EAST WENATCHEE -- When Dave Crosby heard the news, it was as if his heart had
plummeted through his body and splattered against the snow. He walked out of the
orchard he had nurtured for more than 20 years, hung his pruning loppers outside
the house and settled into the easy chair in front of the blank screen of a
television.
Dave's wife, Phoebe, had just given him the
letter. They had been turned down again in their request for an orchard
operating loan. After futile attempts at securing a loan through their regular
lender, U.S. Bank, and then two other conventional banks, they had been denied
this time by the government operated Farm Service Agency, the lender of last
resort.
They knew things did not look favorable for a loan
with the FSA, but Dave had busied himself in the orchard and tried not to think
about the mounting financial pressures.
That was nearly a year ago. The orchardist would
spend much of the next six weeks sitting in that same reclining chair looking at
the ceiling, watching television, thinking. Or, trying not to think of how it
had come to pass that he would lose the orchard that had been his life and, he
had thought, his passport to a comfortable retirement. The Crosbys aren't the
only ones facing the loss of their apple orchards. No one knows for sure how
many, but a drive through orchard country shows large blocks of apple orchard,
particularly older trees, that have been taken out and have not yet been
replaced.
The Crosbys may be forced to file for personal
bankruptcy. Title to their 17-acre property is now tied up in court as attorneys
haggle to come up with a way to satisfy the Crosbys' indebtedness. They aren't
sure what will happen next, whether they will ever have the option of working
the orchard again, or how long they will be able to remain in the house.
"It provided us with a good income for 20
years," said Crosby, a friendly, animated man of 62 who wears a flannel
shirt and blue jeans held up by black suspenders. After a year of letting go of
anger and self-criticism and with the help of church members, he and his wife
have regained their self-confidence and can talk about the humbling experience.
"It came as a surprise because we expected
the market would firm up, but it didn't," he said. On a small orchard,
Crosby said, a grower hopes he will have that next good year to make up for a
couple of bad ones and a couple when he just breaks even.
He says he is not bitter, and yet it's hard not to
want to cast blame on the invisible culprits who are bringing many farmers to
their knees: those corporate investors who have increased production to the
point where apples have become a low-value commodity; the retailers who buy low
and sell high; that long line of middle men who must be paid before the farmer
gets what's left. He's angry at the governments that make apple exports
difficult and competing imports easy, and the tax collector who wants more, the
few times a profit has come their way.
Dave and Phoebe don't go out in the orchard much
anymore. It's too painful. Farming used to be fun. A farmer could increase his
income by increasing the quality and quantity of his fruit. Now it's just
frustrating, said Dave, throwing up his hands. "You get so you just don't
give a damn any more."
"We're one of the ones, who are
failing," said Phoebe, a fit, energetic woman in her 50s who looks you
straight in the eye and speaks directly. "We're not failing because we
can't produce. We're failing because the market has failed us."
World photo/ Don Seabrook |
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The Crosbys
are not alone. Lenders say they are being forced to turn down more
requests for operating loans than ever before. Risks are increasing
throughout agriculture and lenders want to see a balance sheet that can
show a positive cash flow.
"The days of equity lending are
pretty much gone," said Thayne Rich, loan director for Farm Credit
Services in Moses Lake. "You have to go in and show a lender that
your business is profitable."
With today's narrow profit margins,
lenders say it's hard to make up accumulated operating debt in addition
to paying a mortgage on a small family farm. Without a price
improvement, they expect to see many more failures in the next few
years.
Growers must borrow about $3,000 an acre
each winter to pay for the pruning, thinning, pest control, and harvest
costs of the coming crop. Only after the crop is sold and everyone else
has been paid, do growers get a return from the warehouse with which to
repay the lenders and pay themselves for their own work and risk. Over
the last three years, hundreds of apple growers have fallen behind in
their debt and had to cut their living expenses. |
| Dave and Phoebe Crosby have
run out of options to keep their 16-acre apple orchard going. |
|
The Crosbys say many of their neighbors also are
struggling. One orchardist plans to pull out his trees this spring. Another one
should but doesn't have the $500 per acre to pay an excavator. The Don Holman
orchard and warehouse nearby couldn't be sold at a farm auction after bankruptcy
two years ago. Banks ripped out the trees and the land has stood vacant ever
since.
The Crosbys thought hard work and thrift would
help them succeed. They are not big spenders. They haven't had a vacation
together in 10 years. But overhead can be high on a small orchard, even though
an owner-operator can be more productive and efficient than a larger operation,
Dave said. The orchard produces about 70 bins of apples per acre, nearly double
the state average. The amount of fruit packed out, as premium quality has always
been high.
In 1991, they grossed $272,000 on 1,174 bins, for
a return of more than $15 a box. Their last good year was 1995, when the orchard
earned nearly $256,000 on about 1,200 bins of apples. Life was good in the early
1990s, and the Crosbys were able to purchase the modular home that now sits on
their land.
Market returns have declined steadily since then,
however. In 1998, apple prices tumbled to their lowest levels in years. To make
matters worse, the Crosby orchard -- which sits on the bench of land overlooking
the Columbia River, past Pangborn Memorial Airport and between East Wenatchee
and Rock Island -- was hit by hail. Gross income that year fell to $56,000 on
717 bins. Average return between 1989 and 1998, including those two great years,
was $153,800 on 1,100 bins, or about $9.34 a 42-pound box.
The Crosbys estimate their average costs of
production during that same 10-year period, including packing fees from the
warehouse, labor and chemical costs, as well as fixed costs like mortgage,
taxes, irrigation and depreciation on equipment, have risen well above $10 a
box.
While returns have gone down, costs have gone up
in recent years. The Washington Growers Clearing House estimates the current
production costs at about $13.50 a box, on average for Red and Golden Delicious
apples. Current returns for top quality Reds are under $10 a box.
The couple went deeper in debt, losing about
$60,000 in each of the last three years and falling further behind in their debt
load. They cut orchard operating costs to a minimum. Dave and Phoebe both worked
longer hours to cut down on paid labor. The steady man's hours were cut. Phoebe
sold her horses and saddles to raise money to pay the bills.
Up until last year, bankers had helped them find
creative ways to borrow on the land's equity in the hopes that market conditions
would turn around the next year. Finally there was no equity left.
In the past, a grower could carve a residential
lot off his property to raise working capital and save him in a crisis. State
growth management laws no longer allow that practice. Minimum lot size has been
increased to 10 acres to protect the county's agriculture base.
With interest amassed in the past year, their debt
has grown to more than $400,000, said Phoebe Crosby. The property, with two
houses and 16 acres of producing orchard, was appraised at $500,000 in 1995.
That value was lowered to $368,000 last year due to the decreased crop value.
The Crosbys rented out their orchard to Rob and
Randy Banning last season. The crop of Red and Golden Delicious, Romes and Gala
apples was excellent. Returns were up a bit and the Crosbys believe the Bannings
made money. The steady man the Crosbys once employed still lives in a house on
the property rent free, but he had to find another job.
Dave found a part-time job as a maintenance man
for the Wenatchee First Presbyterian Church last summer. He volunteers a couple
of days a week driving a truck to local stores to pick up surplus commodities
for the East Wenatchee Food Bank. Phoebe volunteers at the food bank
distribution center while she awaits a reply from dozens of job applications.
It's hard to find a good-paying job nearing age 60, she said, when your work
experience has been apple packing or helping manage the family farm. She's sent
out dozens of résumés with little response.
Struggling to make a living isn't what they had
planned at this time of life. Dave was working as a surveyor for the state of
Alaska in the 1970s. When he was reassigned to a desk job, he decided it was
time for a change. They had friends who purchased an orchard in the Oroville
area and were very happy with the decision.
In 1976, the Crosbys sold their 10 acres and log
home in the Matanuska Valley north of Anchorage to make a down payment on what
they believed was the best piece of orchard property on the Rock Island bench.
They chose well. Over the years, the couple
replaced older trees with newer Red Delicious strains that produced the
tooth-shaped, burgundy-hued apples that warehouses sought for premium markets.
They planted popular Gala apples and a good niche variety, Rome. Production and
quality have always been excellent. They cashed in mutual funds and other
savings to ward off crises that came up, but figured they would get it all back.
They labored long hours, spent their money
frugally and looked forward to the day when they would sell or lease out the
orchard and retire comfortably.
"We worked very hard to renovate, to change
varieties, to produce a premium crop," said Phoebe. "But when you
produce a premium crop and you still can't make money, then you're beating your
head against the wall."
What happens next is up to the banks, and as
Phoebe says, up to the Lord.
"I don't know what we're going to do. I don't
know if we can stay here, if we can have to go, or where we're going to
go," she said. "It's the big I don't know. We're just taking it one
day at a time."
