Steve Anderson | July 1, 2015
Untapped Potential in Oklahoma High-Value Crops
This article is the second in a multi-part series on “Reviving Rural Oklahoma.”
The recent success stories of biotechnology, the boom in oil production through fracking, and the ongoing growth in the major urban areas have created an illusion for some that Oklahoma is no longer an agricultural state. And while recent achievements in creating a more diversified economy certainly bode well for the future prosperity of the state, there can be no doubt that Oklahoma still has a very large agricultural sector that continues to provide a substantial contribution to the state’s fiscal diversification and stability.
The scope of the current size of the agricultural community (shown in Table 1, which does not include the millions of acres devoted to livestock production) drives home the mammoth size of these operations in Oklahoma.
The interesting thing about Oklahoma’s rural diversification is that it is largely in areas not subject to the federal farm program’s subsidies and price supports. Table 2 highlights how much opportunity exists for Oklahoma in those areas where the state is extremely low in the rankings. For example, Oklahoma’s standing at 44th in the nation in the area of the “high value” crops of vegetables, melons, potatoes, and sweet potatoes highlights an area with exciting upside potential. Just the fresh-to-market segment of this sector of the economy generated more than $10 billion in payments to U.S. farmers in 2012, according to the USDA.
It is easy to understand why many of the states ranked above Oklahoma generate more dollars from fresh produce. The majority of the value of production differences can be explained by a long growing season and/or proximity to large urban markets. However, those disadvantages are not true for the most obvious market for Oklahoma’s fresh produce growers: the consumers living in Oklahoma. Oklahoma imports the majority of its fruits and vegetables even during Oklahoma’s harvest season for the same or similar produce.
In an excellent 2003 article entitled “The Future of Fresh Market Fruit, Vegetable Production in Oklahoma,” Steve Upson of the Samuel Roberts Noble Foundation noted that “Oklahoma has always produced quality pecans, peaches, watermelons, sweet corn and strawberries,” yet the acreage of fresh market fruits and vegetables grown in Oklahoma has been on the decline over the last half century. This has occurred despite the existence of more than 250,000 acres of bottomland capable of being irrigated along the Arkansas, Washita, and Red rivers and many thousands of acres of irrigated upland soils that would be suitable for fruit and vegetable production.
Oklahoma’s growing season of more than 200 frost-free days in central and southern Oklahoma is sufficiently long to accommodate production of a number of high-value fruits and vegetables. When you add those positives together one begins to wonder why Oklahoma lags the majority of the states in producing more of these types of crops that provide producers higher returns.
Oklahoma hovers near the bottom in comparison to the rest of the states in both acres in fresh vegetable production and value returned to the farm from fresh vegetable production. Mr. Upson notes that Oklahoma specialty-crop producers have not kept up with production increases on existing acres, which is evident given that Oklahoma is dead last in return per acre among the states reporting.
The issues restricting production of fresh produce revolve around the weather. Heavy rain or no rain, hail, high winds, and unpredictable freezes impact yields on crops in areas of the state on an annual basis. However, our neighbors Colorado (returning $111 million and $5,400 per acre), New Mexico ($121.5 million and $8,100 per acre), and Arkansas ($25 million and $8,920 per acre) have similar growing seasons and weather hazards as Oklahoma, which returns a mere $5 million and $1,790 per acre from the lucrative fresh produce marketplace.
Even without those hazards, specialty crops lack some of the risk-management options of the cash grain crops. While some limited federal crop insurance options are available for some specialty crops, the insurance options are generally much better established and better understood by the agricultural community. However, one has to consider that risk management is a two-sided coin. On one side you control the risk of losing your whole crop and the dollars you have invested in it, while on the flip side you limit the profit you can make per acre of crops by choosing that crop.
The modern farmer is well aware of how to mix “products” to maximize return within the risk/reward curve. The dedication of some percentage of irrigated acres to higher-value crops can provide significant upside. There is also the potential to double crop with spring and fall crops of cool-weather crops like broccoli, which can allow smaller farms to survive and prosper.
A welcome by-product of high-value crops is the ability to keep family members home or bring them back to the farm. According to Craig A. Chase, the local food and farm coordinator at Iowa State University, “the children of corn farmers are coming back to the farm, and carving out 5 or 10 acres to grow fruits and vegetables. They can easily make $30,000 to $40,000 a year.” There are already some examples in Oklahoma of high-value crops providing an avenue to emulate the tradition of the family farm where sons and daughters remain on the land.
In fact, the 2012 national Future Farmers of America Proficiency Award in Vegetable Production-Entrepreneurship/Placement was won by Allison Lynn Slagell of Weatherford. Ms. Slagell, her father, and her brother are growing and marketing commodity and vegetable crops from their western Oklahoma farm. The mix in their operation is 350 acres of irrigated chip potatoes for Frito Lay and Allen’s, 475 acres of spinach for Allen’s that will be canned, 225 acres of collards and other greens for canning, and 20 acres of pumpkins for farmer’s markets in Oklahoma City.
The Slagell family joins other small pockets of successful fresh fruit or vegetable production across the state. These types of small producers have become widespread enough that, according to the Oklahoma State University Extension Agency, more than 60 Oklahoma producers and processors of organic vegetables and fruits were in existence as of September of 2014. Yet as we have noted, Oklahoma sorely lags the vast majority of the states in producing vegetables, fruits, and other high-value crops, much less organic produce.
A missing element in Oklahoma is the presence of the big processors and their national and international distribution channels. Processors go where there is produce they can make money on. It is that plain and simple. But Oklahoma has not yet proven that it can capitalize on its central location to become even a regional player.
That is not to say that certain agricultural growers have not found profitable niches. J-M Farms, for example, is a major player in the fresh market mushroom business, with 600 employees generating 400,000 pounds of mushrooms per week that leave the plant for shipment to states all over the region. Their ability to distribute a highly perishable product over such a wide area highlights the potential for Oklahoma’s farmers to find profits through fresh-market produce. It should be kept in mind that many of the crops suitable for fresh-market production, such as green beans, also have the potential for the freezer market—which adds profit potential beyond just seasonal markets.
The weather hazards and the absence of a federally supported “floor” against crop losses has obviously created barriers that have prevented any significant movement to crops that will put more dollars back in our rural communities. Simply reversing some of the flow of capital to other states during Oklahoma’s harvest season—instead of importing the majority of our fruits and vegetables—is the first step towards creating a larger and more sustainable high-value produce sector. Fresh produce (and, to a lesser degree, frozen produce) prices reflect distance to the consumer for both transportation costs and damage issues in transit.
Why is Oklahoma’s fresh and frozen produce market dominated by out-of-state producers who have those transportation issues as part of the cost of their product? In our next article we will answer that question and show how Oklahoma’s legislature can provide an environment to make Ms. Slagell’s success story much more common.
A Certified Public Accountant with more than 30 years of experience in private practice, he is currently a partner at Anderson, Reichert & Anderson LLC. Anderson spent two years as a budget analyst in the Oklahoma Office of State Finance, and most recently served as budget director for the State of Kansas. At one time he held 17 state teaching certifications ranging from mathematics to physics to business.