California farmers to destroy 420k peach trees following Del Monte bankruptcy
sfgate.com332 points by littlexsparkee 15 hours ago
332 points by littlexsparkee 15 hours ago
People underestimate how difficult it is to seek buyers for the amount of produce we are talking about here.
Farmers are specialists at growing things, not at moving them across great distances, marketing them to dozens small buyers and or starting up packing plants from scratch. They don't have enough trucks, people or packaging machines to move them around.
Maybe, they can take some portion for local use. But the rest will spoil, and rest of the land will be effectively unused, and a burden. The best option is to cut that as much as possible, and plant something else that actually sells.
Of course, people who never approached agriculture will be appalled at this, and call it great injustice.
A situation like this bring out many comments that reveal a very low understanding of basic economics (and a low rate of reading the article).
Del Monte went out of business because there wasn't enough demand for the peaches. The company that purchased their assets is continuing to buy 24,000 tons of peaches, but the previous unsustainable business was buying a lot more. It's the excess fields that need to be repurposed to growing something that the market will absorb.
The reason the trees are being destroyed is so they can grow something else on the land. Something that comes with a sustainable business model for the current market demands. Yes, the trees are technically going to waste, but if we had forced the peaches to be grown and canned (as many comments are suggesting) then that would be a different kind of waste as they'd sit in warehouses while the land, resources, and labor were used to produce something people weren't buying instead of being used to produce foods they were buying.
In the article you can even see that the farm lobby was so powerful that they got the USDA to pay for the tree removal. The comments talking about farmers not being organized enough or powerful enough must be unaware of how powerful the farm lobby is and how much money they're able to secure from the government every year.
> Del Monte went out of business because there wasn't enough demand for the peaches.
Things are often more complicated than that. Del Monte was founded a long time ago and fruit trees take a long time to grow. As a result, as the originator of those trees, you're at a disadvantage because you have to pay for many years of maintenance and interest on capital before the trees bear fruit, and are then sitting on a load of debt from the unproductive years that you can't service if the market price is low after the trees are producing.
But bankruptcy (or new ownership) clears the old debt, and then you're left with a productive asset that might not have been worth the cost to create at current prices, but could easily be worth the cost to continue using now that growing the trees is a sunk cost, which requires a much lower market price to be sustainable.
> In the article you can even see that the farm lobby was so powerful that they got the USDA to pay for the tree removal.
That sounds a lot like a cartel acting through regulatory capture to limit supply.
Like if destroying the trees to grow something else was more profitable than continuing to sell the produce then why does it require a government subsidy?
> Like if destroying the trees to grow something else was more profitable than continuing to sell the produce then why does it require a government subsidy?
Because why pay for something when you can get someone else to pay for it?
"The industry has captured the government and is doing a corruption" is the thing consistent with the theory. The non-corruption/capture reason for the government to pay for it is supposed to be what?
> if we had forced the peaches to be grown and canned (as many comments are suggesting) then that would be a different kind of waste as they'd sit in warehouses while the land, resources, and labor were used to produce something people weren't buying instead of being used to produce foods they were buying.
Worse, the price would have to be lowered to bring up sales, which could put the other peach farmers into bankruptcy as well.
If you try to force production and sale hard enough, the sale price can even go negative.
If your warehouse is full of peaches nobody wants, you might be forced to sell them for negative dollars to take them away. It's either that, or you pay to have the waste management company dispose of them. So the price effectively goes negative from trying too hard to force something to happen.
If you turn all them peaches into high proof alcohol they take up significantly less space...
Similarly, in 1790s America, farmers west of the Appalachians were growing plenty of corn, but because of bad roads the only feasible way to transport it to the much larger markets east of the mountains was as whiskey. When Alexander Hamilton imposed a tax on distilled spirits, the result was a "Whiskey Rebellion" in which George Washington himself rode out at the head of an army against other American citizens.
>Worse, the price would have to be lowered to bring up sales, which could put the other peach farmers into bankruptcy as well.
We run into something similar every year here in India. One recent example [1] This year it is the Middle East crisis. Last year it was probably a glut because there was shortage the year previously.
[1] https://www.ndtv.com/india-news/video-offered-rs-4-per-kg-ma...
The big thing I fear about this sort of destruction is that it takes a very long time for tree bearing fruit to start turning a profit. That means someone that wants to plant new trees needs to do so with the notion that they won't get any sort of return on investment for a decade.
My fear is that institutional farming does not have the long term fortitude to ever start growing a tree bearing crop. Once these trees are destroyed, they are gone for good regardless how the demand shifts.
A downturn of 2 or 3 years or crazy political maneuvers which kill off exports puts access to these fruit in jeopardy. And once they are out of the diet, it's very hard to get them reintroduced. That's a big part of the reason why the US has such a limited fruit diet in the first place (the other being that many fruits are very hard to ship).
It's so weird for you to be fearful of something when you don't know how farming works. Every year farmers cut down a bunch of trees and plant new ones in response to costs and market demand. So what. This is routine and seldom makes the news.
Canned fruit, like what these farmers were producing, has been losing popularity for years. You can't force consumers to like it.
> Every year farmers cut down a bunch of trees and plant new ones in response to costs and market demand
I'll admit my experience is more with vineyard than orchards, but at least for grape, this isn't true. You only cut down old, unproductive vines, and market demand is not a factor. You never know how much you will produce YoY, so basically you try to only produce what your domain can handle. (The english translation for the following will be rough i realize).
On the "planting" side, you're wrong: a limited stock of "rootstock" (if this is the correct translation of "porte-greffe") is produced each year. As those are specific to a certain type of soil and take time to grow, you don't produce a ton each year. And vines "rootstock" are _a lot_ easier to grow than other trees (you have a mother-vine that you don't prune, you bury its branch in the soil, and over a year it will develop roots). My guess is that for orchards, your rootstock should take 3-4 years, so it isn't that easy.
Ever wondered why there are few merlot vineyards in Napa these days? Dozens of vineyards are uprooted and replanted each year in that tiny valley alone in response to market demand.
Grape vines have a longer productive lifespan than most fruit trees so I don't know what point you're trying to make. Lots of wine grape vines are being torn out in California. Competition is intense, we're well past "peak wine" (consumers aren't drinking as much), and honestly a lot of it was kind of garbage anyway.
No, not typically. And I know this because I grew up around farmers and farmers that had orchards. Trees would be cut down and replaced, usually if the tree was sickly. But not because this year plums are doing better on the market.
As I said, trees take a long time to bear fruit. It's not typical that a farmer will cut down a tree in their orchard in response to market pressure as that tree represents a huge investment.
If that were the case, then why are there so many peach trees currently? Why hasn't the entire orchard been replaced with olive trees?
Do you actually have farming experience?
There’s not a lot of overlap between prime citrus and prime olive farmland.
Yes, I actually have farming experience. Farmers aren't naive about this stuff. They forecast future trends as best they can and will replace trees (or other crops) when it seems profitable. Newly planted fruit trees will generally start producing within a few years and output increases as the trees grow, then eventually levels off and declines as they age. A tree is just another capital asset with a limited lifespan. Much ado about nothing.
Ok, then I'll just reissue my 2 questions
> If that were the case, then why are there so many peach trees currently? Why hasn't the entire orchard been replaced with olive trees?
I agree, that farmers forecast and switch up crops. But I disagree with you that you have a bunch of farmers that have mixed orchards setup because of that forecasting. It's not like wheat or barely where you could switch between the two even mid year if you were crazy enough.
I'd also point out that the first fruiting isn't exactly a bumper crop. It takes several more years after that first fruiting before you get to the point where a tree is fully productive.
You're not making any sense. I never claimed that a bunch of farmers have mixed orchards. Some farmers have too many peach trees right now because Del Monte got their forecasts wrong so now those farmers will chop down the peach trees and probably plant something else. Olive oil demand is still trending up so that might be a possibility in some cases, there are lots of options. That's just how farming works: you have to place your bets and then work for years to see if they pay off.
> I never claimed that a bunch of farmers have mixed orchards.
You claimed
> Every year farmers cut down a bunch of trees and plant new ones in response to costs and market demand.
What do you mean responding to "costs and market demand"?
You also claimed
> They forecast future trends as best they can and will replace trees (or other crops) when it seems profitable.
Both those statements would imply that you have orchard farmers who are growing and harvesting multiple types of crops. Unless you are trying to say that it's common for a fruit farmer to completely destroy an orchards and replace with with a new crop.
Both, frankly, are ridiculous claims which are quickly dispatched with "Why aren't there more olive trees".
If the reaction to market forces was that fast, the expectation is that last 10 years of raised olive prices would have caused a lot of these farmers to uproot and plant olive trees. It's currently a very lucrative crop and California is certainly amenable to growing olives.
> That's just how farming works: you have to place your bets and then work for years to see if they pay off.
I agree with this statement. Farming is a game of placing bets on the future of the market. But I disagree that orchard farmers are commonly just diving head first into switching crops in any sort of fashion. It takes a severe event, like their primary distributor going bankrupt, to move an orchard farmer towards new crops. That is not common or business as usual.