Specialty Crops- An Overview

Background

The statutory definition of the term is wide-ranging, including fruits, vegetables, tree nuts, dried fruits and vegetables, horticulture, and nursery crops. Pub. L. No. 115-334, 13 Stat. 1905. In practice, however, the term “specialty crops” is generally used to describe all crops except those commodities that receive direct income support under Title I of the Agricultural Improvement Act of 2018 (Farm Bill).

Specialty crops have been gaining attention across the agricultural spectrum since the increased number of provisions addressing specialty crop issues in the Food Conservation and Energy Act (2008 Farm Bill) and Agricultural Act of 2014 (2014 Farm Bill). The 2018 Farm Bill continues to increase provisions pertaining to specialty crops and make research for specialty crops a cornerstone.

In recent years, specialty crops have accounted for thirty to forty percent of the total value of U.S. crops. USDA, Economic Research Service, http://www.ers.usda.gov/topics/farm-economy/farm-sector-income-finances.aspx.  California and Florida have the largest specialty crop acreage; however, the Upper Midwest, the North East, and the Eastern Seaboard all produce significant quantities as well. USDA, Economic Research Service, Outlook Rep. No. VGS-31301, Fruit and Vegetable Backgrounder (2006).

Since the definition of the term is so expansive, there are a vast number of legal issues that affect individuals involved in the production and marketing of specialty crops. Many of those issues are subsections of larger topics, and affect more areas of agriculture than just specialty crops. For more information on those specific issues, follow the links to other Reading Rooms.


Issues


Specialty Crop Markets

Specialty crop issues often vary depending on the type of crop involved and the type of market in which they are sold. Specialty crops produced for fresh markets have distinct characteristics from those produced for processing. Consumer demand requires specialty crops sold in fresh markets to have aesthetic appeal. Thus, many producers harvest these crops by hand to reduce bruising. Most products sold in the fresh market must be transported quickly from field to consumer before they perish or lose visual appeal. Therefore, most specialty crops sold for fresh consumption are sold in spot markets. For more information, please refer to the Local Foods Reading Room

The market for specialty crops intended for processing has different characteristics than the market for fresh specialty crops in terms of desired qualities and method of sales. Unlike fresh market specialty crops, specialty crops intended for processing are not expected to meet high standards in terms of appearance. This allows producers to use mechanical harvesters which are less labor intensive and faster than harvesting by hand, but may result in superficial bruising.

Furthermore, because food processors often have large, consistent demands and desire crops with qualities uniquely designed for the processing system, they will often enter contractual growing agreements with specific farmers rather than purchasing crops from spot markets. The perishable nature of specialty crops often requires that growers ship their fresh fruits and vegetables prior to receiving payment. Congress enacted the Perishable Agricultural Commodities Act (PACA), to give growers of these crops special protections and remedies regarding payment for their crops. The primary purposes of the PACA are to prevent unfair and fraudulent conduct in the marketing and selling of perishable agricultural commodities and to facilitate the orderly flow of perishable agricultural commodities in interstate and foreign commerce. Since the definition of the term “perishable commodities” encompasses many specialty crops, such as fresh fruits and vegetables, the PACA is an important piece of specialty crop legislation. For more information, please refer to the PACA Reading Room


Food Safety

Food safety is an increasing concern of producers, sellers, retailers, and consumers of specialty crops, especially with the recent scares caused by recalls of produce contaminated with E.Coli and Salmonella. Crops which are consumed raw or after a minimal amount of cooking, like many fruits and vegetables, are of particular concern to consumers and the Food and Drug Administration (FDA). To address these concerns, the FDA has issued a number of voluntary compliance guidance documents. These handbooks are designed to minimize the possibility of microbiological contamination in fresh fruits and vegetables by describing safe transportation, storage and handling procedures for producers and handlers.

Furthermore, the 2018 Farm Bill authorizes a special initiative under which the Secretary of Agriculture may create a food safety education program to inform the public and persons in the fresh produce industry about practices for reducing microbial pathogens on fresh produce, and methods of reducing the threat of cross-contamination of fresh produce through sanitary handling practices. Several of these FDA guidelines and related documents can be found in the main body of this Reading Room. For more information on this subject, please refer to the Food Safety Reading Room


Trade Patterns

The seasonal limitations on the production of specialty crops, combined with higher consumer expectations, have affected international trade patterns, raising concern among some domestic producers. Increased consumer demand has caused many markets to offer a wider range of specialty crops and year-round availability. Although technological advancements have increased domestic producers’ ability to provide crops year-round, there are still times when domestic supply is inadequate. For example, many crops still need to be imported during cold months to meet consumer demand. Some domestic farmers are concerned that trade agreements which were originally used to supplement domestic production during times of low production have enabled importers of specialty crops to directly compete with domestic producers during peak seasons. Due to the increase of imports, domestic producers of specialty crops have generally been supportive of regulations, which require retail level country of origin labeling (COOL) for shellfish, peanuts, fruits, vegetables, and various meats.

In an attempt to close the negative trade gap, government programs such as the Quality Samples Program and the Agricultural Trade Promotion and Facilitation Program have been developed to help overcome the various barriers to exportation. Under the 2018 Farm Bill, the Market Access Program, Foreign Market Development program, and Technical Assistance for Specialty Crops program are consolidated into the Agricultural Trade Promotion and Facilitation Program.

For more information on the COOL regulations, please refer to the COOL Reading Room


Labor

Farming is a labor-intensive operation, particularly for those producers who harvest their crops manually. Crops harvested in this manner are often sold in fresh markets, where they face increasing competition with imports. The availability of affordable labor is vital to the ability of these domestic producers to compete with foreign producers. Labor is the largest variable expense for U.S. producers of specialty crops. Thus, issues like immigration and foreign worker laws that affect the availability of labor will likely determine the continued success domestic producers will have competing with imports. For more information, please refer to the Labor Reading Room


Programs and Statutes

Unlike producers who grow commodities, specialty crops producers do not receive direct income subsidies. However, government policies and programs provide support and protection for specialty crop farmers through planting flexibility restrictions, crop insurance and disaster assistance, and research and promotion programs, which are discussed below


Planting Flexibility Restrictions

Traditionally, farmers who participate in Title 1 income support programs of the Farm Bill are able to use their base acreage to grow any crop they wish – except for fruits, vegetables and wild rice. These restrictions were originally put into place to protect the market share of growers of these crops, who are not eligible for program payments. The rule has effectively prevented most program participants from planting fruits, vegetables, and wild rice on program acreage, with only a minor exception that allows farms with a history of growing fruit and vegetables as part of a diversified operation to continue to do so.

These restrictions received negative attention in the World Trade Organization (WTO) negotiations, where ultimately the production limiting features of the restrictions resulted in some program payments being targeted as those that affect international trade, and placed into the “blue box” category. As a result of these international pressures, there was much debate over whether to continue the restrictions in the 2008 Farm Bill. While the restrictions were ultimately retained, a pilot “planting flexibility project” will allow cucumbers, green peas, lima beans, pumpkins, snap beans, sweet corn, and tomatoes to be grown on a limited number of acres in the Midwest. 7 U.S.C.A. § 8717(d)(1). This pilot program was not renewed in the 2014 or 2018 Farm Bill and ultimately expired after the 2012 crop year.

For more information, please refer to the United States Farm Bills Page.


Crop Insurance and Disaster Assistance

Just like typical commodity crops, many specialty crops are eligible for insurance policies through the Risk Management Agency (RMA) of the USDA and can receive subsidies to cover a portion of the premiums. The RMA conducts pilot programs in specific regions to decide what additional crops should receive coverage. It is important for farmers to consider the effects of failing to obtain adequate levels of coverage prior to planting. Under the linkage provisions in the 2008 Farm Bill, farmers are ineligible for disaster program payments unless they sign up for some form of coverage prior to planting. Furthermore, when disaster payments are issued they are often based on existing insurance policies.

The availability and level of coverage specialty crop producers are eligible for varies significantly according to crop and geographic area. Depending on the location some specialty crops will be covered under federal crop insurance policies and producers will be able to purchase additional coverage beyond the catastrophic risk protection (CAT) coverage amount. In some instances levels of coverage have even differed according to end use as some policies take into account the distinctions between the fresh and processed markets.

The type of federal crop insurance available to specialty crop producers often depends on the particular crop and region. Most specialty crops covered by federal crop insurance policies are eligible for multiple peril crop insurance (MPCI), a yield based type of coverage. However, there are some pilot programs for specific specialty crops focused on providing revenue based coverage. The main revenue type of coverage, Crop Revenue Coverage (CRC) is only available to commodity crops. However, many specialty crops are eligible for another type of revenue based coverage, Adjusted Gross Revenue (AGR), which insures the revenue of the entire farm rather than an individual crop.

Many specialty crops are not covered by federal crop insurance policies. Producers of these crops are, however, eligible for CAT coverage under Noninsured Crop Disaster Assistance Program (NAP). The program provides payments to qualified growers who lose at least 50 percent of their crop or are unable to plant more than 35 percent of their acreage due to a natural disaster. Payments are based on producers’ yield and production records. Unlike the federal crop insurance policies, which are administered by the Federal Crop Insurance Corporation (FCIC) and the Risk Management Association (RMA), NAP is administered by the Farm Service Agency (FSA). For more information, please refer to the Crop Insurance Reading Room


The 2018 Farm Bill

One of the main goals of the Specialty Crops Competitiveness Act of 2004 was to provide funding to improve the efficiency, productivity, and profitability of specialty crop production. To further this goal, the 2018 Farm Bill continued the Specialty Crop Research Initiative established in the 2008 Farm Bill. Under this initiative, research will be funded by competitive grants which must be matched by non-Federal sources. The research focuses on problems affecting specific crops and regions including plant breeding, genetics, and genomics; pollination, pest and disease issues (including funds for methyl bromide alternatives research); productivity and profitability, furthering innovation and food safety. For the first time in history the 2008 Farm Bill contained a separate title covering horticulture and organic agriculture. This title, Title X, included many provisions that provided funding for research, nutrition, export assistance, promotion, and marketing programs designed to improve the commercial viability of the specialty crops sector. The 2018 Farm Bill continued this practice and included a Title X for horticulture.


Research Programs

Title X made some basic changes to what is included in the specialty crop sector, while also increasing the availability of information to help determine the economic status of the sector. For example, horticulture was added to the definition of specialty crops previously provided in the Specialty Crops Competiveness Act. Pub. L. No. 1150-334246, 1322 Stat. 49051651. Also, a yearly census of specialty crops is made as part of the Census of Agriculture. Finally, funding is appropriated to expand the USDA’s Market News Program to provide timely information on fruit and vegetable prices.

Title X also increased the mandatory levels of funding for the block grant program created by the Specialty Crop Competitiveness Act and ensures that every state will receive funds designated for that purpose. The grants are awarded to researchers and trade groups, and are designed to enhance the competitiveness of specialty crops primarily through marketing, promotion, and technical research. Furthermore, Congress authorized grants to state and local governments; grower cooperatives and producers; national, state, or regional producer, shipper, or carrier organizations; and other approved groups to improve cost-effectiveness and address deficiencies of transporting specialty crops to local, regional, and international markets.

Title X also provides funding for a number of pest and disease detection and eradication programs, including the Specialty Crop Certification and Risk Management Systems programs. 7 U.S.C.A. § 7721(d). The program will use audit based certification programs to develop a nursery plant pest risk management system and reduce the risk of pest movement in plants and plant products. The National Clean Plant Network will store and maintain plant material free of targeted plant pathogens and pests. State certification programs and private producers will have access to this material to perform research and testing in order to ensure the global competitiveness of specialty crops producers.

Finally, Title X establishes a program to educate persons involved in the fresh produce industry and the general public about sanitary handling practices and ways to reduce pathogens in fresh produce. The 2018 Farm Bill increased total funding for the program by providing $85 million per year for fiscal years 2019 through 2013. In addition, the 2018 Farm Bill made multi-state projects more feasible by decreasing existing hurdles in current legislation.


Nutrition Programs

The Fresh Fruit and Vegetable Program was created by an amendment to the National School Lunch Act in order to increase children’s consumption of fruits and vegetables and decrease their consumption of less nutritious food. The program was made permanent in the Child Nutrition and Special Supplemental Nutrition Program for Women, Infants and Children (WIC) Reauthorization Act of 2004. The 2008 Farm Bill expanded the mandatory funding for the program, pledging over $350 million for fiscal years 2008 through 2011. The program requires that the Secretary of Agriculture spend an average of $198 million per year over the next five years to purchase fruits, vegetables, and nuts for use in schools and institutions participating in the program. The 2014 Farm Bill expanded the program to include a pilot program to evaluate the inclusion of canned, frozen, or dried fruits and vegetables in the program. After the enactment of the 2018 Farm Bill, the program will now continue with only fresh fruits and vegetables.

For more information on nutrition programs, please refer to the Local Food Systems Reading Room.


Export Assistance Programs

The Technical Assistance for Specialty Crops (TASC) Program  provides funding to be used to address the technical barriers such as sanitary and phytosanitary requirements that make the exportation of specialty crops difficult. Funding for TASC was reauthorized by both the Specialty Crop Competitiveness Act of 2004 and the 2008 Farm Bill. Additionally, the 2018 Farm Bill provided mandatory funds of $9 million in fiscal year 2019 through 2023. Title X also reauthorizes $200 million annually for the Market Access Program which provides funding to expand markets for U.S. agricultural products through technical assistance, market research, and promotion of U.S. value-added products. For more information, please refer to the Farm Bills page


Marketing Orders

Marketing orders and agreements are legal instruments issued by the Secretary of Agriculture that are designed to stabilize market conditions for certain agricultural commodities. They do so by regulating the entrance of these commodities into the marketplace, as well as the handling of those commodities once they have entered the stream of interstate or foreign commerce. Over 30 marketing orders for fruit, vegetables, tree nuts and other specialty crops have been created. Some of these marketing orders received special attention in the 2008 Farm Bill, which addressed specific concerns in the mushroom, Haas avocado, Clementine orange and honey industries. In the 2018 Farm Bill, cherries and pecans were also added to the list of specialty crops in the Agricultural Adjustment Act for which a marketing order may be established.

For more information on marketing orders and agreements please refer to the Marketing Orders Reading Room


Promotion Programs

Congress has created several programs designed to promote and provide research and information for particular specialty crops without reference to specific producers or brands. These programs, often referred to as “checkoff programs,” are financed through assessments charged to producers, handlers, and/or importers on a per unit basis of the marketed crop, usually deducted from revenue at the time of sale. The constitutionality of these programs continues to be challenged by producers under the First Amendment on grounds that mandatory assessments unlawfully force them to pay for speech they do not support. For more information please see the Checkoff Programs Reading Room


Conclusion

While specialty crops have many unique aspects associated with their production, sale and processing, they also have many aspects that are common to other areas of agricultural production. With expanding interest on the part of legislators, consumers and producers in the field, the similarities as well as the differences between specialty crops and other, ‘traditional’ commodity crops will become more and more apparent. This Reading Room is meant to highlight some of these similarities and differences, while enabling the researcher to find the resources that are most applicable to their specific issue.