Watsonville's Coast Produce thrives with help from local bankMarch 7, 2011
WATSONVILLE - During the economic recession, the problems in the commercial lending industry often played out in black and white, documented in government reports or Wall Street stock tickers.
Monday, Gary Manfre, co-owner of Watsonville Coast Produce, put those problems on display in brilliant color: ruby strawberries, bananas ripening from green to yellow, and jade-colored bell peppers.
Despite $30 million in annual business and 85 employees, Watsonville Coast Produce was abandoned by its longtime lender, and Manfre said he never got an answer why. During the recession, many banks became skittish over falling commercial real estate values and a soft consumer market, with lending to small businesses dried up.
Without access to capital, the 84-year-old produce wholesaler couldn't import perishables from around the hemisphere despite customer demand. It was at a crossroads.
"We were pretty much down to not knowing what we were going to do," Manfre said.
For a lifeline, the company turned to a U.S. Department of Agriculture program aimed at bolstering rural businesses. In 2009, Coast Produce secured a $4.6 million loan from Santa Cruz County Bank, the largest of 11 loans the bank has issued over the past four years through the program, the value topping $20 million.
"It was a lifesaver for us. It really saved a lot of people's jobs," Manfre said.
Monday, USDA Rural Business Service Administrator Judith Canales toured Coast Produce, part of the agency's efforts to promote rural development. Buy partially guaranteeing loans, the USDA hoped to assure nervous lenders and free up the gears that make the economy turn: money.
In a pristine warehouse near downtown Watsonville, Manfre led a spirited tour for Canales, Rep. Sam Farr, D-Carmel, and several Santa Cruz County Bank officials, showing off nature's bounty - stacked boxes of broccoli and lettuce, onions as big as a boxer's fist.
Called the Business & Industry Guaranteed Loan program, the government also hopes to particularly encourage investment in rural areas, often by smaller community banks like Santa Cruz County Bank.
About $1 billion is lent annually, and Canales said California consistently ranks at or near the top of states that benefit from it. The program temporarily swelled to $3 billion after the 2009 economic stimulus package was passed, when Coast Produce got its loan.
"We know that this was critical, because the comment that Gary made. Replicate that around the United States," Canales said.
Locally, the recession and slow recovery battered Watsonville hardest of all, and unemployment there tops the rest of the county. Many businesses are struggling, yet Coast Produce's enormous warehouse still bustles with activity.
Farr said it is important that rural economies thrive, but that local problems can often be concealed by the affluence of Monterey and Santa Cruz.
"Don't let that fool you, that there isn't a lot of poverty in these areas," said Farr, adding that the USDA's program demonstrates the value of local banks. "And that poverty is working in agriculture, helping to produce this bounty."