Rural Communities Pay Price for Consolidation, Globalization in California's Processed Fruit & Vegetable Sector

California's processed fruit and vegetable industry shrank dramatically after 1992 as a raft of new international trade deals and consolidation swept the industry. A new report released today by consumer group Food & Water Watch documents that California farmers who sold fruits and vegetables to canneries and freezing plants in the decades following had fewer buyers, and that the prices they received fell dramatically as imported processed produce -- often from the same companies that formerly owned plants in California -- competed head-to-head with domestic production.

"Americans are eating the same amount of processed produce, but more and more of it is imported," said Food & Water Watch Executive Director Wenonah Hauter. "American companies have consolidated and moved many of their plants offshore to chase sweatshop labor and lax environmental rules, and the losers are American farmers, workers and consumers."

Although California produces three-fifths of the frozen and canned fruits and vegetables in the United States, consumers are eating a growing share of imported processed produce. Food & Water Watch's report, The Economic Cost of Food Monopolies, found that the imported share of domestic consumption of a dozen California-grown processed produce crops (including canned peaches, processed tomatoes and frozen spinach) more than doubled from 4.9 percent in 1993 to 12.3 percent in 2007. But despite conventional wisdom that these imports have benefited consumers, average prices for canned and frozen fruits and vegetables (as measured by the consumer price index) increased 30 percent between 1998 and 2007.

International trade mechanisms like the North American Free Trade Agreement and the World Trade Organization facilitated both rising imports and the offshoring of manufacturing plants. The volume of imported processed tomatoes tripled from 1993 to 2007, and the price that farmers received for processing tomatoes dropped 17.1 percent from 1993 to 2006. The flood of imports and low prices ultimately pushed many farmers out of business. Processed tomato acreage in California dropped from a peak of 310,000 acres in 2000 to 275,000 acres in 2007, and 18 percent of farms that grew processing tomatoes disappeared between 2002 and 2007.

"Farmers cannot stay afloat under a tidal wave of low-priced imported processed fruits and vegetables," said California Farmers Union President Joaquin Contente. "Today, fewer processing plants buy California-grown fruits and vegetables, which means that the prices paid to California farmers for these crops continue to decline."

Food & Water Watch's analysis found that the increased consumption of imports reduces demand for California-grown and processed fruits and vegetables. This reduces the economic multipliers generated from farmers buying supplies and workers spending their paychecks throughout the Central Valley. The number of large freezing and canning plants in California fell by 12.7 percent between 1992 and 2007, the number of workers at these plants fell by 6,300 (26.4 percent) and the real earnings of these workers dropped by $231 million, in inflation-adjusted 2010 dollars.

This examination of the California processed fruit and vegetable industry was part of a multi-sector examination of the cost of economic consolidation in the U.S. food and agriculture system. Other sectors and regions included the Iowa hog industry; the milk processing and dairy farming in upstate New York; poultry production on Maryland's Eastern Shore; and organic soymilk production and organic soybean farming.

"The consolidation of the food and farm sector is sucking the economic vitality out of rural America and shipping it off to Wall Street," said Hauter. "These findings shine a much-needed light on the negative economic impact that farm and agribusiness monopolies have on farmers, consumers and rural communities."

A copy of the report, The Economic Cost of Food Monopolies, can be downloaded here: https://www.foodandwaterwatch.org/reports/the-economic-cost-of-food-monopolies/