E-mail: nass-ny@nass.usda.gov
(518) 457-5570


FOR IMMEDIATE RELEASE:

Contact:

Dr. Gerald White or Dr. Wen-fei Uva

E-mail: gbw2@cornell.edu or wl32@cornell.edu

(607) 255-2299 or (607) 255-3688

Friday,

July 25, 2003

http://hortmgt.aem.cornell.edu/programs/riskmgt.htm

 

SPECIALTY CROPS SURVEY SUMMARY

In 2002, specialty crop producers in New York State were surveyed about their risk management and cropping practices. This study was a partnership endeavor among the USDA Risk Management Agency, New York Agricultural Statistics Service, and the Department of Applied Economics and Management at Cornell University. We defined specialty crops as including fruit, vegetable, floriculture, nursery, maple syrup, Christmas tree, turf, aquaculture, honey, and mushroom enterprises. Other states involved in this study were California, Florida, and Pennsylvania.

New York is an underserved state in terms of farmers' use of crop insurance and other risk management products and tools, and growers of specialty crops in particular make less use of these tools than other farmers. The primary objective of the survey was to determine why federal crop insurance and other risk management products are utilized at current levels by specialty crop producers in New York. A second objective was to determine how the design of crop insurance and other risk management tools could be improved to better meet the needs of special crop producers.

The New York Agricultural Statistic Service mailed 8,998 surveys to specialty crop producers in New York State in February 2002, with a follow-up mailing two weeks after the first mailing and telephone follow-ups a month after the first mailing. We received 2,808 usable responses for a response rate of 31.2 percent. Approximately two-thirds of all responses were obtained from the mail survey; the rest were obtained by a follow-up phone survey. Producers were asked to answer the survey based on information from their 2001 crop year.

Major Findings

Yield Fluctuations-Just over 20 percent of respondents reported that their largest yield fluctuation from the five year average was greater than 50 percent. Yield volatility was greatest for bee and honey operations and for fruit (other than apples and grapes). Tart cherries and peaches are examples of fruit having large yield variations.

Price Fluctuations- For annual average price fluctuations in the past five years, 10 percent variation or less was the overwhelming estimation (50 percent of those who responded). Price volatility was greatest for potatoes, apples, onions, and bees and honey.

Profit Fluctuations-Forty percent indicated less than a 10 percent fluctuation in profit in the last five years. Fifteen percent indicated that the largest fluctuation in profit was 50 percent or greater. By commodity, bee and honey was the most variable with large profit fluctuations also occurring for apples, onions, potatoes, fruits, and other specialty crops.

Main causes of lowest profits- The main cause of lowest profit from the primary specialty crop over the last five years was poor yield, attributed by half the respondents. Otherwise, low price due to high domestic production, high input costs, and low price due to increased imports were about equal in effect.

Ranking of risk management tools- Over the entire sample, producers reported that "diversified marketing" was the preferred risk management tool, followed by "commodity diversification". Crop insurance was the third preference.

In terms of availability of risk management tools, however, 76 percent of respondents indicated that crop insurance was not available to them. For the remaining producers, 15 percent indicated that they used crop insurance. When available, government programs and diversification (both in commodities and in marketing) were the most adopted risk management practices relative to availability.

For various specialty crops, important differences from the total group of respondents were noted. Grape, onion, and apple producers ranked crop insurance high as a risk management tool. Diversification into multiple commodities was the most preferable risk management tool for vegetable producers.

Purchase of crop insurance- The survey asked whether producers had purchased any crop insurance within the past five years. "Yes" responses were given by about 24 percent of surveyed respondents who answered this question, but most indicated they had not purchased any in the past five years. Less than 10 percent were "regular users" of crop insurance. The main reasons producers purchased crop insurance was (1) the risk of crop loss and (2) because crop insurance was required for other USDA programs. This suggests that most bought catastrophic (CAT) coverage since that, in the past, has been the minimum required by USDA for participation in government programs.

Differences between fresh vs processing producers-Fruit and vegetable producers were separated into two groups; those with sales of over 70 percent of their primary specialty crop into either fresh or processing, yielding a subset of 1,393 growers. This analysis suggests that crop insurance has worked better for processing growers than for fresh, probably due to quality (size, color, cosmetic appeal) being a greater consideration for fresh produce than for fruit and vegetables for processing use.

Additional details of the results and recommendations of this survey are available at Cornell's website at http://www.hortmgt.aem.cornell.edu/programs/riskmgt.htm

#

7-25-03