VEGETABLES AND SPECIALTIES April 27, 1995 Approved by the World Agricultural Outlook Board ------------------------------------------------------------------------------- VEGETABLES AND SPECIALTIES Situation and Outlook is published twice a year by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20005-4788. VGS-265. Please note that this release contains only the text of VEGETABLES AND SPECIALTIES--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 #VGS, $17/year. ERS-NASS accepts MasterCard and Visa. ------------------------------------------------------------------------------- Contents Summary Industry Overview Fresh Vegetables Processing Vegetables Potatoes Sweetpotatoes Pulses Special Article U.S. Horticulture's Long Run Economic Outlook List of Tables Situation Coordinator: Gary Lucier, (202) 219-0117, FAX (202) 219-0042 Principal Contributors: Gary Lucier (202) 219-0117, John Love (202) 219-0388, Charles S. Plummer (202) 219-0009 Editor: Diane Decker Graphics & Table Design: Wynnice P. Napper Layout and Text Design: Wynnice P. Napper Approved by the World Agricultural Outlook Board. Summary released April 26, 1995. The summary of the next Vegetables and Specialties Situation and Outlook is scheduled for release July 26, 1995. Summaries and text of Situation and Outlook reports, including tables, may be accessed electronically; for details, call (202) 720-9045. The Vegetables and Specialties Situation and Outlook is published semi-annually (April and November) and supplemented by a yearbook (July). Summary U.S. growers are expected to harvest fewer acres of fresh-market vegetables during first-half 1995 than a year earlier. Growers' restraint in planting and a series of rain storms in Florida and California restricted domestic production during January-March. Unusually heavy rains caused flooding in central California during mid-March, a transition period for the west coast winter vegetable harvest. Just when lettuce, broccoli, and cauliflower production was moving northward out of Arizona and southern California, flooding in central California led to shortages and higher prices in late March and April. Retail prices for most vegetables are expected to remain higher than usual through at least mid-May. Fresh-market vegetable growers had incentive to cut back production in first- half 1995. The market for fresh vegetables suffered from weaker demand and low prices during much of 1994. However, grower prices have improved since fall 1994, when acreage cutbacks and adverse growing conditions reduced supplies. The current high-priced market may encourage growers who faced sluggish prices a year ago to expand area for harvest in the 1995 summer season. Summer area for harvest is the largest of the four seasons in U.S. production. The season's area has trended down slightly from 501,500 acres in 1992 to 482,750 in 1994. U.S. fresh-market vegetable exports (including melons) outstripped expectations for fourth-quarter 1994, and January-February 1995 exports signal another big quarter to start the year. Fresh vegetable exports in fourth-quarter 1994 were valued at $291 million, up 41 percent from a year earlier. Volume increased 36 percent to over 1 billion pounds, the first time that fourth-quarter volume exceeded that level. Big gains were seen across the board. Several standouts include onions (up 200 percent in value), lettuce (up 58 percent), celery (31 percent), broccoli and cauliflower (26 percent), and tomatoes (18 percent). With wholesale prices for processed vegetables averaging just below a year ago, contract acreage for the five leading processing vegetables (tomatoes, sweet corn, snap beans, green peas, cucumbers) is expected to increase less than 1 percent to 1.526 million acres in 1995. The increase follows a 13-percent jump a year earlier. Acreage increases for tomatoes, green peas, cucumbers, and snap beans for freezing outweighed reductions for snap beans for canning and sweet corn for canning and freezing. If yields follow trend this coming season, total processing output could approach last year's record. Among the major States, acreage will likely be down 1 percent in Minnesota, 10 percent in Wisconsin, and 2 percent in Michigan. Acreage increased in California (5 percent) and Washington (4 percent). Tomato processors and growers are expected to contract for 4 percent more tomatoes this season. Despite some flooded fields at the time of normal planting, this year's increase follows a 19-percent gain a year ago. With expansion in processing capacity this year, production in California (which accounts for 93 percent of the processing tomato crop) is expected to increase 5 percent to a record high. However, output is expected to be lower in most other States, including Ohio (down 14 percent) and Indiana (down 11 percent). U.S. fall potato acreage is likely to decline only slightly this year despite sharply lower potato prices in many States in 1994/95. However, in Idaho, which accounts for about a third of the crop, average prices have not changed much from their low year-ago levels. In addition, there will be little change in contract returns for 1995/96 processing potatoes in most States. Although grower prices are much lower, record-large fall potato crops in each of the last 4 years have meant continued relatively favorable prices for consumers. Retail prices for all types of fresh (tablestock) potatoes averaged 9 percent below a year ago during first-quarter 1995. Retail prices will likely remain below those of 1994 until the new fall crop harvest begins in September. Dry edible bean producers say they intend to plant 2 percent more acres this year than in 1994. The slight increase follows last year's production of 29.2 million cwt, the largest since 1991 and 33 percent higher than 1993. After relatively low production in 1992 and 1993, large production in 1994 and 1995 could generate higher stocks. However, annual domestic per capita use is strong at around 7.5 pounds and export volume was up 48 percent from a year earlier during October-February 1994/95. If domestic and export demand falter, another year of solid production could weaken prices in 1995/96. Industry Overview Vegetable Crop Value in 1995 Likely To Increase 6 Percent The U.S. farm-level value of vegetable production in 1995 is likely to increase 6 percent from the $11.8 billion produced in 1994. Expected higher prices for fresh-market vegetables during first-half 1995 contribute to the improved outlook. The potato price outlook is also likely to improve in 1995, if growers do not expand fall production. Continued strong export demand for dry edible beans has U.S. growers expanding acreage again in 1995, even though 1994-crop prices have been below a year earlier. Increases in acreage contracted by tomato processors are offsetting reduced demand by snap bean, sweet corn, and green pea processors. The value of U.S. vegetable exports are keeping pace with the rapid growth experienced by most other U.S. agricultural commodities. U.S. vegetable exports increased 27 percent during January to February 1995, compared with a year earlier, while total agricultural exports increased 29 percent. Fresh, frozen, and canned vegetables and frozen potatoes continue to post large export gains. o Fewer acres of fresh-market vegetables are expected to be harvested during first-half 1995. Grower and retail prices were higher in first-quarter 1995 than a year earlier. Imports of fresh vegetables from Mexico were up during the winter quarter (January-March) 1995, but did not offset lower supplies from Florida. o Snap bean and sweet corn processors are expecting a lower pack in 1995, while tomato, green pea, and pickle processors are expecting a larger output. Canned and frozen vegetable exports are trending toward the $600-million mark in 1995. o Potato growers are showing signs of cutting back acreage for the 1995 fall crop. Prices for the 1994 fall crop have been 15 to 20 percent below a year earlier, and potato seed shipments through March are lower. o Dry edible bean growers intend to plant 2 percent more acres in 1995. Another large crop after 1994's is likely to depress prices, unless export demand continues trending up. Fresh Vegetables Weather Adds to Producer Restraint in 1995; Domestic Supplies Lower, Prices Higher U.S. growers are expected to harvest fewer acres of fresh-market vegetables during first-half 1995 than a year earlier. Growers' restraint in planting acreage and a series of rain storms in Florida and California restricted domestic production during January to March. Lower domestic production is expected to continue during April to June. Acreage cutbacks in 1995 are due in part to the low prices received by U.S. growers during much of 1994. The average price received by growers for fresh- market vegetables was down 10 percent in 1994, compared to 1993. In addition, per capita consumption was flat in 1994, indicating that demand was weak during the year. January-March fresh-market vegetable area was down 9 percent to 180,750 acres, and April-June area (including spring onions) is down 3 percent to 381,000 acres. For first-half 1995, U.S. growers will likely harvest 5 percent fewer acres than a year earlier. Tighter supplies of most fresh-market vegetables and melons (excluding potatoes and sweetpotatoes) raised grower and retail prices during first-quarter 1995 (table 9). Fresh-market supplies during first-quarter 1995 (including imports) were 2 percent lower than a year earlier. Grower prices for fresh-market vegetables during January to March averaged 24 percent higher, and retail prices (excluding potatoes) averaged 21 percent higher than a year earlier. A series of unusually heavy rain storms caused flooding in central California during mid-March, a period of transition for the west coast winter vegetable harvest. Just when lettuce, broccoli, and cauliflower production was moving northward out of Arizona and southern California, flooding in central California led to shortages and higher prices in late-March and April. In November 1994, Tropical Storm Gordon swept through Florida, causing wind and rain damage to vegetable fields. Florida's tomato supplies during January to March 1995 were down 42 percent from a year earlier, while Mexico shipped 37 percent more tomatoes during the 3-month period. Fresh-market vegetable growers had incentive to cut back production in first- half 1995. The market for fresh vegetables suffered from weak demand and low prices during much of 1994. The price situation for U.S. growers has only improved since fall season 1994, when acreage cutbacks and adverse growing conditions reduced supplies. The current high-priced market may encourage growers who faced sluggish prices a year ago to expand area for harvest for the 1995 summer season. Summer area for harvest is the largest of the four seasons in U.S. production. The season's area has trended down slightly from 501,500 acres in 1992 to 482,750 in 1994. Winter Fresh Vegetable Imports From Mexico Increase in 1994/95 U.S. imports of six winter fresh vegetables from Mexico increased during the 1994/95 fall/winter season (October-March), compared to 1993/94. Imports of snap beans, cucumbers, eggplant, bell peppers, squash, and tomatoes (including cherry tomatoes) from Mexico increased 9 percent to 17 million cwt from October 1994 through March 1995. Although Florida's supply of these winter vegetables was down during the 1994/95 fall/winter season, imports from Mexico did not offset the difference. The impact of Mexico on Florida in the U.S. winter fresh tomato market has been the focus of dispute for many years. On March 30, 1995, Florida tomato growers filed a formal complaint with the U.S. International Trade Commission (ITC), alleging injury due to excessive imports of fresh-market tomatoes from Mexico this winter. In a provisional 21-day investigation, the ITC ruled against the Florida petitioners. The petition asked for relief under the North American Free Trade Agreement (NAFTA). Under NAFTA, Presidential approval is required for any action or relief. The ITC has now begun a 180-day case where further evidence will be generated to support a ruling under section 201 of the Trade Act of 1974. Factors affecting U.S. imports of tomatoes from Mexico include the competing supplies of tomatoes from Florida, U.S. market prices for tomatoes, the peso- dollar exchange rate, and Mexico's tomato harvest schedule. Florida's tomato production was lower during the winter quarter of 1995. Acreage for harvest during January to March was estimated down 8 percent from a year earlier, and yields were expected lower because of Tropical Storm Gordon. Immediately before Tropical Storm Gordon struck in mid-November 1994, acreage planted for tomatoes in Florida was even with the previous season at 19,600 acres. By January 1995, southwest Florida (with about half the total area) had harvested only two-thirds the area harvested a year earlier. By March, the Dade county area, which began the season with 25 percent fewer acres planted, had harvested only about 60 percent of its year-earlier level. Florida tomato shipments for the fall and winter seasons (through March 1995) totaled 24 percent less than the comparable period of 1993/94. U.S. grower prices for tomatoes in January and early February 1995 were about $40 a cwt, at the high end of the normal range for winter. During late- February, a surge of imported tomatoes from Mexico forced prices down, causing concern within the Florida tomato industry. The March 1995 grower price at mid-month was about even with the monthly average for March 1993 ($25 a cwt). According to reports from winter vegetable areas, the introduction of new tomato varieties coinicided with hot weather in Mexico's tomato-producing region, reportedly resulting in a "bunched" harvest. Warm day and night temperatures increased tomato growth rates and forced growers to harvest more, or risk losing production. The weakened peso (in relation to the U.S. dollar) has been cited as a factor in the increased imports of tomatoes from Mexico. This shift in exchange rates likely made the U.S. market more attractive than Mexico's domestic market. However, Mexico's tomato plantings were already in the ground before the peso devaluation in late December 1994. Therefore, the peso effect is likely to have been limited by production potential, while a continued weak peso is likely to have a greater effect in the 1995/96 season. Fresh-market Exports Heat Up Since October U.S. fresh-market vegetable exports (including melons) outstripped expectations for fourth- quarter 1994, and January-February 1995 exports signal another big quarter to start the year. Fresh vegetable exports in fourth-quarter 1994 were valued at $291 million, up 41 percent from a year earlier. Volume increased 36 percent to over 1 billion pounds, the first time that fourth-quarter volume exceeded that level. Big gains were seen across the board for fresh items in fourth-quarter 1994. Several standouts include onions (up 200 percent in value), lettuce (up 58 percent), celery (31 percent), broccoli and cauliflower (26 percent), and tomatoes (18 percent). January and February 1995 monthly export value of fresh vegetables averaged 32 percent higher than a year earlier, while volume increased 26 percent. Although volume and value are expected to rise during the second quarter, the increase is not expected to be as great for volume as for value. Volume increase may be limited due to the California flooding. Much of the increase in fresh vegetable exports is due to increases to Asia, particularly Japan. Onion exports to Japan increased 65-fold to 2.6 million cwt during October to February. Onion yields in Japan were reduced by poor weather in 1994, and U.S. suppliers had a record storage crop on hand. Without the export demand from Asia, U.S. onion prices would likely have been much lower during October to March. Fresh vegetable exports account for about 11 percent of U.S. fresh-market vegetable production (table 15). The percentage is higher for some items, such as cauliflower (38 percent) and asparagus (37 percent). Export volume accounts for 15 percent of fresh-market onion and celery production and about 10 percent for lettuce and tomatoes. If the trend in higher exports continues at the recent pace, 1995 fresh vegetable exports are likely to reach a record $3 billion. However, the boom in onion exports is not likely to be as strong in 1995, unless inclement weather in importing countries reduces yields. Still, the trend is based on a broad array of items, and a weak dollar against the Japanese yen is favorable for exports. Fresh-market Vegetable Production Up Slightly in 1994, Prices Low U.S. fresh-market vegetable production increased slightly in 1994, but exports increased 12 percent, while imports increased only 5 percent. For U.S. consumers, the net result was a drop in domestic supplies. But even with lower supply available, the 1994 average price received by growers fell 10 percent, while consumer prices (excluding potatoes) increased less than 1 percent. U.S. producers harvested 392 million cwt of fresh-market vegetables in 1994, 1 percent above 1993, and about the same as in 1992. However, large crops of U.S. sweet corn (up 12 percent), onions (10 percent) and watermelons (6 percent) mask the general decrease in the other items (down 2 percent). Lettuce production was down 8 percent in 1994, to 76 million cwt. Head lettuce was off 7 percent, while leaf lettuce and romaine was off 19 percent from 1993. Per capita consumption of lettuce decreased 9 percent to 22.5 pounds of head lettuce and 4.2 pounds of leaf and romaine. Tomato production was unchanged in 1994, but imports were 5 percent less. Exports decreased only 1 percent and per capita consumption dropped 2 percent to 15.7 pounds. The 1994 grower price for tomatoes, at $27.20 a cwt, averaged 14 percent below 1993. Onion production hit a record 63 million cwt in 1994, while an 83-percent increase in exports kept prices from falling as far as they might have without the additional demand. Per capita consumption of fresh onions increased 3 percent (to 16.5 pounds), while grower prices decreased 37 percent (to $10.50 a cwt). The total value of U.S. fresh-market vegetable production decreased from $6.9 billion in 1993 to $6.3 billion in 1994. The production value of lettuce, tomatoes, and onions--accounting for nearly half of the total--decreased 21 percent in 1994. The strong export demand, lower net domestic supply, and low grower and retail prices for fresh vegetables point to weak demand by U.S. consumers. Processing Vegetables Outlook for 1995 As the U.S. economy continues to expand in 1995, vegetable processors can expect good domestic and export movement of processed vegetables in the coming months. Grocery store food sales (all food) rose 2.9 percent last year, with real (inflation-adjusted) sales rising slightly. Restaurant (eating places only) sales rose 7 percent in 1994 to $216 billion, with constant dollar sales also increasing. For 1995, economic conditions are generally positive with the unemployment rate low, real disposable incomes rising, and the overall inflation rate remaining low. Given this economic outlook, spending on away- from-home meals is again expected to show strong growth. With record-large output last year, wholesale prices during the first quarter declined 1 percent each for canned, frozen, and dried and dehydrated vegetables. Frozen vegetable stocks on March 1, 1995, totaled 1.869 billion pounds (7.1 pounds per capita), up 13 percent from a year earlier. With larger 1994 output, stocks were higher for such vegetables as cut corn, green peas, green beans, and okra. Freezer stocks were lower for asparagus, broccoli, and diced carrots. Movement appears to be brisk, apparently reflecting the strong economy. While prices received by processors have been lower, the associated costs of processing those vegetables were mixed in 1994. Based on data from the ERS food marketing cost index, prices paid for some of the major processing inputs during 1994 changed as follows: o The cost of cans for vegetables and vegetable juices fell 3.5 percent; o The cost of paper boxes and containers rose 4.7 percent; o Energy costs fell 1.6 percent; o Hourly labor costs rose an average of 2.6 percent; o Transportation (rail) costs increased 2.1 percent; and o Overall producer prices increased 1.7 percent. Contract Acreage Up Slightly For 1995 With wholesale prices for processed vegetables averaging just below a year ago, contract acreage for the five leading processing vegetables (tomatoes, sweet corn, snap beans, green peas, cucumbers) is expected to increase less than 1 percent to 1.526 million acres in 1995 (table 17). The increase follows a 13- percent jump a year earlier. With the exception of snap beans for canning and sweet corn for canning and freezing, acreage is expected to rise for the major processing crops. If trend yields are experienced this coming season, total processing output could approach last year's record. Among the major States, acreage was down 1 percent in Minnesota, 10 percent in Wisconsin, and 2 percent in Michigan. Acreage increased in California (5 percent) and Washington (4 percent). Frozen vegetable processors expect to contract for 2 percent more acres in 1995. During the first quarter of 1995, wholesale prices for frozen vegetables averaged 1 percent less than a year ago due largely to weak sweet corn prices. With strong crops last fall and larger inventories, prices were lower for frozen sweet corn, green peas, and green beans (table 23). With stocks at manageable levels and prices running just under those of a year ago, processors of frozen vegetables are planning for a crop just above that of a year ago. Acreage of the five major vegetables for canning is expected to remain flat as a 4-percent increase in tomato acreage offsets declines in sweet corn (4 percent) and snap beans (2 percent). Tomato production, which accounts for more than 60 percent of processing vegetable output, is forecast to increase 500,000 short tons in 1995. With persistent heavy rain flooding central California processing tomato fields early this spring, some growers were late getting into the fields to plant. Growers compensated for delayed planting by using early-maturing varieties and setting plants instead of direct seeding. Contract acreage for sweet corn is expected to fall 4 percent to 526,600 acres (nearly all sweet corn for processing is produced under contract). This decline comes on the heels of last season's record large crop. Acreage of sweet corn for canning is expected to decline 6 percent while area for freezing is forecast to be off 3 percent. Although the industry no longer reports estimates of canned stocks, canned sweet corn stocks are estimated to be well above a year earlier. This estimate is confirmed by canned sweet corn who- lesale prices, which are averaging well below a year ago (table 19). Sweet corn acreage is expected to be lower in major States such as Minnesota (down 7 percent) and Wisconsin (down 15 percent), but is expected up in Washington (up 11 percent). Retail demand for frozen sweet corn has been weak. Supermarket sales volume for frozen whole kernel corn fell 2 percent in 1994. Weaker demand and higher output in 1994 left frozen stocks up 31 percent from a year earlier on January 1, 1995. With higher frozen stocks, wholesale prices for cut corn in 1994/95 have averaged below a year earlier. These conditions led processors and growers to plan for fewer freezing-sweet-corn acres this season. Record-High Processing Tomato Crop Contract tomato production rose 19 percent a year ago, and tomato processors and growers are expected to contract for 4 percent more tomatoes this season. Acreage is also expected up 4 percent this season despite some flooded fields at the time of normal planting. Production is expected to be record high in California (up 5 percent) where processing capacity is being increased this year. However, output is expected lower in most other States including Ohio (down 14 percent) and Indiana (down 11 percent). The California League of Food Processors reported that December 1 inventories of processed tomato products in U.S. warehouses (on a fresh-equivalent basis) totaled 7.0 million short tons. The report covered about 91 percent of 1994 production. According to ERS estimates, this represents the largest stocks since 1991. The fact that this inventory level is not a burden on the industry, underscores the rapid growth that has occurred in tomato product demand during the 1990's--growth that continues today. On a fresh equivalent basis, domestic use totaled an estimated 19.6 billion pounds in calendar 1994-- 75.2 pounds per capita. Per capita use is projected to increase in 1995. Processing tomato yields have shown strong gains the past few years. Yield in 1994 was a record-setting 33.94 short tons per acre. Given the late start to the season and past experience that suggests yields average lower during wet years, yields in 1995 are not expected to be record-setting. However, per acre yields are currently forecast to come in near last year's average. With California intrastate reservoir storage above historical averages (and some releasing water in preparation for the coming mountain snow melt), irrigation water will not be a limiting factor this season. Given this, in California and elsewhere, if acreage expectations are realized, total raw product delivered to processors is forecast to approach 12 million tons. This will more than cover current domestic and export demand and will likely result in some stock accumulation. By agreement with the California Tomato Growers Association (CTGA), the average field price to be paid by processors for red ripe tomatoes in California is reported to be $51.50 per short ton--up from $50.00 in 1994. The CTGA represents the majority of processing tomato growers. Reflecting strong demand, wholesale prices for most tomato products are now averaging around year-earlier levels despite last year's record crop (table 19). Reported quotes for 55-gallon drums of industrial paste in mid-April ranged around 40 cents per pound. If contract production is fully realized, larger supplies will likely result in some softening of wholesale prices this fall. Processing Employment Up In 1994, the fruit and vegetable canning industry employed 3.1 percent more production workers than a year earlier (averaging 69,400). The fruit and vegetable freezing industry employed 1.9 percent more production workers in 1994 (averaging 42,700). The average hourly earnings of fruit and vegetable cannery workers rose 1.9 percent to $10.53 per hour while workers in the freezing industry received $9.20 per hour (2.2 percent above 1993). According to preliminary data from the 1992 Census of Manufactures, the number of fruit and vegetable canning companies increased 9 percent to 502 between 1987 and 1992. However, the number of establishments with 20 or more employees declined 4 percent during this period, indicating that growth occurred primarily in small firms. Between 1987 and 1992, the number of firms producing frozen fruit and vegetables declined 6 percent to 182. However, the number of establishments with 20 or more employees increased 4 percent during this time, indicating that some consolidation likely occurred within the industry. Processed Vegetable Imports Outpace Exports In 1994, the United States was a net importer of processed vegetables (excluding potatoes, mushrooms, and dehydrated vegetables). Processed vegetable imports increased 17 percent, reaching $576 million, while exports increased 5 percent, reaching $547 million. The net difference--$29 million favoring imports--compares with a $31-million trade surplus in 1993. U.S. import value of canned vegetables increased 25 percent to $352 million in 1994. Artichokes, pickles, tomatoes and tomato products, green peas, sweet corn, and green beans increased 56 percent and accounted for 53 percent of the 1994 total. The remaining value of canned imports, which includes a wide variety of items, increased 6 percent in 1994. Import volume of canned items accounted for about 2 percent of total U.S. supply in 1994, the same as a year earlier. Import value of frozen vegetables increased 7 percent to $224 million in 1994. A group of frozen vegetables comprising a wide variety of minor and unspecified items representing one-third of the total) increased 19 percent. The remaining items (broccoli, cauliflower, sweet corn, and green peas) increased only 1 percent. The 1994 value of canned vegetable exports increased to $415 million, up 3 percent from 1993. Canned tomato exports increased 10 percent, while sweet corn decreased 7 percent. Other canned vegetable exports ( 23 percent of the total) increased 6 percent. Frozen vegetable exports increased 9 percent in 1994, reaching $133 million. The value of frozen sweet corn exports increased 10 percent while green peas increased 1 percent. The other frozen vegetable items (excluding frozen potato products), which accounted for half of the total, increased 9 percent in 1994. About half of U.S. processed vegetable exports in 1994 were shipped to Asia, mostly Japan. Canada accounted for 28 percent of the total, while Western Europe accounted for 12 percent. Sweet corn to Japan and canned tomato products to Canada are two leading export opportunities showing recent growth for U.S. exporters. Per Capita Use Down in 1994 Per capita use of all vegetables and melons (on a fresh-equivalent basis) fell slightly to 425 pounds in 1994 (table 46). Processing vegetables (excluding potatoes) accounted for 127 pounds per person in 1994, down 3 percent from a year earlier. Some of the highlights are as follows: o Within the processing category, vegetables for freezing declined 5 percent to 21.7 pounds per person while canning vegetables declined 3 percent to 105.4 pounds. Increases are expected in both categories in 1995 due mostly to lower retail prices caused by larger supplies of major items. o Tomatoes for canning, which account for nearly three-fourths of all canning vegetable use, declined slightly in 1994 to 75 pounds per person. With demand strong, domestic use of canning tomatoes is expected to rebound to record-high levels in 1995. o Per capita use of processing sweet corn, the second most popular processed vegetable, fell 9 percent to 19.2 pounds. Canning use dropped 11 percent to 10 pounds and sweet corn for freezing fell 6 percent to 9.2 pounds. With prices lower in 1995, use is expected to rebound. o Use of snap beans for processing rose 2 percent to 5.9 pounds per person in 1995 as slightly lower canning use was outweighed by an 11-percent gain in freezing use. o After 2 consecutive annual declines, use of cucumbers for pickles rose 5 percent to 4.6 pounds per person. The stronger economy and the associated gains in "away from home eating" were likely behind the increase. Potatoes Outlook for Fall 1995 U.S. fall potato acreage is likely to decline only slightly this year despite sharply lower potato prices in many States in 1994/95. However, in Idaho, which accounts for about a third of the crop, average prices have remained near their low year-ago levels. In addition, there will be little change in contract returns for 1995/96 processing potatoes in most States, including Idaho, where contract returns negotiated with fryers are very close to those of a year ago (around $5.10 per cwt) based on 5-year average quality. Acreage is expected to fall slightly in each of the major regions. Although potato prices are below a year earlier, the prices for alternative commodities that could be planted in place of potatoes are also below a year earlier in most cases. On paper, no one crop appears to stand out this year as clearly offering the best potential return. Aside from cotton, which is not an alternative crop for fall potato growers, no noteworthy shifts in acreage appear to be occurring among the major field crops. Prospective plantings of wheat, one of the most common program crops grown in rotation with potatoes, are up just 1 percent with most all growth in durum wheat, a crop dominated by North Dakota. Overall wheat plantings are expected to be down for most potato States, including Idaho and Washington. The paucity of financially appealing alternative crops will tend to keep potato acreage close to a year ago. Fall potato yields continue to exhibit a relatively consistent and robust upward trend. Yields the past 3 years have exceeded the long-run trend, which indicates average growth of around 4 cwt per acre per year. If fall-crop yields were to return to trend, average yield would drop 9 cwt to 340 cwt per acre in 1995. Potato yields only exceeded 300 cwt during 1985-87, when yields were strong all 3 years. Assuming a small cut in planted area and a range of yields between trend and last year's average, the 1995/96 fall potato crop could range from 395 to 408 million cwt. If production from the winter, spring, and summer seasons totals 44 to 46 million cwt, 1995 potato production could range from 1 to 4 percent below the record 459 million cwt of 1994. Spring Crop Up Slightly The first estimate of the 1995 spring potato crop was 22.7 million cwt, up slightly from a year earlier (table 30). A 4-percent increase in per-acre yield was largely offset by a 4- percent decline in area harvested. Half of the six spring-potato-producing States expect increased output (Arizona, Florida, and North Carolina). Florida's production is expected to increase 5 percent as improved weather helped yields (up 7 percent). In California, 12 percent less acreage outweighed a 5-percent increase in yields, leaving spring potato output down 8 percent from 1994. Together, Florida and California will account for 71 percent of the spring potato crop, down slightly from 1994. The first estimate of winter-season potato production indicated an increase of 16 percent to 2.7 million cwt as harvested acreage rose 2 percent and per-acre yields increased 13 percent (table 29). Production in Florida (up 3 percent) and California (up 34 percent) rose despite poor weather in both States. Despite flooding and foggy weather through part of the season, the California crop increased as yields recovered from 2 consecutive poor years. Potato Stocks Up On April 1, fresh potato stocks stood at 123.3 million cwt, 6 percent above the previous record in April 1994. April 1 stocks represented 31 percent of fall production in the 15 potato-storage States, the same as a year ago. Stocks were 4 percent above a year ago in the three major processing States (Idaho, Washington, and Oregon). Idaho potato shipments (fresh and chip) through April 1 were running 18 percent above a year earlier. North Dakota fresh and chipper shipments were up 25 percent and Wisconsin's shipments were up 19 percent. Despite these increases, declines in States like Maine, Michigan, and Washington have left fresh and chipping potato movement up just 2 percent through April 1. Compared with a year earlier, April 1 stocks were up the most in the Central States (24 percent), up less in Western States (4 percent), and down 5 percent in the East. Eastern stocks may be drawn down a bit faster during the next month due to a shortage of potatoes for processing in eastern Canada. Maine growers will benefit if Canada extends an easement to allow Maine potatoes to be shipped into the country for processing. Frozen potatoes in cold storage on April 1 were 11 percent above a year earlier at 1,171 million pounds. Stocks of frozen french fries were 16 percent higher than a year ago, accounting for 78 percent of all frozen potatoes in storage. Of stocks held, 68 percent were in public warehouses and the remainder were privately held. The Pacific and Mountain States held 76 percent of french fry inventories and 58 percent of other frozen potato products. Prices Lower in 1994/95 While growers and shippers continue to market the 1994 fall potato crop, fresh (tablestock) potato prices continue to average below a year earlier at all levels of the marketing chain. U.S. grower prices for fresh-market potatoes averaged $4.89 per cwt during October to February, almost half that of a year earlier (table 35). In general, table potato prices have remained well below a year earlier since last September. Prices for processing potatoes have also averaged below a year ago each month since October. The 1994/95 preliminary U.S. season-average price for all potatoes is forecast at $5.36 per cwt, down 14 percent from 1993/94. Because of weaker prices, the value of the 1994/95 potato crop is estimated to have declined 7 percent to $2.4 billion. With larger production, the value of the Idaho potato crop improved 1 percent to $591 million. Because of lower prices, the value of the Washington potato crop fell 17 percent, to $391 million. Although grower prices are much lower, record-large potato crops in each of the past 4 years have meant continued relatively favorable prices for consumers. Retail prices for all types of fresh (tablestock) potatoes averaged 9 percent below a year ago during the first quarter of 1995. This year, retail prices for fresh-market potatoes will likely remain below those of 1994 until the new fall crop harvest begins in September. Retail prices for frozen french fries averaged $0.85 per pound during the first quarter of 1995, down 4 percent from a year ago. Reflecting strong demand, the pack of frozen potato products continued to rise in 1994, jumping 18 percent during the first half of the year. The retail price for potato chips averaged $3.02 per pound during the first quarter of 1995, up 2 percent from a year earlier. Through April 1, shipments of chipping potatoes for the 1994/95 season are up 3 percent from a year earlier. Record 1994 Fall Production Brings Record Use With record-setting yields in many States, the 1994 fall potato crop easily became the largest ever harvested--surpassing the previous record by 7 percent. Because of the large crop, potato markets have been under constant pressure this season as shippers and processors struggle to move record large stocks each month. While several States have experienced monthly fresh-market shipment records this spring, processors have also moved record volumes through their plants. As of April 1, the eight major processing States have processed 8 percent more potatoes than a year ago (table 34). About a third of the increased processing has taken place in four Midwestern States (MI, MN, ND, and WI). Increased processing capacity in this region has boosted the region's share of potato processing from 13 percent to about 15 percent of the eight-State total. Overall, increased processing has been driven by strong domestic and export demand for frozen potatoes, particularly frozen french fries. According to preliminary ERS estimates, domestic use of potatoes (including imports) for freezing hit a record 15.1 billion pounds in calendar 1994. This was 30 percent larger than 1989. Exports, also record-high, accounted for another 1.3 billion pounds last year and end-of-year stocks accounted for 2.2 billion pounds (also a record). However, growth in use of potatoes for freezing is expected to slow in 1995. A major question looms for the industry..."When will the domestic french fry market reach the saturation point?" If domestic french fry promotions have run their course, this would leave frozen use near last year's record and force processors to look to foreign markets for most of the expansion this year. Frozen Potato Processing: Fewer Firms, More Volume According to the 1992 Census of Manufactures, 13 companies with production in excess of $100,000 were engaged in processing frozen french fried potatoes, 2 fewer than reported in the 1987 census. The 13 companies reported total french fry shipments of 6.1 billion pounds, 30 percent greater than in 1987 and 67 percent larger than in 1982. The wholesale value of 1992 frozen french fry shipments was $1.8 billion, compared with $1.5 billion in 1987 and $1.2 billion in 1982. The census data also listed 21 firms (up from 20 in 1987) with shipments in excess of $100,000 that processed potato puffs, patties, and other miscellaneous frozen potato products. These firms shipped 1.0 billion pounds of frozen potato products (up from 0.9 in 1987) with a value of $435 million (up 12 percent). According to the census, in 1992 all firms producing frozen potato products utilized 13.4 billion pounds of fresh potatoes with a delivered cost of $652 million. Potato Trade Surplus at $410 Million in 1994 In 1994, the United States continued to enjoy an ever-widening net trade surplus for potatoes with the value of exports at $572 million and imports totaling $162 million. The value of potato imports increased 5 percent due to increases in fresh (12 percent) and frozen (8 percent) imports. Potato export value surged 31 percent due largely to increased sales of chips and fries. Exports of chips/chip products and frozen potato products now account for roughly 20 million cwt (more than 4 percent of the potato crop) and are expected to continue growing in the coming year. Production in the Maritime provinces of eastern Canada is expected to increase this fall, which means a likely increase in fresh exports to the U.S. and pressure on eastern U.S. potato prices in 1995/96. Frozen french fry exports rose 29 percent to $199 million with export volume rising 24 percent. French fries accounted for 35 percent of U.S. potato export value last year, the same as a year earlier. With the Japanese economy improving, the value of french fry sales to Japan increased 17 percent to $104 million. With sales to countries such as South Korea, Singapore, and Mexico also growing, Japan now accounts for 52 percent of U.S. french fry exports, down from 58 percent in 1993. As the world economy strengthened, U.S. potato chip exports continued their robust performance, jumping 53 percent to $200 million in 1994. The chip export category includes both traditional sliced potato chips and extruded products manufactured from dehydrated potato products. Potato chips now account for 35 percent of U.S. potato export value, compared with 30 percent in 1993 and 16 percent in 1990. Japan suddenly became the top export market in 1994 with 26 percent of U.S. potato chip export value. In 1993, Japan only accounted for 5 percent of the value of U.S. chip exports. Belgium (19 percent of the U.S. total), Canada (11 percent), Taiwan (9 percent) and Mexico (8 percent) were also important markets. Chip exports to Mexico surged from 1993's $6 million. However, potato chip exports to Mexico during the first 2 months of 1995 were a miniscule $77,037 compared with $3.4 million during the first 2 months of 1994. It is likely the sagging value of the peso has made U.S. chips too expensive in Mexico. Potato flake exports totaled $30 million in 1994, up 23 percent from 1993. Japan is the major destination for U.S. flake exports with 70 percent of the total value in 1994. The U.S. also exports flakes to Canada (5 percent) and Singapore (4 percent). Sweetpotatoes U.S. sweetpotato growers intend to plant 83,100 acres in 1995, down 1 percent from last year, but the same as in 1993 (table 37). Louisiana is the only State where growers indicated intentions to increase acreage from last year. The near 8-percent increase in planted acreage will raise Louisiana's share of total U.S. planted acreage to 26 percent. Despite a slight decrease from last year, North Carolina will remain the largest planter of sweetpotatoes, accounting for nearly 39 percent of U.S. acres. During 1988-92, North Carolina planted an average of 34,600 acres of sweetpotatoes while Louisiana planted 18,600. In 1995, North Carolina's intended plantings are 8 percent below the 5-year average, but Louisiana's are 16 percent above that average. Since 1988, the average yield in Louisiana has been 154 cwt per acre, while North Carolina has averaged 134 cwt per acre. Record U.S. yields last year helped raise sweetpotato production to nearly 13.1 million cwt, the highest since 1985. The preliminary season-average price for the 1994 crop is $15.10 per cwt, with a preliminary crop value of $198 million. Based on reported monthly prices through March 1995, the 1994 season-average price is likely to drop 10 to 20 percent when final estimates are released in the July Agricultural Prices Annual Summary. If growers plant their intended 83,100 acres, realize average acreage abandonment, and yields return to an average 146 cwt per acre, production will fall to about 11.6 million cwt, and the average price could range between $13 and $14 per cwt. However, if recent upward yield trends continue, production could rise above 12 million cwt, and prices could fall below $13 per cwt. Pulses Dry Edible Beans In 1995, dry edible bean producers intend to plant 2 percent more acres than in 1994 (table 39). The slight increase follows last year's production of 29.2 million cwt, the largest output since 1991 and 33 percent higher than 1993. After 2 years of relatively low production in 1992 and 1993, strong production in 1994 and 1995 could result in higher stocks. However, annual domestic per capita use is strong at around 7.5 pounds and export volume was up 48 percent from a year earlier during October-February 1994/95. If domestic and export demand falter, another year of solid production could weaken prices in 1995/96. Specific grower intentions are as follows: o North Dakota growers have indicated they will plant 5 percent more acres in 1995; o Colorado, which is the second largest producer of pinto beans behind North Dakota, has indicated a 2-percent increase in acreage; o Michigan, the largest producer of navy and black beans, intends to plant 5 percent more acres in 1995 than a year ago; o Nebraska intends to plant about the same acreage as 1995. Great Northern production, which drastically increased last year, is likely to be strong again this year ; o California, the largest producer of such specialty dry beans as limas, blackeyes, and garbanzos, intends to plant 3 percent more acres this coming season. Grower Prices Down in 1994 The preliminary 1994 season-average price for all dry beans is $21.70, down 12 percent from 1993's high levels. Wholesale prices for several major dry bean classes averaged lower during the first 7 months of the marketing season (September through March). These lower prices are likely influencing grower acreage intentions only slightly. Some preliminary average-wholesale prices per cwt during this period include: o $21.20 for Colorado pinto beans, down 39 percent from the same 7 months a year ago; o $35.23 for Nebraska Great Northern beans, up 3 percent; o $31.92 for Michigan navy beans, up 46 percent, indicating that supplies are tight; o $31.61 for California kidney beans, down 6 percent from a year ago. Dry Edible Bean Trade Total dry edible bean exports in 1994 as reported by the U.S. Department of Commerce were up 13 percent from 1993 (table 42). Great Northern and kidney bean exports rose 92 and 26 percent respectively, with Western Europe being the largest foreign market. Pinto exports rose 35 percent, with significant quantities going to Haiti and several African countries through Food for Peace programs (PL 480 or 416). Food for Peace programs for 1995 have not been determined. Eligible commodities and recipient countries will be determined later in the year. According to Commerce data, black bean exports declined 46 percent in 1994. However, industry estimates suggest that the actual volume is four times that officially reported. Michigan is the main supplier and industry sources estimate that black bean exports to Mexico are currently rising at a rapid pace. If black beans are severely under-reported, it is also possible that other beans exported to Mexico (most notably pintos) are also under-reported. Dry Pea Prices Up, Lentil Prices Down Grower prices for whole green and yellow peas are up for the first half of the 1994/95 marketing season. The average price for 1994-crop whole green peas through February 1995 was $10.50 per cwt, up 55 percent from the same period a year ago. The average grower price for whole yellow peas for the first half of the marketing season was $9.27 per cwt, up 7 percent from a year ago. Low processor stocks are contributing factors to increased prices. At the end of February, green pea stocks were nearly 45 percent below the 5-year average, and yellow pea stocks were 47 percent below average. On the other hand, large lentil stocks (46 percent above the 5-year average) have lowered prices 26 percent from a year earlier. Dry Pea and Lentil Exports Rise in 1994 In calendar year 1994, exports of dry green peas and lentils rose 22 and 35 percent respectively from 1993, due largely to strong PL-480 exports. However, the 1995 trade outlook is uncertain. Both House and Senate Appropriations Committees have approved cuts in PL-480 funding, and it is not certain which commodities (if any) will be affected. Through February 1995, PL-480 sales of lentils were down considerably compared to the first 2 months of last year, but it is still too early to determine total 1995 exports. Special Article U.S. Horticulture's Long Run Economic Outlook by John M. Love 1/ Abstract: Production of fruits, nuts, vegetables, potatoes, dry beans, and greenhouse/nursery crops is projected to increase to $46 billion by 2005 from $31 billion in 1994. The increase, equivalent to 3.6 percent per year, is less than the 4.4-percent growth during 1982-93. Consumption of many fruits and vegetables is increasing at slower rates than a decade earlier, and the slowdown is forcing U.S. producers to develop markets in Asia and Latin America. Although U.S. fruit and vegetable production is rising, imports have risen recently, increasing competition in the domestic market. However, demographic changes in the U.S. population suggest a possible upturn in demand, contingent on a strong economy. Keywords: Horticulture, fruits, vegetables, greenhouse and nursery, economics, outlook. Horticulture Industry Set To Grow 3-4 Percent Annually The U.S. horticulture industry, including fruits, nuts, vegetables, potatoes, dry beans, and greenhouse and nursery crops, is projected to produce $39 billion of output in 2000 and $46 billion in 2005. The projections follow a trend of 3-4 percent annual average growth from 1994's $31 billion. Output is projected to increase faster than U.S. population, exports are projected to increase faster than imports, and price is projected to increase at the long run rate of 1 to 2 percent per year. Projected efficiencies in production and marketing technology will moderate increases in costs. Projections are based on trends and expected changes in fundamental factors affecting supply and demand. 1/ Agricultural economist with the Commercial Agriculture Division, Economic Research Service, USDA. Produce Consumption Flattens in the 1990's U.S. consumers are apparently paying less heed to health professionals' advice to increase consumption of fresh fruits and vegetables. The consumption trend has flattened in the 1990's after rising most of the 1980's, putting a chill on expectations that U.S. consumers would double their consumption of fruits and vegetables by 2000. In 1994, consumption of fresh fruits, vegetables, and potatoes totaled 288 pounds per person--about the same as in 1988. However, in the 1980's, consumption increased nearly 2 percent per year, on average. The current flat trend for produce is the net result of declining consumption of vegetables offset by a rise in bananas and fresh citrus. Fresh potato consumption remains flat. Vegetable growers have been reacting to the low prices received during most of 1994 by cutting back on area planted in 1995. In addition, storms in Florida and California (during November 1994 to March 1995) have reduced yields. The weather-reduced yields and the supply response to low prices have lowered fresh vegetable supplies and boosted prices in early 1995--and kept consumption flat. Fruit growers have an incentive to produce less if prices remain low, but they have less flexibility than vegetable growers to cut costs by cutting back on output. For example, citrus growers in Florida and Texas, who replanted after a series of destructive freezes in the early 1980's, are facing large supplies in the next 5 to 10 years as more trees come into full bearing. For fruit growers, increasing demand through export growth is an important alternative to downsizing in the face of increasing supplies and stagnant domestic demand. The fruit and vegetable industry has responded to the flat trend in consumer demand by looking to foreign markets for increased opportunities. Exports of fresh fruits and vegetables have increased from 7.5 billion pounds in 1990 to over 10 billion pounds in 1994, expanding 7 percent per year. The value of fresh fruit and vegetable exports in 1994 totaled $2.9 billion, up from $2.2 billion in 1990. However, sales to Canada and Western Europe have stagnated since 1990, owed in part to their weakened currencies relative to the U.S. dollar. During 1990-94, the value of U.S. produce exports to these countries increased less than 1 percent per year, while exports to Latin America and Asia increased about 15 percent annually. The share of U.S. produce exports sold to Canada and Western Europe decreased from 61 percent in 1990 to 47 percent in 1994. The lower growth in these markets was made up by gains in Asia, going from 33 percent in 1990 to 41 percent in 1994, and in Latin America, going from 5 percent to 11 percent. Mexico accounts for all of the increase in Latin America's share. Although a weakened peso is likely to slow the growth in exports to Mexico in the short term, Latin America and Asia are likely to continue as the most rapidly developing markets for U.S. produce. The NAFTA and GATT trade agreements helped the U.S. produce industry by lowering tariffs, reducing quotas, and facilitating resolution of phytosanitary disputes. But even before NAFTA, U.S. exports to Mexico were on the rise. Recently Japan accepted its first load of Washington State apples, and U.S. exporters anxiously await the verdict of consumer acceptance. Japan's economy is emerging from recession, and higher consumer incomes should boost demand for U.S. produce exports. Produce imports followed the pace of U.S. domestic consumption in the early 1990's. The recent upturn is due to increases in a wide variety of items, from avocados to berries, mangoes, and melons. Imports of several high-volume items, such as tomatoes and apples, have remained flat in the 1990's. While Latin America remains the major source of U.S. imported produce with an 85-percent share of the total, the position of South America has eroded in the last 5 years. The share of produce import value coming from South America declined from 28 percent in 1990 to 24 percent in 1994, while Mexico's share remained at 38 percent. Chilean grape and apple imports declined from $270 million in 1990 to about $215 million in 1994. Recent reports from Chile suggest that fruit exports will continue level or decline due to aging orchards and vineyards. Importing from countries with relatively weaker currency partly explains the increased share of U.S. imports coming from Canada. In addition, U.S. supply shocks (citrus freezes, for example) and consumers' preference for new products (exotically colored bell peppers) explain some of the increased imports from Western Europe. Together, Canada and Western Europe account for 11 percent of annual U.S. fresh fruit and vegetable imports, up from 9 percent in 1990. Popular Items Keep Processed Market Strong Consumption of processed fruits and vegetables, primarily orange juice, frozen potatoes, and tomatoes, continues to increase in the 1990's. This reflects the continued demand for convenience foods both domestically and abroad. And, where the domestic trend has become flat, processors are looking for exports to boost sales. U.S. per capita consumption of frozen vegetables is projected to increase about 1 to 2 percent per year during 1995 to 2005, while canned vegetable consumption is projected to remain flat. Orange juice consumption is projected to increase about 0.5 percent per year to 2005. Processed fruit and vegetable exports (including canned, frozen, and dried products, juices, wines, and nuts) increased from 45 percent of total fruit and vegetable exports in 1990 to 50 percent in 1994. About 37 percent of U.S. exported processed fruits and vegetables goes to Canada and Latin America, 37 percent to Asia, and 20 percent to Western Europe. Exports to Asia have increased faster than exports to other regions in recent years, and U.S. firms are anticipating continued growth, especially in Japan. U.S. imports of processed fruits and vegetables will continue to be largely affected by changes in the domestic supply situation and the relative value of exporter currencies. For example, U.S. imports of frozen concentrated orange juice decreased from 1990 to 1992, as Florida growers recovered from the devastating freezes of the 1980's. However, 1994 FCOJ imports were up about 10 percent. Now that Florida's orange production is set to increase with maturing trees in place, imports from Brazil face a highly competitive U.S. market. On the other hand, a weaker Latin American currency will force U.S. processors to improve efficiency to be price competitive with the cheaper imports. Processed tomato imports from Western Europe, which increased in 1994, are also likely to face stiff competition in the U.S. market if the U.S. continues to increase output at the 1990's rate of 2-3 percent annually. Processed fruit and vegetable exports have contributed to the growth in high- value product (HVP) exports, which claim a growing share of total U.S. agricultural exports. HVP exports (including meats, snack foods, etc.) have risen 8 percent annually during the past 5 years, while bulk commodity exports have declined 4 percent. HVP exports will likely claim a 59-percent share of U.S. exports in 1995, and rise to 62 percent by 2000. Horticultural products and animal products will account for most of the increase in U.S. agricultural exports to 2005. Long Run Factors in the Outlook for U.S. Horticulture Performance of the U.S. and foreign economies is an important factor affecting demand for horticultural products. The period of fastest rise in produce consumption--the late 1980's--followed several years of rapid growth in the domestic economy, and the recent slowdown follows the 1991 recession. If the U.S. economy maintains a long run projected growth of 2-3 percent per year, domestic demand is likely to remain steady--and not increase like the 1980's-- over the next 10 years. Western Europe and Japan are emerging from recent recessions, and near-term export demand is likely to remain strong. The U.S. population is expected to grow 0.9 percent per year to the year 2000. But the expected change in demographics is likely more important than the aggregate rate of increase. The age distribution of U.S. consumers is projected to skew toward older age groups. The "baby boomers" are moving through middle age now, and healthy eating choices are more important to older populations. U.S. producers could reasonably expect total domestic consumption to increase faster than the rate of population growth, based on increasing income and aging of the population. In addition, the ethnic composition of the U.S. population is expected to favor increased demand for fruits and vegetables as immigration of Latin Americans and Asians continues to increase. The export outlook for fruits and vegetables is optimistic, based on recent trends. Horticultural exports have increased faster than total agricultural exports. While part of the growth in 1994 exports of vegetables to Asia was due to weather-related shortages in Japan and Korea, lower trade barriers and resolution of several phytosanitary disputes promise continued growth in U.S. fruit and vegetable exports. The recent efforts by U.S. firms to establish marketing relationships in other countries, for example Japan and Mexico, are expected to yield benefits over the long run. With the Japanese, consistent high quality and confidence are the most important ingredients for a lasting partnership. On the supply side, U.S. fruit and vegetable growers continue to improve efficiency in the 1990's. With new production and marketing technologies, growers are likely to increase yields at the long run rate of 1-2 percent per year. Traditional improvements include better varieties and planting and cultivation methods. Scientific advances using biotechnology promise further increases in the quantity and quality of output. Biotechnology that increases pest resistance in plants growing in the field could reduce the costs of pest control. Also, technology to transfer plant genes that reduce perishability or increase the efficiency of canning and freezing could reduce spoilage and waste. U.S. fruit yields dipped sharply in the 1980's, due to several severe freezes in Florida and Texas that destroyed citrus trees. Florida growers have replanted citrus groves with higher densities of trees per acre and moved production areas farther south. The Gulf coast region in southwest Florida has developed rapidly as a producer of grapefruit, oranges, and specialty citrus. Texas grapefruit production is increasing, but the urbanization of land values in the Rio Grande Valley is likely to cap production at below pre-freeze levels. U.S. average yields for noncitrus fruits (apples, pears, peaches, and cherries, for example) have increased about 300 pounds (0.15 tons) per acre per year over the last 10 years, compared to about 200 pounds per year for citrus fruits. Growers increased area in production of noncitrus fruit, mainly apples, in the 1980's. The expansionary period for apples ended by 1990, and production has continued to increase as trees reach full-bearing age. Similarly, citrus groves in Florida are reaching full-bearing age, and yields are expected to increase rapidly from 1995 to 2000. Yields of both vegetables and potatoes have risen above the long run trend in recent years. The trend rate of increase for vegetables and potatoes is 4-5 cwt per acre per year. Processing tomato yields in California continue to set records, and potato yields in Washington and Idaho were near records in 1994. Fresh-market cabbage, cucumber, tomato, and watermelon yields have increased well over 2 percent per year over the last 20 years, outpacing other vegetables. The leading marketing technology for U.S. produce is adding value to fresh fruit and vegetables through convenience packaging (light processing). Packaging lettuce and other salad items for ready use appeals to U.S. consumers and has made inroads into traditional bulk selling strategies. As with foreign markets, new techniques of packaging and selling produce expand the total potential for growth in the horticulture industry. By adding value to fruits and vegetables--whether through traditional processing, light processing, brand identification, or marketing through foodservice channels--the horticulture industry will increase the demand for consistency and high quality. Innovators who develop technologies and new sources to meet this demand will profit the greatest in the next 10 years. List of Tables Table 1. U.S. vegetable industry: Area, production, value, unit value, and trade, 1993-95 2. Selected fresh vegetables: U.S. trade volume, 1993-94 3. Domestic utilization of selected processing vegetables 4. Potatoes: U.S. retail prices by type, 1984-95 5. Fresh vegetables: Prices received by U.S. growers, by month, 1990-95 6. Commercial vegetables and potatoes: Indexes of prices received by U.S. growers, by month, 1990-95 7. Vegetables: Producer price indexes, by month, 1990-95 8. Vegetables: Consumer price indexes, by month, 1990-95 9. Fresh vegetables: U.S. average retail prices, by month, 1989-95 10. Fresh vegetables: U.S. area, production, and value, 1992-94 11. Winter-season fresh vegetables: U.S. harvested area, selected crops,1992- 95 12. Spring-season fresh vegetables: U.S. harvested area, selected crops, 1992- 95 13. Fresh vegetables: U.S. shipments, by quarter, 1993-95 14. Fresh vegetables: U.S. import volume and value, by region or country, 1994 15. Fresh vegetables: U.S. export volume and value, by region or country, 1994 16. Vegetables: U.S. farm cash receipts, 1985-93 17. Processing vegetables: Selected U.S. contract plantings, 1990-92 average, 1993-95 18. Processing vegetables: U.S. acreage, production, and value, 1992-94 19. Canned vegetables: Quarterly wholesale price trends,1988-95 20. Canned vegetables: U.S. import volume and value, by region or country, 1994 21. Canned vegetables: U.S. export volume and value, by region or country, 1994 22. Frozen vegetables: U.S. carryover, pack, seasonal supply, shipments, 1988/89-1994/95 23. Frozen vegetables: Quarterly wholesale price trends, 1991-95 24. Frozen vegetables: U.S. cold storage holdings, January 1, 1992-95 25. Frozen vegetables: U.S. import volume and value, by region or country, 1994 26. Frozen vegetables: U.S. export volume and value, by region or country, 1994 27. Supermarket sales of selected processed vegetables, 1989-94 28. Selected processed vegetables: Number of firms and value of shipments 29. Winter-season potatoes: U.S. acreage, yield, and production, 1985-89 average, 1990-95 30. Spring-season potatoes: U.S. acreage, yield, and production, 1985-89 average, 1990-95 31. Domestic shipments of U.S. potatoes, 1985-95 32. Fall potatoes: March 1 stocks, by area, 1979/80-1994/95 33. U.S. potato shipments: Season total through April 1 34. Potatoes: Processing use through December 1, monthly and season total, major States, 1981/82-1994/95 35. Potatoes and pulses: Prices received by U.S. growers, by month, 1989-95 36. Potatoes: U.S. export volume and value, by region or country, 1994 37. Sweetpotatoes: U.S. planted acreage, 1988-92 average, 1993-94, indicated 1995 38. Sweetpotatoes: Shipping-point prices, by State, selected weeks, 1991-95 39. Dry edible beans: U.S. planted acreage, 1988-92 average, 1993-95 40. Dry edible beans: U.S. production, by State, by class, 1994 41. Dry edible beans: Prices received by U.S. growers, by class, 1982/83- 1993/94 42. Dry edible beans: U.S. trade volume, by quarter, 1993-94 43. Dry peas, lentils, and beans: U.S. export volume and value, by region or country, 1994 44. Vegetable imports: U.S. value, by group, by month, 1991-95 45. Vegetable exports: U.S. value, by group, by month, 1991-95 46. U.S. per capita use of selected, commercially produced, fresh, and processing vegetables and melons, 1987-95 END END END