Fruit and Vegetable Fruit and Vegetable Situation and OutlookSituation and Outlook

Atlanta, Georgia, September 22-24Atlanta, Georgia, September 22-24

Deacue FieldsDeacue FieldsAssociate Professor/Extension EconomistAssociate Professor/Extension EconomistDepartment of Ag Economics and Rural Soc.Department of Ag Economics and Rural Soc.Auburn UniversityAuburn Universityfieldde@auburn.edufieldde@auburn.edu

2008 2008 Southern Southern Outlook Outlook ConferenceConference

Top U.S. Horticultural ProducersTop U.S. Horticultural Producers

1. California2. Florida3. Texas4. Arizona5. Michigan6. New York7. Washington8. Oregon

US Farm Cash Receipts for Crops, 2006

Fruit and NutIndex of prices received by fruit and tree nut growers in

April fell 10% from April 2007. Sharply lower orange prices relative to 07 contributed Fresh-market orange prices were down 67 % in April from a

year ago.April prices for strawberries, lemons, apples, and

grapefruit fell.California is forecast to increase its strawberry production

by 2% to 2.2 billion pounds, a new record Florida’s winter crop was affected by a freeze and is

estimated to be down 22%Banana prices are strong due a number of banana-

producing countries experiencing unfavorable weather and high shipping costLower U.S. imports during the 1st quarter, along with high

fuel

Fruit and NutNASS estimates 740,000 acres were planted to

almonds in 2007 (615,000 bearing)Large number of nonbearing acres suggest a

continued trend toward increasing bearing acreage

U.S. demand for papaya is growing an average 12%annually since 1990

Mango imports in the U.S. continue to follow an upward path, increasing an average of 4 % annually since 2000.

The first forecast for the 2008/09 almond crop is exceed last year’s record crop by 6 percent.

Fruit and NutU.S. fresh orange and strawberry exports are

significantly higher than last season with volumes through March up 54 % and 26 %, respectively.

July forecast for U.S. peach production in 2008 was set at 2.19 billion pounds, down 3 % from a year ago. Production decline is attributed mainly to a smaller

crop in CaliforniaSouth Carolina and Georgia crop is expected to

almost double with 110 and 70 million pounds Grower prices for fresh peaches averaged 47.4

cents per pound in May and 27.3 cents in June, 16 % and 4 % higher than in May and June last year

State

2005 2006 2007 2008 2005 2006 2007Million pounds Cents per pound

Alabama 24 18 6 20 40.4 51.5 52.5

Arkansas 10 8 0 10 55 51.5 65

California 1,738 1,424 1,898 1,620 16.1 19 17.5

Georgia 80 82 26 70 37.2 44.6 41

Kentucky 2 2 0 2 50 63 105

Louisiana 1 1 1 1 86.5 86.5 95

North Carolina 12 11 1 12 42.5 48.4 56.5

Oklahoma 4 4 2 4 50.5 55 79.5

South Carolina 150 120 25 110 35.2 37.5 56.5

Tennessee 4 4 1/ 4 64 70.5 1/

Texas 18 3 17 11 84 82 97.5

United States 2,369 2,020 2,257 2,194 22.4 26 22.6

Source: USDA, National Agricultural Statistics Service

Peaches: Total production and season-average price, 2005-07, and indicated 2008 production

U.S. vegetables and melon productionabout 2 % of all harvestedcropland, but generates 16 % of all farm cash receipts and 8% of U.S. farm export value during 2004-06

Specialized Vegetable and Melon Farms: Regional distribution,2006

Vegetable IndustryRetail prices increased by 3% for fresh market vegetablesThe farm value share of the retail cost of all fresh vegetables

increased 4 % in 2007 to an estimated 19.6 %Summer fresh market acreage for harvest down 6%

Snap beans (-21), broccoli (-3), cabbage (-13), Cauliflower (-2), Sweet corn (-3), lettuce (-12), tomato (-6))

2008 Potato acreage estimated down 8% - lowest since 1951June avg. price was $18.61/cwt – highest on record

Area for harvest of 3 leading melon crops, down 8%Area in GA down 11% due to droughtJuly wholesale prices up 42%

Vegetable IndustryProcessors of the 5 leading vegetables (tomatoes, sweet corn,

snap beans, green peas, and cucumbers) have contracted 1.2 million acresTomato contract area down 7%

Production of the major vegetables used for processing increased 12 % to 17.8 million short tons in 2007

The value of production for processing vegetables rose 20 percent to $1.65 billion.

Domestic demand for chile peppers increasing563 million pounds fresh market were imported in 07Imports accounted for 76% of U.S. consumption in 07

Salmonella OutbreakSince April 1,401 people have been infected

with Salmonella in 43 states.Cost Florida tomato growers over $40 million Average tomato prices during June and July

were 76% higher than 07 Retail price for field-grown tomatoes avg.

$1.53/lb and organic $2.90/lbAfter tracing the outbreak to a pepper in

Northeastern Mexico, U.S. grown jalapeno and serrano peppers were cleared.

Vegetable ExportsProcessed exports increase rapidly due to

weak dollar and strong wholesale price (Canada-32%, Japan -12%, Italy – 7%, Mexico - 7%, and Hong Kong – 5%)

Processed imports increased by 14%

2007 2008 2007-08 ChangeCommodity March April March April March April

----------------------Dollars per box----------------------- ----Percent------

Citrus Fruit

Grapefruit, all 2.91 2.1 3.14 2.89 7.9 37.6Grapefruit, fresh 7.78 8.07 9.4 8.73 20.8 8.2

Lemons, all 8.68 9.18 39.77 28.18 358.2 207

Lemons, fresh 37.71 36.71 45.9 43.2 21.7 17.7

Oranges, all 10.58 10.62 6.07 6.21 -42.6 -41.5

Oranges, fresh 21.22 21.23 7.62 7.04 -64.1 -66.8

Noncitrus fruit

Apples, fresh 0.292 0.281 0.344 0.335 17.8 19.2

Pears, fresh 0.272 0.299 0.256 0.246 -5.9 -17.7Strawberries, fresh 0.889 0.646 0.953 0.621 7.2 -3.9

Monthly fruit prices received by growers, United States

Production ExpensesThe largest vegetable and melon farms (those

with more than $1 million in sales) averaged $2.9 million in total cash expenses. Cash expenses for all farms and ranches with more than $1 million in sales averaged about 40 percent less

Average input prices increased 25 % between 1998-2000 and 2004-06, while average prices received by commercial vegetable growers increased by about 11 % during this period.

Production ExpensesAnnual variable expenses across all

specialized vegetable and melon farms averaged $240,510 per farm—79 percent of total cash and noncash expenses

Hired labor) was the single largest expense item

Agricultural chemicals (including fertilizers) were the second-largest expense - accounting for about 21 % of total variable expense

Top Five InputsIn Terms of Price Gains 1. Fuels (up 99 percent)2. Fertilizer (up 47 percent)3. Seeds and transplants (up 38 percent)4. Farm machinery (up 27 percent)5. Wage rates (up 23 percent)

Cash expense shares: Specialized vegetable and melon farms, 2006

Organic SituationIn 2005 the US retailed $13.8 billion in organic food95% of world organic retail sales from the EU and

US.Organic share of retail sales increased from 0.8% in

1997 to 1.9% in 2003, and 2.5% in 2005. Organic standards were implemented by the US in

2002In the US demand trends suggest organic food sales

of $23.8 billion by 2010.In 2001 there were 2.3 million acres of certified

organic land in the USApproximately 46% of organic food is handled by

mass market channel

Natural vs OrganicNatural Production means producers claim to

produce with no man made chemicals.With natural production there is limited ability

to assure consumers that products were actually produced with no synthetic chemicals

Organic certification was developed to reduce fraud by those claiming “organic” production.

Do Consumer Care?Consumers are beginning to substitute fuel

for organics.

2008 Farm Bill The Food, Conservation, and Energy Act of

2008, includes a title that is specific to specialty crops and organics

First inclusion in Farm BillTitle focuses mostly on the health and well-

being of specialty crop production.The USDA allotted $28.4 million for research

and extension projects of specialty crops for the 2008 fiscal year.

2008 Farm BillAn additional $50 million in funding will be allotted

during the four other fiscal years, covering 2009-2012. The total funding will amount to $230 million.

Projects must pertain to 1 of 5 areas:1. Research in plant breeding, genetics and genomics to

improve crop characteristics.2. Threats from pests and diseases, including threats to

specialty crop pollinators3. Efforts to improve production efficiency, productivity,

and profitability over the long term (including specialty crop policy and marketing).

4. New innovations and technology, including improved mechanization and technologies that delay or inhibit ripening

5. Methods to prevent, detect, monitor, control, and respond to potential food safety hazards in the production and processing of specialty crops, including fresh produce.”

2008 Farm BillEach State is to receive $100,000 or 1/3 of 1% of total

funding for each fiscal year, whichever is higher. Includes specialty crops as part of each Census of

Agriculture.Expands market news activities to provide timely price

information on fruits and vegetables. Authorizes additional $9 million annually for FY 2008-12

Adds an agri-tourism promotion program to categories of farmer-to-consumer direct marketing activities eligible for funding. Provides mandatory CCC funding of: $3 million for FY 2008,

$5 million/year for FY 2009-10, $10 million/year for FY 2011-12

Authorizes grants to improve cost-effectiveness and address intermodal deficiencies of transporting specialty crops to local, regional, and international markets.

MALTAGRegional, Multi-state committee comprised

primarily of Ag Economist who work with Specialty Crops

Group has been working on specialty crop issues such as Organics, Production Costs, Financial Management, Budgeting and Planning, and Risk Management since 2002.

The group is poised to compete for specialty crop funding and expand on past efforts