VEGETABLES AND SPECIALTIES YEARBOOK -- SUMMARY July 22, 1999 July 1999, ERS-VGS-278 Approved by the World Agricultural Outlook Board --------------------------------------------------------------------------- This SUMMARY is published by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20036-5831. The complete text of this Yearbook will be available electronically about 2 weeks following this summary release. --------------------------------------------------------------------------- Vegetable and Melon Use Expected To Rise in 1999 In 1999, increased use of fresh vegetables are expected to outweigh reduced use of most other vegetable categories to push vegetable and melon consumption (on a fresh-equivalent basis) up 1 percent to a record high 453 pounds per person. Despite expected lower fresh-market imports, higher domestic production and lower prices will likely support a 5-pound increase in 1999 fresh vegetable and melon per capita use. In total, the United States is expected to consume about 123 billion pounds of vegetables and melons in 1999. This year's expected increase in vegetable and melon use would be a reversal of the scenario experienced in 1998. Last year, total vegetable and melon use was 449 pounds per person--down 1 pound from the previous year. Declining freshmarket vegetable use (down 4 percent) outweighed rising per capita use of canning and freezing vegetables (up 1 percent). In 1998, El Nino-related weather brought aboveaverage precipitation and below-average temperatures to many of the major vegetable-producing areas, reducing quality and yields, shifting harvest schedules, and ultimately raising prices. On the fresh-market side, significant declines in per capita use were experienced in head lettuce, cucumbers, carrots, and cabbage, partially offsetting increases in snap beans, asparagus, and broccoli. Based on preliminary data, per capita use of potatoes, the largest U.S. vegetable crop, rose 2 percent to about 145 pounds in 1998. Larger output and lower prices during the second half of the year encouraged consumption and outweighed the effects of smaller marketings and higher prices for potatoes from the 1997 crop. Both fresh and processing uses likely increased. While processed use, which now accounts for 65 percent of the potato crop, has been rising this decade, fresh use continues to remain relatively stable at around 50 pounds per person. This summer (largely July-September), fresh-market vegetable and melon area for harvest is forecast up 5 percent over a year ago. Increased summer acreage the past 2 years largely reflects strong grower prices during the previous summer season. During the summer of 1998, average prices received by growers for fresh-market vegetables were the second highest this decade (second only to 1997). California, accounting for 46 percent of this year's summer season area, increased acreage 9 percent. New York, the second leading summer-season producer with 11 percent of acreage, expects to harvest about the same area as last year. With market volumes above a year ago, third-quarter vegetable prices are expected to average below the highs of the past 2 years. In 1998, all U.S. vegetable and melon production declined 1 percent from the previous year to 1.3 billion hundredweight (cwt). Output was stronger for potatoes (up 2 percent) and dry edible beans (up 5 percent), but declining output for fresh-market vegetables and melons (down 4 percent), processing vegetables (down 5 percent), and sweet potatoes (down 7 percent) outweighed these gains. Driven primarily by demand for fresh-cut products, fresh-market broccoli production rose 10 percent to a record high, with stronger yields and increased acreage (primarily in the summer season). On the processing side, cool, wet California weather led to an uncharacteristically large 12-percent decline in per acre processing tomato yields. This was the largest annual decline in tomato yields since 1973. Although potato yields fell slightly in 1998, growers harvested 3 percent more acreage, resulting in a 2-percent gain in U.S. potato production to 477 million cwt. This was the second largest crop on record. Total potato shipments increased about 6 percent during calendar 1998, while imports of both fresh-market and frozen potatoes from Canada each reached record high volumes. The season-average farm price received for all 1998-crop potatoes is estimated at $5.24 per cwt, down 7 percent from 1997/98. The slightly larger U.S. fall crop and record-large production in Canada each contributed to a 7-percent decline in prices for both fresh-market and processing potatoes. U.S. fall-season potato growers expect to harvest 2 percent fewer acres in 1999. Reduced area is expected in Idaho (down 4 percent), Minnesota (11 percent), New York (6 percent), and California (5 percent). Larger acreage is expected in Washington (up 3 percent), Maine (4 percent), Colorado (2 percent) and Wisconsin (2 percent). During the March to May period, when most fall-season potatoes were being planted, U.S. shipping-point prices for all potatoes averaged $6.08 per cwt, 4 percent below a year ago. Reflecting lower potato prices at planting time, summer-season potato growers expect to harvest 2 percent fewer acres this year. However, per-acre yields are expected to increase 3 percent to 285 cwt-the highest summer-season yield since 1972. As a result, summer potato production is expected to rise about 1 percent to 19.1 million cwt. The summer crop typically accounts for 4 percent of all potato production, with Texas, Colorado, California, and Missouri the leading States. In 1999, U.S. dry bean growers expect to harvest an estimated 1.94 million acres, up 1 percent from a year earlier and 6 percent greater than the average of the 1990's. If realized, this would be the largest acreage since 1990 and the third largest since the end of World War II. Acreage is expected to be up in five major States, including California (44 percent), Michigan (15 percent), and Nebraska (9 percent). Acreage in California is expected to be the largest since 1990, reflecting dwindling stocks and surging prices for lima, blackeye, and red kidney beans. Most of the increase in U.S. output will likely occur among the white bean classes, such as navy, with reduced output expected for pintos and blacks. After a strong year in 1998, export volume for dry beans has been reduced this year, due largely to a dearth of sales to Mexico and Iraq. Total dry bean export volume for January through May 1999 was 30 percent below a year earlier. U.S. sweet potato growers expect to harvest 2 percent more acreage this fall-the largest acreage since 1990. If crop conditions remain relatively favorable, per acre yields will likely improve from last season's lows. Last year, drought in key southern States dropped U.S. sweet potato yields 9 percent to the lowest level in 6 years, cutting output by 1 million cwt from the previous year's level. With stronger production in 1999, sweet potato per capita use is expected to rebound from last year's low, perhaps reaching 4.6 pounds. Processors of five selected vegetables (tomatoes, sweet corn, snap beans, green peas, and cucumbers) expect to contract for 1.4 million acres in 1999-up 2 percent from a year earlier. Given a need to replenish tomato product stocks, contract acreage is up strongly for tomatoes (18 percent). Processors also increased contract area for cucumbers for pickles (up 4 percent). With adequate frozen stocks and lackluster demand for canned product, processors decided to reduce contract area for sweet corn (down 3 percent), snap beans (down 2 percent), and green peas (down 2 percent). Given average acreage losses and trend yields this coming season, output of the 13 leading processing vegetables could be 15 percent higher than a year ago and total a record high 18 million short tons. For processing tomato growers, another cool, wet spring in California (which accounts for 95 percent of the crop) delayed the start of planting by several weeks. With more acreage to cover this year, processors are concerned that bunching of the tomato harvest could overwhelm handling capacity, resulting in loss of fruit and reduced production. As of July 1, the 1999 U.S. processing tomato crop is expected to rise 24 percent over a year earlier to 11.5 million short tons. Despite the fact that production will likely be rising, wholesale prices for most processed tomato products have only declined marginally over the past few months. With foreign and domestic demand remaining relatively strong, stable prices may be a reflection of the need for yet another substantial crop in 2000 to help replenish stocks. With poor weather reducing yields in the Northwest, the first estimate of 1999 contract production for processing green peas indicates a 7-percent decline from 1998 to 447,333 short tons. Overall harvested area was up 1 percent, but per-acre yields declined about 7 percent. The most substantial reduction in output is expected to be in the canning sector, where wholesale prices have been relatively low and stable for the past year. Green pea production is expected to decline in most major States, such as New York (down 26 percent), Washington (16 percent), and Wisconsin (14 percent). Trade continued to play an increasingly larger role in the U.S. vegetable industry. In 1998, nearly 11 percent of the more than 121 billion pounds of total U.S. vegetable and melon consumption was satisfied by imported products. This was up from 9 percent in 1997 and 7 percent in 1990. On the other side of the ledger, the United States exported about 8 percent of its available supply of vegetables and melons in 1998. This is about the same as a year earlier but up from 6 percent in 1990. For the third consecutive year, the United States was a net importer (in dollar value) of vegetables, melons, pulses, and related seed crops in 1998. Although export value increased 6 percent from a year earlier to $3.2 billion, imports rose much faster. The value of imports jumped 22 percent to $3.9 billion, with much of the gain reflecting higher prices, especially for fresh-market commodities. Fresh vegetables accounted for about half of total import value. Tomatoes were the largest freshmarket import, at $758 million. Round tomato varieties accounted for twothirds of the total, followed by romas (valued at $195 million) and cherry tomatoes ($61 million). Freed of tariffs, encouraged by a favorable dollar exchange rate, and supported by strong U.S. consumer demand, the value of U.S. vegetable imports from Canada has risen 16 to 34 percent annually for 6 consecutive years. In 1998, the value of imports increased 28 percent to $713 million. Two crops-potatoes and tomatoes--and their products account for about two-thirds of U.S. vegetable imports from Canada. In 1998, frozen french-fried potatoes ($224 million), freshmarket (largely hothouse-grown) tomatoes ($101 million), fresh potatoes and potato seed ($95 million), and processed tomato products ($30 million) were the leading imports. Like tomatoes, bell peppers ($31 million), are also largely grown in hothouses, and shipments to the United States have been rising. Mexico continued to be the leading foreign supplier of vegetables, melons, pulses, and seed to the United States in 1998. Imports from Mexico increased 22 percent to nearly $1.9 billion as both average import prices and volume increased. This was the largest increase since 1993 and was caused largely by weather-reduced domestic vegetable supplies, which raised prices and increased import demand. While the value of U.S. imports of fresh-market tomatoes from Mexico increased 10 percent to $567 million, freshmarket bell pepper imports increased 32 percent to $172 million, with most of the increase due to higher average import prices. For the first 5 months of 1999, average import prices for both crops were sharply lower and will likely result in a decline in overall annual import value. The U.S. trade surplus in potatoes increased nearly 7 percent in 1998 to $388 million after 2 years of declines due to increasing imports of frozen french fries from Canada. Total U.S. potato exports were valued at $757 million in 1998, compared with imports of $369 million. Imports of fries from Canada continued to grow, but were more than offset by increased exports of potato chips (up 52 percent in value, to $247 million) and fries (up 8 percent to $324 million). The index of prices received by growers for fresh-market vegetables decreased 3 percent in 1998 as lower summer and fall-season prices outweighed higher average prices during the first half of the year. Higher prices for onions (up 10 percent) and tomatoes (up 10 percent) were outweighed by lower prices for celery (down 17 percent) and lettuce (down 14 percent). Growers received 6 percent higher prices during the first half of 1998 as record-setting precipitation in California's Salinas Valley and heavy rains, winds, and cool temperatures in Florida disrupted crop growth. In 1999, despite cool, rainy weather in California, first-half fresh vegetable prices averaged 4 percent below those of a year earlier. The index of retail prices for fresh-market vegetables (including potatoes) increased 11 percent in 1998. Increases were noted for all major items, including carrots (up 9 percent), lettuce (9 percent), tomatoes (14 percent), and potatoes (6 percent). During the first 6 months of 1999, retail prices for freshmarket vegetables averaged 5 percent below those of a year earlier. Average retail prices for processed vegetables (frozen, canned, and dried) increased 2 percent during the first 6 months, largely reflecting increased marketing costs. In 1997/98, U.S. mushroom sales rose 4 percent to 809 million pounds, led by a 12-percent jump in fresh agaricus mushroom sales. Fresh mushrooms accounted for 77 percent of all mushroom sales, the highest on record. Weak demand and competition from imports pulled processing mushroom sales down 16 percent to 187 million pounds. This was the smallest volume since the 1988/89 season, with the majority of the decline registered by Pennsylvania firms. Recovery in domestic processed volume is expected for 1998/99 as imports decline due to anti-dumping duties placed on China, India, Indonesia, and Chile. Printed copies of the Vegetables and Specialties Situation and Outlook Yearbook will be available in about 2 weeks. For more information contact Gary Lucier, 202-694-5253 or Charles Plummer, 202-694-5256. The text and tables for this report will also be available electronically via the ERS website at www.econ.ag.gov. END_OF_FILE