Steamed about asparagus? The news of the last few months is that Washington's asparagus industry is collapsing under competitive pressure from imported South American asparagus. Is it a good idea for the state -- meaning us taxpayers, of course --to prop up the local asparagus industry with subsidies? Let's talk asparagus.
First, some facts. Washington state is the nation's second largest producer of asparagus, second only to agricultural giant California. Planted acreage in the state has fallen to less than half of the area covered in 1991, as cheaper asparagus has come in from Peru. The last big canning facility will be shutting down next year.
Several factors contribute to the industry wipeout, but the important change is that the federal government eliminated a tax on imported asparagus. Asparagus yields are much higher in Peru and wages are much, much lower. Washington would never have had a major asparagus industry if the import tax hadn't provided artificial protection.
Our state government is putting up millions of taxpayer dollars to support asparagus. What are the arguments for and against? First, the pro side.
The asparagus farmers are pretty much blameless. Farming is hard work and these folks make a first rate product. They got blindsided by the change in national policy on the import tax. State support for asparagus is just a way to help a neighbor down on his luck.
Asparagus is a sentimental, hometown favorite. Fresh Washington-grown asparagus in the market is a harbinger of spring. It's local, it's absolutely scrumptious, and it's not too expensive. Its annual appearance is part of the fun of living in Washington.
The asparagus industry is big enough to notice, but small enough to do something about if we wish. (If Washington's asparagus fields were all in one spot they'd cover about a five mile by five mile square.) We're talking about several hundred year-round jobs and several thousand seasonal ones. A lot of jobs, but not a Boeing or Microsoft.
First argument against: If we want new industries, we have to be willing to let go of the old. That's what makes capitalism an economic success. State subsidies to dying industries divert resources that could be more effectively deployed.
Second: the canned asparagus industry is dead. The South American crop has unbeatable advantages. Throwing money into life support for an industry tha has passed away might keep the body going a little while longer, but won't bring it back to life. Sympathy is in order, but not money.
Third, but maybe the first argument you thought of: a few million dollars is a lot! State coffers are not so flush that a million bucks is just pocket change.
Make up your own mind, and I'll share my opinion below.
One plan the state had early on, to buy new canning equipment, was a bad idea. If better canning equipment was worthwhile, then an existing firm -- or a new one -- would finance the machines acting in its own self interest. Seeing canneries shut down signals that the value of canning asparagus here is less than the cost. So subsidizing processing machines as a form of state support is out.
In contrast, a marketing board -- not at all unusual in agriculture -- might have a shot and the state government could lend a hand in getting one started. Contrast the cannery's decision about staying in business with the decision of a farmer who wants to sell fresh asparagus into the gourmet market. It's not realistic for one farmer to establish a "Farmer Joe's" brand, but it is possible you can have a good business with a "Fresh Washington Asparagus" label.
Since a Washington Asparagus brand would benefit all the farmers, you can't expect "Farmer Joe" to bear the costs of establishing the brand on his own. Helping start a marketing co-op for fresh asparagus or building a "Fresh Washington Asparagus" brand, those are government programs worth talking about.
Now that we've talked asparagus, are we willing to swallow the same medicine on a potentially bigger problem -- high-tech outsourcing? If instead of asparagus we were talking about high-tech jobs, would you feel the same way about government assistance?
Lots of Washington high-tech jobs have moved overseas and there have been calls for "industry assistance." Requests for assistance have just gotten started and so far have been in the form of asking for restrictions on outsourcing. Overall, Washington high-tech is robustly healthy, but that's not much help if you're the one whose job has been outsourced.
We tend to make bail-out decisions emotionally. Do we like asparagus? Is it a friend whose job is endangered? But if we stick to principles of economics, bailouts will be few and far between.
###
Dick Startz is Castor Professor of Economics and Davis Distinguished Scholar at the University of Washington. He can be reached at econcol@u.washington.edu.
This column appeared in the following publications:
Walla Walla Union-Bulletin -- July 28, 2004
Bellingham Herald -- July 25, 2004