Fresh Produce Economics

Is Global Trade Volatility Putting the U.S. Fresh Produce Industry at Risk?

Mon, 11 May 2026 22:06:26 GMT

Editor’s Note: This is the latest report in a series that explores the shifting economic landscape of the specialty crop industry.

When asked to describe the current state of the global fresh produce industry and trade, some people have used words like “uncertainty,” “volatility” and “complex.”

Whether it’s navigating reciprocal tariffs or rising fuel charges during the unrest in the Middle East, produce industry insiders say those issues put the global fresh produce industry in the hot seat.

Jonathan Coppess, Gardner associate professor of agricultural policy at the University of Illinois Urbana-Champaign, says regardless of the commodity, the current state of growing “is a level of chaos and uncertainty that ... you’re trying to manage in an operation that itself is full of risk.”

“This has been a tough climate to operate your business in,” says Anthony Serafino, president of the Exp Group, a multinational company specializing in the production, importation and distribution of tropical fruits and vegetables from Central and South America. “Geopolitical issues are the biggest headwind you can face in running a business. A lot of things are out of your control.”

Why Export Markets Dictate Domestic Produce Prices

Exports are a critical part of the fresh produce industry. U.S. Apple Association President and CEO Jim Bair says if export markets tighten, more fruit stays in the domestic market; that puts downward pressure on prices, which hurts growers.

“There’s really nothing hidden about the threat of trade volatility for apple growers,” he says. “When markets become unstable, the consequences are immediate and visible: lost sales, lower prices, disrupted customer relationships and even more pressure on already razor-thin margins.”

Washington Apple Commission President Michael Schadler also points out that one state’s exports can impact the country’s other growers who don’t export.

“An economic study from years ago found that if 5 million boxes of fresh apples destined for the export market were instead added to the domestic market, the income loss to growers would be about $55 million,” he says.

Long Road to Market Recovery

Bair says the U.S. apple industry continues to navigate the fallout from 2018 retaliatory tariffs from India, where the country pushed the total duty on U.S. apples to 70%. Before 2018, India was the No. 2 export market for U.S. apples — and growing fast. USApple worked with the Office of the U.S. Trade Representative to lift these retaliatory tariffs, which reopened the market in 2023.

“By 2025, India had climbed back to the No. 5 export destination for U.S. apples, buying roughly 2.2 million bushels worth nearly $40 million in 2024-25,” he says. “That is a meaningful rebound, but it remains well below the predisruption peak, underscoring how difficult it is to regain market share once competitors establish themselves.”

Schadler highlights just how deep that disruption went for Pacific Northwest growers, as the tariff effectively slashed exports from 8 million boxes to virtually zero overnight.

“The global apple market is very competitive, and once you lose market share, it can be very hard to get it back,” he says.

Riley Bushue, vice president of the Northwest Horticultural Council, estimates a $900 million loss since 2018 due to restricted access to China. The industry now looks to unlock expanded access to other markets to fill that gap.

“You’re trying to offset what has been lost and continues to be lost over and over in China every year,” he says.

Navigating High Tariffs and the Race for Global Market Access

Bushue estimates the U.S. exports its apples, pears and cherries to nearly 50 countries around the world, and he says it’s important for the industry to remove trade barriers and expand access.

“We’re looking at places where, as an industry, we can compete and maintain that competitiveness in the face of trade barriers, removing those trade barriers,” he says. “Because at the end of the day, we’re a high-cost-of-production product. We’re not going to be the low-cost supplier in these markets. So, remaining competitive is the important focus point.”

Bushue says the U.S. often has no tariffs on imported produce, but countries such as Thailand put a 40% tariff on imported cherries without a domestic production and a 40-year struggle to get access to South Korea.

He says growers will ask him, “Why is it that the United States can find a way to sell a nuclear attack submarine to Australia, but we can’t sell them an apple? And why is it China has access to Australia, but we don’t?” And they often express frustration at how long it takes to realize trade deals.

“There is a real concern bordering on frustration with, you know, the need for expanding these markets — just the pace of how things have been for a long time,” he says, noting there has been positive momentum with some of the newly announced trade deals. “It’s a robust trade policy from the U.S. to go after these long-standing and unfair trade barriers.”

Schadler points to promising deals with Taiwan, Indonesia, Vietnam, Thailand, Malaysia and Cambodia. For example, the U.S.-Taiwan Agreement on Reciprocal Trade would eliminate a 20% tariff on U.S. apples.

Bushue agrees, noting, “It’s a direct result of the U.S. trying to increase leverage on these to get these things resolved.”

Protecting the North American Supply Chain

Mexico and Canada remain the U.S. fresh produce industry’s most vital partners. Mexico accounts for approximately 40% of all U.S. apple exports; combined with Canada, it represents more than 50% of the export market. And as Mexico, Canada and the U.S. come together to renegotiate the United States–Mexico–Canada Agreement, any disruption to that tariff-free framework could harm U.S. exports.

“The biggest risk is any disruption to the stable, tariff-free framework that has allowed Mexico and Canada to become our top two export markets,” Bushue says. “Even the introduction of uncertainty creates a risk. Once buyers begin to question whether the North American market will remain stable and tariff-free, purchasing patterns can shift quickly.”

It was a tough year for the watermelon industry last year, says George Szczepanski, executive director of the National Watermelon Association. Cold weather leading into Memorial Day 2025 meant people weren’t necessarily thinking watermelons. And, he says, the industry also faced pressure from Canadian tariffs.

“If we are pushing Canada to the point where they are saying every watermelon costs 25% more, it’s hurting this domestic industry,” he says.

Watermelon exports to Canada are an important part of trade for U.S. watermelon growers, some of whom import melons from Mexico and Central America. This global watermelon industry means trade dynamics can be high stakes when it comes to fresh produce.

But Szczepanski says he sees the reasoning behind this volatility.

“We all think that what we’re doing now is just really counterintuitive and does not make sense the way that traditional trade economics have been taught and delivered and structured,” Szczepanski says. “This more aggressive setup — really trying to protect the domestic industry — there’s a logic behind it.”

And the aggressive trade strategy might have a different impact on manufacturing or other items traded on the global stage, but the volatility might be a valuable tool in negotiation; it’s not always the best for fresh produce, which has such a short life cycle.

“When changes in trade dynamics happen, and things are already planted and it is harvested and cut, and you have a ticking time bomb — in terms of what revenue you can or you cannot capture from the minute that it’s cut from the vine or plucked from the bush or the tree — the uncertainty is, it’s just one more problem for produce that we just don’t have the bandwidth for,” Szczepanski says.

Rising Costs and the Threat of Imports

Beyond trade policy, growers and importers are facing higher costs. Serafino of Exp Group says fuel expenses are increasing month over month, adding that bunker fuel prices are up, and that also hits imported produce, and large multinational companies are all increasing fuel surcharges.

Serafino says as diesel prices increase, his company now has to calculate weekly freight charges, which it has never had to do. He says fuel expenses have increased month over month by thousands of dollars, and that’s just not something his company can absorb.

“For the first time in our company’s history, we’re adjusting logistics costs weekly — not monthly, not quarterly, weekly — and that’s how we’re operating,” he says. “Our delivery costs are switching on a weekly basis.”

On top of rising fuel charges, the unrest in the Middle East also affects fertilizer prices, plastic packaging and more.

“I guess if there’s any silver lining in this situation, [it] is that if you can operate a business in this type of environment, you’re Teflon,” he says.

Coppess says those rising costs of fuel charges come at a cost.

“You got all the diesel you need to ship,” he says. “You got all the fossil fuels that go into fertilizer and chemical production. Everything is wrapped in plastic, which is made from oil.”

Coppess says he’s also concerned that as the industry struggles to break tough inflationary pressures, chaos will become quid pro quo.

“I also worry that we’ll normalize it,” he says. “We only outrun the pain of that for so long, yeah — and it’s usually not very long.

Balancing Year-Round Availability With Domestic Survival

Coppess notes that even if the U.S. successfully negotiates better trade deals, the domestic grower might still end up as the casualty. He warns that focusing solely on the “balance of trade” can be a deceptive metric if it ignores who is actually growing the food.

“While the balance of trade might improve, it might have more dire consequences for growers and the domestic fresh produce industry,” Coppess says. “If the balance of trade overall is better ... but we’re importing more food, that may not be an ideal situation.”

Schadler says that as production costs continue to rise, it puts the U.S. apple industry in a vulnerable position.

“It’s not that hard to imagine a scenario in the future when the high cost of U.S. production creates an opportunity for imported apples, which could eventually pose a meaningful threat to domestic apple production,” he says. “I’m not forecasting that, but there are certainly other fruit and vegetable crops in the U.S. that have experienced that dynamic over the last few decades.”

And it’s happening in other commodities. Bret Erickson, senior vice president of Business Affairs for Little Bear Produce, points to USDA Economic Research Service data that reveals that domestic specialty crop production has declined from 193 billion pounds in 2012 to 155 billion pounds just 10 years later. He says the data also shows that fruit and vegetable exports from Mexico to the U.S. have increased from $4 billion to $20 billion over roughly the same period.

“That growth has fundamentally reshaped the U.S. produce market,” he says. “That’s not a coincidence; it reflects a policy environment where domestic production is becoming less competitive, and imports are replacing domestically grown.”

Little Bear Produce imports greens, onions and melons from Mexico to complement its domestic programs in Texas and New Jersey. Erickson says these imports help the company serve as a year-round supplier to retailers.

“Having reliable suppliers who deliver on quality, strong food safety and consistency is efficient and good business sense,” he says. “Buyers want a trusted source for their product.”

Erickson says while consumers have high expectations of produce availability year-round, regardless of the crop, this fuels the need for imports to balance out domestic production. But, he says, the cost of production and the regulatory burdens growers face have made it a challenge to profitably grow produce in the U.S. (Future stories in this series will look at both the cost of production and regulatory burdens on growers.)

“I think we should all be worried that we are more reliant than ever on other countries to supply our food, particularly healthy, whole foods like fruits and vegetables,” he says. “Nutritional security and food security is national security. That phrase has almost become something of a cliché, but clichés exist for a reason; there is typically a lot of truth to them.”

Nick Oomen’s family business grows organic cabbage, zucchini, yellow squash and bell peppers, as well as conventional asparagus, butternut and acorn squash, broccoli, green beans, carrots, potatoes and jack-o’-lantern pumpkins.

Oomen, a fourth-generation specialty crop grower with West MI Produce in Hart, Mich., says his family has struggled to compete with Mexican and Peruvian asparagus imports.

“My family owns an IQF freezer for frozen vegetables,” he says. “We just can’t compete with them on the price, because they can deliver it cheaper than we can. … They can pay their labor force 10% of what I have to pay mine. They’re just at a competitive advantage with their cost of labor compared to what we’re doing.

“All we can do is try to put a product in the store as cheaply as we possibly can, and hope that we can hang on,” he adds.

Oomen says he’s not advocating for the banning of imports but rather to have a level playing field for domestic commodities.

“It does get to a point where there’s certain advantages other countries have that we don’t have here,” he says.

Marc Arnusch, a third-generation seed wheat, barley, craft grains, silage corn, alfalfa and former onion grower in Prospect Valley, Colo., says he used to see imported onions at his local grocery store right down the road.

“That was a tough, tough pill to swallow,” he says. “The overwhelming majority of our onions were shipped outside of the state. There were very few that actually stayed in the state. So, to have these low-cost and, in some cases, different kinds of offerings coming from out of the country is tough to compete with.”

Sixth-generation grower Lisa Tate, managing owner of Rancho Filoso, says the market has changed rapidly for lemons, with Argentinian lemons flooding the market and putting extreme pressure on U.S. growers.

Tate, who grows citrus, avocados and pomegranates in Ventura County, Calif., says when the U.S. opened lemon imports from Argentina in early 2018, the market deteriorated rapidly. However, 2019 was when the volume really impacted U.S. growers.

“If the lemons get here and they don’t have a good price for it, they’re not going to turn around and ship them back,” she says. “They’re just going to dump them here in the market. That’s going to lower the price for everybody.”

Tate says it’s time for consumers to understand where their fresh produce truly comes from and decide to support domestic production.

“If the United States is the biggest consumer and everybody wants to import their stuff, then there’s got to be some way that we can help support locally grown stuff,” she says. “We have to look out for our farmers if we as a nation decide that this is valuable.”

Tate says this might mean consumers have to pay more for domestic produce, with the understanding that it benefits U.S. growers. She says something as simple as a few more cents per lemon is all it would take.

“I really do believe people would be willing to pay that amount,” she says. “I think we can do it as a country. It’s a solvable problem.”

Are We on the Verge of a Global Food Crisis?

Fri, 27 Mar 2026 12:01:27 GMT

In a world of erratic climates and geopolitical volatility, data is becoming as essential as soil to our food supply. That data, specifically new predictive modeling, suggests a catastrophe is looming.

Are we on the verge of a global food crisis? Yes, says Francisco Martin-Rayo, whose Helios AI platform aggregates billions of data points to provide a real-time view of the climate and economic risks affecting commodities around the globe.

“We’re at the beginning of the worst food crisis we’ve ever seen, with global food prices heading 12% to 18% higher by the end of the year,” says the Helios AI CEO and co-founder.

The cause? Martin-Rayo says 50% of globally traded urea transits through the now-closed Strait of Hormuz; Qatar Fertiliser Company (QAFCO), the world’s largest urea production site, is currently offline; and spring planting is underway in the Northern Hemisphere without full access to fertilizer.

The exec detailed the crisis in an op-ed piece, “The Iran War’s Other Energy Shortage — Food,” published in The Wall Street Journal on Wednesday.

Helios’ AI platform aggregates billions of data points to provide a real-time view of the climate and economic risks affecting commodities around the globe, so it can equip customers with the market intelligence they need to get ahead of price movements and supply disruptions.

“We cover 90% of all the places in the world that are growing commodities for export. We cover 77 commodities across 90 countries,” says Martin-Rayo. “We’re always showing you what’s the total percent of production, what’s the total percentage of export. And that allows our folks to say, ‘Hey, we don’t think you’re going to get your tomatoes from Spain or Mexico or California or your mangoes from Peru or your blueberries from Chile. Here are the other places you really need to start looking at.’”

Predicting Specialty Crops in Crisis

Aggregating these billions of data points across the world’s key growing regions allows Helios to predict everything from bumps in the supply chain road to major disruptions like the ongoing Brazilian citrus crisis, which intensified in 2024 with record-low production and all-time high orange juice prices, driven by citrus greening disease (also known as huanglongbing or HLB), severe droughts and heatwaves.

Months ahead, the data told Helios that heat and drought levels were high in Brazilian citrus groves, and a forecast for a crisis was likely.

“We predicted the Brazilian citrus [crisis] eight months before Reuters and Expana, and 12 months before the USDA,” says Martin-Rayo. “When you had that level of heat and drought during the flowering period, it’s just not going to happen, right? Those are not the right conditions for the citrus trees to develop flowers. So, we basically told our customers, ‘You’re going to have to find an alternative [supply].’”

More recently, unexpected freezes impacted cherries in Michigan and Turkey simultaneously.

“Cherries is one of the most interesting items in produce, because it’s not really fungible like raspberries, blackberries and blueberries, which are somewhat from a consumer perspective. Cherries are not [interchangeable with other fruit],” Martin-Rayo says. “These are the types of insights we bring in: If you think you’re going to have a really bad cherry harvest, here’s what it means and what supply levers you can pull.”

At present, Helios is working with California peaches, as it expects “a pretty bad drought this summer,” he says.

CEO Francisco Martin-Rayo says we’re on the verge of the worst food crisis we’ve ever seen.

(Photo courtesy of Helios AI)

Global Supply Chain Disruption

Citrus, cherries and peaches are three examples, but Martin-Rayo says Helios is tracking agricultural commodities around the globe to help procurement teams leverage AI to get ahead of supply chain interruption.

“When I say we cover 90% of all the places in the world that are growing these commodities for export, it’s almost at the farm level,” he says. “Every 24 hours, we’re constantly updating actual temperatures, precipitation, speed — all these different weather metrics, and we reforecast it out for the next 10 years, but the core forecast is really the next two years, so it gives us an unrivaled look at what any crop looks like globally overall.”

With weather increasingly wild, Martin-Rayo says the Helios value proposition is resonating like never before.

“We work with one of the largest retailers in the U.K. They buy a couple billion dollars’ worth of produce a year,” says Martin-Rayo. “Our main contact there has been in the field 30 years. We were talking recently — though before the war — and he said, ‘The last two months have been the hardest two months of my professional career because of climate.’”

Every major retailer is sourcing globally, which means every retailer is impacted not just by the weather in their own backyard but also around the world.

“It is such a different environment and ecosystem than it was even two or three years ago when we first started,” says Martin-Rayo. When he and Eden Canlilar, Helios co-founder and chief technology officer, launched in 2022, they had to convince potential customers there was a need for their AI platform.

“We don’t have to do that anymore,” he says. “Now, we just have to convince them that we’re the best company out there.”

From Fertilizer to Food Crisis

As to fertilizer shortages and soaring input costs impacting food supplies, Martin-Rayo says he spoke with an Australian grain grower last week who has access to just 15% of the urea he needs for planting, with no viable source to fill the gap.

“That conversation is being replicated from the Punjab to the Po Valley to the Cerrado,” says Martin-Rayo. “Fertilizer not applied in April cannot be retroactively applied in July.” For the Australian wheat grower, if he only has 15% of the fertilizer he needs, it means lower production and lower yields in the future, he says.

And as the global supply chain awaits the Strait of Hormuz reopening, a recovery won’t be instantaneous, Martin-Rayo warns.

“The strait will reopen, but the food system clock doesn’t reset when it does,” he says. “The fuse was lit in February. The harvest damage is already locked in.”

As a result, Helios predicts global food prices rising by as much as 18% by the end of 2026.

“Unfortunately, that’s what we expect,” he says. “We work with procurement managers that are sourcing agricultural commodities globally, and there were these dual shocks that happened. Your strait closes, and the Gulf isn’t necessarily important in terms of a lot of agricultural commodities, but it’s so crucial in terms of fertilizer.”

The combined impact of the Strait of Hormuz closure and QAFCO shutting down had significant repercussions on fertilizer supplies, says Martin-Rayo, who estimates QAFCO makes up 14% of total urea production globally.

“And the hard part about growing conditions right now is, when are we going to have a ceasefire? When are we going to have oil transport, etc. Even if you had a ceasefire tomorrow, you still have to demine. You have to get insurance rates to the level where it makes sense to transport goods. You have to get captains who are comfortable transporting — and then the first thing you’re going to transport is going to be oil … You’re going to export the thing that gives you the highest profit margin.”

The Domino Effect

Australia produces a high-protein type of wheat, says Martin-Rayo. The lack of fertilizer now will result in lower harvests for the Australian wheat grower, which means grain stocks go down, he says. Then the market looks for the product elsewhere, like the U.S., another supplier of high-protein wheat.

“Then you have a price issue, but eventually it becomes an availability issue, and you start to look at export restrictions, and that’s when it gets really difficult, because when we look at the futures markets, what they’re pricing right now is a price shock, but they’re not pricing availability or an export restriction shock, and that is a huge difference,” says Martin-Rayo.

He says while the U.S. is in a somewhat different situation than the Australian wheat grower, the interconnectedness of the global food supply means everyone must brace for impact.

“We’re incredibly lucky in the United States,” he says. “We are geographically blessed. I think we make domestically 75% of the nitrogen fertilizer we need to use, but we’re still impacted by global prices, and so we’re not going to have an availability shock, but we’re already seeing the price shock.

“Farming is probably the most difficult business in the world,” he continues. “If everything is perfect, you make a few points. If anything goes wrong, you lose money.”

Martin-Rayo estimates urea prices last year were in the $400s per metric ton and they’re now in the $600s.

“It’s a huge input differential,” he says. “And so that’s also going to impact the amount of fertilizer you’re putting in.

“The agricultural supply chain is so tightly integrated at the global level, and once certain problems kick off, like the ones we’re seeing now around price and availability of fertilizer, it really starts to cascade, which is what we worry about,” he adds.

While Martin-Rayo says row crops will more immediately feel the impact of soaring fertilizer costs, specialty crops are part of the same global food supply ecosystem.

“Within the specialty crop market, we need to do a deeper dive in terms of what are the different inputs across the different specialty crops? What are the different margins that exist there? How will this impact them?” he says.

And rising fuel prices will also contribute to the cost of produce, whether it’s coming from California, Mexico or overseas, says Martin-Rayo.

“This is after you grow it, you’ve already paid more for your input costs,” he says. “Then that second part of it is it’s actually a lot more expensive to transport.”

Mark Your Calendars
For additional insights on demand forecasting and how AI is helping to protect and grow retail margins, join us at West Coast Produce Expo , May 27-29, where Helios AI CEO Francisco Martin-Rayo is one of our esteemed speakers.

Are Fresh Produce Growers Price Takers in a Consolidated Retail Market?

Tue, 17 Mar 2026 21:48:40 GMT

Editor’s Note: This story is part of a series that explores the shifting economic landscape of the specialty crop industry.

Marc Arnusch, a third-generation seed wheat, barley, craft grains, silage corn, alfalfa and former onion grower in Prospect Valley, Colo., says this notion of growers being “price-takers” is nothing new. In fact, this notion has been repeated for more than 30 years, starting when he was in college and even when he graduated in the mid-1990s.

“I heard that we’re just price-takers, we’re not price-makers, and that always stuck with me, whether it was the commodities that I grew or the specialty side,” he says.

The Squeeze in Michigan as Margins Tighten

Nick Oomen is also a fourth-generation specialty crop grower with West MI Produce in Hart, Mich. His family’s business grows organic cabbage, zucchini, yellow squash and bell peppers, as well as conventional asparagus, butternut and acorn squash, broccoli, green beans, carrots, potatoes and jack-o’-lantern pumpkins.

For Oomen, the math simply no longer adds up for labor-intensive crops like asparagus facing steep pricing pressure from imports. (Production costs and labor costs will be examined in detail in future articles.)

“In the last five years, our gross sales costs, or what we sell it for, have been probably within 5%,” he says. “It’ll go up and up and down, but it never really moves. I can’t go to a single retailer and say, ‘I’ve seen input costs go up by 20%, labor’s gone up by 15% and my overhead has gone up by 25% in the last four years, and I need a pay increase.’ They just come back with you with, ‘You have to match that price.’”

Oomen says, as a result of these increased costs, his family has opted not to buy new asparagus seed and plant new fields and has instead maintained fields in production. He says they have tried to maximize efficiencies in harvest and packing, but there’s only so much they can do.

“Sooner or later you stop picking the low-hanging fruit, and there’s not much left on this tree,” he says. “You’re trying to squash pennies out to make a difference, and you’re losing dollars. It’s at a certain point [where] you just have to hang it up and say, ‘This is a lost cause. This crop’s no longer going to be profitable.’”

That’s the position Chris Pawelski and his family found themselves in. Pawelski, a fourth-generation onion farmer from Goshen, N.Y., eventually left specialty crop growing due to the challenges of selling his family’s onion crop.

He says he never had a way to verify the price he would get was fair or real; if the price came lower than production costs, he would have to eat it.

“The packer would say, ‘I’m getting them from your [neighbor] for $13 or $12 [per 50-pound bag],’ and there’s no verification; you have to take their word for it,” he says.

Pawelski often faced pressure from imports from Canada or other parts of the country that the packer would use as leverage to keep prices down.

“I had onions sitting in my barn that I could not sell, and they were good onions,” he says. “I would go to the local grocery store 5 miles away, and it was just loaded with Canadian onions, and I had onions sitting in my barn that I could not sell.”

Pawelski says he sold the onions he grew to a local packer-shipper, though he would often have to beg the packer-shipper to take his crop.

“I could not tell you, even to this day, what the process is as far as like when the onions leave my dock,” he says. “I know they go to a local repacker, but the actual full process of what and who the other buyers are like where they are located, I couldn’t tell you.”

Pawelski says while some buyers tried to help keep prices up, generally, the prices were about the same as they were 40 years ago.

“I’m getting paid the same price for my onions dollar for dollar that I got in the 1980s,” he says. “I was paid $6.50 a bag, and I’m paid $6.50 a bag now.”

High Production Costs Reshape the Agricultural Landscape

Jordon Walsworth, a fourth-generation asparagus grower for Golden Stock Farms in Mears, Mich., says growers often face higher production costs, whether that be labor, inputs or more, but they can’t necessarily pass those inflated costs on to the retailer.

“The farmer grows the product, and the downstream packer, input providers, chemical providers, salespeople, they all don’t have a job without that product, and all of their costs have inflationary increases,” he says. “We have the pleasure of paying all of those inflationary increases before we end up with what’s left.”

While costs have gone up, Walsworth notes, commodity prices have either gone down or remained flat.

“What that’s done to the landscape of agriculture is that these specialty crop guys are getting bigger, but the smaller guys are getting pushed out because they can’t afford it on those margins,” he says. “Growing up around here in Mears, everybody had 10 acres of asparagus. Kids after school ... would go pick it. Everything was great. Those farms don’t exist anymore. Now you have to have guys that can capitalize on little economies of scale and stack together the pennies that are left to make a go of it.”

Though his family’s farm is about six years away from a Centennial Farm designation, aside from a genuine love of farming, what’s weighing on him is the potential loss of domestic production. (Import pressure will also be examined in detail in a future article.)

“Where will our food come from if we’re not growing it?” he says.

Jon DeVaney, president of the Washington State Tree Fruit Association, says another challenge that he’s faced in conversations with legislators is that any government policy change that adds cost to a grower’s production can’t get passed on to the consumer.

“[Legislators] just assume that if they impose a new cost on everyone, it will get socialized, and it just gets baked into the price of goods,” he says.

Over the last two years, DeVaney says retail fruit prices have climbed while wholesale returns for growers and packers moved in the opposite direction.

“Consumers see retail prices increasing and the assumption is that, well, growers are getting some part of that,” he says. “The policymakers and a lot of the public’s assumption is that the growers get a share of the price. Price at retail remains relatively constant, and it’s not necessarily the case that retailers may be using a higher margin on particular products to absorb their overall cost of doing business and potential losses or non-increases in margins on other products. And while that might make sense for their enterprisewide management, it really puts growers in an untenable position to have their own production costs increasing even as their wholesale pricing is flat or declining.”

Starting With the End in Mind

Arnusch says he thought about the notion of growers as price-takers as he entered the fresh produce industry and eventually took over a packing shed. He says he was at one point the third- or fourth-largest onion packing shed in Colorado.

“We started with the end in mind,” he says. “We started with the market, and we worked backward. Let’s start off with these consumer packs. Let’s try to hit that, that high margin, that high revenue, maybe lesser volume, but that high-revenue product.”

Arnusch says he looked to 2- and 3-pound bags and onion sacks to hit that higher-revenue item, and then that informed the types of varieties he planted and the management.

“We weren’t looking to produce the most onions in the state of Colorado. We were looking to produce the highest-return onion per acre, and that’s not just a metric of yield, that’s not just a metric of cost, but it was the metric of market value,” he says. “We did a lot of specialty labeling. We did a lot of things in that space that differentiated in the marketplace, where maybe a lot of the big packers didn’t want to play. That was our sweet spot, and because we were smaller, because we were more individualized, we could do so many more things in the field that rewarded us in the marketplace.”

Shrinking Share of the Consumer Dollar and Consolidation

Washington State University professor and economist Karina Gallardo points to a stark USDA metric: For every dollar a consumer spends at the grocery store, the farmer sees only 14 to 15 cents.

“The rest of the 85 cents goes to the supply chain, whoever is between the grower and the end consumer,” she says.

Packinghouses sit in the middle of that gap. Growers face receiving fees and per-box processing charges, while the packinghouse — and not the grower — negotiates the final fob price with the retailer.

Gallardo works with growers to maximize efficiencies, often fighting the “pick everything” mentality. While clearing a tree quickly cuts harvest labor, it often backfires at the packinghouse.

While a faster pick will cut harvest costs, picking everything will also increase packing charges through receiving fees. She says a grower that reduces the number of defects going into packing by about 15% to 20% will likely see a beneficial outcome.

“It is a very fine trade-off,” she says. “The packinghouse charges $100 to $130 per bin they receive. It is to the advantage of the grower to send only the best apples possible.”

Chris Jones, executive director of the Main Street Competition Coalition, an alliance of independent business owners, trade associations and agricultural groups, says this notion of growers being price-takers is true when there is a lack of competition among retailers. That consolidation has a significant impact on the overall market share; in fact, a study in 2021 showed the top four grocers sold 69% of the country’s food.

Consolidation creates more leverage for retailers over suppliers, but Jones says part of the reason the fresh produce industry finds itself in this situation is the lack of enforcement of antitrust laws. A healthy competitive retail marketplace benefits both growers and consumers.

“For producers, generally, you want a robust, robustly competitive retail marketplace to sell into. And likewise, for consumers, consumers want to have choices,” he says. “When you have a market like that, you create space for smaller-scale packers and produce growers, and you also address the problem of retailers being too consolidated in one area and dictating terms to produce growers and packers.”

Jones says that unfortunately has allowed for continual consolidation in the last 40 years in which those retailers have more power over producers and food product suppliers. He says this consolidation of retail forces a consolidation of packers to meet the scale of this new marketplace.

“It’s created this cascading effect of consolidation that’s problematic if smaller producers want to be viable in this retail economy,” he says. “What we believe is needed is a fair marketplace that is policed by our antitrust laws, and right now, the marketplace is being inadequately policed by the antitrust laws, and that is ... in large part responsible for this problem we have in the economy.”

Breaking the Commodity Cycle and Winning the Fresh Aisle

What can growers do? For one, Arnusch sees an opportunity with value-added.

“You’re de-commoditizing a commodity,” he says. “Even though a specialty crop can sometimes be a commodity, you can add value to that crop by differentiation. You can add a little bit more margin ability into it because it is so specialized.”

Arnusch points to how his company packed two yellow, two white and two red onions in a sleeve that was a unique pack and offering.

“What drew me to that space originally was the opportunity to be economically viable,” he says. “I could differentiate myself in the market. If I’m a corn grower or I grow wheat, I really can’t differentiate myself in that space; maybe by location, maybe by growing a particular variety, but I’m very much still producing a commodity, and when you do that, you’re subject to the market. With a specialty crop, a lot of times you can set the market or participate in that up value.”

Growers can also deploy effective storytelling to help set the business apart from competitors.

“Most consumers, they really don’t care who’s growing their flour,” he says. “They buy corn oil at the store, and they really don’t think twice about the farmer who was behind it. But they pick up that onion, they grab that bag of potatoes, they grab that apple off the shelf and there’s a story behind that.”

Arnusch says that in a time when the disconnect between consumer and grower is at an all-time high, storytelling will be paramount.

“Especially in Colorado, where agriculture feels like it’s on the defensive, I think that’s going to become more and more important all the time, to get the story out in front of the consumer rather than playing defense,” he says. “I think a specialty crop does that for us.”

Dawn Thilmany, an agricultural economist and professor at Colorado State University, agrees, noting that specialty crops have to some extent leveraged branding to stave off the price-taking notion. Thilmany points to about 10 to 20 different fresh produce brands that consumers can likely name, which hasn’t happened in the past.

Along with branding, there are new cultivars that offer unique eating experiences. She points to Cotton Candy grapes and new apple varieties.

“Just even look at the tomato section,” she says. “Now, between all of the different variants of grape tomatoes, cherry tomatoes, multicolored tomatoes, there’s brand names that weren’t there 10 years ago. So, that’s a signal to economists that they actively have chances to not be price-takers.”

Thilmany says that while retail consolidation may continue, bigger isn’t always better, and the produce industry can look to independent grocers to an advantage.

“Some of those midsize brands can survive by just being in the independent grocers and don’t need to have access to the Big Five, because the Big Five are really the ones who are saying ‘You shall be price-takers. This is what we’re giving you,’” she says. “And if you can stay at the size that the volume you need to move can be workable through what is still left of an independent slice of the food supply chains, you’re going to be in a much better position.”

Innovation serves as a final defense, Thilmany says. Because specialty crop growers are naturally entrepreneurial, growers are more nimble than those in broader commodities.

“With all the changing conditions and stuff, they pivot better, because it’s not as big of a shock to them,” she says.

Why Specialty Crop Economics Has Become an Endurance Game

Mon, 02 Feb 2026 08:36:04 GMT

Editor’s Note: This is the first story in a series that will explore the shifting economic landscape of the specialty crop industry.

Washington State Tree Fruit Association President Jon DeVaney was recently in Olympia, Wash., for Tree Fruit Day, which is a time for growers to discuss the issues impacting the industry with state officials. While those in attendance discussed the dire situation growers find themselves in, he says, a major challenge to having these conversations with elected officials has been how the economics of modern specialty crop farming have taken a turn for the worse.

“Some elected officials think you’re like those carpet stores in big cities that have been going out of business for 30 years, but they’re still there,” DeVaney says. “There is a little bit of that boy who cried wolf danger, from the perspective of talking to some of those folks.”

But much of the conversation stems from the data from the most recent census of ag in which the state of Washington lost more than 3,700 farms from 2017 to 2022, he says.

“Part of it is making sure that they have the stats to see that, yes indeed, this is a particularly rough time throughout the ag economy, especially for specialty crops, and that we’re losing farms,” DeVaney says. “A lot of my growers say, ‘Well, it certainly hasn’t gotten better since 2022, and it has gotten a lot worse.’ So, the aggregate statistics may not be updated, but we know that that trend line, unfortunately, is still continuing.”

Federal Funding Gap

And the sentiment DeVaney shared from his growers seems to be a pulse running through the specialty crop industry. The American Farm Bureau Federation’s figures show $3.6 billion in economic losses for almonds, $1.4 billion for apples, $763 million for lettuce and $717 million for potatoes in 2025. Many specialty crop leaders have pushed for economic support from the federal government .

The Specialty Crops Farm Bill Alliance says specialty crops contribute more than $75 billion annually in U.S. agricultural cash receipts and make up more than one-third of all U.S. crop sales. Yet, under the current USDA Farmer Bridge Assistance program, only $1 billion has been reserved for specialty crops and other commodities while $11 billion has been set aside for row crops.

So, where does that leave the economics of specialty crop farming in 2026? David Magaña, Rabobank senior analyst for horticulture, says a common theme might be unpredictability.

“There have been a lot of moving pieces, but overall, if we want just to characterize the current economic outlook for specialty crops, for growers in ‘26 the climate remains challenging, and tight margins continue to be one of the biggest challenges as the costs remain high, while demand is holding steady,” he says.

Labor and Price Squeeze

And for those in the specialty crop industry, it will likely come as no surprise that labor is the highest cost in specialty crops “by a country mile,” says Michael Swanson, Wells Fargo Agri-Food Institute chief agricultural economist. Swanson says this labor cost extends far beyond the field but even to the cashier at the supermarket.

“The producer can’t change the economy’s wage inflation, but they can work to get the best labor force for their spending,” he says. “This will make the human resource manager a key player in 2026.”

Magaña says crop performance also plays a hand in the economic picture of 2026 with tree nuts, including almonds, pistachios and walnuts, performing better thanks to a better balance with supply and demand. He says this is likely due to the crops’ less labor-intensive production.

While tree nuts faced some challenging seasons from 2021 to 2023, they began to improve in 2024 and 2025.

“Prices for almonds, for example, should be profitable for most growers depending on the cost structure that they have,” he says. “The vegetables and the fruits that are more labor-intensive are facing more cost pressure compared to others.”

Magaña says what’s interesting is that growers often get excited about lower yields because it could mean more returns. But, he says, revenue equals price and quality. With the current walnut crop, it doesn’t always translate to higher prices, which further compresses margins.

The Consumer Paradox

“When we take a look at all this revenue compared to the cost, you need to be looking also, obviously, [at] how inflation is moving, both on your cost side and on your final price side. … To the point of the consumer, we’re seeing inflation has been stabilizing with the Consumer Price Index, but that doesn’t mean that prices are declining. They’re just increasing at a lower rate,” Magaña explains.

He says fresh produce prices have stabilized when compared to other food categories, which is a good thing for consumers but perhaps not so much for growers.

“The fresh produce aisle has become a healthy alternative, and also from a budget perspective,” he says. “So, that’s good news for the consumer, but for the grower, just stabilizing or flat prices and increasing costs, that’s just more pressure on markets.”

Swanson says that while retailers look to price, it’s also important to secure consistency and reliability in fresh produce contracts.

“It does not do them any good to get a good price on nonexistent or below-average quality product,” he says. “A buyer will always prioritize a supplier who does not let them down.”

Swanson says also of note in 2026 will be the impact of GLP-1 drugs on consumers’ buying habits.

“At the moment, they are trying to add protein to their diet to make up for the lower number of calories they are consuming,” Swanson says. “This pressures the fruits and vegetable categories as they make these trade-offs.”

Global Competition and Currency

Swanson says imports will be another economic challenge in 2026, with imports continuing to put a ceiling on domestic prices for specialty crop commodities that go head-to-head against them.

“U.S. producers certainly know that they have to match or beat import prices,” he says. “That is a tall order with higher land costs, labor costs and stricter environmental regulations, but the U.S. producer also has better local logistics, financing and productivity to compete in this market.”

Magaña, though, says that as the dollar weakens, it helps U.S. growers in the export market. He says the dollar depreciated almost 10% in 2025.

“That has improved the competitiveness of U.S. exports in international markets, and at the same time, when you look at that, that serves in practice in the same way as a tariff does for imports,” he says. “All exporters of fresh produce from Latin America, exporting to the U.S., when the dollar is weakening, they lose competitiveness.”

On the market, Magaña says the weakening dollar has had beneficial impacts. Western Europe has begun to import more California almonds and walnuts, which has also helped improve prices.

Wholesale Disconnect

DeVaney says a lot of his conversations in the Washington statehouse stemmed from prices, showing the upward trend line of retail pricing and the downward trend of wholesale fruit prices. He says it was difficult for those officials to understand.

“We had to explain to them that, yes, you’re hearing consumers say that prices are too high, but we’re not seeing any of that,” he says. “And quite the opposite, our growers are seeing less income and are trying to figure out how to survive in that environment. ... We don’t really have the ability to affect directly what we get from retailers.”

Tree fruit growers also raised the issue that they put up-front costs and investments into a crop for which they might not get paid until eight to 14 months later.

“It’s still the growers’ fruit as it goes into storage, and it’s only when it comes out of long-term storage and is packed and sold that they eventually get the net proceeds,” DeVaney says. “And so, that’s the other decision-making challenge, because the grower doesn’t know what the price will be at the time they’re selling it.”

For many tree fruit growers, certain expenses — such as labor costs — are determined by government policy. When asked to identify the most burdensome piece of legislation, policy or economic factor, DeVaney says it’s hard to do. He likens the current state of economics and policy to being attacked by a swarm of bees.

“There’s so many things coming at you that it’s overwhelming, and potentially fatal,” he says. “But you say, ‘Which bee is the worst in that environment?’ Well, they’re all bad, and they’re all coming at me at once. So, it’s the swarm. It’s not the individual bee.”

Capital Strategy and Survival

In terms of inputs, Swanson says this year growers will look to competitive bids on inputs and technology due to the added constraints.

“The entire crop production sector is asking for value with their compressed margins,” he says. “The old saying ‘you don’t get if you don’t ask’ will ring especially true in 2026.”

Magaña also says growers will likely delay investments and upgrades with a challenging financial picture. This includes orchard development, irrigation upgrades or even automation or mechanization. However, the potential for lower interest rates this year before an expected climb in 2027 and 2028 might mean it’s a good time for growers to secure financing and lock in rates.

The biggest risk in a high-volatility market is illiquidity, Swanson says. The key will be for growers to control growth or financing to avoid being asset-rich but cash-poor.

“Debt is not the problem, but the dosage is the problem,” he says. “The old saying ‘the dosage makes the poison’ is true for debt as well. Oftentimes, illiquidity and impatience are two sides of the same coin. Companies should be growing, but making sure it’s a controlled growth is the key.”

Endurance Game

DeVaney says another challenge facing growers is the notion of an appropriate supply, which fluctuates based on current market conditions.

“We do not calibrate supply and demand that finally, especially in fresh produce,” he says. “Because if there’s an abundance of table grapes one year, then that sort of puts downward pressure on all the competing fresh fruits that people might grab for lunch. It’s not just our own crops, it’s the aggregated produce sector, in a lot of ways.”

DeVaney says it’s not so easy to simply make a quick reduction in production for permanent crops, especially if growers are unsure that what they’re seeing is a short-term blip or a larger trend.

“Once you’ve already made that investment, the bias is toward sticking with it until you’re absolutely certain it’s not a good long-term prospect,” he says. “And some of those decisions have been drawn out as well, because the grower doesn’t want to walk away from that investment. And if they have revenue insurance, they have sort of a cushion to keep them hanging on longer to decide: Is that the decision they have to make or not?”

When asked to give a snapshot of his growers’ outlook, DeVaney says there’s a lot of frustration, as growers want to be the masters of their own fate. While agriculture has always had inherent risks, it seems even riskier now.

“It doesn’t feel like there’s a single action they can take to determine the outcome with this variety of global market forces and public policy issues at the state and federal level that are influencing their costs and their returns, and so their profitability feels outside of their control — that when they make good farming decisions that affects their potential, but it doesn’t determine their success or not, which is a frustrating place to be,” he says.

While growers might see choices that need to be made to recalibrate with current market and demands, it’s difficult for growers to be the first or second one to make that decision. It’s easy for the industry to say production needs to decrease, but it’s in the execution that becomes more of a challenge.

“It’s like people in a lifeboat together, with a limited amount of food, who want to jump overboard and not save the others,” he says. “That’s a terrible request to make of anyone, and so everyone is dealing with the starvation rations, looking at each other: ‘Will I outlast you and be able to then survive going forward?’ It feels like an endurance game with your industry peers to see who will come out the other side. And that’s a terrible place to be. People know maybe what needs to happen, but it can’t be decided on. And so, you just buckle down and see if you can survive through the point at which the market forces that correction upon us.”

Swanson says since labor will be the No. 1 cost driver, it will also need to be the specialty crop industry’s No. 1 focus.

“Employers cannot hire at below-average wages without getting below-average productivity,” he says. “However, they can hire at average wage rates and get above-average labor productivity.”

Swanson says there will be opportunities for specialty crop growers to share growth and cost control.

“Converting new customers allows them to outgrow conventional crop performance,” he says. “Their challenge is seeking a higher price to match their premium product offerings. If consumers are looking to save money on food spending, it will be harder to convince them to switch to the premium category.”

Swanson also says overproduction pressuring down prices is the biggest risk to crop profitability in 2026, which could come in the form of aggressive plantings or excellent weather.

“Let’s hope that producers stay in their lane plantingwise and the weather is average,” he says. “The flip side is underplanting or a weather event reducing supply. Let’s not hope for that either. It’s not bad when someone else gets hit by bad weather, but it might be you.”