Farmers Forced to Leave Tomatoes in Fields

When it comes to food, perceived danger can be as harmful as a real one, especially to a farmer’s wallet. Georgia tomato growers learned that lesson firsthand when consumers stopped buying fresh tomatoes during this summer’s Salmonella scare linked to fresh tomatoes.

In July, the U.S. Food and Drug Administration issued a nationwide warning regarding a Salmonella risk on varieties of raw red plum, red Roma and round red tomatoes.

“The disease wasn’t found on Georgia tomatoes, but the general public’s perception was that all tomatoes were affected,” said Archie Flanders, an economist with the University of Georgia College of Agricultural and Environmental Sciences.

The scare cost Georgia farmers $13.9 million. Georgia grows about 3,000 acres of tomatoes, worth between $60 million and $80 million annually.

As president of the Georgia Fruit and Vegetable Growers Association, Bill Brim tried to tell consumers through media interviews that Georgia tomatoes were safe. He ate tomatoes straight from his field on television.

“I was interviewed by (all the major Atlanta television media), and I tried my best to persuade people that Georgia tomatoes are safe,” Brim said. “The national news media really put us under by telling people not to eat any tomatoes unless they have the vine attached. What was so sad was that it wasn’t true.”

Georgia growers weren’t the only ones. “Growers in Tennessee, north Florida, Louisiana, North and South Carolina, and of course California, were all hit hard, too,” he said.

Brim grows 80-acres of tomatoes in Tifton, Ga. The summer scare cost him $1.2 million. “This was a very significant loss for small- and large-scale farmers,” he said.

Tomatoes are one of Brim’s most expensive crops to grow. An acre of tomatoes costs him $12,000. Bell pepper costs $8,000 per acre. Squash costs him $2,500 per acre, he said.

Georgia tomato growers lost $1.6 million from harvested tomatoes that were picked but not sold. Much of the state’s tomato crop wasn’t harvested because there wasn’t a market for them, Flanders said.

“When wholesalers aren’t buying produce, growers know the market is lost,” Flanders said.
To determine the total impact of the scare, Flanders led a survey conducted by the UGA Center for Agribusiness and Economic Development.

Most Georgia tomatoes are grown in nine southwestern counties and one county in northeast Georgia. Farmers there were surveyed by UGA Cooperative Extension agents.

The survey revealed that 32 percent of Georgia’s tomato acreage was left in the field due to decrease demand caused by the scare, Flanders said. Another 9 percent was lost to discarded harvested and packed tomatoes due to decreased demand.

Before the scare, Brim’s tomatoes were bringing $19 a box. Three days after the FDA warning, the same tomatoes dropped to $4 a box. A box costs him $8 to grow. That doesn’t include the packing cost.

“All the food chains and grocery chains quit taking them,” he said. “I dumped 30 percent of our crop and left 30 percent in the field. It was heartbreaking. … You do an excellent job growing it, and then you don’t have a market to sell it. You just have to leave it to rot.”

Each year, Georgia has two tomato crops, one harvested in summer and one in fall.

Brim is now harvesting 40 acres. Prices are still.

“I think there are going to be more and more people getting out of the tomato business because the market was just declined,” Brim said. “We just hope the market will turn around and consumers will get the confidence back. I stand behind the fact that Georgia-grown produce is the safest food in the world.”

By Sharon Dowdy
University of Georgia

Sharon Dowdy is a news editor with the University of Georgia College of Agricultural and Environmental Sciences.

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Existing-Home Sales Rise on Improved Affordability

PRNewswire/ -- Existing-home sales increased last month as buyers responded to improved housing affordability conditions, according to the National Association of Realtors(R).

Existing-home sales -- including single-family, townhomes, condominiums and co-ops -- rose 5.5 percent to a seasonally adjusted annual rate(1) of 5.18 million units in September from a level of 4.91 million in August, and are 1.4 percent higher than the 5.11 million-unit pace in September 2007.

Lawrence Yun, NAR chief economist, said more markets are seeing year-over-year gains. "The sales turnaround which began in California several months ago is broadening now to Colorado, Kansas, Minnesota, Missouri and Rhode Island," he said. "The South was hampered by much lower home sales in Houston in the aftermath of Hurricane Ike."

NAR President Richard F. Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said low home prices and low interest rates have been attracting buyers. "This is the first time since November 2005 that home sales have been above year-ago levels," he said. "Credit tightened at the end of September, but the improvement demonstrates that buyers who've been on the sidelines want to get into the market to make a long-term investment in their future."

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 6.04 percent in September from 6.48 percent in August; the rate was 6.38 percent in September 2007.

Yun said there may be market disruptions. "The credit markets are not settled yet, although the mortgage market stabilized with the government takeover of Fannie Mae and Freddie Mac. Inventory remains high, and price declines are pressuring owners," he said. "Additional housing stimulus would stabilize prices more quickly, which in turn would bring faster stability to Wall Street. Removing the repayment feature on the first-time buyer tax credit and permanently raising loan limits would bring more buyers into the market and further reduce inventory."

Total housing inventory at the end of September fell 1.6 percent to 4.27 million existing homes available for sale, which represents a 9.9-month supply(2) at the current sales pace, down from a 10.6-month supply in August. This marks two consecutive monthly declines since inventories peaked in July.

The national median existing-home price(3) for all housing types was $191,600 in September, down 9.0 percent from a year ago when the median was $210,500. "Compared to a fairly small share of foreclosures or short sales a year ago, distressed sales are currently 35 to 40 percent of transactions. These are pulling the median price down because many are being sold at discounted prices," Yun explained. "The current market is not being dominated by speculative investors. Rather, 80 percent of current buyers are purchasing a primary residence, which is a bit higher than historic norms."

Single-family home sales increased 6.2 percent to a seasonally adjusted annual rate of 4.62 million in September from a pace of 4.35 million in August, and are 3.8 percent above the 4.45 million-unit level a year ago. The median existing single-family home price was $190,600 in September, which is 8.6 percent below September 2007.

Existing condominium and co-op sales were unchanged at a seasonally adjusted annual rate of 560,000 units in September, but are 15.7 percent below the 664,000-unit pace in September 2007. The median existing condo price(4) was $199,400 in September, down 10.2 percent from a year ago.

Regionally, existing-home sales in the West jumped 16.8 percent to an annual rate of 1.25 million in September, and are 34.4 percent higher than September 2007. The median price in the West was $253,600, down 18.5 percent from a year ago.

In the Midwest, existing-home sales increased 4.4 percent to an annual pace of 1.19 million in September, but are 2.5 percent below a year ago. The median price in the Midwest was $152,500, which is 7.9 percent lower than September 2007.

Existing-home sales in the South rose 2.2 percent in September to a pace of 1.90 million but remain 7.8 percent below September 2007. The median price in the South was $167,200, down 4.1 percent from a year ago.

In the Northeast, existing-home sales slipped 1.2 percent to an annual pace of 840,000 in September, and are 7.7 percent lower than a year ago. The median price in the Northeast was $246,800, down 5.4 percent from September 2007.

The National Association of Realtors(R), "The Voice for Real Estate," is America's largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

NOTE: References to performance in states or metro areas are from unpublished raw data used to analyze regional trends; please contact your local association of Realtors(R) for more information.

(1) The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.

Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings. This differs from the U.S. Census Bureau's series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which generally account for 85 percent of total home sales, are based on a much larger sample -- more than 40 percent of multiple listing service data each month -- and typically are not subject to large prior-month revisions.

(2) Total inventory and month's supply data are available back through 1999, while single-family inventory and month's supply are available back to 1982. Condos were tracked quarterly prior to 1999 when single-family homes accounted for more than nine out of 10 purchases.

(3) The only valid comparisons for median prices are with the same period a year earlier due to the seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if more data is received than was originally reported.

(4) Because there is a concentration of condos in high-cost metro areas, the national median condo price can be higher than the median single-family price. In a given market area, condos typically cost less than single-family homes.

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Credit Aftershocks Damage Nation’s Growth Prospects; Oil Holds the Key to Fed’s Next Move, Says Georgia State Forecaster

The aftershocks from the credit crisis which continue to spread to other sectors have not only put the economy into a recessionary state but also have damaged its growth prospects until 2010, according to Dr. Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University. In his Forecast of the Nation, released today, Dhawan warns that any additional uptick in oil prices could put the economy further at risk and recovery further away.

“Despite all of the aftershocks from the credit fallout, oil has been the wild card testing the Fed’s patience,” he said. “If the price of oil does not retreat below $100 per barrel by October on a sustained basis, worries of inflation will cause the Fed to raise rates much earlier than expected.”

Dhawan expects the price of oil will drop to an average of $89 per barrel in the fourth quarter of 2008 allowing the Fed to hold off on rate hikes until next spring. However, he anticipates that the Fed will be somewhat aggressive raising the federal funds rate by 250 basis points by mid-2010.

“The Fed hikes will begin even before growth catches its stride which is a departure from the norm,” he said. “But rather than waiting until job growth picks up to normal levels, the Fed will hike the federal funds rate to show it is serious about containing inflation.”

While Dhawan says that the Fed will be able to stave off inflation, he cautions that the fragile health of the banks will cause the economy to recover at a slow rate.

“Despite efforts by the Fed and the Treasury to help bail out the financial industry, lenders still need to keep liquidity or cash on hand to deal with charge-offs that they will have to take as loans continue to go sour,” he said. “Still, some banks are on the brink of failure and it will be up to the FDIC to bail them out and should they run short of funds, look for the government to bail out the FDIC leaving taxpayers with the tab. Thus my forecast calls for an anemic recovery in 2009 and a below potential growth in 2010.”

Highlights from the Economic Forecasting Center's National Report:
The GDP growth fails to cross the 2.0% mark until late-2009. Overall, real GDP growth for 2008 will be 1.4%, decelerating to a 0.5% rate in 2009. In 2010, real GDP will grow by 2.2%, still below the trend rate of 3.0%.
For 2008, consumption growth will be 1.0%, before moderating to 0.3% in 2009. It will rise by 1.9% in 2010. Durable goods consumption will decline by 2.8% in 2008 and 3.7% in 2009, before experiencing a sharp 3.9% rise in 2010.
For the year 2008, oil prices will average $106.7 per barrel, before moderating to just below $90.0 per barrel in 2009 and 2010.
Housing starts will average 0.949 million units in 2008 and will drop to 0.900 million units in 2009. Housing starts will rise to 1.209 million units in 2010.
For 2008, the inflation rate will average 4.3% but will moderate sharply to a 2.2% rate in 2009. In 2010, the inflation rate will average 2.0%. Meanwhile, the core CPI inflation rate will average 2.3% in 2008 and 2009, before rising mildly to 2.4% in 2010.
The unemployment rate will average 5.5% in 2008, but it will rise to 6.3% in 2009, dropping slightly to 6.2% in 2010.

Georgia and Atlanta—Georgia’s Boat Tied to National Woes

Georgia’s job picture continues to look bleak despite gains in education, healthcare, and government jobs during the second quarter of 2008. According to Dhawan, the problem stems from the housing downturn which has had a negative ripple effect throughout Georgia’s economy. Additionally, high gas prices and the credit crisis have added to the area’s problems and, like the national economy, Georgia’s growth prospects will not return until 2010.

In his Forecast of Georgia and Atlanta, Dhawan says that Georgia’s residential and commercial real estate sector continues to show signs of weakness which not only impacts construction jobs but has spread to supporting sector jobs as well. While future construction growth depends on what the economy’s growth warrants, it is also a function of credit market conditions.

“Ultimately, it is the willingness of the banking sector to make new construction loans that makes future construction activity possible. The ability to finance construction in turn depends on the quality of the bank’s balance sheet,” says Dhawan. “Unfortunately, Georgia has been hard hit by the credit crisis with a proportion of unprofitable lending institutions currently at 25%, almost double the national rate.”

In addition, high gas prices are negatively impacting consumer spending and are wreaking havoc with Delta, the area’s largest employer, which has already announced major cutbacks in routes and jobs.

Net-net, says Dhawan, the prognosis for Georgia’s growth in the coming quarters is bleak. The question is when can the area expect to see job growth return?

“I expect job losses to continue at a somewhat heavy rate for the rest of the year and anticipate a net loss of 35,300 jobs for calendar year 2008,” he said. “In 2009, we’ll see the decline slow to 2,600 losses before the recovery strengthens in 2010 where we can expect to see 61,700 new jobs.”

However, he cautions, “Like the national picture, this forecast assumes that oil prices moderate below $100 per barrel by late October and stay low.”

Highlights from the Economic Forecasting Center's Local Report:
For calendar year 2008, we anticipate 35,300 net losses (14,600 premium jobs). In 2009, 13,900 job losses are expected in the first half of the year, followed by 11,300 job gains in the second half, making for 2,600 job losses (11,000 premium jobs losses). The recovery will strengthen in 2010 when 61,700 jobs will be created (12,000 premium jobs).

Atlanta’s employment growth will remain negative for the remainder of 2008 for a total loss of 20,600 jobs (8,000 premium job losses). For calendar year 2009, Atlanta will post 3,900 job gains, but 4,100 premium job losses. The recovery will strengthen in 2010 when 44,200 jobs are created (10,200 premium job gains).

Atlanta's total housing permits will plummet by posting a 52.1% drop in 2008 after a 34.6% decline in 2007. Permit activity will again decrease at a slower rate of 5.0% in 2009 but will inch up in 2010, posting an 18.4% increase.

Most MSAs in Georgia will exhibit slower employment growth in 2008, with Albany, Columbus, Dalton, and Macon observing job losses. Only Savannah, Gainesville and Warner Robins will see any increase in employment in 2008, though increases will average below 1.0%.

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