Subsidies Encourage Maine Farmers to Keep Growing Too Many Blueberries
The market can't fix the problem when government insists on intervention.
During a multi-year wild blueberry glut, government agencies have been using subsidies and grants to encourage Maine farmers to keep growing the crop. Too bad no one seems to want them. Maine has a glut of the berries, and now the governor of Maine hopes to help sell them off by spending $2.5 million on agricultural marketing.
Farmers have been growing wild blueberries in Maine since the mid 1800s. The berries perish quickly, so 99 percent of the crop is frozen, making it easier for a berry surplus to continue from previous years.
Maine farmers are already at a market disadvantage because their main competitors, Canadian farmers, trade with a weaker currency. John Bott, the director of communications and special projects for the Maine Department of Agriculture, Conservation, and Forestry told Reason that there has also been a surplus of frozen highbush blueberries, a separate breed competing with wild blueberries in the market.
A combination of falling prices, increased competition, and advances in production technology should have reduced the number of blueberry farmers. Yet, government intervention has caused a multi-year surplus. According to Bott, berry prices have plummeted: 100 million pounds sold for $1 per pound in 2011 but only 25-27 cents per pound in 2016.
Despite these low prices, Canada and Maine churned out a bumper crop of blueberries in 2016: 400 million pounds, almost double the typical 250 million pounds. Bott explained that much of the wild blueberry surplus comes from improved production technology, pollination, good fertilizer, and favorable weather.
Last year's berry surplus prompted the U.S. Department of Agriculture (USDA) to spend $13 million buying up some of the berries. A $50,000 grant from the Department of Agriculture, Conservation and Forestry helped fund marketing to public schools—the berries will now be served in 19 states.
Despite obvious changes in the market, subsidies have encouraged farmers to keep at it; the number of farmers and acreages has not decreased this year. There have been some indications of scaling back production by using less fertilizer and fewer bees for pollination—perhaps because farmers in two Maine counties, Washington and Hancock, are producing at annual losses of $70 million.
The state of Maine is now hoping to solve problems exacerbated by government spending with more spending. Gov. Paul LePage's budget proposal allocates $2.5 million to promote Maine agricultural products by advertising the nutritional benefits of wild blueberries and promoting the berries at trade shows.
The hope is that this program will find new markets where wild blueberries could be desirable, such as in Asian cuisine, Bott said in a phone interview with Reason.
"We are trying to develop new markets for lots of agriculture in Maine. For wild blueberries, we can promote its uniqueness," Bott said. "They are a good source of antioxidants and have lots of health benefits. … We want to make connections between the grower and seller for this is specialty product. We have started to do some marketing events outside of the state, which resulted in new regional, national and international opportunities. … Traditionally, there has not been a lot of state money for this, and small farmers don't have a lot of resources, so we need to band together. If we can create new partnerships, there will be opportunities for growth."
The governor's latest proposal may keep farmers afloat for another year. Yet, farming has become more productive, thanks to better irrigation methods and improvements in technology. Eventually, Maine will need fewer farmers producing frozen blueberries.
A fear of the creative destruction to traditional farming practices is driving some of the market interventions. Nancy McBrady, executive director of the Wild Blueberry Commission of Maine, makes her position clear: "There is a real possibility that some growers might exit the business entirely, which is a real tragedy because this is a 150-year-old industry in the state."
Attitudes like McBrady's are nothing new. In fact, it is strikingly similar to statements made during the Trump campaign about the loss of the American factory worker or during pretty much every expansion of production technology in history.
No one likes to see jobs lost or businesses fail. This is an ugly effect of the otherwise remarkable benefits of improved technology in agricultural production. Cheaper blueberries means more Americans can afford the awesome antioxidants Maine may now attempt to advertise. The state should let creative destruction play out—consumers will thank them in the long run.