United States Department of Agriculture ERS Economic Research Service VGS-283 April 2001 Vegetables and Specialties Situation and Outlook Report Grower input prices rising in 2001 % of 1990-92 160 150 Wage rates 140 Fertilizer 130 120 110 100 90 Fuel 80 1990 92 94 96 98 2000 Source: Economic Research Service, USDA.
Available Soon Throughout the Year New online newsletters from the Economic Research Service This summer, ERS is launching two online newsletters on specialty crops a new Vegetables and Melons Outlook will alternate each month with a new Fruit and Tree Nuts Outlook. Our electronic format offers: Frequent publication on the web Timely analysis and forecasts Supplements on key issues E-mail notifications Yearbook available electronically and for sale in hard copy No interruption in the 2001 publication schedule Late summer: The new online newsletters will debut while the current schedule of outlook reports continues in print and on the web until the end of the year. Starting in 2002: The new, exclusively online, newsletters will replace the Vegetables and Specialties Situation and Outlook Report and the Fruit and Tree Nuts Situation and Outlook Report. Yearbooks, available in hard copy as well as electronically, will contain articles and data. Watch for the new specialty crop newsletters etters on the ERS website Vegetables and Melons Outlook Fruit and Tree Nuts Outlook Visit the Vegetables es and Melons briefing room on the ERS website www.ers.usda.gov/briefing/vegetables
Vegetables and Specialties Situation and Outlook Report. Market and Trade Economics Division, Economic Research Service, U.S. Department of Agriculture, April 2001. VGS-283. Contents Summary........................................................3 Industry Overview.................................................5 Fresh Vegetables and Melons........................................8 Cash Receipts and Cost Indicators...................................13 Processing Vegetables.............................................14 Potatoes........................................................19 Sweet Potatoes...................................................23 Dry Edible Beans.................................................24 Mushrooms.....................................................27 Special Articles Factors Affecting Onion Consumption in the United States................28 The U.S. Lettuce and Fresh-Cut Vegetable Industries: Marketing Channels, Sales Arrangements, Fees, and Services.............................36 List of Tables....................................................44 Situation Coordinator Gary Lucier Voice: (202) 694-5253 FAX: (202) 694-5820 E-mail: GLucier@ers.usda.gov Principal Contributors Gary Lucier (202) 694-5253 Charles S. Plummer (potatoes & sweet potatoes) (202) 694-5256 Editor Louis King Graphics, Table Design, and Layout Wynnice Pointer-Napper Approved by the World Agricultural Outlook Board. Summary released April 19, 2001. The summary of the next Vegetables and Specialties Situation and Outlook is scheduled for release July 26, 2001. Summaries and full text of Situation and Outlook reports may be accessed electronically via the ERS website at http://www.ers.usda.gov/ The Vegetables and Specialties Situation and Outlook is published two times a year and supplemented by a yearbook. To order, call 1-800-999-6779 in the United States or Canada. Other areas please call (703) 605-6220. Or write ERS-NASS, 5285 Port Royal Road, Springfield, VA 22161. The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race, color, national origin, sex, religion, age, disability, political beliefs, sexual orientation, or marital or family status. (Not all prohibited bases apply to all programs). Persons with disabilities who require alternative means for communication of program information (braille, large print, audiotape, etc.) should contact USDA s TARGET Center at (202) 720-2600 (voice and TDD). To file a complaint of discrimination, write USDA, Director, Office of Civil Rights, Room 326-W, Whitten Building, 14th and Independence Avenue, SW, Washington, DC 20250-9410 or call (202) 720-5964 (voice and TDD). USDA is an equal opportunity provider and employer. 2 n Vegetables and Specialties Situation and Outlook/VGS-283/April 2001 Economic Research Service/USDA
Summary According to preliminary estimates, per capita use of all vegetables and melons totaled 464 pounds in 2000 up about 2 percent from a year earlier. Most of the gain stems from increased use of potatoes (up 6 percent), due largely to the record-large crop last fall and subsequent lower prices. Increases were also noted for vegetables for canning and sweet potatoes. Per capita vegetable and melon use is projected to decline about 1 percent in 2001 as potato use declines with the expected smaller crop this year. Although fresh vegetable use could decline slightly due to reduced supplies this past winter, little change is anticipated in the use of processing vegetables (excluding potatoes) as processors reduce output and work down stocks. On the fresh-market side, significant increases in 2000 per capita use were experienced in cabbage, romaine/leaf lettuce, and bell peppers. These were offset by reduced use for melons, broccoli, and tomatoes. Utilization of both watermelon and cantaloup declined last year as growers responded to low prices by reducing acreage and production. Preliminary estimates of potato use indicate both fresh and processing uses registered gains in 2000, with use for dehydrating gaining the most. Detailed utilization data for the 2000 potato crop will not be available until September. Processors of five major vegetables (tomatoes, sweet corn, snap beans, green peas, and cucumbers) expect to contract for 1.18 million acres in 2001 down 14 percent from a year ago. Because of generally weak wholesale prices, most of the decline will come from canning vegetables, with canners contracting for 18 percent fewer acres. Assuming average acreage losses and trend yields this coming season, output of the five leading processing vegetables could be 12 to 16 percent lower than a year ago and total around 14 million short tons. U.S. tomato processors intend to contract for 12 percent less tonnage in 2001. Contract area is expected to decline 14 percent to 263,800 acres, with yields forecast to rise 2 percent this year. California, which now accounts for about 95 percent of the U.S. processing tomato crop, expects to produce 12 percent fewer tomatoes, with all other States projected to produce only 2 percent less than a year ago. This is the second consecutive reduction in the processing tomato crop following the record-large 1999 crop. Although production was cut 15 percent last year, output was the sixth highest on record and exceeded market needs. This resulted in a small addition to already burdensome stocks. As a result, wholesale prices for tomato products sank to the lowest levels since 1997 and were the third lowest since the late 1980s. The average price for bulk tomato paste, the key raw ingredient used in the manufacture of tomato products like sauces, soups, ketchup, and juice, was down 9 percent from the previous year during the first quarter of 2000. This spring, area for harvest of 13 selected fresh-market vegetables is expected to be 8 percent above a year ago. Assuming average weather and yields, available domestic supplies will likely exceed those of a year earlier. Rising acreage for commodities such as cabbage, celery, tomatoes, and cauliflower outweighed reduced area for eggplant, watermelon, honeydew melons, and cucumbers. Spring-season melon acreage for harvest is expected to be 9 percent lower than a year ago, with area for each of the three major melons (watermelon, cantaloup, and honeydew) declining. Lower prices a year ago, especially for watermelon and cantaloup, spurred growers in most areas to cut spring melon acreage to the lowest level in several years. Increased supplies for many fresh-market vegetables will likely result in reduced shipping-point prices from the highs experienced during the first quarter. As a result, April-June f.o.b. shipping-point prices are expected to settle at or below the average of the past 5 years and remain below the level of a year ago. Planted area for the summer onion crop is expected to decline 3 percent this year. All but two storage-type onion producing States are expected to plant less. Among the nonstorage States, onion acreage is expected to decline 5 percent, with area in Texas, the third largest non-storage State, down 27 percent. For the storage crop, which provides the bulk of the Nation s onions into the next spring, growers were encouraged by improving prices last year, but are expected to exercise restraint when planting this spring cutting area 3 percent. Most States are expected to reduce acreage but Colorado growers intend to increase area 4 percent Colorado growers had cut acreage 23 percent in 2000 because of financial losses. Growers in Oregon, the top fresh-market storage onion State, expect to plant 3 percent more area this year after dropping 18 percent a year ago. Combining this increased area with average acreage losses and trend yields could produce an Oregon onion crop second only to the 1999 record. The 2001 winter-season potato crop is estimated at 4.0 million hundredweight (cwt), down 20 percent from 2000 and 2 percent below 1999. Harvested area was down 18 percent from a year ago, and yields were down 2 percent declining in both California and Florida. With heavy supplies of potatoes on hand from the fall 2000 crop, growers planned for a small reduction in winter-season production by decreasing planted acreage by 2 percent from the previous winter. However, heavy rains in Florida s Homestead area during December virtually wiped out the crop. In total, about 3,000 acres were abandoned in Florida, and yields on remaining fields were down nearly 20 percent from a year ago. The combination of lost acreage and reduced yields have Florida Economic Research Service/USDA Vegetables and Specialties Situation and Outlook/VGS-283/April 2001 n 3
output estimated at 58 percent of last year s level. In California, winter production this year is estimated to be just 3 percent below a year ago, due entirely to reduced yields. As exports of french fries continue to rise, so do french fry imports from Canada. Domestic demand for french fries in the United States has increased steadily over the past three decades, and an increasing portion of this demand is being met by Canadian processors. Since 1989, imports of fries from Canada have increased an average of 25 percent per year. Canadian-produced fries currently account for about 13 percent of all fries consumed in the United States, up from about 2 percent in 1989. In 2000, total fry imports from Canada were nearly 1.1 billion pounds, up 17 percent from 1999 and were just 2 percent less than total U.S. french fry exports. With Canadian processing capacity continuing to expand, the United States could become a net importer of french fries for the first time in 2001. U.S. sweet potato growers have indicated they will reduce area planted 1 percent in 2001. Barring any weather-related disasters this season, average acreage abandonment and a return to long-term trend yields (159 cwt/acre) could place 2001 U.S. sweet potato production as high as 14.7 million cwt. That would be the largest crop since 1982, and would be 8 percent above a year ago. Grower prices would likely fall, but with good domestic and export demand, the season-average price might not drop much below $15 per cwt. However, if sweet potato yields do not follow trend and instead maintain the recent 3-year average (147 cwt/acre) level, production would be about the same as last year, with prices potentially rising to a forecast range of $15 to $16 per cwt. Because of continued low prices (the lowest since the 1980s), 2001 U.S. dry bean output is expected to decline from last year s level. U.S. Department of Agriculture s (USDA) Prospective Plantings report indicated that dry bean growers plan to seed 17 percent fewer acres this spring. If realized, planted area of 1.453 million acres would be the smallest since 1983. With the exception of Idaho, all major producing States have indicated substantial reductions in area this year. Michigan growers intend to plant 200,000 acres, 30 percent less than a year ago and the lowest acreage on record (records began in 1909). During the first quarter of 2001 (January March), U.S. grower prices for all dry beans were 2 percent below the low levels experienced a year ago and were the lowest since 1988. With burdensome stocks, this was the fourth consecutive year that grower prices have declined from the previous year, having dropped at least 11 percent in each of the past 3 years. Economic Research Service (ERS) forecasts suggest total dry bean output could drop from 26.44 million cwt a year ago, to a range of 21 to 23 million cwt this year. Figure 1 Winter fresh vegetable shipping-point prices reach record high in 2001 Metric tons 160 140 120 100 80 60 40 20 0 1990 92 94 96 98 2000 Source: National Agricultural Statistics Service, USDA. Figure 2 Vegetables and melons: Per capita use Pounds 600 500 400 300 200 100 0 Dried 3/ Frozen 3/ Canned 2/ Fresh 1/ 1970s 1980s 1990s 2000 2001 1/ Includes potatoes, sweet potatoes, and mushrooms. 2/ Includes potatoes and mushrooms. 3/ Includes potatoes. Source: Economic Research Service, USDA. 4 n Vegetables and Specialties Situation and Outlook/VGS-283/April 2001 Economic Research Service/USDA
Industry Overview Cool weather so far in 2001 has damaged or delayed U.S. fresh vegetable production and kept market prices well above last year s levels. With yields down, fresh vegetable shipments (excluding potatoes) have declined 14 percent during the first 3 months of the year, with much of the decline coming from domestic sources. With production down, Florida s share of the winter vegetable market declined, with some of the shortfall being made up by Mexico. Reduced market volume led to higher shippingpoint prices for domestic fresh-market vegetables following very low prices a year ago. During the first 3 months of 2001, f.o.b. shipping-point prices for commercial vegetables averaged 40 percent above a year earlier and 22 percent above the average of the previous 5 years. On the processing side, contract tomato production could decline as much as 12 percent from a year ago as processors again attempt to cut stocks and raise prices that are under pressure from high inventories and soft demand. Dry bean growers continue to be besieged by the lowest prices since 1992 and have indicated that they will again cut acreage and output dramatically this season. Similarly, sweet potato growers expect to trim acreage slightly after last year s large crop dropped prices. Some economic highlights for the U.S. vegetable and melon sector: n U.S. growers are likely to harvest 8 percent more acres of fresh-market vegetables this spring than last year. Increasing acreage in Florida (9 percent) and California (8 percent) outweighed declines in Texas (23 percent) and Georgia (3 percent). Melon area is expected to decline 9 percent as rising area in Arizona and Georgia outweighed lower area in all other States. n Assuming average weather and yields this spring, available domestic supplies of fresh vegetables are expected to exceed those of a year earlier. Fresh-market vegetable imports are also expected to increase as higher U.S. prices bring more product in from Mexico. At the same time, demand is not likely to improve this spring due to the pause in the general economy, which should put downward pressure on April-June f.o.b. shipping-point prices. n For processing vegetables, canneries expect to trim contract area 18 percent, while freezing firms cut area 5 percent despite reduced stocks and stronger prices for some items. Contract area for the five leading processing vegetables is expected to drop 14 percent to 1.18 million acres in 2001. This decline largely reflects weaker markets for canned vegetables such as tomatoes and green peas. n The preliminary estimate of 2000 total per capita vegetable and melon use is a record 464 pounds up 2 percent from a year earlier. Much of the gain reflects the Table 1--U.S. vegetable industry: Area, production, value, unit value, and trade, 1999-2001 1/ Item Unit 1999 2000 2001f Area harvested 1,000 ac. 7,152 6,827 6,340 Vegetables Fresh-market 1,000 ac. 1,911 1,924 1,940 Processing 1,000 ac. 1,513 1,450 1,250 Potatoes 1,000 ac. 1,332 1,352 1,320 Dry beans 1,000 ac. 1,877 1,606 1,340 Other 2/ 1,000 ac. 519 495 490 Production Mil. cwt 1,372 1,368 1,302 Vegetables Fresh-market Mil. cwt 448 452 450 Processing Mil. cwt 384 344 310 Potatoes Mil. cwt 478 516 490 Dry beans Mil. cwt 33 26 22 Other 2/ Mil. cwt 29 30 30 Crop value $ mil. 13,732 14,246 14,300 Vegetables Fresh-market $ mil. 7,548 8,634 8,600 Processing $ mil. 1,743 1,513 1,425 Potatoes $ mil. 2,746 2,540 2,675 Dry beans $ mil. 548 423 450 Other 2/ $ mil. 1,147 1,136 1,150 Unit value 3/ $/cwt 10.01 10.41 10.98 Vegetables Fresh-market $/cwt 16.85 19.10 19.11 Processing $/cwt 4.54 4.40 4.60 Potatoes $/cwt 5.74 4.92 5.46 Dry beans $/cwt 16.55 15.98 20.45 Other 2/ $/cwt 39.85 38.37 38.33 Trade Imports $ mil. 3,995 4,128 4,260 Vegetables Fresh & melons $ mil. 2,171 2,279 2,300 Canned, frozen $ mil. 858 762 775 Potatoes $ mil. 420 500 565 Dry beans $ mil. 50 65 70 Other 4/ $ mil. 496 522 550 Exports $ mil. 3,289 3,314 3,390 Vegetables Fresh & melons $ mil. 1,068 1,219 1,225 Canned, frozen $ mil. 700 687 700 Potatoes $ mil. 806 768 790 Dry beans $ mil. 207 185 195 Other 4/ $ mil. 508 456 480 Per capita use Pounds 452 467 464 Vegetables Fresh & melons Pounds 171 176 175 Processing Pounds 129 127 126 Potatoes Pounds 140 146 144 Dry beans Pounds 8 8 8 Other 1/ Pounds 5 10 10 1/ ERS estimates of trade in 2001. 2/ Other includes sweet potatoes, dry peas, lentils, and mushrooms. 3/ Ratio of total value to total production. 4/ Other includes mushrooms, dry peas, lentils, dehydrated vegetables, sweet potatoes, and vegetable seed. Sources: Economic Research Service and National Agricultural Statistics Service, USDA. Economic Research Service/USDA Vegetables and Specialties Situation and Outlook/VGS-283/April 2001 n 5
record-large potato crop, as use of both fresh and processed potato products increased. Despite higher prices, fresh vegetable use remained at the strong yearearlier level. Increases were also noted for canning vegetables and sweet potatoes. In 2001, a reduction in domestic output is likely across many commodities, which may result in a small decline in per capita vegetable, melon, and pulse use. n The value of vegetable, melon, and pulse imports rose 3 percent to $4.1 billion in calendar 2000 because of reduced domestic fresh vegetable supplies and higher prices. Reflecting continued higher prices and smaller supplies during the first 2 months of 2001, the total value of U.S. vegetable, melon, and pulse imports jumped 25 percent from the low levels of a year earlier. n With somewhat stronger potato prices this past season and a lack of attractive alternatives, the ERS projects that fall-season potato growers could plant 2 to 5 percent less area than a year ago. This spring, a 1-percent drop in harvested area and 6 percent lower yields are expected to produce an 8-percent smaller spring-season potato crop. n U.S. sweet potato growers intend to plant 1 percent fewer acres than a year ago. With strong output in 2000 in States such as North Carolina setting the market tone, U.S. season-average prices in 2000/01 were about 12 percent below those of 1999/2000. Given average growing weather this year, yields should trend higher and largely offset the small reduction in acreage to leave production at or above a year earlier. In 2000, increased production was outweighed by weaker prices, cutting the value of the 2000 sweet potato crop 3 percent to an estimated $209 million. n Preliminary indications point to a 17-percent decline in dry bean plantings this year, with acreage in Michigan, Minnesota, and California down considerably. With low prices this year encouraging larger domestic use and improved export volume, reduced stocks and higher dry bean prices are expected in the coming months. n Total U.S. mushroom production rose 1 percent during the 1999/2000 season and is expected to rise again in 2000/01. The value of mushroom sales totaled $867 million in 1999/2000, placing the crop fifth (following potatoes, tomatoes, lettuce, and onions) among all vegetable crops. Per capita use of fresh mushrooms continued to trend higher in 2000, reaching a record 2.24 pounds. Table 2--Selected fresh vegetables: U.S. trade volume, 1997-2000 Exports Imports Item 1997 1998 1999 2000 1999-2000 1997 1998 1999 2000 1999-2000 --1,000 cwt-- Percent --1,000 cwt-- Percent Asparagus 317 336 344 381 11 886 1,098 1,423 1,592 12 Snap beans 447 580 754 721-4 460 428 438 495 13 Broccoli 2,786 2,900 3,003 3,294 10 707 805 1,004 1,105 10 Cabbage 969 955 995 910-9 877 898 814 899 11 Carrots 2,101 2,301 2,555 2,624 3 2,230 1,792 1,848 1,675-9 Cauliflower 2,328 1,881 1,761 1,915 9 376 321 175 175 0 Celery 2,576 2,573 2,717 2,717 0 681 1,060 845 644-24 Sweet corn 910 1,245 936 891-5 230 400 122 517 325 Cucumbers 707 718 509 528 4 6,675 7,233 7,496 7,629 2 Lettuce, head 4,175 3,657 4,047 3,909-3 679 229 289 319 10 Onions, all 5,814 5,962 6,205 6,619 7 5,712 5,939 5,769 4,769-17 Tomatoes 2,954 3,417 2,863 3,343 17 16,368 18,680 16,329 16,095-1 Cantaloupes 1,344 1,440 1,538 1,555 1 9,216 9,386 11,081 11,192 1 Watermelon 2,553 2,689 2,448 2,920 19 5,042 4,842 4,816 4,460-7 Total 29,979 30,653 30,676 32,329 5 50,141 53,110 52,448 51,566-2 Source: Bureau of Census, U.S. Department of Commerce. 6 n Vegetables and Specialties Situation and Outlook/VGS-283/April 2001 Economic Research Service/USDA
Figure 3 F.o.b. shipping-point prices for selected fresh vegetables Broccoli $/cwt 50 Lettuce $/cwt 30 40 30 2001 1999 25 20 15 2001 1999 20 2000 10 2000 10 Jan. Mar. May July Sep. Nov. 5 Jan. Mar. May July Sep. Nov. Carrots Onions $/cwt $/cwt 30 25 25 20 2001 2000 20 15 2001 2000 15 10 1999 10 5 1999 5 Jan. Mar. May July Sep. Nov. 0 Jan. Mar. May July Sep. Nov. Cauiflower $/cwt 80 70 60 50 40 30 20 10 2001 1999 Jan. Mar. May July Sep. Nov. 2000 Sweet Corn $/cwt 50 40 2001 30 1999 20 2000 10 Jan. Mar. May July Sep. Nov. Celery $/cwt 30 Tomatoes $/cwt 60 25 1999 50 2001 20 40 1999 15 10 2001 2000 30 20 2000 5 Jan. Mar. May July Sep. Nov. 10 Jan. Mar. May July Sep. Nov. Source: National Agricultural Statistics Service, USDA. Economic Research Service/USDA Vegetables and Specialties Situation and Outlook/VGS-283/April 2001 n 7
Fresh Vegetables and Melons Spring Outlook: Acreage Up, Prices To Recover This spring, area for harvest of 13 selected fresh-market vegetables is expected to be 8 percent above a year ago. Assuming average weather and yields, available domestic supplies will likely exceed those of a year earlier. Rising acreage for commodities such as cabbage, celery, tomatoes, and cauliflower outweighed reduced area for eggplant, watermelon, honeydew melons, and cucumbers. Spring-season melon acreage for harvest is expected to be 9 percent lower than a year ago, with area for each of the three major melons (watermelon, cantaloup, and honeydew) declining. Lower prices a year ago, especially for watermelon and cantaloup, spurred growers in most areas to cut spring melon acreage to the lowest level in several years. Some highlights of spring-season vegetable acreage for harvest includes: n 13 selected fresh-market vegetables, up 8 percent; n head lettuce, up 11 percent; n the three major melon crops, down 9 percent; n asparagus, down 7 percent; and n spring onion harvested area, up 2 percent. A combination of higher area this spring and good yields (due to favorable weather) could leave domestic spring season fresh-market vegetable shipments above the average of the past 3 years. With imports expected to rise slightly as a result of higher domestic prices and improved supplies in Figure 4 U.S. fresh-market vegetables and melons: Seasonal area for harvest 1,000 acres 600 500 400 300 200 100 0 1998 1999 2000 2001 Winter Spring Summer Fall Source: National Agricultural Statistics Service, USDA. Figure 5 Fresh-market vegetables: Quarterly retail prices % of 1982-84 250 240 230 220 210 200 190 180 170 I III I III I III I III I III I 1996 1997 1998 1999 2000 2001 The second quarter for 2001 is forecast. Source: Bureau of Labor Statistics, USDL. Mexico compared with both this past winter and last spring, overall supplies should be higher than last spring. Increased supplies for many fresh-market vegetables will help ease prices down from the highs experienced during the first quarter. As a result, April-June f.o.b. shipping-point prices are expected to settle at or below the average of the past 5 years and remain below the level of a year ago. With reduced acreage and generally lower yields in both southern and western growing areas during the first 3 months of 2001, f.o.b. shipping-point prices for fresh-market vegetables averaged 40 percent above the low levels experienced during the first quarter of 2000. Assuming favorable growing weather persists this spring, vegetable and melon prices will likely continue to average below those of last year through at least early summer. In early April, shippingpoint prices for many major commodities were mixed in terms of changes from the low levels of last spring. In early April, the following shipping-point prices were noted: n California iceberg lettuce, $6.00 per 24-head (50-pound) box, about even with a year ago; n Florida roma tomatoes-large, $11.90 per 25-pound carton, up 9 percent; n Florida bell peppers-large, $6.92 per 28-pound carton, down 11 percent; n California asparagus-bunched, large, $28.50 per 28-pound carton, unchanged; n Arizona broccoli, $4.50 per 23-pound carton, down 5 percent. 8 n Vegetables and Specialties Situation and Outlook/VGS-283/April 2001 Economic Research Service/USDA
The f.o.b. shipping-point price for head lettuce eased considerably in mid-march as harvest wound down in the desert regions and began in the Central Valley of California. Head lettuce reached as high as $15.50 per 24-head carton in early March before settling at $4.50 per carton by mid-month. This winter, the shipping-point price averaged above the cost of production (around $6 per carton) during both January ($7 per carton) and February ($12 per carton). Lettuce prices during April and May are frequently variable due to uncertain spring weather and the shifting from one production region to another. However, given average weather during the spring, supplies are expected to be more than adequate and prices should average below the highs of a year earlier ($10 per carton). Melon Crops Off to A Late Start Cool temperatures in the California and Arizona desert vegetable region slowed the growth of cantaloups and honeydews this spring. As a result, the spring crop was about two weeks behind schedule. Harvest of desert cantaloups typically begins around the second week of May and runs into early July. Since the Mexican melon season ended before the bulk of the domestic seasons began, shipping-point prices for cantaloups will likely start off well above a year earlier during the first few weeks of May. This could benefit both Florida and Texas melon shippers who were expected to be shipping by May 1. In Florida, the spring melon crops were also expected to be one to two weeks late due to cold, dry, windy weather early in the growing season. The harvest typically begins in early April but did not start until late in the month. Spring watermelon area declined 12 percent due to oversupply and low prices a year ago. Some growers have reportedly switched to other crops such as cantaloups. With new varieties and increasing demand, cantaloups are becoming more popular among Florida shippers. Although USDA s National Agricultural Statistics Service (NASS) does not currently estimate cantaloup production in Florida, the 1997 Census indicated acreage had risen 55 percent between 1992 and 1997. Indications are that area has continued to rise since 1997. U.S. per capita use of cantaloup peaked in 1999 at 11.8 pounds up 28 percent since 1990. Declining domestic output in 2000, reflecting reduced area and low yields in some States (e.g. Arizona) and poor market prices in others (e.g. Georgia), caused per capita use to drop back to 10.9 pounds in 2000. With acreage and shipments down, per capita use is expected to remain around this level in 2001. USDA Adds Nine New Crops To Annual Estimates Program In January, NASS added nine vegetable crops to its annual estimates program for 2000. These nine are collard greens, kale, mustard greens, turnip greens, okra, chile peppers, pumpkins, radishes, and squash (table 11). Similar to existing estimates for celery and bell peppers, data for these nine crops cover all uses and are not broken down into fresh and processing components. The data are grouped with fresh market vegetables since they are largely used in fresh form. Only kale has previously appeared in past NASS estimates. The farm value (all uses) of these nine crops in 2000 was estimated to be $607 million, with squash accounting for one-third of this value. These nine crops also add more than 16 pounds to the estimate of U.S. per capita vegetable use. NASS also expanded the coverage of several existing vegetable and melon crops through the addition of estimates for several States. For example, Arizona, New York, Delaware, and Virginia were added to the fresh-market spinach estimates program in 2000. These four States accounted for 5,220 harvested acres and 89 million pounds of production in 2000. The production of these four States added 0.3 pounds per capita to the 2000 consumption estimates for fresh spinach. As a result, per capita use of fresh spinach is now estimated to be 1.5 pounds the highest since 1952. Winter Acreage Declined Acreage for harvest of 13 selected fresh vegetables fell 2 percent to 193,000 acres during the 2001 winter season (largely January to March). Acreage declined in two of the four surveyed States, with Texas down 14 percent and California down 3 percent. Arizona s acreage remained unchanged at 50,300 acres. Reflecting improved shipping point prices, Florida growers increased area 4 percent from a year ago. California accounts for about 46 percent of winter vegetable acreage, followed by Arizona (26 percent), Florida (21 percent), and Texas (6 percent). Acreage increased the most for endive/escarole (50 percent), snap beans (16 percent), and sweet corn (15 percent), but declined for cabbage (-27 percent), spinach (-19 percent) and eggplant (-17 percent). Winter acreage accounts for about 10 percent of the annual fresh-market vegetable and melon area (1.92 million acres in 2000). With variable weather in growing areas impacting yields and average winter weather in eastern cities helping to maintain demand, commercial fresh-market vegetable prices rose impressively during the first quarter from the depressed levels of a year ago. Winter quarter fresh vegetable shippingpoint prices increased 40 percent from the lows of a year earlier as the effect of reduced winter acreage combined with lower yields caused by several occurrences of below freezing weather in Florida and bouts of cool, wet weather in California and Arizona. A year earlier, shipping-point prices during the winter quarter were 14 percent below the average of the previous 5 years and were the lowest in a decade. This past winter, cool weather in the Southern California and Arizona desert areas delayed growth and affected harvest schedules for lettuce, broccoli, cauliflower, and asparagus. The same weather pattern affected the winter growing areas in Mexico, slowing import volume. This was one factor lead- Economic Research Service/USDA Vegetables and Specialties Situation and Outlook/VGS-283/April 2001 n 9
Figure 6 Winter-fresh vegetables: Shipments for October-March season Mil. cwt 40 30 20 10 Florida Mexico 0 1990/91 92/93 94/95 96/97 98/99 2000/01 Includes snap beans, cucumbers, eggplant, bell peppers, squash, and tomatoes. Source: Agricultural Marketing Service, USDA. ing to elevated prices for crops such as bell peppers and snap beans this winter. When hard freezes hit Florida this winter, tender vegetables like these were heavily damaged leading to sharply reduced supplies in Florida. However, Mexican shippers were hard pressed at times to keep up with the additional demand as rain and cool weather played havoc with their growth and harvest schedules. Thus, with weekly shipment volumes below average, and demand frequently termed good by market reporters, winter-season shipping-point prices remained above the average of the past 5 years. Iceberg (crisp head) lettuce prices averaged $7 per carton in January and over $12 during February before slipping to $4.50 during the last half of March. Onion Markets Much Improved from Last Year A year ago, onion growers were lamenting poor market prices. These low prices were the result of a record large storage onion crop, which filled bins to bursting and drove winter quarter (January-March) f.o.b. shipping-point prices to their lowest levels since 1980. This past winter, onion growers had a smaller storage crop to market (shipments were 10 percent below a year earlier) and also enjoyed relatively strong domestic and export demand (January- February 2001 export volume was up 17 percent). As a result, winter quarter shipping-point prices were 126 percent above the extreme lows of a year ago and 36 percent above the first quarter average of the past 5 years. These higher prices reflected a smaller crop last fall, good storability and quality of the fall crop, strong domestic and export demand, and fewer imports from foreign suppliers such as Mexico and Peru. With a strong and orderly conclusion to the marketing season for the fall storage crop, the transition to the spring onion crop is likely to see shipping-point prices remaining above the average of the previous 5 years ($14.13 per hundredweight, or cwt). F.o.b. shipping-point prices in early April for jumbo yellow onions in south Texas were $8.00 per 50 pound sack (80 percent or more U.S. No. 1) up from $5.25 per sack a year earlier. Despite average prices last spring and a strong fall-season market (the spring crop is planted the previous fall), the four U.S. spring onion States (Texas Georgia, California, and Arizona) reduced planted area 8 percent this year. Planted area declined in each state with California (12 percent) and Georgia (down 10 percent) cutting area the most. In Texas and Georgia, although area planted is down, harvested area is expected to rise in each state. Last spring, acreage abandonment was larger than normal as heavy spring rains flooded some fields. This year, despite cooler than normal weather, the Texas spring onion crop was in average condition with good quality expected. In Georgia, where the marketing focus is on the mild Vidalia onion, per acre yields are expected to average below the record-high of last spring (255 cwt). In south Texas, where a large portion of the crop is geared toward mild onions such as the 1015 variety, cool, wet weather has brought the possibility of record yields. Unless wet weather increases crop losses, preliminary data indicate Texas yields could reach 320 cwt per acre, compared with last spring s record-tying level of 310 cwt. Although the first U.S. estimate of total spring onion production will be released on July 10, crop estimates are available for Georgia and Texas. With a small increase in acres har- Figure 7 Onions: F.o.b. shipping-point prices Cents/lb 25 20 15 10 5 0 Jan. July Jan. July Jan. July Jan. 1998 1999 2000 2001 Source: National Agricultural Statistics Service, USDA. 10 n Vegetables and Specialties Situation and Outlook/VGS-283/April 2001 Economic Research Service/USDA
Figure 8 U.S. seasonal onion havested acreage 1,000 acres 250 200 150 100 50 0 California-summer Summer-storage Summer-nonstorage Spring 1991 93 95 97 99 2001 Source: National Agricultural Statistics Service, USDA. vested and record yields, the Texas onion crop is expected to rise 12 percent to 4.7 million cwt. In Georgia, unusually cold weather will bring lower yields and drop production 18 percent from last year. Spring-season supplies from the Rio Grande Valley and Georgia generally peak in April, with Texas supplies continuing into June. Georgia growers also place a portion of the perishable Vidalia crop into controlled atmosphere storage for marketing during the fall. Planted area for the summer onion crop is expected to decline 3 percent this year. All but two storage-type onion producing States (States that store fresh dry-bulb onions for later marketing) are expected to plant less. Among the nonstorage States (States that market fresh onions soon after harvest), onion acreage is expected to decline 5 percent with area in Texas, the third largest non-storage State, down 27 percent. For the storage crop, which provides the bulk of the Nation s onions into the next spring, growers were encouraged by improving prices last year, but are expected to exercise restraint when planting cutting area 3 percent. Most States are expected to reduce acreage but Colorado growers intend to increase area 4 percent Colorado growers had cut acreage 23 percent in 2000 because of financial losses. Growers in Oregon, the top fresh-market storage onion State, expect to plant 3 percent more area this year after dropping 18 percent a year ago. Combining this increased area with average acreage losses and trend yields could produce an Oregon onion crop second only to the 1999 record. Tomatoes: Mexico Up, Florida Down Supplies of 2000/01 fresh-market tomatoes (excluding cherry tomatoes) since December 1, 2000 totaled 4 percent higher than the previous year. Heavier shipments from Mexico (up 23 percent) have offset a 13 percent decline in Florida s volume caused by freeze damage. Since December 1, tomato shipments (including round and roma) from Florida and Mexico have totaled 13.8 million cwt, compared with 13.3 million cwt a year earlier. Florida s share of the tomato market during December to March declined from 53 percent in 1999/2000 to 44 percent this season, largely due to the combined effects of winter freezes on volume sold in early January and March. This is still above the low market share of 1998, when Florida only captured one-third of the winter tomato market. Interestingly, Florida s cherry tomato shipments increased 10 percent during December to March, while imports from Mexico fell 5 percent. Thus, Florida s share of the increasingly popular cherry tomato market increased from 40 percent a year ago to 43 percent this year. With reduced yields and smaller domestic supplies, shipping-point prices for tomatoes have averaged above yearearlier levels since last August. The December-March U.S. average for all fresh-market tomatoes was $37.55 per cwt, up 42 percent from the low levels of the previous year and 7 percent above the average during the same period for the 5 previous years. For product coming from Mexico, the average import value during December to February (most recent available) was $37.47 per cwt, up 35 percent from the previous year. Fresh-market tomato import volume declined 1 percent in 2000 to 1.6 billion pounds. With volume down, the import share of domestic tomato consumption declined to 30 percent, the lowest since 1995. Tomato import volume from Mexico fell 4 percent to 1.301 billion pounds. Mexico continued to lose market share, accounting for 81 percent of tomato import volume down from 83 percent last year, 87 percent in 1998, and over 90 percent 4 years ago. Most of Figure 9 Fresh-market tomatoes: Import share of consumption Percent 40 30 20 10 0 1990 92 94 96 98 2000 Source: Economic Research Service, USDA. Economic Research Service/USDA Vegetables and Specialties Situation and Outlook/VGS-283/April 2001 n 11
this share has been lost to countries primarily selling greenhouse/hydroponic tomatoes, which have been gaining favor with consumers the past several years. Although volume from Belgium (down 36 percent) and the Netherlands (down 19 percent) also declined in 2000, gains in this market segment came from Canada. The volume of fresh-market tomato imports from Canada rose 27 percent in 2000 to 224 million pounds, after jumping 29 percent last year. With Canada s greenhouse industry continuing its expansion (although likely at a slower pace), the value of the Canadian dollar remaining weak, and continued U.S. demand for premium tomatoes, further increases are anticipated in 2001. Greenhouse Tomato Industry Files Anti-dumping Petition On March 28, 2001, a group of U.S. greenhouse tomato producers filed a petition with the U.S. International Trade Commission (USITC) alleging dumping of greenhouse tomatoes by Canada in the U.S. market. The USITC has started an investigation to decide if there is a reasonable indication that the U.S. industry is injured or under threat of injury by the selling of greenhouse tomatoes from Canada at less than normal value. The USITC must reach a preliminary decision by May 14 and communicate its findings on injury to the Department of Commerce by May 21. Canada is the second largest foreign supplier of fresh-market tomatoes to the U.S. market, and may be the largest exporter of greenhouse tomatoes to the United States. About 14 percent of all U.S. fresh-market tomato imports came from Canada in 2000, with the majority of these tomatoes produced in greenhouses. Canada s share of the U.S. fresh tomato import market has risen substantially since 1995, when it had about 2 percent of the U.S. import market. Most of this market share has been lost by Mexico, which controlled nearly 96 percent of the tomato import market in 1995. Although Mexico s tomato export volume to the United States in 2000 was about the same as in 1995, it has not generally shared in the 18-percent growth in import volume that has occurred since the mid-1990s. The Netherlands also ships fresh tomatoes to the United States (virtually all are greenhouse-produced) and is the third largest supplier, holding 4 percent of the market in 2000. Per Capita Use Rises in 2000 According to preliminary estimates, per capita use of all vegetables and melons totaled 464 pounds in 2000 up about 2 percent from a year earlier (table 47). Most of the gain stems from increased use of potatoes (up 6 percent), due largely to the record-large crop last fall and subsequent lower prices. Increases were also noted for vegetables for canning and sweet potatoes. Per capita vegetable and melon use is projected to decline about 1 percent in 2001 as potato use declines with the expected smaller crop this year. Although fresh vegetable use could decline slightly due to reduced supplies this past winter, little change is anticipated in the use of processing vegetables (excluding potatoes) as processors reduce output and work down stocks. In 2000, per capita use of fresh market vegetables (for a comparable set of crops) was unchanged from the year earlier. Significant increases were experienced in fresh cabbage, romaine/leaf lettuce, and bell peppers. These were offset by reduced use for melons, broccoli, and tomatoes. Utilization of both watermelon and cantaloup declined last year as growers responded to low prices by reducing acreage and production. Preliminary estimates of potato use indicate both fresh and processing uses registered gains in 2000, with use for dehydrating gaining the most. Detailed utilization data for the 2000 potato crop will not be available until September. Per capita use was estimated for several new vegetables in 2000. The estimated levels (all uses) include: n squash, 4.5 pounds; n pumpkins, 3.3 pounds; n okra, 0.2 pound; n collard greens, 0.7 pound; n mustard greens, 0.5 pounds n turnip greens, 0.5 pound; n kale, 0.3 pound; and n radishes, 0.5 pound. ERS has included estimates of per capita use for radishes and chile peppers based on State data for several years. Except for squash, estimates for the others begin with 2000 and have no historical context. ERS has been constructing a brief supply and use history for squash based on available State data and plans to publish it in the July Vegetables and Specialties Situation and Outlook Yearbook. Per capita vegetable and melon use is projected to decline about 1 percent in 2001 as potato use declines with the expected smaller crop this year. Smaller output of fresh market crops could also lead to reduced per capita consumption. Little change is anticipated in use of processing vegetables as processors reduce output and work down stocks for items such as canned tomatoes. 12 n Vegetables and Specialties Situation and Outlook/VGS-283/April 2001 Economic Research Service/USDA
Cash Receipts and Cost Indicators Revenue Up in 2000 But May Fall in 2001 In 2000, grower cash receipts from the sale of vegetables (including melons, potatoes, pulses, and mushrooms) rose 3 percent from a year earlier to a record $16 billion (table 17). This was 17 percent of all crop receipts and greater than field corn receipts ($15 billion). Although vegetable shipping-point prices generally improved during 2000, field crop prices remained low, which has been reflected in crop revenues. In 2000, cash receipts from the sale of all crops were estimated to be about the same as the lows experienced in 1999 ($93 billion), but were much lower than the 1997 peak ($111 billion). Despite the lack of direct subsidies and bouts of low market prices, the vegetable and melon sector continues to be one of the more resilient industries within the crop sector, having managed small gains in gross revenues since the mid-1990s. In 2000, increases in the value of fresh vegetable output outweighed lower revenues for processing vegetables, potatoes, and dry beans. Combined revenue for the 25 major fresh market vegetables and 10 major processing vegetables increased 9 percent in 2000 to $10.1 billion. In general, higher prices led to a 14 percent increase in value of the 25 major fresh-market vegetables and melons to $8.7 billion. Reduced production caused processing vegetable revenue to drop 14 percent to $1.4 billion. Processing tomatoes (down 27 percent), brussels sprouts (down 27 percent), and fresh carrots (down 20 percent) realized the largest decreases in farm value while significant increases were recorded for celery (up 44 percent), freshmarket cabbage (up 38 percent) and head lettuce (up 34 percent). While declines were the result of reduced production or lower prices, most increases resulted from sharply higher prices. In 2001, grower cash receipts are projected to remain near year-earlier levels as higher prices offset reduced volume for most major commodity categories. Input Prices Rising In 2001, prices paid by vegetable and melon farmers for production inputs are projected to rise 5 to 7 percent from a year earlier. Prices are expected to increase markedly from a year earlier for fertilizer (especially nitrogen), labor, agricultural chemicals, and fuel and electricity. A sharp increase in the price of natural gas last winter was the main factor behind an 80-percent leap in the price of nitrogen fertilizer this spring. In addition, the California vegetable industry is facing substantial price increases for electricity, which will add to irrigation expenses and food processing costs. Partly offsetting increases in the energy sector will be slight declines in prices for machinery and building supplies. In 2000, ERS estimates suggest the average input costs for vegetable and melon growers increased between 3 and 4 percent. Farm wage rates, which rose nearly 4 percent in 2000 and are the most heavily weighted item in the ERS vegetable input price index, are expected to rise 5 to 7 percent in 2001, partly reflecting the continuing difficulty in attracting skilled labor. Marketing Costs in 2000 During 2000, the ERS marketing cost index indicated that the prices for production items used by food processors, wholesalers, and retailers rose 4 percent from a year earlier. Few categories registered lower costs in 2000 (metal cans were down 7 percent). Among individual items, the largest increase was in fuel and power, which rose 29 percent from a year earlier. Although the cost of electricity rose just 2 percent from 1999, the cost for petroleum products (gasoline, diesel) doubled. Petroleum costs leaped during the first quarter and remained high throughout the year. Retailer labor costs rose just 1 percent in 2000 after rising 4.3 percent in 1998 and 2.6 percent in 1999. However, the cost of paper products rose significantly in 2000, with paperboard boxes and containers increasing 9 percent and paper bags and related products rising nearly 7 percent. Short-term interest (up 11 percent), property taxes and insurance (6 percent), and advertising (2 percent) also registered increases in 2000. Despite rising energy prices, the cost of transportation services averaged about the same as a year earlier, after declining 8 percent in 1999. Figure 10 Vegetables and melons: U.S. cash receipts $ billion 18 16 14 12 10 8 6 4 2 1990 92 94 96 98 2000 2000 preliminary and 2001 forecast. Source: Economic Research Service, USDA. Economic Research Service/USDA Vegetables and Specialties Situation and Outlook/VGS-283/April 2001 n 13
Processing Vegetables U.S. Economy Slows U.S. economic growth has slowed over the past several months as consumer confidence has waned and labor demand has slackened. Despite the softening economy, the unemployment rate remains low (around 4 percent) which is a positive sign for food demand (including processed vegetables) in both the retail and foodservice industries in 2001. Real disposable personal income increased 2 percent in 2000, and is expected to post similar modest gains in 2001. According to preliminary data from the Bureau of the Census (unadjusted for inflation), retail sales at all food stores (95 percent were grocery stores) increased about 5 percent to $484 billion in 2000. A somewhat smaller gain is expected in 2001. On the foodservice side of the market, full-menu restaurant sales rose nearly 5 percent in real terms while fast food sales increased about 2 percent. According to the National Restaurant Association, total restaurant industry sales are expected to slow slightly in 2001, but will reach nearly $400 billion, up 5 percent (about 3 percent in real terms) from 2000. Per capita use of all processing vegetables (including potatoes and mushrooms) totaled 227 pounds in 2000, up 3 percent from a year earlier. The increase was due to an expected 18-percent gain in dried and dehydrated potato products and 1-percent greater use of canning (including potatoes and mushrooms) and freezing vegetables (including potatoes). Canning use totaled about 107 pounds per person, with freezing use at 83 pounds. An estimated 34 pounds per capita of potatoes were processed into chips and dehydrated products in 2000. In the year ahead, utilization of processed vegetables is expected to decline 1 percent, spurred largely by higher prices for dehydrated potato and canned tomato products. Output To Decline, Prices Rise Processors of five major vegetables (tomatoes, sweet corn, snap beans, green peas, and cucumbers) expect to contract for 1.18 million acres in 2001 down 14 percent from a year ago (table 20). Most of the decline will come from canning vegetables (down 18 percent) as canners attempt to reduce inventories and shore up wholesale prices. Assuming average acreage losses and trend yields this coming season, output of the five leading processing vegetables could be 12 to 16 percent lower than a year ago and total around 14 million short tons. In general, the expected 14 percent decline in canning contract acreage will likely cause wholesale prices for canned vegetables to rise this coming fall, as most canned vegetables register increases. During the first quarter of 2001, wholesale prices for canned vegetables were largely Figure 11 Canned vegetables: Wholesale price index % of 1982-84 123 122 121 120 119 118 Jan. July Jan. July Jan. July Jan. 1998 1999 2000 2001 Source: Bureau of Labor Statistics, USDL. Figure 12 Frozen vegetables: Wholesale price index % of 1982-84 129 128 127 126 125 124 Jan. July Jan. July Jan. July Jan. 1998 1999 2000 2001 Source: Bureau of Labor Statistics, USDL. unchanged from a year earlier, reflecting burdensome stocks of processed tomato products. Stocks of frozen vegetables in cold storage on January 1, 2001, were down 2 percent from a year earlier (table 26). Excluding potatoes, stocks were 4 percent below a year ago. Green pea stocks were up 7 percent and were the highest since 1992. However, stocks of frozen green beans were 14 n Vegetables and Specialties Situation and Outlook/VGS-283/April 2001 Economic Research Service/USDA