HDR1011800401100830950900 FRUIT AND TREE NUTS August 30, 1995 Approved by the World Agricultural Outlook Board ----------------------------------------------------------------------------- FRUIT AND TREE NUTS Situation and Outlook is published three times a year by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20005-4788. FTS-273. Please note that this release contains only the text of FRUIT AND TREE NUTS--tables and graphics are not included. Subcriptions to the printed version of this report are available from the ERS-NASS order desk. Call, toll-free, 1-800-999-6779 and ask for stock #FTS $18/year. ERS-NASS accepts MasterCard and Visa. ----------------------------------------------------------------------------- Summary Smaller Crops Boost Fresh Fruit Prices Grower prices for noncitrus fruits are likely to stay high for the remainder of 1995 and into 1996, more than offsetting low citrus prices. Several key western States are harvesting smaller crops of apples, grapes, and pears this fall. During the spring and summer, reduced production of California stonefruit and strawberries raised grower prices. Apple and pear prices also rose as 1994-crop stocks were drawn down. Orange prices dropped in 1995 as Florida produced a near-record crop, and another large crop is projected based on good summer weather and more trees reaching bearing age. Retail prices of most fresh fruit rose faster than other consumer goods in January-July 1995. The fresh fruit index averaged 7 percent higher than a year earlier, compared with a 3-percent increase in the overall CPI. Retail prices were higher for oranges, bananas, peaches, grapes, and strawberries, but slightly lower for apples. Larger 1995 apple crops in many apple-producing States will be nearly offset by a smaller Washington crop. USDA's August forecast indicated the U.S. apple crop would be down 1 percent from the 1994 record. In the western States, apple output is expected to be down 11 percent, but up 21 percent in the central States and up 13 percent in the East. U.S. apple prices are likely to continue rising, given the expected decline in Washington output and limited foreign supplies of apple juice concentrate. A smaller European apple crop expected in 1995 will not replenish juice supplies and could bolster export demand for U.S. fresh-market apples. California grape production is expected to decline 3 percent in 1995, with wine varieties down 3 percent, raisin varieties dropping 6 percent, and output of table-type grapes rising 6 percent. Grape prices will be supported by the higher value of premium wine varieties and strong fresh-market export demand. The 1995 U.S. pear crop is forecast down 8 percent from the year earlier, with Pacific Coast production of Bartlett pears down 14 percent, but other varieties down less than 1 percent. Bartlett pears are mostly canned and other varieties are intended for fresh use. Reduced supplies of pears, as well as apples, in 1995/96 indicate rising prices for fresh-market pears. California and Georgia produced fewer peaches in 1995 than in 1994, but increases in South Carolina and many other States nearly compensated. Overall, the 1995 U.S. peach crop forecast is down only 1 percent from the year before. There will be 13 percent more freestone peaches for the fresh market, but 17 percent fewer California clingstones for canning. The U.S. sweet cherry crop was down 35 percent in 1995 from the year earlier and the smallest in 10 years. Fresh-market prices were up sharply as production dropped in California and Washington. In contrast, Michigan's 1995 tart cherry crop was probably the largest since 1964. Frozen cherry stocks are relatively high and a large crop will force prices down. Excessive rain in California and Oregon cut 1995 U.S. strawberry production 7 percent from the 1994 record. Reduced output and higher prices will likely lower strawberry consumption from 5 pounds per person in 1994. In contrast, blueberry consumption will probably rise from last year's three-quarters of a pound, if crops in Maine and Michigan are as large as expected by the industry. U.S. citrus production in 1994/95 was up about 11 percent from the prior season and 3 percent less than the 1979/80 record. Large orange and grapefruit crops in Florida resulted from favorable weather, an increased number of bearing-age trees, and higher per acre yields. Excessive rainfall and harsh weather early in 1995 did not reduce California orange production, which was nearly the same as 1993/94. USDA expects Brazil to produce and export about 10 percent less orange juice in 1995/96 due to lower juice yields and increased diversion to the domestic fresh-fruit market. The Florida orange industry expects another large crop in 1995/96. The first USDA forecast of the 1995/96 U.S. citrus crop will be available in October. California kiwifruit production declined for a second year in 1994 and grower prices increased by one-third. U.S. consumption dipped slightly, to 0.5 pounds per person, as increased kiwi imports did not compensate for reduced California shipments. Record-high imports from Mexico in 1994 raised U.S. consumption of mangoes and papayas to 1.0 and 0.3 pounds per person, respectively. Imports and consumption are likely to be even higher in 1995. Florida mango production continued recovering from damage by Hurricane Andrew in 1992. Hawaiian production of papayas and pineapples continued its slow decline. Imports sustained fresh pineapple consumption in the United States, but processed consumption dipped in 1994. U.S. banana imports were record high in 1994 and consumption increased to 28 pounds a person. The European Union (EU) policy regulating banana imports appears to bring more bananas to the United States. U.S. banana prices strengthened in 1995, but remain low relative to other fresh fruits. A special article in this issue of Fruit and Tree Nuts explains the EU banana import policy and how it affects the U.S. and European banana markets. Another special article describes Chile's role as a fruit and vegetable supplier to the United States. Chile's accession to NAFTA is not expected to significantly affect the U.S. horticulture industry because current U.S. tariffs are low on fresh fruit from Chile. The highest tariffs are applied on processed fruit and vegetables and wine. Eliminating the relatively large tariffs on these competitive products could affect these sectors of the U.S. horticulture industry. However, relaxing Chile's phytosanitary restrictions could boost U.S. horticultural exports to Chile. Fruit Price Outlook Noncitrus Prices Strengthen Less abundant harvests of noncitrus fruits in 1995 indicate higher grower and retail prices. However, a slight upturn in orange prices will likely be quashed by the prospect of another large crop beginning late in 1995. _____________________________________________________________________________ Noncitrus fruit prices will continue to strengthen with curtailed production in many areas. In many western States, especially California, 1995 crops of apples, grapes, pears, stonefruit, and strawberries are expected to be smaller than those harvested in 1994. Reduced production of California stonefruit raised the prices received by growers in the spring and summer of 1995. Apple and pear prices also rose seasonally as stocks were drawn down. New-crop prices are likely to be buoyed by tighter supplies following harvest in the fall of 1995. Lower Grower Prices Prevail in 1994/95 During the first half of 1995, monthly grower price indexes averaged nearly 6 percent lower than in January-June 1994. The index for all fruit and tree nuts rose in May 1995 to exceed the year-earlier level for the first time since May 1994. Low orange prices were mostly responsible for the year-long slump. Apple and pear prices were below a year earlier during the last half of 1994, but were higher in 1995. Orange prices rose in May as sales of lower-valued processing oranges decreased and fresh-market prices rose. Peach and strawberry prices have also been higher in 1995. Orange prices dropped in 1994/95 as Florida produced a near-record crop. From November 1994 through May 1995, prices that growers received for all oranges averaged nearly 25 percent less than during the same months in 1993/94. Reduced Florida processing prices contributed the most to the drop, but fresh-market prices were also down. About 5 percent more fresh oranges were shipped from Florida in 1994/95 and prices were mostly lower than the year earlier. Although California's 1994/95 orange output is expected to be about the same as in 1993/94, grower prices for fresh-market oranges have slipped. A smaller European crop, relatively high-priced foreign juice, and a reduction in U.S. apple production are likely to boost apple prices in 1995/96. Although a record-large apple crop was harvested in the fall of 1994, movement out of storage was brisk throughout the marketing season and January-July prices for fresh apples averaged 17.2 cents a pound, 4 percent higher than the year earlier. USDA's preliminary estimate of the 1994/95 season-average grower price for all apples was about 13 cents a pound, unchanged from 1993/94. Grower prices for fresh-market apples were down just 1 percent from 1993/94, but averaged 7 percent below 1992/93. In contrast, tight world supplies of apple juice contributed to an 11-percent increase in the average price paid to U.S. growers for juice apples. Higher prices will accompany an 8-percent decline in 1995 pear production. Grower prices for fresh-market pears averaged nearly twice as high in January-July 1995 as the abysmal levels of 1994. The large crop harvested in the fall of 1994 and low prices boosted fresh use nearly 9 percent and processing 13 percent from the year earlier. USDA's preliminary estimate of the 1994/95 season-average price was 13 cents a pound, down 8 percent from the prior season and only two-thirds of the 1992/93 average. The 3-percent smaller 1995 California grape crop forecast will likely bolster 1995/96 prices. The average price growers received for all grapes in 1994 was 16 cents a pound, down nearly 6 percent from 1993. U.S. grower prices for fresh-market grapes dropped 14 percent in 1994 from the relatively high 34-cent-a-pound average of 1993. Fresh utilization of the 1994 grape crop remained high with continued strong export and domestic demand. The average price of grapes used for wine rose 5 percent in 1994, while the price of grapes used for raisins declined 15 percent. Most Retail Fruit Prices Rise The monthly Consumer Price Index (CPI) for fresh fruit has been above a year earlier since July 1993. Between January and July 1995, monthly indexes averaged 7 percent higher than the same period in 1994. Prices of fresh fruit rose faster than other consumer goods. The overall CPI was up about 3 percent during 1995. Retail prices were higher for oranges, bananas, peaches, grapes, and strawberries, but slightly lower for apples. Consumers found the prices of their favorite fresh fruit--bananas and navel oranges--inching up more than other consumer prices. From January through July 1995, retail banana prices averaged 49.8 cents a pound, up 6 percent from a year earlier. Banana prices may be turning around from a cycle of excess supply and low prices. During 1994 retail banana prices averaged 46 cents a pound, compared to 44 cents in 1993 and 46 cents in 1992. From November 1994 through May 1995, retail prices for navel oranges averaged 59 cents a pound, 4 percent above 1993/94. Retail prices for Thompson Seedless grapes are on an upward trend, averaging 7 percent higher than the prior year from January through July 1995, and up 12 percent for all of 1994 compared to 1993. Consumer demand is strong for many varieties of table grapes and imports are up. In the winter, most of the U.S. grape supply is imported from Chile. Higher table-grape production could pressure prices later this year. However, reduced stonefruit supplies will bolster grape demand and prices. Retail prices for fresh strawberries rose in the early spring after March rains damaged crops in the major northern California strawberry-growing area. Excessive rain had previously interrupted shipments from southern strawberry-growing areas. Prices averaged $1.30 cents a pound during the first seven months of 1995, compared to $1.10 in 1994. The gain was due mainly to an extremely high price in February, when supplies were more limited than usual. Noncitrus Fruit Outlook Hardy Apple Demand Buoys Prices Processor demand for juice apples has been strong, as well as export demand for fresh-market apples. Apple prices are likely to continue their modest rise, given the expected decline in Washington and European output. _____________________________________________________________________________ U.S. Apple Output Stable in 1995 USDA expects a smaller Washington apple crop to be nearly offset by larger crops in many other apple-producing States, including Michigan, New York, Pennsylvania, and Virginia. The August forecast indicated a crop of 11.186 billion pounds, which would be down 1 percent from 1994's record crop. In the western States, apple output is expected to be down 11 percent from the year earlier. In contrast, forecasts for the eastern and central States amount to 13- and 21-percent increases, respectively, in apple production. Washington had a cool, wet spring in 1995, and some hail damage in the summer that resulted in an apple-crop forecast of 5.2 billion pounds, down 9 percent from 1994. Some of the same weather conditions affected California orchards and, despite the maturing of new plantings, the prospective apple crop is down 5 percent, to 1.0 billion. New York's 1995 apple crop forecast was 3 percent more than 1994 crop, 1.1 billion pounds. Michigan had good growing conditions in most areas and another record crop of 1.2 billion pounds is projected, up 19 percent from 1994. The 1995 Pennsylvania apple crop forecast was up 33 percent from a year earlier and Virginia's was up 38 percent. Apple Shipments Strong in 1994/95 Apple stocks are not excessive despite the record-large harvest in the fall of 1994. According to the International Apple Institute, 95 percent of the apples in storage on November 1, 1994, were gone by July 1, 1995. Shipments have been above average, with total movement from storage 23 percent higher than the prior 5-year average (1990-94). Processor demand for juice apples has been strong, as well as export demand for fresh-market apples. U.S. stocks were only 6 percent above the year earlier on July 1, 1995, but 38 percent higher than the 5-year average. Supplies of apples intended for the fresh market were about the same as the year earlier, while there were nearly one-third more processing apples in storage. Apple stocks were up 9 percent in Washington and up more than 100 percent in California and the Southeast (mainly Virginia and West Virginia), where July 1, 1994, inventories had been very low. Michigan apple stocks were 60 percent lower by July 1, 1995, compared to the year before and, in the Northeast (mainly New York and Pennsylvania), stocks were down 33 percent. Despite a large New York apple crop in 1994, stocks were drawn down as deliveries to processors in 1994/95 outpaced the prior season by 9 percent. Washington accounted for 89 percent of the July apple stocks and 66 percent of the apples in storage were Red Delicious. Stocks of Red Delicious were 14 percent higher in 1995 than in 1994 and up 37 percent from the 5-year average. The inventory of Golden Delicious apples was up 32 percent from July 1, 1994, and 50 percent higher than the 5-year average. Granny Smith stocks were down from the year before, but 7 percent above the 5-year average. Export demand for fresh apples continues strong. During the first 4 months of 1995, export volume was down just 6 percent from the record-breaking pace of 1994. Total 1994 fresh-market apple exports rose 42 percent from 1993. Shipments from the United States to Mexico were restricted by phytosanitary concerns early in the 1994/95 marketing season and later by the devaluation of the peso that raised the price of U.S. goods in Mexico. From August 1994 to June 1995, Washington apple exports were up 14 percent from a year earlier. Countries in Asia and the South Pacific accounted for more than half of the season-to-date total as exports to those areas increased 30 percent from the same period in 1993/94. Shipments to Canada and Mexico from Washington were off nearly 40 percent, while Central and South American countries (especially Brazil, Colombia, and Ecuador) nearly doubled their imports of Washington apples. Apple Prices Increase for Growers Apple prices are likely to continue rising, given the expected decline in Washington output, the weak U.S. dollar, and limited foreign supplies of apple juice concentrate that put upward pressure on imported juice prices. Juice supplies are not likely to be replenished by European apple production, which is expected to be down in 1995. The weak dollar and smaller European crop also could raise export demand for U.S. fresh-market apples. Since January 1995, the prices that growers received for apples have been above the year earlier while consumer prices have remained lower. Grower prices averaged 18.6 cents a pound from January through June 1995, up 8 percent from a year earlier. During the same period, retail prices for Red Delicious apples were 1 percent lower, 79.6 cents, compared to 80.6 cents in the first half of 1994. Retail prices have started to rise seasonally and are likely to be above a year earlier throughout 1995. Although a record-large U.S. apple crop was harvested in the fall of 1994, the average grower price did not fall significantly and the value of the crop rose to $1.427 billion, up 5 percent from 1993. USDA's preliminary estimate of the season-average grower price for all apples was down only slightly, from 12.9 cents a pound in 1993/94 to 12.8 cents in 1994/95. Prices for fresh-market apples were lower, averaging 18.2 cents a pound, compared to 18.4 cents in 1993/94. However, the price of processing apples rose 5 percent, to 5.6 cents a pound ($112 per ton) due to tight world supplies of apple juice. The U.S. juice-apple price was 11 percent higher in 1994/95 than in 1993/94. Smaller 1995 Grape Crop A smaller California grape crop is expected to boost grower prices in 1995 after increased supplies lowered table and raisin grape prices last year. Americans are drinking higher quality wine, but consumption is stable. ______________________________________________________________________________ More Grapes for Wine and Juice California grape production is expected to decline 3 percent in 1995. Vineyards in Napa and Sonoma counties were flooded in March, but more damage was inflicted on the grape crop by a mid-June hail storm in Fresno County, the major producing area. The forecast for wine-type grapes is 4.4 billion pounds, down 3 percent from the year earlier, while raisin-type production is pegged at 4.5 billion pounds, a 6-percent drop from 1994. Output of table-type grapes is expected to increase 6 percent to nearly 1.3 billion pounds. USDA reports grape production for 12 States, other than California, that account for about 10 percent of U.S. grape production. Grape crops in other States were forecast to total 1.4 billion pounds, up 11 percent from 1994. About three-fourths of the other States' production is Concord grapes that are used for juice, jams and jellies, and wine. Washington grape production is projected to increase 36 percent in 1995 and Michigan is expected to produce 8 percent more grapes than in 1994. However, the grape crops in New York and Pennsylvania are anticipated to be smaller this year than last. Grape Production and Prices Down in 1994 Although bearing acreage rose slightly in 1994, per acre yields were lower in California and U.S. grape production dipped 3 percent. California's output of wine- and table-type grapes dropped 5-6 percent while raisin-grape output rose 1 percent from 1993. Fresh use of the U.S grape crop rose 1 percent from 1993, to 1.62 billion pounds. California provided 1.56 billion pounds of fresh-market grapes, about 15 percent of the State's grape output. Nearly 60 percent of California's fresh-marketed grapes were table varieties, such as Flame Seedless, Red Globe, and Ruby Seedless, and 35 percent were raisin types that include Thompson Seedless. Processing accounted for 85 percent of the California grape crop in 1994, with 48 percent crushed, 36 percent dried, and 1 percent canned. Thirteen percent more of the 1994 U.S. grape crop (3.8 billion pounds) was made into raisins in 1994 than the year earlier. Although the share of the U.S. crop crushed to make wine and juice rose in 1994, the quantity, 6.23 billion pounds, was down 11 percent from the year earlier. The average price growers received for all grapes declined to $315 a ton (15.8 cents a pound) in 1994 from $334 (16.7 cents) the prior year as higher prices for grapes used to make wine and juice were more than offset by lower prices for fresh grapes and raisins. U.S. grower prices for fresh-market grapes averaged $581 a ton (29.1 cents a pound) in 1994, down from the relatively high $678 (33.9 cents) in 1993, when supplies were tight. Strong demand raised the prices of grapes crushed to make wine and juice, as well as the increased output of higher-valued varieties of wine grapes. Prices of all grapes used for wine averaged $347 a ton (17.45 cents a pound), up 5 percent from 1993. However, the price of grapes used for raisins dropped 15 percent to $185 (9.3 cents). Grape Imports Steady, While Exports Soar The volume of fresh-market grapes imported in 1994 was about the same as the year earlier. Most U.S. grape imports are from Chile and arrive between January and May. Although down from the relatively high 1990 level, imports still constitute about 30 percent of U.S. grape supplies. The United States exported 482.5 million pounds of grapes in 1994, up 7 percent from the year earlier. Canada remained the major destination, receiving nearly half of U.S. grape exports, but the growth was in shipments to Mexico (up 86 percent), the Philippines (up 45 percent), and Hong Kong (up 20 percent). Mexico moved ahead of Taiwan to become the third most important export destination, following Canada and Hong Kong. As recently as 1992, ten other countries received more U.S. grapes than Mexico. Aggressive marketing by California growers and the lowering of trade barriers that accompanied NAFTA negotiations helped raise grape exports to Mexico. U.S. Wine Consumption Stable Although Americans have not increased the quantity of wine they drink, the quality is higher. U.S. wine consumption averaged 1.76 gallons per person in 1994, compared to 1.77 gallons in 1993. However, more premium table wines are being consumed (Chardonnay, Cabernet Sauvignon, Merlot, and Zinfandel) and there is less demand for generic wines (such as Chablis and other white wines using Chenin Blanc and Columbard varieties) and wine coolers. In 1994, California shipped a record 343 million gallons of wine in the domestic market, accounting for 75 percent of consumption. Wine from other States accounted for 10 percent of the market, and imports made up the remaining 15 percent. The United States is still a net importer of wine (70 million gallons imported in 1994 compared to 32 million exported). Since the mid-1980s, U.S. wine exports have been rising and imports declining. Contrary to the trend, 1994 imports increased from 65 million gallons in 1993 and exports declined from 34 million gallons. Italy and France are major sources of imported wine--42 and 26 percent, respectively, of the 1994 volume. Canada remained the main destination for U.S. wine exports, followed by the United Kingdom and Japan. Pear Production Plunges U.S. pear production is forecast to decline in 1995 following 3 years of growth. Bartlett pear production is projected down sharply but other varieties will decline little. Reduced supplies will push prices higher. ______________________________________________________________________________ Fewer Bartlett Pears in 1995 The 1995 U.S. pear crop forecast is 1.9 billion pounds, down 8 percent from the prior crop. Pacific Coast production of Bartlett pears is expected to be down 14 percent from 1994, while output of other varieties declines less than 1 percent. Bartlett pears are mostly canned and other varieties are intended for fresh use. Tighter supplies of pears, as well as apples, in 1995/96 indicate rising prices for fresh-market pears. Bartlett pear production is expected to drop 20 percent from 1994 in California and 16 percent in Oregon. A slight increase in Washington will not compensate and total crop will be the smallest since 1988. Bartlett pears from these three States usually comprise 60 percent of total U.S. pear production. Excessive rain that flooded some orchards and interfered with pollination, as well as hail damage to fruit, contributed to the drop in California Bartlett output. Unusual spring weather resulted in extended bloom periods and uneven pollination in Oregon. Production of other pear varieties in Washington is projected to increase 6 percent to a record high in 1995, and will nearly offset a 9-percent decline in Oregon's output. Other varieties that develop later than Bartletts were less affected by the adverse spring weather in Oregon. Pear Prices Plummet in 1994/95 Grower prices for all pears fell 9 percent in 1994/95 as utilized production rose 10 percent, to 2.09 billion pounds. Fresh use, including exports, increased 9 percent and amounted to 53 percent of the 1994 pear crop. The 1994/95 season-average price was 12.9 cents a pound for all fresh pears, down from 14.0 cents the year before. However, the average price of non-Bartlett, fresh-market pears rose 9 percent, averaging 14.2 cents in 1994/95. Although production of other-than-Bartlett pears increased 6 percent in 1994, strong domestic and export demand supported prices. Grower prices for all fresh pears recovered from their slump early in 1995 as imports slacked off and exports climbed. Grower prices for fresh-market pears averaged 19.3 cents a pound during the first 6 months of 1995, nearly twice as high as in 1994. Processing accounted for 47 percent of the 1994 pear crop and the quantity processed rose 13 percent to 989 million pounds. Processing prices for California, Oregon, and Washington Bartletts dropped 20 percent to $200 a ton (10 cents a pound) from $250 the prior year. Reduced production could revive grower prices for processing pears, although cannery carry-over stocks remain high this year. In California, early contract prices were up slightly, but the Washington-Oregon Canning Pear Association reported $185 a ton (9.25 cents a pound) for No. 1 Bartletts, compared to $210 in 1994. Pear Imports Fall and Exports Rise From July 1994 through April 1995, the United States imported 65.5 million pounds of fresh pears, less than two-thirds of the quantity imported during the same 10 months of 1993/94. Only 57 percent of the pears were from Chile, compared to 70 percent the year earlier. Imports from Argentina increased, but less than half as many pears were imported from Chile as the prior year. A large U.S. pear crop and low prices helped stifle imports and boost exports. Exports of U.S. fresh-market pears, between July 1994 and May 1995, totaled 282.8 million pounds, up 15 percent from the year earlier. Mexico received 34 percent of the exports and remained the main destination for U.S. pears, although the volume did not increase from the prior year. The devaluation of the peso discouraged purchases from the United States, despite the lowered tariff resulting from the North American Free Trade Agreement (NAFTA). Pear exports to Canada increased 18 percent from the year before, with nearly one-third of all U.S. pear exports going to Canada. California Stonefruit Output Drops in 1995 Excessive rain, wind, and hail reduced production of California apricots, cherries, peaches, plums, and prunes. Although other States' peach and cherry production will outpace 1994, prices have been higher for most stonefruit. ______________________________________________________________________________ More Fresh Peaches, but Fewer for Canning California and Georgia will produce fewer peaches in 1995 than in 1994, but increased production in South Carolina and many other States will nearly compensate. Overall, the 1995 U.S. peach crop forecast is only 1 percent less than 1994 production. The freestone peach crop is projected to be 13 percent larger than the year earlier, while 17 percent fewer clingstones are expected in 1995. The forecast includes 1.55 billion pounds of freestone peaches and 940 million pounds of California clingstones. About 75 percent of freestone peaches are typically used fresh and the clingstones are mostly canned. A stormy spring helped lower California peach ouput 16 percent from the year earlier. Hail storms in late May caused some localized damage in the San Joaquin Valley and severe hail storms in Fresno and Tulare counties on June 15 damaged peaches, as well as plums, nectarines, and grapes. Excessive moisture, hail damage, and wind scarring raise the incidence of split pits, brown rot, and soft fruit that lowers quality and reduces the packout. By the end of June, the freestone fresh-market pack was 15 percent less than the industry's adjusted pre-season estimate and prices were up about 20 percent from the year earlier. The South Carolina peach crop forecast is 255 million pounds, up 2 percent from 1994. Growing conditions have been favorable all season, including some needed rain in June. Rain also improved the size of Georgia's peaches, but production is still expected to be down 9 percent to 160 million pounds. USDA expects peach production to be up in most other States, except Colorado, Idaho, Oregon, and Utah. Poor pollination reduced the crop in Oregon and a late spring freeze damaged peach buds in Colorado, Idaho, and Utah. Normal production is forecast for eastern States that had practically no peach crop in 1994 due to freeze damage--Pennsylvania, Indiana, Ohio, West Virginia, and Kentucky. Output will also increase from below normal in 1994 in Michigan, Illinois, Virginia, Arkansas, and New Jersey. Peach Prices Rise California's reduced fresh-market peach output helped boost early season prices. USDA's grower prices for fresh-market peaches in May and June 1995 were the highest in 10 years. Increased marketings from the mid-Atlantic and Great Lakes areas in July and August brought more moderate prices. Canners are paying more for peaches this year, but grower revenue will be down due to the reduced crop. The California Canning Peach Association announced a top price of $213 a ton (nearly 11 cents a pound) for loads with less than 8-percent offgrade, compared to $185 (about 9 cents a pound) the year earlier. However, paid-for tonnage will be at least 25 percent less than in 1994. Limited Apricot and Plum Crops This was not a good year for apricots. Total U.S. apricot production is forecast at 135 million pounds, the lowest since 1986. Production in California dropped to 120 million pounds, down from 300 million in 1994. The stress of a heavy crop in 1994 reduced the 1995 fruit set. In addition, warm winter temperatures did not provide adequate chilling, the spring was wet and foggy, and there was excessive rain during harvest in June. In Utah, a spring freeze and snow storm destroyed the apricot crop. Hail damaged some of Washington's crop and output was down slightly from a year ago. USDA projects a 4-percent decline in California dried prune production, due to poor pollination, wind, and flood damage early in the season. Growers anticipate a 50-percent decrease in plum shipments. In 1994, California's plum output rose by one-third from the prior year and the average price received by growers fell nearly 40 percent. At the same time, prune output was the highest in 5 years, up 60 percent (dried basis) from 1993, but the price came down only 10 percent. Since fresh-market prices are more volatile, expect plum prices to rise much more than prune prices in 1995. Sweet Cherries Damaged by Rain The U.S. sweet cherry crop is expected to be 271 million pounds in 1995, 35 percent smaller than in 1994 and the lowest ouput in 10 years. Production drops in the western States were not offset by gains in Michigan and New York. Washington and California grow mostly Bing cherries and supply the fresh market, while light-colored sweet cherries from Oregon and Michigan are processed to make maraschino cherries. Fresh cherry prices were very high in May when most California cherries are usually marketed and remained high in June and July when northwest cherries were ready. F.o.b. prices were about $1.30 a pound in July, up nearly 20 percent from the year earlier. In California, sweet cherry output dropped more than 70 percent from the year earlier, to just 30 million pounds. Rain during full bloom in March hampered pollination and knocked blossoms from trees and heavy rain in May split the skin of mature cherries. Cool, wet weather also contributed to poor pollination and reduced fruit set in Washington, where the crop forecast was down 27 percent, to 120 million pounds. Heavy rains in July caused some of the remaining cherries to split, further reducing production. If the forecasts are realized, Michigan's sweet cherry production will exceed Oregon's for the first time since 1985. The forecast for Michigan is 58 million pounds, up 16 percent from the 1994 crop. Oregon sweet cherry production is projected down 36 percent, to 54 million pounds. The major cherry-producing areas in Oregon (the Dalles and Hood River) have moderate-sized crops. However, in the Willamette Valley, pollination was poor and the fruit set light. Tons of Tart Cherries Most of the U.S. tart cherry crop is grown in Michigan so the expected 52- percent gain in Michigan output will raise U.S. production 36 percent from 1994. Michigan's 1995 tart cherry crop is forecast to be the second largest since estimates began in 1925. The record crop occurred in 1964, when 380 million pounds were produced and 300 million pounds utilized. This year's production forecast is 320 million pounds. Frozen cherry stocks are relatively high and the large crop will force prices down. California Kiwifruit Curtailed California kiwifruit production declined for a second year in 1994 and grower prices increased by one-third. U.S. consumption dipped slightly as more kiwi imports did not quite compensate for reduced California shipments. ____________________________________________________________________________ Fewer Kiwi Shipped in 1994 California kiwifruit production declined 6 percent in 1993 and 20 percent in 1994. Kiwifruit is harvested in October and November and marketed through the following May. The U.S. kiwifruit industry is centered in northern California and USDA does not report production in any other State. The U.S. supply of kiwifruit was down in 1994 (January-December) and consumption dipped to 0.50 pounds per person from 0.53 pounds in 1993. Imports of kiwifruit rose 14 percent and California shipments declined 13 percent in 1994. Although California output has more than doubled since 1985 and imports have declined, the United States is still a net importer of kiwifruit--in 1994 nearly 63 million pounds were imported and 21 million pounds exported. Imports provided about 40 percent of 1994 supplies, compared to 50 percent in 1990. Chile replaced New Zealand as the main source of kiwi imports in 1992 after the United States imposed anti-dumping duties on New Zealand kiwifruit. Chile's share of U.S. kiwi imports rose from 11 percent in 1991 to 87 percent in 1994, while imports from New Zealand dropped to 10 percent in 1994. Italy, New Zealand, Chile, France, Japan, and Greece produce more kiwifruit than the United States. Italy, the leading producer and exporter, supplies most of the European market at the same time California kiwi is available. New Zealand ships kiwifruit to Europe and Japan from May through October, during the Northern Hemisphere off-season, when the United States is the main destination for Chilean kiwifruit. Exports of U.S. kiwifruit declined from 1989 through 1992 in the face of rising production and exports from Italy and France. However, the relatively large 1992 and 1993 California crops brought lower prices and boosted kiwifruit exports in 1993 and 1994. Exports accounted for 14 percent of the U.S. supply and 23 percent of California shipments in 1994. Kiwifruit Exports Decline with Output California produced 78.8 million pounds of kiwifruit in the fall of 1994, 20 percent less than the year before and down 25 percent from the record-large 1992 crop. Low prices following the 1992 and 1993 harvests encouraged growers to pull vines, so bearing area dropped 400 acres between 1992 and 1994. The smaller crop brought average grower prices up 33 percent to 24.6 cents a pound and the value of production rose 12 percent to $18.4 million. The California Kiwifruit Commission reported total 1994/95 shipments down 13 percent from 1993/94. Domestic and export shipments declined by nearly the same percentages, 13-14 percent. Exports to Korea increased 25 percent from the year before, but shipments to Canada, Taiwan, Mexico, and Japan were down. Canada and Korea were the major export destinations for U.S. kiwifruit in 1994/95, accounting for 34 and 30 percent of exports, respectively, while Taiwan was third with 20 percent. Berry Outlook Strawberry Production Down in 1995 Excessive rain in California and Oregon brought U.S. strawberry production down 7 percent from record-high output in 1994. Prices and imports are up, along with frozen strawberry supplies. ________________________________________________________________________ Rains Extinguish Output Gains Although California growers had a few hundred more acres of strawberries to harvest in 1995 than a year earlier, yields were off 9 percent. Yields per acre were unusually high in 1994, but excessive rain also contributed to the decline. Several rainstorms in March destroyed some fields in the major-producing areas of Monterey and Santa Cruz counties and delayed harvest in other areas. Earlier in the year heavy rain disrupted strawberry shipments from southern areas, especially near Oxnard. The 1995 California strawberry crop is expected to be down 8 percent from the record-large 1994 crop. Winter strawberry acreage in Florida rose to 6,000 acres, up 200 acres from 1994. Florida shipments of fresh-market strawberries began in November 1994, peaked in March 1995, and were finished by May. Although California ships fresh strawberries every month, April and May are usually the peak shipping months. However, rain delayed the 1995 harvest and June shipments were higher. Oregon strawberries were mostly harvested in June and processed (frozen). Rains in mid-June caused higher than normal field rot in some areas of Oregon and output was down 15 percent from 1994. Ample Frozen Strawberry Stocks Stocks of frozen strawberries were high at the beginning of the year and have remained above the year earlier. One-third of California's record-large crop was frozen in 1994 and 90 percent of Oregon's. The total U.S. frozen pack reached 484 million pounds (processed weight), up 7 percent from the prior year. Although stocks declined from the July peak of nearly 344 million pounds to 245 million pounds by the end of 1994, they were 14 percent higher than the year earlier. In spite of strong exports and delayed harvest, frozen strawberry stocks were still 5 percent above the year earlier on May 31, 1995. Deliveries of strawberries to processors were slow early in the season. By June 30, 1995, deliveries of grade-1 freezer berries were down 13 percent from the same time in 1994. Oregon deliveries were down 12 percent and California's were off 8 percent. After falling short of year-earlier levels in April and May, California deliveries picked up in mid-June and continued strong into July. By July 22, season-to-date deliveries of California strawberries to freezers had caught up to the year earlier, only to drop off sharply in the following weeks. Total deliveries to processors in 1995 will likely be down from the year earlier and the frozen pack will be smaller. Higher Prices Prevail Demand has been strong for fresh and frozen strawberries and, despite the record-large California crop in 1994, grower prices rose. In 1994, the average price received by U.S. growers for fresh-market strawberries was 60.2 cents a pound, up from 54.1 cents in 1993. Grower prices for all processed strawberries averaged 29.1 cents in 1994 compared to 28.4 cents the year earlier. Expectations of a smaller crop and rain-delayed picking in 1995 raised January-through-July prices for fresh strawberries nearly 15 percent from the year earlier. In contrast, processing prices are likely to average lower this year due to large carryover stocks of frozen strawberries. More Trade with Mexico Mexico had a large 1994/95 strawberry crop and exports to the United States rose. Shipments of fresh-market strawberries from Mexico in the United States totaled 52 million pounds from January through June 1995, compared to 41 million during the same period of 1994. The delayed harvest in California, devaluation of the peso, and lower tariffs under the NAFTA also contributed to the surge of strawberry exports from Mexico to the United States. U.S. frozen strawberry imports were nearly 50 percent higher during the first 5 months of 1995 than in 1994, while imports of fresh strawberries were up by one-third. Strawberry exports were booming in 1994, when fresh exports rose 24 percent and frozen exports rose 56 percent from the year earlier. Although U.S. exports of fresh strawberries in January-May 1995 were off 18 percent from the prior year, exports of frozen strawberries were 42 percent higher. Canada is the main destination for U.S. fresh strawberry exports, followed by Mexico, Japan, and the United Kingdom. Japan receives the most frozen strawberries. U.S. exports to Mexico nearly doubled in 1994, aided by the large California crop and lower tariffs under NAFTA. Another Consumption Gain U.S. strawberry consumption set a new record during 1994, topping 5 pounds per person. Americans consumed an average 4.00 pounds of fresh strawberries and 1.12 pounds (fresh-weight equivalent) of frozen strawberries (1.26 pounds, processed weight). Fresh use of the U.S. crop reached an all-time high in 1994 and, although exports were also record high, total U.S. consumption of fresh strawberries was more than 1 billion pounds. The industry reported an increased frozen pack in 1994 and, although exports rose, domestic consumption did not, leaving ending stocks higher. Total and per-capita consumption of frozen strawberries declined 3-4 percent in 1994. Blueberry Production Rebounds U.S. blueberry production is expected to be up 25 percent in 1995, due mainly to large crops in Michigan and Maine. Plentiful supplies of fresh and frozen blueberries put downward pressure on prices. __________________________________________________________________________ Fresh Blueberries Good crops in most of the major blueberry-producing States provided ample fresh-market blueberries all through the summer of 1995. And given the projected total size of the crop, U.S. blueberry prices are likely to average lower in 1995. Reduced production in 1994 pushed the average price paid to growers for fresh blueberries up to 90 cents a pound from 88 cents in 1993. New Jersey is the main source of fresh blueberries, providing one-third of U.S. fresh-market use in 1992-94. The largest crop in 3 years is anticipated in 1995 and two-thirds of New Jersey blueberries are typically fresh marketed. A much larger crop is expected in Michigan, which recently provided nearly one-fourth of U.S. fresh-use blueberries, although most Michigan blueberries are processed. Processing Blueberries Frozen blueberry supplies would be rebuilt by the large crops processors are expecting in Maine and Michigan. Virtually all of Maine's wild lowbush blueberries are usually frozen and the crop was projected to jump from less than 60 million pounds last year to 75 million pounds in 1995. However, a dry summer in Maine has likely reduced crop prospects. In Michigan, processors anticipated a record-large blueberry crop of 89 million pounds, nearly 90 percent larger than the freeze-reduced 1994 crop. USDA estimated nearly 70 percent of Michigan's 1994 crop was processed. Increased production in Michigan, Maine, and some of the Canadian Provinces will put downward pressure on processed blueberry prices. However, stocks were drawn down in 1994 and continued strong export demand for frozen blueberries will prevent a precipitous price drop in 1995. USDA reported about 32 million pounds of frozen blueberries in U.S. cold storage facilities on June 30, 1995, down 23 percent from the year earlier. And, during January-May 1995, frozen blueberry exports were 50 percent higher than in the same months in 1994. Blueberry Consumption Stable Americans consumed about three-quarters of a pound of blueberries per person in 1994, composed of 0.49 pounds of frozen berries and 0.27 pounds of fresh. Per capita consumption of fresh blueberries stayed at the record-high attained in 1993 while frozen consumption rose from 0.47 pounds. Relatively high beginning stocks and increased imports in 1994 kept U.S. supplies of frozen blueberries from declining more than 4 percent when the commercial pack dropped 20 percent, to 110 million pounds. Frozen blueberry imports swelled by more than 60 percent in 1994, to 20.6 million pounds. At the same time, U.S. imports of fresh blueberries increased 7 percent, to 19.1 million pounds. Canada is the source of nearly all blueberries imported by the United States. Tighter supplies reduced U.S. blueberry exports in 1994. Fresh-market blueberry exports were off 6 percent from the year earlier, to 17.4 million pounds. Shipments to Canada declined 8 percent, but still amounted to 90 percent of U.S. fresh blueberry exports, while shipments to Switzerland and Germany increased. Frozen exports were down 7 percent, to 16 million pounds in 1994. Shipments to Germany, the main destination of U.S. frozen blueberry exports in 1993, dropped sharply in 1994 while U.S. exports to Canada, the Netherlands, and Japan increased. A large crop in 1995 will provide more blueberries for export. Tropical Fruit Outlook Banana Imports and Consumption Up U.S. banana imports topped 8 billion pounds in 1994 and continued to outpace the previous year early in 1995. Consumption increased to 28 pounds a person. ____________________________________________________________________________ Banana Popularity Grows U.S. banana consumption increased more than a pound per person in 1994, climbing to 28.0 pounds from 26.8 pounds in 1993. Bananas remained the most popular fresh-market fruit consumed in the United States, trailed by apples (nearly 20 pounds per person) and oranges (about 15 pounds per person). Continued high tariffs on Latin American bananas in European markets brought more to the United States, where banana imports were record-high in 1994. [See the accompanying special article about the effects of the EU banana policy on the U.S. market.] Almost all of the U.S. banana supply is imported from Central and South America. Hawaiian production increased to 13.7 million pounds in 1994, while U.S. imports totaled 8.144 billion pounds. Costa Rica was the main source of U.S banana imports for the third year, providing 27 percent, while Ecuador provided 21 percent, followed by Colombia, Honduras, and Guatemala. From January through May 1995, 4.4 percent more bananas were imported to the United States than during the same period the prior year. Banana Price Drop Stops Banana prices have shown some signs of recovery from a 2-year slump. Banana prices are usually highest between February and May, drop as U.S. summer fruit becomes available, and remain seasonally low from August until January. From January through June 1995, retail prices averaged 49.4 cents a pound, up from 47.3 cents during the same period in 1994. And during all of 1994, retail banana prices averaged 46.2 cents a pound, compared to 43.9 cents in 1993, and 45.8 cents in 1992. More limited stonefruit, apple, and pear supplies will help support banana prices during the rest of 1995. Record High Imports Boost Tropical Fruit Supplies Mango imports from Mexico pushed U.S. consumption to a record high. Florida's mango output increased, while Hawaii provided fewer pineapples and papayas. ______________________________________________________________________________ Florida's Mango Production Doubles Florida harvested 5.5 million pounds of mangoes in 1994, twice the 1993 output, but still only one-fourth of the pre-hurricane level. Increased mango production reflects partial recovery from Hurricane Andrew and was due to higher yields per tree and a few more trees. Higher output pushed the average grower price to 27.3 cents a pound in 1994, down 21 percent from the prior year, but well above the 1989-92 average. Mango production will continue to increase in Florida over the next several years, as bearing acreage slowly recovers from the damage done by Hurricane Andrew in August 1992, after the crop was harvested. Mango production in 1994 was 75 percent less than in 1992, bearing acreage was down about one-third, and the number of bearing trees was down 63 percent. Florida had 300 more acres of mango trees in 1994, mostly in Dade County where the most serious damage from Hurricane Andrew occurred. Although the number of bearing-age (5-year-old) trees increased by 2,000 to 151,000 trees, most of the additional area was nonbearing. Florida's mango-producing area was not affected by Hurricane Erin, which struck central Florida August 2, 1995. Mango production is concentrated in the southern portion of the State. Another Import and Consumption Record Record-high mango imports during 1994 compensated for relatively low domestic production and raised domestic consumption to a new record. U.S. mango imports were up 11 percent from 1993 and 62 percent from 1992. Imports accounted for 98 percent of total U.S. mango supplies in 1994 and consumption of mangoes rose from 0.90 pounds per person in 1993 to 0.98 pounds in 1994. Mexico remains the major supplier of mangoes to the United States, accounting for 88 percent of 1994 imports. Shipments from Mexico during 1994 reached 238.9 million pounds, 13 percent above the year before. Peru, Venezuela, Haiti, Guatemala, Brazil, and Ecuador each exported at least a million pounds of mangoes to the United States. U.S. mango imports are likely to increase in 1995, putting downward pressure on wholesale prices. Mexico is expected to produce a large mango crop in 1995, as in 1994. However, more of the 1995 supply is reportedly of export quality than the prior year. The cost of Mexican mangoes is down because the dollar is strong relative to the peso. U.S. mango imports between January and May 1995 were 29 percent higher than at the same time in 1994 and the average value was 38.9 cents a pound, 9 percent below the year earlier. The Mexican shipping season is usually from February to August, with peak shipments to the United States in July. Papaya Imports Boost Consumption Increased papaya imports, mainly from Mexico, raised fresh papaya consumption to 0.30 pounds per person in 1994, 7 percent above 1993. Growth of imports more than compensated for a dip in Hawaiian production. Imports accounted for 42 percent of U.S. fresh papaya supplies in 1994, compared with 35 percent in 1993. Total imports increased to 41.2 million pounds in 1994, up 32 percent from the year before. Mexico is the leading foreign supplier of fresh papayas to the United States, providing nearly 33 million pounds in 1994, about 80 percent of total U.S. papaya imports. Despite a slightly smaller Hawaiian crop, U.S. exports of fresh papayas increased to 18.3 million pounds in 1994, up about 10 percent from the prior year and the highest since 1991. Hawaii produced 62 million pounds of papaya in 1994, down nearly 3 percent from the prior year. The decline in utilized output reflects a 14-percent decrease in harvested acres. Fresh use accounted for 91 percent of all utilized production in 1994 and amounted to 56.2 million pounds, 2 million less than in 1993. Processed utilization rose to 5.8 million pounds, but was well-below the all-time high of 15.5 million pounds in 1992. Papaya production will likely continue to decline, resulting in higher grower prices. During the first 6 months of 1995, harvested acreage averaged 7 percent higher but yields were lower and Hawaiian production was 21 percent less than the same period a year ago. Lower per-acre yields were attributed to the continuing spread of the papaya ringspot virus and variable weather. Some dry periods in January, February, and March affected yields because most of the papaya-growing areas are not irrigated. Grower prices for fresh-market papaya averaged 33.7 cents a pound from January through March, 27 percent higher than a year earlier. More fresh papaya imports are expected to offset some of the declines in domestic production during 1995. Imports have consistently increased over the last 7 years and have accounted for an increasing share of total papaya supplies. January through May imports were already 93 percent higher than the same period in 1994. U.S. Pineapple Production Continues To Decline Hawaiian pineapple production declined for the seventh consecutive year in 1994, totaling 730 million pounds, about 1 percent less than in 1993. Fresh use decreased from 270 million pounds in 1993 to 260 million pounds, while processed use remained unchanged at 470 million pounds. Hawaiian pineapple production will probably continue to slide in the face of increased industry pressure from rising production costs, foreign competition, a tight labor situation, and an oversupply of canned pineapple products. Lower production pushed down the value of the 1994 Hawaiian pineapple crop to $78.9 million, about 1 percent less than the year before. Acreage harvested increased by 300 acres from 22,000 acres in 1993, as former sugarcane lands became available for pineapple production. However, the Hawaii Department of Agriculture reported only 15 farms growing pineapple in 1994, down from 20 in 1993 and 21 in 1992. The 1994 season-average grower price for pineapples was unchanged from 1993. Grower prices for fresh market pineapples averaged 2 percent higher, but a smaller proportion of the crop was used fresh. In addition, utilized production and the season-average price for processing pineapples remained unchanged from the year before. U.S. fresh pineapple imports will continue to aid in meeting domestic supply needs. Lower domestic production in 1994 was augmented by 289.1 million pounds of imports, keeping U.S. supplies nearly unchanged from the prior year. Fresh pineapple consumption was 2.04 pounds per person in 1994, also about the same as in 1993. Imports increased for the seventh consecutive year and reached an all-time high in 1994. From January through May 1995, imports were about 3 percent above a year ago. Exports, on the other hand, declined for the second consecutive year, to 12.8 million pounds in 1994, 12 percent below the prior year. Exports through May of 1995 were down nearly 8 percent from January-May 1994. Costa Rica continues to be the major supplier of U.S. fresh-market pineapple imports. Duty-free status, established in the Caribbean Basin Initiative in 1983, encouraged more imports from Central American and Carribbean countries. In 1994, Costa Rica, the Dominican Republic, and Honduras were the main sources of U.S. fresh pineapple imports, accounting for 63 percent, 22 percent, and 8 percent, respectively. Mexico was the major source of fresh pineapple imports in the early 1980s but accounted for only 4 percent in 1994. Imports of canned pineapple continue to represent a significant proportion of U.S. supplies (nearly 90 percent in 1994). The United States imported 740.1 million pounds of canned pineapple in 1994 and exported 8.3 million pounds. In addition, U.S. pineapple juice imports during the same year totaled 73 million gallons, while exports were only 2 million gallons. The three major suppliers of processed pineapple imports in 1994 were Thailand, the Philippines, and Indonesia, representing 91 percent of all canned pineapple imports and 92 percent of all pineapple juice imports. Unlike fresh pineapples, imports and consumption of canned pineapple and pineapple juice in the United States came down in 1994. Juice imports dropped 18 percent and canned imports were off 3 percent. Pineapple juice consumption dropped 17 percent from 1993 to 0.35 gallons in 1994. Reduced supplies brought canned pineapple consumption down 3 percent, to 3.17 pounds per person. Antidumping Investigation on Canned Pineapple Imports Concluded On June 29, 1995, the U.S. International Trade Commission (ITC) made an affirmative final determination (under section 735(b) of the Tariff Act of 1930) that the domestic canned pineapple industry was materially injured by canned pineapple imports from Thailand being sold in the United States at less than "fair value". Thailand provided nearly half of all U.S. canned pineapple imports during the last 6 years. This determination will lead to duties levied on canned pineapple imports from Thailand to raise the import price of this product to a fair value. The duties will be collected by the U.S. Customs Service under the direction of the U.S. Department of Commerce. The final dumping margins, announced by the International Trade Administration, U.S. Department of Commerce, will vary by company and range from 2.36 to 55.77 percent of the product value. Citrus Fruit Outlook Large Florida Citrus Crops Harvested in 1994/95 Favorable weather, maturing yields, and more bearing trees led to bumper orange and grapefruit crops in Florida. California citrus output was unchanged from the year before, while Arizona's dropped and Texas' rose. ______________________________________________________________________ The July forecast for U.S. citrus production in 1994/95 was nearly 16.1 million short tons, up 11 percent from last season and 3 percent less than the 1979/80 record. Favorable weather, an increased number of bearing-age trees, and higher per-acre yields of oranges and grapefruit in Florida contributed to the large citrus crops. Excessive rainfall and harsh weather early in 1995 did not reduce California orange production, which is forecast nearly the same as last year. Meanwhile, Arizona's crop declined due to hot weather during last year's bloom and fruit set. Orange output in Texas surpassed Arizona for the first time since Texas suffered severe tree losses following a freeze in 1989. Large supplies pushed down grower prices for oranges in 1994/95. Record grapefruit output in Florida coincided with larger crops in Texas and California and a smaller crop in Arizona. Ample supplies of fresh-market grapefruit resulted in generally lower prices during 1994/95. Plentiful Orange Juice Sinks Grower Prices A bountiful Florida orange harvest, a modest decline in Brazilian orange juice output, and stable U.S. demand for orange juice reduced grower prices for processing oranges in 1994/95. ______________________________________________________________________ U.S. orange juice production in 1994/95 is forecast at a record 1.27 billion single-strength gallons, up 13 percent from 1993/94. Florida harvested 205.4 million 90-pound boxes of oranges, up 18 percent from 1993/94 and the most since 1979/80. The all-orange Florida juice yield was 1.50 gallons (42 degrees Brix) per box, dropping 4 percent from last year's near record. About 95 percent of Florida's oranges were processed, up slightly from a year earlier. Monthly on-tree prices for processing oranges in Florida ranged from $2.15-$4.80 per 90-pound box in 1994/95, down about 15 percent from a year earlier and similar to 1992/93. Ample supplies of low-priced Florida orange juice have reduced U.S. imports, which are forecast down 44 percent in 1994/95 (beginning December), the lowest in 10 years. Also, relatively strong orange juice demand in Europe and a modest decline in Brazilian output kept the price (U.S. basis, including import duty) of Brazilian frozen concentrated orange juice (FCOJ) above the price of Florida product this season, reducing the incentive to import Brazilian FCOJ into the United States. Domestic Consumption Stable, Exports Grow in 1994/95 The processing margin between the price of oranges and the price of bulk concentrate tends to widen when growers harvest a large crop. This market condition, combined with higher prices for imported product, led to only slightly lower FCOJ retail prices for most of the first half of 1994/95. Retail prices for all forms of orange juice (concentrate and ready-to-serve) from December to mid-June averaged the same as a year earlier. With retail prices mostly flat in 1994/95, domestic consumption is forecast to tie last year's record 1.39 billion single-strength gallons. Meanwhile, orange juice exports advanced on lower prices and growing demand in Europe. Foreign shipments are forecast at a record high 120 million gallons for 1994/95. Europe is the leading customer, accounting for almost half of U.S. exports this season. Brazil FCOJ Output To Decline USDA forecasts Brazil's FCOJ production and exports down about 10 percent in 1995/96 (beginning July) due to lower juice yields and increased diversion to the domestic fresh-fruit market. The processing season began about two months later than normal because the fruit matured later this year. The drought in 1994 delayed the bloom and fruit set for the 1995 crop. Limited Brazilian carryover supplies and declining inventories in Florida may help to firm world prices until Brazil's processing season gets fully underway in September. Florida Growers Brace for Another Big Crop The 1995/96 bloom was excellent in all areas of Florida, which raises the potential for a large crop. The number of bearing orange trees will increase from 70 million in 1994/95 to approximately 76 million in 1995/96, as trees planted in 1992 begin to bear commercial quantities of fruit. However, more important than tree numbers is the increase in yields as trees mature, especially those planted after the freezes of the 1980s. Damage from Hurricane Erin, which passed through central Florida in August, was minimal. Current industry forecasts for Florida's 1995/96 orange crop range from about 200 to 220 million boxes. The first USDA forecast will be released in October. If the Florida orange crop exceeds 200 boxes, U.S. orange juice production would be record high in 1995/96, signaling another year of low grower prices. However, a small decline in Brazilian FCOJ production, if met with continued strong demand in Europe, may leave the world supply and demand balance for orange juice relatively unchanged in 1995/96. Consequently, grower prices for processing oranges may not decline significantly from prices received in 1994/95. Orange Prices Perk Up in 1995 A slightly smaller California-Arizona Valencia crop and reduced supplies of other fruit pushed up fresh-market orange prices earlier this summer. Strong export demand and rains that hampered California harvesting kept fresh-market navel orange prices firm in January and February 1995. ______________________________________________________________________ The U.S. orange crop is forecast at 11.7 million short tons in 1994/95, up 14 percent from the year earlier, and slightly under the 1979/80 record. More Florida oranges account for the increase. Navel and Valencia output in California-Arizona is forecast down less than 1 percent from 1993/94. From November 1994 through July 1995, on-tree prices for fresh-market oranges in California averaged $7.88 per 75-pound box, down 5 percent from the year earlier, but about the same as the 2-year average. Navel Orange Shipments Affected by Rain Fresh-market navel orange shipments from California slowed earlier this year when persistent rains hampered harvesting in the coastal areas as well as in the Central Valley. The adverse weather slowed shipments and firmed up orange prices in January and February when f.o.b. prices for California navels averaged about 6 percent higher than the year earlier. Shipments increased and prices declined in March as the skies partially cleared. Export demand for fresh-market oranges picked up in 1994/95 from the prior season due to better quality fruit and a better size structure, which added some price support. From November 1994 through May 1995, fresh orange exports totaled 465,000 tons, up 10 percent from a year before. Exports to Canada, the largest foreign market, were down slightly, but shipments to Japan advanced. The industry expects California navel production in 1995/96 to hold steady for the third season in a row. The first USDA forecast for California navel orange production will be available in September. California-Arizona Valencia Production Off The California-Arizona Valencia crop is forecast at 26.7 million 75-pound boxes in 1994/95, down 2 percent from last season. Smaller supplies, relatively good export demand due to good quality, and less competition from other California fruits have strengthened grower and f.o.b. prices for Valencia oranges earlier this summer. In June, on-tree prices averaged $9.05 per 75- pound box, up 7 percent from a year earlier, but were down to $7.05 in July, 1 percent below the year earlier. Higher Supplies Push Down Grapefruit Prices Large grapefruit crops in Florida and Texas led to lower grower and retail prices in 1994/95. Grapefruit juice output climbed, severely reducing grower returns for processed grapefruit. ___________________________________________________________________________ U.S. grapefruit production is expected to total 2.90 million short tons in 1994/95, up 9 percent from last season and just under the record of 3.03 million set in 1976/77. Favorable weather, more bearing trees, and higher yields from maturing trees boosted the Florida crop to a record 2.37 million tons. Texas output continues to rebound following a 1989 freeze, climbing 47 percent to 176,000 tons. Hot weather during bloom reduced Arizona's crop 20 percent, while California output rose 2 percent. Grower prices for fresh-market grapefruit in Florida averaged 10-15 percent lower than last year, but slightly higher than in 1992/93. The large Florida crop, more competition from Texas grapefruit, and lower-than-expected export demand weighed on fresh-market grower prices. Domestic Consumption Up, Exports Even Domestic consumption is forecast to advance in 1994/95 due to lower prices and sluggish foreign demand. Retail prices averaged 50 cents a pound from September 1994 through June 1995, down 2 percent from a year earlier. However, per capita consumption remains well below that of the early 1980s. Fresh grapefruit exports from September 1994 through May 1995 totaled 473,000 short tons, up 5 percent from a year earlier. Exports for the season were expected to remain about the same as the prior year, despite a larger Florida crop, due to lower availability of export quality grapefruit at the end of the Florida season in 1995. Juice Stocks Overflow A larger crop and a larger portion processed more than offset lower grapefruit juice yields. Florida grapefruit processors packed 31 million 40-degree-Brix gallons of concentrated grapefruit juice (excluding reprocessed juice), up 17 percent from 1993/94. Increased output and high stocks from bumper output the prior two seasons kept frozen concentrated grapefruit juice supplies high. In mid-July, product-on-hand in Florida totaled 23 million gallons, up 12 percent from last year and 45 percent higher than the 3-year average. High stocks have put some downward pressure on retail prices for grapefruit juice, but demand is relatively weak. Retail grapefruit juice sales from November through mid-June were down 4 percent, while prices declined 1 percent. Not-from-concentrate juice was the only category that registered a volume increase. As expected, grower prices for processing grapefruit in Florida have been extremely low in 1994/95. Returns are expected to average less than $0.50 per 85-pound box (on-tree), down from $1.36 in 1993/94 and the lowest in more than 10 years. With significant product on hand, another large grapefruit crop would signal low grower prices again in 1995/96. Tree Nut Outlook Almond Crop Cut in Half, Walnut Output Up in 1995 Spring storms sharply reduced California's almond output, while walnuts escaped damage. Generally good weather conditions portend increased hazelnut and pecan production. ______________________________________________________________________ Almond Supplies Down and Prices Up California almond production is forecast at 310 million pounds (shelled basis), down 58 percent from last year's record and the smallest since 1986. Heavy rain and winds during the bloom period caused bloom loss and pollination problems this spring. Also, many producing areas suffered tree losses from the severe weather, with the Sacramento Valley especially hard hit. Bearing acreage is estimated at 390,000 acres in 1995, down from 403,000 last year. Tree conditions and nut sets vary within orchards, while nut sizes range from normal to large. Crop development is behind normal due to the cool, wet weather in March. Beginning stocks are the highest in 4 years, but the tremendous crop shortfall will reduce total almond supplies by more than one-third. Grower prices for almonds are expected to be sharply higher in 1995/96. In July, list wholesale prices were up 75 percent from a year earlier. The 60-million-pound almond reserve was released to the market following the first crop forecast in May. In 1994/95, U.S. consumption and exports advanced due to lower prices. Grower prices averaged $1.25 per pound, down from $1.94 in 1993/94. Strong foreign demand, especially in Europe and the Middle East, pushed exports record high, and cleared out a large part of the 1994 crop. Walnut Output Up 6 Percent California walnut growers expect to harvest 490 million pounds (in-shell basis) in 1995, up 6 percent from last year. The bloom was late this year, so orchards were not affected by the spring storms. Lower carryin is expected to offset higher production in 1995/96, leaving total supplies about the same as the previous season. Expanding walnut exports could minimize the impact of a larger crop on grower prices. Foreign shipments are expected to top 100 million pounds (shelled basis) for the first time in 1994/95. The United States is shipping more walnuts to big in-shell markets such as Germany, Italy, and Spain, as well as to Japan--the major shelled-walnut market. Industry Expects Pecan Crop To Rebound The pecan industry expects the 1995 crop to total 210-250 million pounds, up from the 199-million-pound crop harvested in 1994. The first USDA forecast will be available in September. Stocks on July 1, 1995, returned to a more typical level after ballooning last year following the enormous 1993 crop of 365 million pounds. If the 1995 crop is near 230 million pounds, the midpoint of the industry range, pecan production plus carryin would be about the same or slightly lower than the previous season. Little change in U.S. supplies and a reportedly smaller crop in Mexico--the principal U.S. supplier--should indicate little change in grower prices in 1995/96. Grower prices averaged $2.40 per pound (shelled basis) in 1994/95, up from $1.36 the year before. Hazelnut Output Surges The 1995 hazelnut crop is expected to be up sharply from 1994. Weather has been nearly ideal all season, unlike the previous year's hot, dry conditions. USDA's first forecast of production will be available late in August. Beginning stocks are down some, but a bumper crop will boost supplies and pressure grower prices in 1995/96. The U.S. agricultural attache reported reduced production prospects for Turkey, the world's largest hazelnut producer, which would provide some support to U.S. grower prices. In 1994/95, reduced U.S. hazelnut supplies and strong export demand raised the U.S. average grower price to $1.05 per pound (shelled basis). Domestic consumption dropped due to higher prices, while ending stocks declined to the lowest in 5 years, clearing the way for a large 1995 crop. U.S. in-shell exports increased, particularly to Germany and the United Kingdom, while shelled hazelnut exports declined. Good Prospects for Pistachios The industry reports good growing conditions for the 1995 California pistachio crop, boosting the likelihood of increased production. As with walnuts, the harsh spring weather occurred prior to bloom and is not expected to have affected pistachio output. USDA's first indication of production will be available in January. Pistachio production declined in 1994 following two record crops. Beginning stocks were record high last year, so supplies were relatively large and prices lower in 1994/95. Consumption and exports are forecast to increase, reducing ending stocks about one-third from a year earlier. Moderate beginning stocks in 1995, coupled with continued strength in domestic and export demand, are expected to provide some support to grower prices in 1995/96. Special Article Bananas: The Top Fruit For U.S. Consumers John M. Love Abstract: Banana consumption is the highest among fresh fruits consumed in the United States, spurred by banana retail prices that continue to decrease relative to other fruits. Nearly all U.S. banana imports come from Latin America, and 1995 imports are forecast to hit 8.5 billion pounds. Central America has increased its share of the U.S. banana market, due in part to lower prices relative to South America. The European Union (EU) policy of regulating its banana imports is likely diverting supplies to U.S. markets and keeping prices competitive with other fruits. The EU policy favors EU and overseas territories, and African, Caribbean, and Pacific (ACP) countries by granting duty-free quotas, while setting quotas and charging tariffs on bananas from Latin American countries. Key words: Banana, consumption, prices, demand, European Union, trade policy. U.S. Banana Demand Is Price Sensitive Bananas are the leading fresh fruit in the diet of U.S. consumers. The banana's appeal is a high vitamin and fiber content, affordability, snacking convenience, and year-round availability. The United States is likely to import about 8.5 billon pounds of bananas in 1995, which would amount to consumption of over 29 pounds per person. In comparison, U.S. per capita consumption of fresh apples averages about 20 pounds, oranges 14 pounds, and grapes 7 pounds. Bananas will account for over 30 percent of U.S. fresh fruit consumption in 1995, up from 26 percent in 1990. U.S. retail prices for bananas average about $0.45 a pound, making bananas worth $3.8 billion for retailers. Bananas, relative to other fresh fruits, have become more affordable in recent years. The index of U.S. consumer prices for bananas is likely to average 143 (1982-84=100) in 1995--up only 4 percent from 1990--while all other fruits are likely to average 225--up 29 percent. Also, retailers apparently limit price variability for bananas, maintaining its status as a staple in the produce department. In 1994, for example, the monthly index of retail banana prices ranged from 138 to 158--a 14-percent difference. Wholesale prices ranged from $10 a 40-pound box ($0.25 a pound) to $15 a box--a 50-percent difference. The 1994 monthly index of consumer prices for oranges ranged from 162 to 221 (36-percent difference), apples 161 to 188 (17 percent), and other fruit 212 to 261 (23 percent). Bananas Come to the U.S. Mainly from Latin America U.S. banana supplies come almost entirely from Latin American countries. Hawaii, producing 14 million pounds in 1994, is a minor source of bananas for U.S. consumption. Central America (principally Guatemala, Costa Rica, Panama, and Honduras) accounted for 54 percent of U.S. banana imports in 1994, while South America (principally Colombia, Venezuela, and Ecuador) accounted for about 41 percent. The share of U.S. banana imports from Central America has increased in recent years from 45 percent in 1990, while the share from South America has decreased from 50 percent in 1990. In recent years, the increasing share of bananas coming from Central America is related to lower average costs, relative to South America. In 1994 the per-unit value of bananas from Central America averaged $0.12 per pound (at the port of embarkation), 6 percent below the value of South American bananas. Compared to 1990, Central American banana prices decreased 14 percent and South American increased 3 percent. Thus, over the 4-year period, the relative cost of Central American bananas decreased 17 percent, providing importers with an incentive to switch regions. Bananas are picked green, and the stem ends are often treated with a postharvest fungicide to reduce spoilage. Upon arrival in U.S. ports, bananas are stored in large ripening rooms for up to several weeks and are typically treated with ethylene gas (a natural ripening compound) before distribution to wholesale and retail markets. Bananas arrive in U.S. markets year-round, but usually peak around May. At this time, just before harvest of California summer fruits, orange supplies are declining and prices of U.S. apples from storage begin seasonally increasing. EU Banana Import Regime and the U.S. Market The European Union (EU) policy of limiting banana imports from Latin America--giving preference to African, Caribbean, and Pacific (ACP) banana growers--in effect has increased availability of bananas in the U.S. market since July 1993 (see box). U.S. banana imports in 1994 were up 5 percent from 1993 and, through March 1995, increased at a 7-percent annual rate. The pace slowed to about 4 percent in June due to short-term weather and labor problems in Latin America, but is expected to pick up. The EU policy is aimed at aiding small ACP countries that depend on bananas for a significant share of their export earnings. But the United States has asked the EU to change its policy to accommodate more bananas shipped by U.S.-owned companies. U.S. companies ship bananas from Guatemala, Costa Rica, Panama, and Honduras in Central America, and from Colombia, Venezuela, and Ecuador in South America. The U.S. position is that EU assistance to ACP countries should not be tied to limited access for Latin American bananas in EU markets. A limited EU market leaves the United States as the alternative for a recent buildup of capacity in Central and South American banana production. Anticipating free access to a common European market several years ago, banana producers in Central and South America reportedly geared up for a boom in sales. Access through EU traders to Central and Eastern European markets had also expected to increase sales. But with the removal of intra-EU trade barriers, the restrictive import policies of France, Spain, and the United Kingdom (various tariff and nontariff barriers) became the single policy for all EU countries. Increased supplies on the U.S. market could lead to even lower banana prices relative to other fruit, which would likely boost banana consumption. With banana supplies higher through most of first-half 1995, U.S. wholesale prices for bananas were relatively low, and the 1995 annual average retail price is expected to drop relative to other fresh fruits. New York wholesale prices stayed below $11 per 40-pound box during most of first-half 1995, compared with $12-$15 per box in first-half 1994. During late-June to August 1994, wholesale prices shot up to $14-$16 a box on reports of shortages in Central America. Similar reports for June-July 1995 sent prices temporarily higher. Banana retail prices were up 5 percent during first-half 1995, compared to a year earlier, while other fruit prices were up 7 percent. A drop in banana prices is expected during the second half because of increased supplies. The reduced output and higher prices of California stone fruits may have offered a brief boost to banana prices, but the downward pressure is expected to resume by late summer with new U.S. crops of apples, pears, and grapes. The EU Banana Import Regime The European Union (EU) banana import regime, in place since July 1, 1993, favors "Community" bananas--mainly from countries with historical or political ties to the United Kingdom, France, or Spain. Bananas from EU and overseas territory producers, and from ACP (African, Caribbean, and Pacific) countries such as Cote d'Ivoire, Cameroon, St. Lucia, and Jamaica, are given duty-free quotas on imports to the EU. However, over-quota sales are subject to tariffs. In contrast, the policy sets quotas and charges tariffs on bananas from Latin American countries that have bilateral agreements with the EU. Prior to the implementation of a single, EU-wide policy in July 1993, regulations on banana imports from Latin American producers varied by importing country. Germany kept an open market for bananas. Belgium, Denmark, Ireland, Luxembourg, and the Netherlands imposed a 20-percent tariff. France, the United Kingdom, Italy, Spain, Greece, and Portugal imposed various tariff and nontariff barriers. "Community" bananas accounted for about 35 percent of EU banana imports before the July 1993 policy change. They now account for nearly 45 percent. Latin American suppliers, whose exports to the EU had increased rapidly since the late 1980's to 2.7 million tons in 1992, currently export only about 2 million tons annually. In part to adjust for EU enlargement with the addition of Austria, Sweden, and Finland, the tariff-rate quota (principally for Latin American producers) was raised 16 percent to 2.55 million metric tons (2.8 million short tons) in 1995. Also, since January 1, 1995, quota licenses were made transferable among ACP countries in the event that assigned quotas cannot be used, due to external events (drought or storm, for example). Licenses that allocate EU quotas for bananas are used to guarantee access to the EU market. Except for Community bananas, a 20-percent tariff (ad valorem equivalent) is charged on within-quota amounts, and 170 percent is charged for over-quota amounts. Quotas are set by the EU to meet projected consumer needs, and over-quota sales are generally not expected. Although the licenses are now transferable among ACP countries, banana exporters have complained in the past about unaccountable methods of distribution--licenses were sometimes given to sellers who were not producing enough to fill their quota. When banana prices fall below the reference price set by EU regulations, compensatory aid is given to EU and overseas territory producers (such as Canary Islands, Martinique, and Guadeloupe). For example, when banana prices fell below the reference price during 1994, compensatory aid was set at about $4 per 40-pound box. The EU banana import regime, by limiting supplies, may be helping indirectly to support prices of other fruits, thereby lowering EU payments to domestic growers of fruits such as apples. In the absence of the regime, banana prices would likely be lower and consumption would rise. Prices of competing fruits would be pressured downward, adversely affecting fruit growers and potentially increasing EU budget outlays. EU consumers currently pay higher prices than U.S. consumers for bananas. In western Germany, for example, the March 1995 average price of bananas equaled about $1 a pound, compared with $0.50 a pound in the United States. In addition, German consumers pay higher prices for bananas relative to other fruits. For example, banana prices are 10 percent higher than apple prices. In comparison, U.S. banana retail prices are 40 percent lower than fresh apple prices. Before the new regime was put into place throughout the EU, banana prices in France and the U.K., where policies were more restrictive, averaged about 35 percent higher than those in Germany. According to a World Bank study, the EU banana import policy costs European consumers $2.3 billion annually in artificially inflated prices. Moreover, the policy increased costs by over 40 percent, compared with the various national policies in place 2 years ago. The study estimated a 12-percent increase in banana prices, on average, due to the new EU policy, and found the increased cost to consumers was distributed mostly to traders rather than to ACP banana growers. Special Article Competition of Chilean Horticultural Exports with the U.S. Horticultural Industry Boyd M. Buxton Abstract: Discussions on the accession of Chile into the North American Free Trade Agreement (NAFTA) are underway between the United States, Canada, Mexico, and Chile. Chile is a major supplier of horticultural commodities to the United States. Its potential accession to NAFTA raises questions about the impact on the U.S. horticultural industry. Because Chile's growing season is opposite from that of the United States, grapes, peaches, and plums enter when U.S. supplies are low. However, imports of apples, pears, kiwifruit, avocados, dry onions, and processed commodities are competitive with U.S. production. U.S. tariffs vary among commodities but most are relatively low compared with the 11-percent duty for U.S. exports to Chile. In addition, phytosanitary restrictions have effectively closed Chile to imports of fresh fruits and vegetables from all countries, including the United States. Key words: Chile, fruits, vegetables, horticultural commodities, trade, tariffs, phytosanitary restrictions. Introduction The North American Free Trade Agreement (NAFTA) between the United States, Mexico, and Canada was implemented on January 1, 1994. In December of that year, President Clinton and leaders of Canada and Mexico met with leaders of Chile and agreed to begin talks that could lead to the accession of Chile into NAFTA. The discussions are now underway with the expectation that the negotiations will lead to Chile becoming part of the NAFTA. Chile is an important supplier of horticultural commodities and products to the United States and its accession to NAFTA raises questions about the possible economic effects on the U.S. horticultural industry. The value of U.S. horticultural imports from all countries, including fruits (excluding bananas), vegetables, tree nuts, wine, cut flowers, and nursery stock, expanded from over $2.4 billion in 1980 to over $6.4 billion in 1994 (figure B-1). Chile's share of these U.S. imports rose from 1.7 percent or $40 million in 1980 to just over 6 percent or $429 million in 1994. Chile's Role in the U.S. Fruit and Vegetable Markets In terms of value, fresh fruit is by far the most important U.S. horticultural import from Chile accounting for one-third of total U.S. fresh fruit imports (excluding bananas) in 1993 and 1994 (table 1). Despite Chile's relatively small 7-percent share of total U.S. horticultural imports in 1994, its exports to the United States were concentrated in relatively few commodities, mostly fresh fruits, fruit juice, and some processed fruit and vegetables. Processed vegetables, mostly tomato and mushroom products, were equivalent to about 10 percent of the fresh vegetable imports from Chile, while processed fruit were equivalent to only 3 percent of fresh fruit imports from Chile. Chile is the dominant foreign supplier of fresh peaches (including nectarines), plums, grapes, and kiwifruit, accounting for over 74 percent of total U.S. imports in 1993 and 1994. Chile also accounted for about 50 percent of U.S. avocado and pear imports. Other important Chilean exports to the United States were processed tomatoes, berries (excluding strawberries), fresh apples, and fruit juice. Although representing a relatively small share of total U.S. imports, Chile exported significant values of wine and dry onions. In terms of total value, fresh grapes were by far Chile's leading horticultural export to the United States (figure B-2). Far behind grapes were peaches, apple juice, processed tomatoes, and plums. In 1994, the nine commodities represented in figure 2 accounted for well over 85 percent of Chilean horticultural exports to the United States. The remainder represented relatively small quantities of fresh fruits, some processed fruits (including grape juice), wine, fresh vegetables (asparagus, garlic, onions, and endive), and processed mushrooms, cucumbers, and artichokes. Chilean Exports to United States Are Often Complementary Chile's annual share of U.S. horticultural imports does not provide a complete picture of the competitive situation between Chile and the United States. Because Chile is in the Southern Hemisphere, some U.S. horticultural imports from Chile do not compete directly with the U.S. domestic industry, as they enter the United States when few if any domestic supplies are available. Monthly shipment data from USDA's Agricultural Marketing Service provide estimates of Chile's monthly share of the total U.S. market and of total U.S. imports (table 2, see figures B-3 and B-4). From 1991 to 1994, Chile, on average, accounted for virtually all U.S. imports of fresh plums and peaches, about 87 percent of U.S. table grape imports, and more than 50 percent of the fresh pears, avocados, and kiwifruit. Generally, fresh grapes, peaches, and plums are not competitive. However, some competitive overlap occurs for fresh grapes at the beginning and end of the U.S. shipping season. Early season grapes, mostly produced in California's Coachella Valley, are ready for market by early May before the Chile season ends and, therefore, are competitive with Chilean grapes. Similarly, Chilean grapes often enter the United States before the end of the U.S. marketing season in late November and early December. A similar, but less dramatic, overlap exists for peaches and plums. Chile is nearly 100 percent of the U.S. fresh peach and plum market during the winter season. In contrast, much of U.S. pear, apple, and avocado production is marketed year-round, making Chilean imports of those commodities directly competitive. Most kiwifruit from Chile are directly competitive with U.S. production, as they enter during the last portion of the U.S. marketing season. Chilean exports of apple juice and tomato products to the United States can be directly competitive with domestic supplies since they are storable. Chile represents a relatively small share of total U.S. imports of a number of commodities, including fresh vegetables. Increased exports to the United States would directly compete with Mexico, the major supplier of foreign winter vegetables, and winter vegetable production in Florida and California. Chile has not become a major supplier of fresh vegetables, probably because Mexico, with its closer proximity, has an advantage in U.S. markets. In 1993 and 1994, Chilean dry onion exports to the United States represented only 0.2 percent of the U.S. dry onion market but 2.6 percent of total U.S. imports. For the same period, Chilean exports represented only about 1 percent of the U.S. apple market but over 20 percent of U.S. imports. Tariff Barriers Between the United States and Chile Chile is designated as a beneficiary developing country and is assessed a lower tariff for some commodities under the Generalized System of Preferences (GSP). This status provides lower tariffs than the most favored nation (MFN) rates for many commodities. U.S. tariffs on imported Chilean horticultural commodities are set forth in the GSP and MFN rates specified in the Harmonized Tariff Schedule of the United States. No tariff is assessed on Chilean imports of fresh apples, kiwifruit, strawberries, or peaches from December 1 to May 30, pears from April 1 to June 30, and plums from January 1 to May 31. Seasonal tariffs are assessed on peaches, pears, and plums for other times of the year (Table 3). Chile imposes a flat 11 percent tariff on all fruit and vegetable commodities from the United States. Phytosanitary Barriers Effectively Bar U.S. Exports to Chile Table 4 lists horticultural commodities that Chile can export to the United States from all provinces and those that are medfly free. Special treatments for plant pests are usually required for commodities from the provinces that are not designated medfly-free zones. However, most fruit exports to the United States are from medfly-free zones. Phytosanitary restrictions have effectively closed Chile to imports of fresh fruits and vegetables from all countries, including the United States. The only exceptions are U.S. lemons, bananas, pineapples (excluding Hawaii), and coconuts. U.S. authorities are working with Chile to change existing phytosanitary barriers for additional U.S. horticultural commodities including apples, pears, grapes, peaches, nectarines, plums, raspberries, strawberries, avocados, and citrus. Summary and Conclusions If acceded into NAFTA, Chile would be required to eliminate tariffs immediately or to phase them out over a specified time period and to eliminate phytosanitary rules that are not scientifically based and justified. The United States would have to do the same. Under the terms of the Uruguay Round of the General Agreement on Tariffs and Trade, both countries are required to reduce tariffs and eliminate non-scientifically based phytosanitary rules. Chile's accession into NAFTA likely would have a relatively small economic impact on the U.S. horticultural industry because most commodities are presently allowed to enter and U.S. tariffs are quite low on most horticultural commodities. Some commodities enter the United States without a tariff. The highest tariffs are applied on processed fruit and vegetables and wine. Eliminating the relatively high tariffs on these competitive products could affect these sectors of the U.S. horticulture industry. On the other hand, eliminating Chile's 11-percent tariff and reducing existing phytosanitary barriers may provide opportunities to increase U.S. horticultural exports to Chile. Chile has expanded production of horticultural commodities, mostly for export, over the past 15 years and there is still potential for expansion should market opportunities become available. This raises questions about further expansion, especially into processed commodities such as canned fruit, fruit juice, and tomatoes, that might occur in Chile should it become part of NAFTA. END-END-END