New pressures force U.S. farmers south of the border
Tougher immigration control and stricter environmental and food safety regulations are prompting US firms to move farms to Mexico, Brazil, and everywhere in between.
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Brian Willott, who grew up on a farm in Missouri, moved to Brazil in 2003 as part of a wave of cotton and soy farmers from the Midwest expanding there.Skip to next paragraph
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He says that he could never expand a farm in the US like he could in Brazil, where he started with about 1,000 acres. Since then the farm's size has doubled, and he has plans to expand further this year. "The land was cheap, the opportunity was there, it was a frontier, there was a huge draw," he says. "Brazil has that magic to it."
At that time, the price of land was a deal. These days Willott says prices have almost doubled, to about $2,000 an acre today, and in some cases tripled. That is still cheaper than many places in the US. Chris Hurt, an agricultural economist at Purdue University in Indiana, says that agricultural land prices in his state have gone up from $3,162 an acre in 2006 to $3,688 last year; they anticipate that by 2010 prices could double from four years prior.
But accessibility of land is the biggest draw, especially since a commodities boom is spurring expansion. "If you want to expand your farm operation in the US, if you are the son of a farm family and want to spend your life farming, that's almost impossible. You simply cannot gain access to land," says Phil Warnken, the president of AgBrazil, which runs tours for prospective investors in Brazil.
Mr. Horner says that the costs of environmental and safety compliance and permitting, and the growing clout of activists, have also pushed investment, particularly in the livestock industry, outside the country. "The ease with which special interest groups can create activists in a community to shut down a viable operation has made more and more in the livestock sector invest outside the US," he says, "so we will have to buy more food from overseas."
Whether in Mexico or Brazil, or anywhere in-between, the risks can outweigh lower costs, however. Mr. Willott says that land deals have waned with the decline of the dollar against the Brazilian currency, the real. Now profits are increasing again, but murky contracts and cultural norms can make farms less productive.
Farmers think twice too, even if moving operations abroad means just 20 miles over the US border. Rick Rademacher, a vegetable farmer in Yuma, Ariz., says he once considered opening green onion production south of the US-Mexico border. But he reconsidered. "It's a whole other deal farming down there. You need someone who understands it very well."
US farm industry under threat?
Analysts say the fastest trend is agribusiness investment, both from traditional multinationals and investors from all over the world who are buying land to grow grains, sugar, and cotton, and positioning themselves as players in a biofuels market – a trend that has sparked some nationalist sentiment in Brazil. "They realize it's the breadbasket of the 21st century," says Peter Goldsmith, director of the National Soybean Research Center at the University of Illinois.
Some say the future of the US farming industry is at stake. Sen. Dianne Feinstein (D) of California is behind an agricultural reform bill to legalize the migrant workforce. She maintains that the US could lose $5 billion to $9 billion to foreign competition because of farms shutting down and, in some cases, shifting production overseas.
Not everyone agrees that the situation is dire. Philip Martin, a farm expert at the University of California at Davis, disputes that a labor shortage even exists. He adds that even if production moves abroad, the majority of fruits and vegetables, for example, will come from the US in the foreseeable future. "We are living in a globalizing world. Fresh fruits and vegetables are part of that," he says. "But that movement is going to be evolutionary, not revolutionary."