP retains strong support among specialty crop sectors seeking new or expanded global markets.

A smaller program, the Technical Assistance for Specialty Crops (TASC) program, originally introduced in the 2002 Farm Bill, established assistance to address barriers prohibiting or threatening exports of US specialty crops. While MAP supports promotion of US goods abroad, TASC addresses market access barriers. The 2018 Farm Bill combined MAP and TASC with the Foreign Market Development Program and the Emerging Markets Program into the Agricultural Trade Promotion and Facilitation Program with a mandatory budget authorization of $255 million annually through FY2023. Combining the programs secured all four in the farm bill budgetary baseline by increasing their combined authorization above the $50 million minimum. Since funding must be both authorized (approved) and appropriated (made available) by Congress, inclusion of mandatory authorization is important. For mandatory funding, Congress appropriates the funds once they have been authorized. For discretionary funding these are separate decisions which can result in support being authorized without funds being appropriated.

Even as farm bill policies support international market development, some specialty crop industries, including many in Florida, face increasing import competition. Consumer demand for year-round availability of fresh produce and transportation improvements shifted domestic and international production regions and contributed to increasing import supplies over the last several decades with increased competition, particularly during the US winter production season (Kramer 2021). Other economic and policy factors that may have contributed to these shifts in trade include relatively low US import tariffs, increased competition from countries with government support programs, non-tariff trade barriers, and financial factors such as exchange rate fluctuations and US overseas investment (Johnson 2016).

Some specialty crop groups have sought trade remedies under domestic trade law (outside the Farm Bill), such as anti-dumping and countervailing duties or import safeguards, to counter potentially unfair competition from imported products (USITC 2021). At the same time, growers may oppose trade remedies because they can lead to retaliatory actions, even when the original action is not related to specialty crops—or even agriculture. To assist farmers affected by trade disruptions, for several years USDA provided aid via the Market Facilitation Program. In 2018, fresh sweet cherries and shelled almonds were the only specialty crops included in MFP. In 2019, the program was extended to additional specialty crops for a total of 10 (almonds, cranberries, cultivated ginseng, fresh grapes, fresh sweet cherries, hazelnuts, macadamia nuts, pecans, pistachios, and walnuts), though out of the almost $15 billion in direct payments across both years, specialty crops accounted for only 2% nationally and Florida’s share across all covered commodities (crops and livestock) was less than 1% of the total (USDA 2022a). Payments to Florida specialty crops were less than $250,000 over two years of the program (USDA 2022a). Results from recent trade actions and concerns over global supply chain continuity suggest that supporting domestic competitiveness may receive increased attention.

The relatively high share of labor costs to total cash expenses and perishability make specialty crop competitiveness particularly vulnerable to wage shocks and labor shortages. Recent farm bills have included initiatives to investigate labor-saving technologies for the sector, suggesting that while trade agreements and regulations will continue to be important for specialty crops producers, alleviating rising input, and particularly labor, costs may become a focus.

Nutrition

With emphasis on the role of fresh fruit and vegetables in nutrition and healthy eating habits, specialty crops have had a growing role in nutrition policy titles over time. Although spending on other food program purchases has been relatively consistent, spending on fruit and vegetable purchases has trended upwards. Specialty crops producers have benefited from farm bill provisions targeted to expanding access to fruits and vegetables through food assistance programs and nutrition education. The value of these programs and a continued desire to link farm policy with nutritional outcomes seems to be well established. It is likely that the next farm bill may leverage nutrition programs to continue expanding support to smaller farmers and processors to support local agricultural markets.

Concerns over food access and affordability in light of COVID-19 market disruptions and rising food prices, along with the current administration’s focus on local food, strengthening supply chains, and equity in nutrition translates to growing emphasis in policy areas that support domestic specialty crop markets. Emergency programs such as the Coronavirus Food Assistance Programs (CFAP, CFAP2, CFAP Additional Assistance) were targeted to payments for farmers to compensate them for losses when markets were disrupted by the Covid-19 pandemic. Eventually more than 230 fruit, vegetable, horticulture, and tree nut commodities were eligible (USDA 2022b), although data limitations often made participation challenging (Schnepf 2020). In March 2021, the CFAP programs were incorporated into a broader USDA Pandemic Assistance for Producers. In 2021, The Emergency Food Assistance Program (TEFAP) was expanded to include TEFAP Fresh Produce, an initiative that provides pre-packed boxes of mixed fresh produce, with emphasis on local sourcing. The TEFAP program (including TEFAP Fresh Produce) is designed to supplement the diets of low-income Americans, including elderly people, by providing them with emergency food assistance at no cost. Between October 2021 and September 2022, almost $61 million in food purchases were distributed through TEFAP in Florida (USDA FNS 2023).

The perishable nature of many specialty crops creates unique challenges for nutrition programs that have been addressed through special or pilot programs. The USDA Department of Defense Fresh Fruit and Vegetable Program (first began as a pilot program in 1996) allows schools to use USDA food purchase dollars to buy fresh produce. It has generally been considered successful in managing perishability and increasing availability of fresh produce to needy populations.

Similarly, greater attention to food security and nutrition have brought changes to the Supplemental Nutrition Assistance Program and other programs dedicated to introducing fruits and vegetables to nutrition assistance programs. For example, under the 2014 Farm Bill, the Food Insecurity Nutrition Incentive Grant Program (FINI) supported SNAP incentives provided through nonprofit organizations. The 2018 Farm Bill authorized the Gus Schumacher Nutrition Incentive Program (GusNIP), which superseded FINI, for FY19–23. GusNIP received budget authority of around $45 million annually to support and evaluate projects intended to increase the purchase of fruits and vegetables by low-income consumers participating in SNAP.

GusNIP includes the Nutrition Incentive Program (to increase the purchase of fruits and vegetables by providing incentives at the point of purchase), the Produce Prescription Program (to demonstrate and evaluate the impact of fresh fruit and vegetable prescriptions to increase procurement and consumption of fruits and vegetables, reduce individual and household food insecurity, and reduce healthcare usage and associated costs), and funds for training, technical assistance, evaluation, and information centers. For example, Fresh Access Bucks (FAB) is a Feeding Florida program funded through GusNIP that increases the purchasing power of SNAP recipients to buy fresh fruits and vegetables at farmers’ markets, produce stands, CSAs, mobile markets, and community grocery outlets. 

Research and Development

An area of agreement among specialty crop industries has been support for research and development (R&D) to address sector needs. The Specialty Crop Alliance, a broad national coalition of more than 120 organizations representing growers of fruits, vegetables, dried fruit, tree nuts, nursery plants and other products, identified “sustained federal investment into research and innovation…of meaningful scale” as one of their overarching principles for the 2023 Farm Bill (SCFBA 2022b). Unlike the titles with substantial mandatory funding (e.g., Titles I, II and IV), Title VII (Research, Education, and Related Matters) contains mostly authorizations that must be subsequently funded by the House and Senate Committees on Appropriations. In general, the focus on authorization over appropriation in Title VII appears to have limited political and partisan disputes over the title and its authorizations even as it has increased uncertainty over whether appropriations will be forthcoming.

R&D specifically targeting specialty crops took a notably different trajectory with passage of the Agricultural Research, Extension, and Education Reform Act of 1998 (not part of an omnibus farm bill). Building upon the Federal Agriculture Improvement and Reform Act (1996 Farm Bill), the separate legislation established a specialty crop research and Extension initiative to address critical needs by developing and disseminating science-based tools for specific crops and their regions. Topics included pest and disease prevention, marketing, and technology. Since 2004, all farm bills have included provisions for specialty crop R&D. While maintaining growth in farm productivity remains an important research focus in farm bill discussions, research on other topics particularly relevant to specialty crops such as health, nutrition, competitiveness, food security, the environment, and sustainability has increased.

Support remains strong for two programs focused specifically on specialty crops: the Specialty Crop Research Initiative (SCRI established in 2008) and the Specialty Crop Block Grants (SCBG established in 2004). The SCBG provides annual funding to state Departments of Agriculture, which then support projects to enhance the competitiveness of specialty crops in that state through marketing, education, and research. In FY22 a total of $72.9 million in SCBG funds were awarded nationally with over $4 million in funding to Florida. Florida priority areas for 2023 include: (1) projects to reduce nitrogen and phosphorus inputs required for specialty crop production or to prevent or reduce leaching/runoff of these nutrients into groundwater or surface waterways; (2) projects to reduce water use, improve irrigation efficiency, or otherwise decrease the impact of agricultural water use in specialty crop production; and (3) projects to research, encourage, or educate producers and consumers on advanced specialty crop production technologies such as hydroponics, aquaponics, aeroponics, protected culture or controlled environment production, and others (FDACS 2023).

More recently, the 2018 Farm Bill authorized the Agriculture Advanced Research and Development Authority (AGARDA), a new advanced research projects-style effort to focus solely on agriculture. Other federal ARPA programs include Defense [DARPA, established 1958], Energy [ARPA-E, established 2009], and Health [ARPA-H, established 2022]. Although no funds were appropriated for AGARDA before FY22, the 2018 Farm Bill established pilot authority to develop technologies, research tools, and products through advanced research on long-term and high-risk challenges for food and agriculture to ensure that the United States maintains its position as leader in global agricultural R&D. Program language identifies critical research and development needs, including specialty crop technologies, as a priority of AGARDA.

Risk Management and Disaster Assistance

Risk management and disaster assistance, including one-time disaster response, are not new but have become a much more prevalent component of farm policy over time. Recent market and supply chain disruptions for both agricultural products and inputs to production, including sustained recovery, are likely to keep risk management a central issue in the upcoming farm bill. The increasing but still relatively lower uptake of crop insurance by specialty crop growers coupled with more recent requests for assistance through one-time programs over the years suggest that considerable areas for expansion remain. A broader-based awareness of market disruption risks brought on by COVID-19 could potentially push the risk management system in new directions, including towards enhanced attention to market development and trade alternatives across a range of commodities, including specialty crops.

The Federal Crop Insurance Program (FCIP) includes policies that target yield-loss, revenue-loss, dollar plans, or whole farm revenue. The number of specialty crop policies under FCIP trended downward from 2016 to 2019 even as acres enrolled increased. As of 2021, RMA had 76 FCIP products available for specialty crops with 5,060 policies were sold in Florida in 2020 (Raszap Skorbiansky et al. 2022). The suite of programs can provide stability to producers in the face of variable weather, including disaster events such as droughts and hurricanes, as well as insurance against price declines in the case of revenue policies. For diversified specialty crop operations, the Whole Farm Revenue Protection product offers coverage tailored to multi-crop farms, including commodities not insurable under individual policies. More recently, the scope of disaster assistance has broadened to include market disruptions.

The Federal Crop Insurance Reform and Department of Agriculture Reauthorization Act of 1994 (not part of an omnibus farm bill) was the first targeted effort to increase the number of covered specialty crop commodities. Lack of data to develop actuarily sound insurance products for individual specialty crops has been a limiting factor, and participation rates still remain below those for field crops. Currently, many specialty crops can only be covered under the Farm Service Agency’s Noninsured Crop Disaster Assistance Program (Raszap Skorbiansky et al. 2022).

Recent developments have built on increasing natural disaster losses and have led to some new products tailored to the particularities of specialty crop production and markets. For example, the Hurricane Protection Insurance-Wind Index Endorsement provides an additional layer of protection overlaying a traditional crop insurance policy for producers who experience the specific types of damage associated with hurricane-force winds. Other new products are tailored to the needs of particular groups of producers, such as the California Citrus Tree policy that protects against specialized dangers like freeze, fire, and loss of irrigation. The Revenue and Production History plan, made available for Florida strawberries for the 2021 crop year, accommodates the lack of public price data availability and different marketing strategies by basing the insurance guarantee on the producer’s personal production and revenue history (USDA RMA 2022).

One-time disaster assistance programs are a significant share of farm program expenditures related to crop and revenue losses. Four standing disaster programs introduced in 2008 were made permanent under the 2014 Farm Bill, including the Tree Assistance Program (TAP). Specialty crops were also included in more recent disaster programs such as the Wildfires and Hurricane Indemnity Program (WHIP). TAP, as well as the 2017 WHIP and its successor WHIP+, provide payments for the replacement and rehabilitation of trees, bushes, and vines damaged by natural disasters.

While specialty crop producers have generally been included in one-time natural disaster assistance programs, their inclusion in the major recent market disruption programs is more unusual. Market disruption mitigation programs, such as the Market Facilitation Program, the Food Purchase and Distribution Program, and the Agricultural Trade Promotion program all include specialty crops.

Sustainability and Environment

The Food Security Act of 1985 was the first omnibus farm bill to include a conservation title, introducing the Conservation Reserve Program (CRP) under which the government rents agricultural land that is retired from production for 10–15 years and maintained in conservation uses. While specialty crop producers are not excluded from CRP, the rental rates have typically not been high enough to balance the production values typical of land in fruit or vegetable production.

The major working lands program, renamed Environmental Quality Incentives Program (EQIP) in the 1996 Farm Bill, delivers financial assistance to offset the costs of implementing environmental measures on lands in agricultural production and to provide technical assistance to producers via expert service providers who help them establish new structures and practices. While specialty crops have always been eligible to participate in EQIP, under provisions of more recent farm bills, USDA’s National Resource Conservation Service established areas of focus that could be of greater value to the sector, including improvements in irrigation, establishment of controlled environment growing systems, and tailored pest management systems.

Specialty crops producers have been particularly affected by environmental sustainability. On a national level, water quantity and quality has been challenging in regions where frequency and length of drought conditions impact available irrigation and in regions prone to flooding. Investment in sustainable environmental practices, coupled with improved food safety protocols that in some cases overlap with environmental innovations (e.g., closed system irrigation, greenhouse and other controlled environment systems), have been encouraged through new farm bill programs. Given growing challenges and clear opportunities for continuing innovation, increasingly targeted conservation options seem likely, possibly through enhancements under the Conservation Stewardship Program, which focuses on creating incentives for producers willing to invest in enhanced conservation practices with public benefits or expanded EQIP offerings, or perhaps in pilot form before scaling up.

Take Away

Hearings on topics relevant for the next farm bill have begun in an era of high prices for farm commodities, food, and inputs, notably including fertilizer and labor. While attention to specialty crops, including those important to Florida, continues to grow, the type of changes enacted in the coming farm bill will be highly dependent not only on current sentiment but also available funding. If the budget is not increased, new programs or significant amendments to existing programs will be difficult to introduce.

At the same time, specialty crops have benefited from a growing national interest among policymakers and the public due to their value in US food systems and consumer diets. Since the outbreak of the COVID-19 pandemic, there has also been a shift in attention towards continuity of agricultural supply chains including food security. In 2022, impacts from hurricanes Ian and Nicole on Florida specialty crop markets and availability further emphasized production risks. Farm bill priorities oriented around R&D, improved nutrition and related health outcomes, risk management, and sustainability are particularly relevant to Florida specialty crops, and opportunities are likely to remain concentrated in these areas.

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