Concurrent Session B: Horticultural Outlook
B02 Warren Hall, 1:30 to 3:15 PM
Moderator: Brad Rickard

Topics and Speakers
• Brad Rickard, Associate Professor, Dyson School
Fruit and Vegetable Situation and Outlook
(1:35 to 2:05 PM)
• Xiaoli Fan, Ph.D. student, Dyson School
Wine and Nursery Situation and Outlook
(2:05 to 2:35 PM)
• Rod Hawkes, Senior Extension Associate, Food Industry
Management Program, Dyson School
Consumer Trends Driving Produce Consumption
(2:35 to 3:05 PM)
• General discussion and evaluation (3:05 to 3:15 PM)

Brad Rickard, Associate Professor
Dyson School of Applied Economics and Management
January 20, 2016

Overview of Fruit Crop Trends in Recent Years
• In 2013 and 2014, U.S. fruit producers experienced very high prices for many crops.
• In 2015 we saw a slight fall in prices for many of the key fruit crops including apples, citrus, grapes, and strawberries, with modest price increases for lemons and pears.
• Overall, we see far less variability in consumer prices for fruit crops, but we did observe a fairly significant decrease in consumer prices for fruit crops in 2015 relative to 2014 (to levels seen in 2013).

Average U.S. Producer Fruit Prices

Average U.S. Consumer Fruit Prices

Situation Report for Apples in NYS and Elsewhere
• In 2015 we saw a substantial drop (~20%) in apple production in WA due to severe heat wave in August that produced smaller and poorer quality fruit
• Production in NY and MI was relatively big, and overall returns to apple growers in the east are at least as good as in 2014.
• Processing prices were up 20% in NYS due, in part, to underestimation of total crop size by processors
• Although plantings and production continue to increase since the mid-2000s, prices and returns continue to be relatively strong.
• Driven by expansion into export markets from WA, higher valued varieties, and stronger efforts by marketers to receive better fruit prices from retailers

Apple Production and Yields in NYS
Consumer Fruit Prices

Average U.S. Producer Prices for Apples

Outlook for Fruit markets in 2016?
• In 2016 industry experts agree that we are likely to observe a substantial increase in apple production
(notably in WA)
• Labor availability continues to be the most important consideration for producers, but related to this is the concern about a (phased) increase in the minimum wage.
• If labor comprises 40% of the total costs of production, and your labor costs increase from
$9/hour to $15/hour (a 66% increase), that is effectively a 25% increase in your total costs
(holding constant labor productivity)
• Hear about renewed interest/pressure among retailers for organic apples (fresh and processed)

Stored Apples as of January 1 in Recent Years

Vegetable Markets are Most Affected by the CA Drought

Overview of Vegetable Crop Trends in Recent Years
• In 2014, the U.S. produced 129 billion pounds of commercial vegetables and pulses with a value of $19 billion and area harvested of about 6.5 million acres.
• Despite ongoing drought and water shortages in California during 2014, where about 40 percent of vegetables and pulses are grown, total U.S. output volume rose 5 percent from 2013.
• Some substitution away from waterintensive crops and more imports

Slight Increases in Imports of Water-Intensive Crops in 2014-15

Import and Export Projections for Vegetables (Billion $)

U.S. Producer Prices for Vegetables

U.S. Consumer Prices for Vegetables

(Nationally)
Trade Agreements: TPP and TTIP
(Regionally)
Changes in School Lunch Procurement
Incentives

• There is much interest in expanding markets for locally produced foods and beverages among final consumers and institutional buyers
• Food serve directors in school districts receive a state reimbursement of $0.06 per lunch (since ~1990s)
• Should we consider providing an additional incentive to food service directors if they include local foods and beverages in their program (for school lunches)?
• Do they do some local procurement anyways?
• What food categories should be the focus?
• What level of incentive might make economic sense?

Component
Protein
Whole grain
Fruit
Vegetable
Dairy
Total
Cost share% Total expenditure for
NYS
Potential expenditure for
NYS sourced food if procured once per week
30
15
15
25
15
100
109,836,300
54,918,150
54,918,150
91,530,250
54,918,150
21,967,260
10,983,630
10,983,630
18,306,050
10,983,630
366,121,012.40
73,224,200

Questions or Comments?
Brad Rickard
607.255.7417
bjr83@cornell.edu

Source: Foreign Agricultural Service, United States Department of Agriculture
Products
Edible Tree Nuts
Soybeans
Heparin and Its Salts; Other
Animal Subsets
Wine & Wine Products
Soybean Cake & Meal
Essential Oils
Wheat
Animal/Vegetable Fats & Oils
Beef & Veal,Fr/Ch/Fz
Feed, Ingredient & Fodder
Flue-Cured, stm
Fruit Juices
Sugar & Tropical Products,
Misc
Fruit, Dried
Leather
Grain & Feed Misc
Flours, Isolates, Concentrate
Corn Oil
Horses, Purebred Breeding,
Live
Vegetables, Prepare or
Preserve
U.S. Total Agricultural Exports to EU-27
U.S. Exports to EU (thousand $)
1,732,092
1,480,536
938,634
% of Total Ag. Exports to EU
17.22
14.72
9.33
470,831
406,674
402,278
316,280
246,855
4.68
4.04
4.00
3.14
2.45
221,725
208,831
207,557
199,203
194,282
189,625
182,712
181,098
152,054
148,220
145,983
143,053
10,057,333
2.20
2.08
2.06
1.98
1.93
1.89
1.82
1.80
1.51
1.47
1.45
1.42
100
Products
Wine & Wine Products
Essential Oils
Beer
Cocoa & Cocoa Products
Olive Oil
Sugar & Tropical Products
Grain & Feed Misc
Licensed Cheese Items
Pork Fresh, Chill Etc
Ot Oilseeds Product Nag
Olives, Prepare or Preserve
Coffee & Coffee Products
Vegetables, Prepare or Preserve
Feed, Ingredient & Fodder
Sugar & Related Product
Horses, Live, NESOI
Casein
Wheat Products
Non-Licensed Cheese
Nursery Products Exclude Cut
Flowers
U.S. Total Agricultural Imports from EU-27
U.S. Imports from EU (thousand $)
3,454,046
1,924,419
1,586,895
842,700
788,414
745,611
685,278
630,579
367,511
332,916
311,878
301,162
249,645
245,574
235,610
233,979
233,129
219,012
214,074
198,670
16,720,085
% of Total Ag.
Imports from EU
20.66
11.51
9.49
5.04
4.72
4.46
4.10
3.77
2.20
1.99
1.87
1.80
1.49
1.47
1.41
1.40
1.39
1.31
1.28
1.19
100