2008
Southern
Outlook
Conference
Fruit and Vegetable
Situation and Outlook
Atlanta, Georgia, September 22-24
Deacue Fields
Associate Professor/Extension Economist
Department of Ag Economics and Rural Soc.
Auburn University
fieldde@auburn.edu
Top U.S. Horticultural Producers
1. California
2. Florida
3. Texas
4. Arizona
5. Michigan
6. New York
7. Washington
8. Oregon
US Farm Cash Receipts for Crops, 2006
Food grains,
7.75%
Other,
18.06%
Fruits and
Vegetables,
29.66%
Feed crops,
23.25%
Oil-bearing
crops, 15.10%
Cotto
n (lint
and
seed),
5.20%
Tobacco,
0.98%
Total Fruit and Nut Cash
Receipts
20,000,000
18,000,000
16,000,000
14,000,000
$
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
0
1998
1999 2000
2001
2002 2003 2004 2005 2006
Fruit and Nut
 Index 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
cost
 Lower U.S. imports during the 1st quarter, along with high fuel
Fruit and Nut
 NASS 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 Nut
 U.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
California
 South 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
US Per Capita Use of Fresh and Processed Fruit
Pounds
295.0
290.0
285.0
280.0
275.0
270.0
265.0
260.0
255.0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Peaches: Total production and season-average price,
2005-07, and indicated 2008 production
2005
State
Alabama
Arkansas
California
Georgia
Kentucky
Louisiana
North Carolina
Oklahoma
South Carolina
Tennessee
Texas
United States
24
10
1,738
80
2
1
12
4
150
4
18
2,369
2006
2007
Million pounds
18
6
8
0
1,424
1,898
82
26
2
0
1
1
11
1
4
2
120
25
4
1/
3
17
2,020
2,257
Source: USDA, National Agricultural Statistics Service
2008
20
10
1,620
70
2
1
12
4
110
4
11
2,194
2005
2006
2007
Cents per pound
40.4
51.5
52.5
55
51.5
65
16.1
19
17.5
37.2
44.6
41
50
63
105
86.5
86.5
95
42.5
48.4
56.5
50.5
55
79.5
35.2
37.5
56.5
64
70.5
1/
84
82
97.5
22.4
26
22.6
Vegetable and Melon Production
U.S. vegetables and melon production
about 2 % of all harvested
cropland, 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
%
70
Percent of Farms
60
Share of
Production (%)
67
50
36
40
24
30
20
10
18
22
13
15
5
0
North East
Mid West
South
Region
West
Vegetable Industry
 Retail prices increased by 3% for fresh market vegetables
 The 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
1951
 June 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 drought
 July wholesale prices up 42%
Vegetable Industry
 Processors of the 5 leading vegetables (tomatoes, sweet corn,
snap beans, green peas, and cucumbers) have contracted 1.2
million acres
 Tomato 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 increasing
 563 million pounds fresh market were imported in 07
 Imports accounted for 76% of U.S. consumption in 07
Salmonella Outbreak
 Since 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/lb
 After tracing the outbreak to a pepper in Northeastern
Mexico, U.S. grown jalapeno and serrano peppers were
cleared.
Value of U.S. Vegetable Imports and Exports
$ Million
8,000.0
7,000.0
6,000.0
5,000.0
Imports
Exports
4,000.0
Net Imports
3,000.0
2,000.0
1,000.0
0.0
2004
2005
2006
2007
Vegetable Exports
 Processed 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%
Pounds
455.0
450.0
445.0
440.0
435.0
430.0
425.0
U.S. Per Capita Use of Fresh and Processed
Vegetables and Melons
Monthly fruit prices received by growers, United States
2007
Commodity
2008
March
April
March
April
----------------------Dollars per box-----------------------
2007-08 Change
March
April
----Percent------
Citrus Fruit
Grapefruit, all
Grapefruit,
fresh
2.91
2.1
3.14
2.89
7.9
37.6
7.78
8.07
9.4
8.73
Lemons, all
8.68
9.18
39.77
28.18
Lemons, fresh
37.71
36.71
45.9
43.2
Oranges, all
10.58
10.62
6.07
6.21
Oranges, fresh
21.22
21.23
7.62
7.04
20.8
358.2
21.7
-42.6
-64.1
8.2
207
17.7
-41.5
-66.8
Apples, fresh
0.292
0.281
0.344
0.335
Pears, fresh
Strawberries,
0.272
0.299
0.256
0.246
17.8
-5.9
19.2
-17.7
Noncitrus
fruit
Production Expenses
 The 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 Expenses
 Annual 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 Inputs
In Terms of Price Gains
1.
2.
3.
4.
5.
Fuels (up 99 percent)
Fertilizer (up 47 percent)
Seeds and transplants (up 38 percent)
Farm machinery (up 27 percent)
Wage rates (up 23 percent)
Cash expense shares: Specialized
vegetable and melon farms, 2006
Repairs, 6%
Custom
Work &
Utilites, 7%
Fuel & Oil, 5%
Labor, 30%
Other Cash
Expenses,
11%
Interest &
Insurance,
5%
Rent/Lease
Payments, 10%
Fertilizer/Chem
icals, 18%
Seed &
Plants, 8%
Organic Situation
 In 2005 the US retailed $13.8 billion in organic food
 95% 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 2002
 In 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 US
 Approximately 46% of organic food is handled by mass
market channel
Natural vs Organic
 Natural 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 Bill
 Title 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 Bill
 An 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.
2.
3.
4.
5.
Research in plant breeding, genetics and genomics to improve
crop characteristics.
Threats from pests and diseases, including threats to specialty
crop pollinators
Efforts to improve production efficiency, productivity, and
profitability over the long term (including specialty crop
policy and marketing).
New innovations and technology, including improved
mechanization and technologies that delay or inhibit
ripening
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 Bill
 Each 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.
MALTAG
 Regional, 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