Associated fruit lays off half it's workers - says without credit extension, it will fold

[The Straight Story]

The 70-year-old Phoenix-based company says without credit extension, it will fold


"We buy crop insurance every year, but this year it didn't make up for level of loss," said Associated Fruit President David Lowry. "We expected a normal year, and then we had a couple nights where it was extremely cold and the pears froze."

Lowry declined to say how many employees were laid off, but said it was at least a dozen across all parts of the operation.

In another era, the 70-year-old company could have negotiated a disastrous year such as this one, when the crop was less than 50 percent of predicted tonnage, without resorting to layoffs and downsizing. But declining land values have shrunk the amount of dollars lenders are willing to forward growers.

"Basically, we just ran out of land value collateral to satisfy (South Valley Bank & Trust's) requirements," Lowry said. "The irony of the Oregon land-use system designed to protect farming was that in overprotecting land, it becomes so devalued that you can't use it to raise money for collateral.

"An orchard on exclusive-farm-use land doesn't have much value under the Oregon land-use system. An acre of orchard land might be worth $10,000, while that same acre might be worth $100,000 closer to town. You can see the horrific impact it has on a company's financial position."

http://www.mailtribune.com/apps/pbcs.dll/article?AID=/20110308/NEWS/103080324

[Horse with no Name]

1. I don't understand the Oregon land use

The property is devalued to minimize the taxes paid on it? Correct?
And the land in Arizona has been in a bubble for many years up until last year--so they have not being paying fair taxes on it? Is that correct?
So they have prime real estate that they have not been paying fair taxes on...and now that the land is devalued because of the bubble--they need to lay off people?
Sorry...I know I am not connecting the dots in the right order--I have the flu--head not completely clear--but it seems to me that something stinks here.