VEGETABLES AND SPECIALTIES November 24, 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-267. 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 Page Summary. . . . . . . . . . . . . . . . . . . . . . Industry Overview. . . . . . . . . . . . . . . . . Fresh Vegetables . . . . . . . . . . . . . . . . . Processing Vegetables. . . . . . . . . . . . . . . Cash Receipts. . . . . . . . . . . . . . . . . . . Potatoes . . . . . . . . . . . . . . . . . . . . . Sweet potatoes . . . . . . . . . . . . . . . . . . Pulses . . . . . . . . . . . . . . . . . . . . . . Mushrooms. . . . . . . . . . . . . . . . . . . . . Special Articles Chilean Horticultural Exports and the U.S. Horticulture Industry. . . . . . . . . . . . . . . List of Tables . . . . . . . . . . . . . . . . . . Situation Coordinator Gary Lucier Voice (202) 219-0117 Fax (202) 501-6782 Principal Contributors Gary Lucier (202) 219-0117 John Love (202) 219-1268 Charles S. Plummer (202) 219-0717 Susan Pollack (202) 219-0505 Editor Martha Evans Layout and Text Design Wynnice P. Napper The Vegetables and Specialties Situation and Outlook is published semi-annually (April and November) and supplemented by a yearbook (July). --------------------------------------------------------------------------------- Summary The U.S. fall-season potato crop is estimated to be 402 million cwt, down 5 percent and second to last year's record high. Harvested acreage was slightly below a year earlier and per-acre yields declined 5 percent. Yields were down in all major production areas, with the most notable declines in North Dakota, Maine, Colorado, and Washington. A combination of poor spring weather, untimely frosts, and scattered incidences of blight contributed to reduced output in the major Western States. A combination of the smaller fall crop and continued strong demand from processors will keep fresh-market potato prices above a year earlier through next spring. The first estimate of 1994 per capita potato use is 140.8 pounds, 3 percent higher than in 1993 and the highest since 1935. Most of the increase was for processing potatoes. While fresh-market potatoes fell 1 percent to 49.1 pounds per person, processing use surged 5 percent to 91.7 pounds. The majority of the increase in processing use went for frozen french fries and other frozen products which surged 9 percent to a record 59.4 pounds. For 1995, per capita potato use is forecast to remain near 140 pounds. The 1995 U.S. onion crop, forecast at 60.6 million cwt, is 3 percent lower than 1994's record crop. The summer storage crop (excluding California, producing mostly for dehydration) is forecast down 2 percent at 34.7 million cwt, although area for harvest is estimated up 2.5 percent. Average yields in Colorado, Oregon, and Washington were off from a year earlier, due to a late start in planting and cool early-season weather. The summer storage crop is harvested and stored for distribution during the fall and winter months. Retail produce prices increased faster than all food in 1995. The all-food index of retail prices increased about 3 percent in 1995. The increase in fresh vegetable prices, averaging about 16 percent, outpaced the 9 percent for fresh fruit. This winter (December through March), retail vegetable prices are expected to average about the same as a year ago. After an 18-percent surge in prices last winter, retail prices remained high throughout most of 1995. This winter, higher potato prices are expected to be offset by an easing of retail prices for several salad vegetables. Contract production of the 4 major vegetables for processing (tomatoes, sweet corn, snap beans, and green peas) is estimated down 2 percent from last year's record high to 16.2 million short tons. Processors contracted fewer acres of sweet corn and snap beans but more acres for tomatoes and green peas. Although green pea and tomato production rose, less-than-ideal growing weather reduced per-acre yields and output of processing sweet corn and snap beans. Despite weather-delayed plantings in northern California, increased acreage is expected to boost U.S. contract tomato output close to a record-high 11.6 million short tons. About 10.9 million contracted tons are expected from California where average per-acre yields declined 4 percent to 33.3 tons--still the second highest on record. Strong domestic and export demand for processed tomato products continue to drive the processing tomato market. Since 1988, per capita domestic use of processed tomatoes (on a fresh-weight basis) has trended higher and is forecast to reach a record 79 pounds in 1995. Much of the rising demand since the late 1980's is due to increased foodservice use of tomato products in items such as pizza, pasta, and salsa. U.S. dry bean production is forecast at 30.6 million cwt, 5 percent above 1994's large crop. Dry bean acreage rose 3-percent and per-acre yields increased slightly. However, much of the increase in U.S. average yield can be attributed to a 31-percent increase in Michigan, while many other States experienced lower yields. Some areas planted late which kept the crop 2 to 3 weeks behind normal and hard freezes in Mountain and Plains States damaged crops in late September. With expected larger supplies, average dry bean prices are likely to continue below a year earlier. Mushroom sales volume increased 4 percent in 1994/95, setting a record at 789 million pounds with agaricus accounting for 99 percent of the crop. Specialty mushroom sales volume fell 5 percent after 5 years of continuous growth. Within the specialty group, Shiitake sales fell 6 percent to 5.25 million pounds, and Oyster fell 12 percent to 1.71 million pounds. Mushroom volume is forecast up 1 percent for 1995/96, with most of the growth expected in Pennsylvania. U.S. exports and imports of fresh and processed vegetables continued to expand in 1995. Through August, the export value of vegetables and melons, potatoes, and pulses, increased 18 percent, while imports increased 13 percent. At these rates, total 1995 exports could reach $3.2 billion and imports $2.7 billion. Fresh vegetable export volume is likely to be lower in 1995 than 1994, due to the supply disruptions in Florida and California; but higher prices are expected to increase total export value 13 percent. Exports of canned and frozen vegetables (excluding potatoes) are projected to increase 18 percent to $648 million, while imports increase 9 percent to $626 million. Potato exports--mainly frozen, chipped, and dehydrated potatoes--are projected to increase 28 percent to $731 million, far exceeding imports of $161 million. Pulse exports are projected to increase 16 percent to $325 million in 1995. Through August, U.S. exports of canned vegetables (including tomatoes) increased 15 percent to $298 million. Most of the gain in exports is due to greater movement of sweet corn (up 23 percent), cucumber/gherkin pickles (up 54 percent), and vegetable mixtures (up 34 percent). Sweet corn, which accounts for 30 percent of canned vegetable exports, increased due mostly to larger volumes sold in the United Kingdom, Germany, and South Korea. During the same period, total canned vegetable imports declined 13 percent to $212 million as U.S. firms purchased fewer offshore artichokes (down 41 percent) and green peas (down 56 percent). Across the board increases led U.S. frozen vegetable exports (excluding potatoes) to rise 14 percent to $92 million during January to August 1995. Sweet corn, which accounts for 38 percent of frozen exports, rose 5 percent to $35 million as volume increased nearly 7 percent. Exports to Japan, which accounts for 63 percent of the U.S. total, rose 3 percent while volume sent to Mexico was cut in half by the peso devaluation. Imports of frozen vegetables declined 15 percent to $144 million during the January to August period. With the exception of broccoli, which accounts for 47 percent of frozen vegetable imports, most frozen import categories declined. Broccoli imports rose 10 percent to $68 million, with more than 90 percent coming from Mexico. Imports now account for 55 percent of frozen broccoli supply compared with just 7 percent in 1980. Industry Overview Vegetable Crop Value Rebounds in 1995 The farm-level value of vegetable and melon production is likely to increase more than $1.5 billion to $13.7 billion in 1995. The 14-percent increase in value contrasts with a 2-percent decrease in 1994. High prices for fresh vegetables during the first half of 1995--spurred by weather-reduced supplies from Florida and California--are behind the increase in total value. Also, higher grower prices for a smaller 1995 fall crop of potatoes are expected to increase that crop's value. The value of vegetable exports is also expected to increase 15 to 20 percent over 1994, while imports increase about 15 percent. Value of production for selected fresh-market vegetables is forecast at $7.4 billion in 1995, 18 percent above 1994. The 1995 area harvested is likely down 2-3 percent, continuing a decline since 1992. During the first 3 quarters of 1995, domestically produced supplies were off sharply, following a series of storms in Florida and California. A 40-percent increase in grower prices during first-half 1995 was much greater than the percentage decrease in supplies, resulting in a forecast increase of $1.1 billion in total value. The value of processing vegetable production is forecast to remain about the same in 1995, after increasing 23 percent in 1994. Reduced output of sweet corn and snap beans is offset by small increases in tomatoes and green peas. The forecast value of $1.4 billion is distributed as follows: about half for processing tomatoes; one-third for sweet corn, green beans, and green peas; and the remainder for items such as cabbage and pickles. The 1995 fall crop of potatoes is forecast down 5 percent from the record 1994 fall harvest. The smaller crop and continued strong domestic and export demand will send prices higher for the next 8 to 10 months. The value of the 1995 crop of potatoes (all seasons) and sweet potatoes is expected to exceed $3 billion, up 15 to 20 percent from 1994. The 1995 U.S. dry edible bean crop is estimated to be 30 million cwt, up slightly from 1994's large crop. Average grower prices in the range of last year's $20 to $22 per cwt are contingent upon continued strong export demand. Strong demand for pulses (including dry beans, peas, and lentils) is expected to keep the 1995 value of production at or above 1994's $689 million. The long-term outlook for the U.S. vegetable industry includes the value of production increasing to about $15 billion by 2000. The rate of growth during 1996 to 2000 is projected to average 3.4 percent a year. A flat trend in U.S. per capita consumption is keeping the growth rate of fresh vegetables below the total, while increases in domestic and foreign demand for frozen french fries maintain potato crop values above average. Vegetable Trade Increases in 1995 U.S. exports and imports of fresh and processed vegetables continued to expand in 1995. Through August, the export value of vegetables and melons, potatoes, and pulses increased 18 percent, while imports increased 13 percent. At these rates, total 1995 exports could reach $3.2 billion and imports $2.7 billion. Fresh vegetable export volume is likely to be lower in 1995 than 1994, due to the supply disruptions in Florida and California; but higher prices are expected to increase total export value 13 percent. Exports of canned and frozen vegetables (excluding potatoes) are projected to increase 18 percent to $648 million, while imports increase 9 percent to $626 million. Potato exports--mainly frozen, chipped, and dehydrated potatoes--are projected to increase 28 percent to $731 million, far exceeding imports of $161 million. Pulse exports are projected to increase 16 percent to $325 million in 1995. Fresh Vegetables Farm Prices Soar in Late 1994 and Early 1995 Grower prices for fresh vegetables began to climb in late 1994, peaking twice--in December 1994 and April 1995 (table 14). Both spikes followed crop damage from storms that hit the principal fall producing areas in Florida and spring areas in California. Tropical Storm Gordon hit Florida in November 1994, and a series of rain storms deluged California in March. The first peak occurred in December when the index of grower prices rose to 161 (1990-92=100). Following that, the monthly indicator sank to 114 in February. After the second peak in April (index of 176), prices returned to about even (index of 93) with July 1994. Twice within the 13 months of July 1994 to July 1995, grower prices for fresh tomatoes doubled and lettuce increased nearly five-fold. The total volume of fresh vegetables (excluding potatoes) shipped during January to September 1995 decreased 5 percent from a year earlier. The volume of imports increased 17 percent for the same period. However, imports only account for about 9 to 10 percent of fresh vegetable supply. This indicates that U.S. domestic production of fresh vegetables through summer was down an estimated 7 to 8 percent from a year earlier. Retail Prices Follow Farm Prices Retail prices for fresh vegetables (including potatoes) moved up after grower prices began increasing in late 1994 (table 12). The increase in monthly consumer prices during the first-half of 1995 averaged 21 percent above first-half 1994. Excluding potatoes, which were plentiful, retail vegetable prices were up 26 percent during first-half 1995. As with grower prices, retail prices also peaked in December 1994 and April 1995. In July 1995, however, retail prices still averaged 12 percent above a year earlier. Monthly retail produce prices, including fresh fruit, have averaged 10 to 12 percent higher in 1995, compared with 1994. Along with fewer fresh vegetables from Florida and California, retailers had to contend with smaller crops of California summer fruit and unexpectedly smaller banana supplies. Retail produce prices increased faster than all food in 1995. The all-food index of retail prices increased about 3 percent in 1995. Fresh vegetable prices, averaging about 16 percent, outpaced the 9 percent for fresh fruit. This winter (December through March), retail vegetable prices are expected to average about the same as a year ago. After an 18-percent surge in prices last winter, retail prices remained high throughout most of 1995. This winter, higher potato prices are expected to be offset by an easing of retail prices for several salad vegetables. California Fall-Season Area Up, Florida Down California's fall-season area for harvest of selected vegetables is estimated up 12 percent to 101,200 acres. All crops registered increases, except cantaloup and celery. Combined acreage of broccoli, cauliflower, and carrots increased 12 percent, while sweet corn and head lettuce increased 15 percent. California's honeydew melon acreage increased 40 percent, while cantaloup acreage was unchanged. In Florida, fall-season area for harvest is estimated down 2 percent, mainly due to decreases in tomatoes and cucumbers. The 1994 Florida snap bean, cucumber, and tomato fall-season acreage estimates were revised substantially higher in January 1995. Florida Fall-Season Tomato Area Down In Florida, 1995 fall-season area for harvest of fresh-market tomatoes was estimated down 7 percent to 17,300 acres. The 1994 fall-season area was revised up from 16,000 acres to 18,600 acres, putting it above fall-season 1993. Because of a series of heavy rains in Florida during October 1995, the fall tomato harvest was slow getting started. Through early-November 1995, Florida had shipped 489,000 cwt of fresh-market tomatoes, compared with 845,000 cwt in 1994. Mexico began shipping fresh tomatoes to the United States earlier this season, compared with 1994/95. Through early November 1995, U.S. imports of tomatoes from Mexico amounted to 1.75 million cwt, 118 percent more than double a year earlier. Mexican producers have a stronger incentive to export tomatoes to the United States this fall, based on the peso's value relative to the U.S. dollar. In October, Mexican producers could exchange $1 for about 7 pesos, compared with only 3 to 4 pesos during most of fall 1994. Weekly shipments of fresh tomatoes fluctuate widely during the winter months when Florida and Mexico are the main sources. During January to March 1995, weekly total shipments ranged from 491,000 cwt (first week of January) to 928,000 cwt (third week of March). Most of the variation is due to imports from Mexico. Florida's shipments varied from 142,000 cwt during the third week of March to 230,000 cwt for the first week of January. During fall 1994, monthly average U.S. grower prices for tomatoes climbed steadily from $28.30 per cwt in October to $37.20 in December. Fewer supplies from Florida, following the damage by Tropical Storm Gordon in November, kept prices rising to $41.60 in January 1995. After a spike in March--when the monthly average hit $43.80--grower prices declined to $14.40 per cwt in May, as higher Florida production increased total supplies. Onion Production Lower in 1995 The 1995 U.S. onion crop, forecast at 60.6 million cwt, is 3 percent lower than the 1994 record (table 4). The summer storage crop (excluding California, producing mostly for dehydration) is forecast down 2 percent at 34.7 million cwt, although area for harvest is estimated up 2.5 percent. The summer storage crop is harvested and stored for distribution during the fall and winter months. Average yields in Colorado, Oregon, and Washington were off from a year earlier, due to a late start in planting and cool early-season weather. Export demand for U.S. onions was a key factor in holding up grower prices in late 1994 and early 1995. Japan's 1994 crop was severely reduced by poor weather, with the result that U.S. onion exports to Asia increased 16-fold during October 1994 to March 1995. Exports to Asia for the 6-month period totaled 3.1 million cwt, about 9 percent of summer storage production. Japan's 1995 crop was reported by the Ministry of Agriculture to be 18 percent larger than 1994. Additional reports of heavy August rains and pest damage in Japan's main producing area--Hokkaido--may reduce the crop estimate. Monthly U.S. grower prices for fresh-market onions ranged from $10.40 per cwt to $17.10 per cwt during October 1994 to March 1995. The 6-month average--$13.72--was 39 percent below the same 6-month average of 1993/94, but it falls in line with previous years. A rebound in Japan's onion crop is likely to curtail U.S. exports from last season. Given the large U.S. summer-storage crop in 1995, monthly prices during December 1995 to March 1996 are likely to fluctuate in the $10 to $15 a cwt range. Processing Vegetables Output Down 2 Percent Contract production of the 4 major vegetables for processing (tomatoes, sweet corn, snap beans, and green peas) is estimated down 2 percent from last year's record high to 16.2 million short tons. Processors contracted fewer acres of sweet corn and snap beans but more acres for tomatoes and green peas (table 20). Although green pea and tomato production rose, less-than-ideal growing weather reduced per-acre yields and output of processing sweet corn and snap beans. Sweet Corn Output Drops Sweet corn output is expected to decline from last year's record-large crop to 3.4 million short tons--down 9 percent from a year ago but 24 percent above the flood-impacted low of 1993. Because of regional production differences, this decline is expected to fall more heavily on the canned sweet corn pack with the frozen pack changing much less when compared with a year ago. Per-acre yields are expected to fall 5 percent this year to 6.85 tons due largely to hot, dry weather in the Midwest. With strong per-acre yields, Washington State is expected to produce a record crop of 762,600 short tons to lead the nation in the production of sweet corn for processing. Hot weather increased acreage abandonment and cut average yields 16 percent in Wisconsin, the usual leader in processing sweet corn. Wisconsin accounted for 22 percent of the 1995 crop-- down from 27 percent a year ago. Frozen and canned sweet corn stocks began the year at levels around the average of the past 5 years (ERS estimates). As a result, wholesale prices were flat to slightly lower until strengthening due to harvest problems in the Midwest (tables 23 and 24). With a strong harvest in the Northwest (which is geared largely to freezing corn), wholesale frozen sweet corn prices are not expected to rise much in the coming months. On the canning side, prices bottomed out in the second quarter and have steadily moved upward since. With the smaller crop in the Lake States, smaller supplies and continued price strength are expected through the first half of 1996. Green Peas Up, Beans Down Contract production of green peas intended for canning and freezing was expected to rise 1 percent to 496,970 short tons. Acreage for harvest increased 3 percent while per-acre yields declined slightly to 1.66 tons per acre. All of the gain in area was intended for freezing, with canners planning to reduce volume this year. Output increased in all major States except Wisconsin and Washington. Good weather in the Northwest resulted in strong per-acre yields but excessive heat (peas are a cool-season crop) in New York dropped yields 41 percent from last year's highs. Minnesota regained the top position in green pea production from Washington in 1995, accounting for 25 percent of the U.S. crop--compared with 24 percent last year. With supplies little changed from last year, wholesale prices are not expected to change greatly from year-ago levels. Contract tonnage of snap beans for canning and freezing was expected to decline 12 percent to 678,540 short tons. Acreage for harvest declined 3 percent while excessive rains and disease took a toll on yields in the Midwest, dropping the U.S. average per acre yield 8 percent to 3.37 tons. With yields and output off in both canning and freezing areas, supplies of both canned and frozen snap beans are likely to be lower than a year ago. Thus, wholesale prices are expected to show some strength in the coming months. Through the first 3 quarters of 1995, wholesale prices for retail-pack canned snap beans averaged 2 percent lower than a year before. During the same period, wholesale prices for retail-pack frozen snap beans averaged 7 percent below a year earlier. Frozen Stocks Unchanged With offsetting changes among the major vegetables, stocks of frozen vegetables (excluding potatoes) in cold storage on October 1 were unchanged from a year earlier and 5 percent less than the high of 1991 (table 25). Frozen vegetable stocks (with cob corn converted to a cut-basis) totaled 2.28 billion pounds. Among the 3 major frozen vegetables, stocks were lower for green beans (3 percent) and green peas (5 percent), but unchanged for sweet corn (expressed on a cut-basis). Due partly to low spring production caused by poor weather in California, stocks of frozen broccoli and cauliflower were below a year earlier. With movement steady, increased imports of frozen broccoli from Mexico were not able to offset the drop in California's output. Meanwhile, stocks of frozen carrots, spinach, and lima beans were each above a year ago. Until this fall, wholesale prices of canned and frozen vegetables had been drifting lower since early 1994. With the exception of tomato products and beets, canned packs are reportedly smaller than a year earlier for most vegetables, and wholesale prices have moved higher. For frozen vegetables, wholesale prices have firmed with the economy supporting consistent demand and supplies about the same as a year ago. Also, with supplies of competing canned vegetables lower and prices higher, some upward pressure on frozen prices could develop early next year. Processing Tomato Output Near Record-High Despite weather-delayed plantings in northern California, increased acreage is expected to boost U.S. contract tomato output close to a record-high 11.6 million short tons. About 10.9 million contracted tons (10.7 million was reported by the industry through late October) are expected from California where average per-acre yields declined 4 percent to 33.3 tons--still the second highest on record. Additional paste capacity was added in California this year, spurring the increase in contract area. Meanwhile, contract production from other States is expected to decline 11 percent to 0.7 million tons. Smaller crops are expected in Ohio, Indiana, and Michigan. A larger percentage of California's tomato output was concentrated in September and October of this year due to late planting caused by unusually heavy spring rains. Normally about a quarter of the crop is delivered after September 1. This year, more than 40 percent of the crop was processed after September 1. Fortunately, the weather held and the industry packed a near-record crop of good quality. Strong domestic and export demand for processed tomato products continues to drive the tomato market. Per-capita domestic use of processed tomatoes (on a fresh-weight basis) is forecast to reach a record 79 pounds per person in 1995. This is the fresh-equivalent of over 20 billion pounds of tomatoes--far more than the 4 billion pounds consumed as fresh-market tomatoes. Much of the rising demand since the late 1980's is due to increased foodservice use of tomato products in items such as pizza, pasta, and salsa. Total foodservice sales in 1995 are expected to reach $309 billion with a further 5-percent nominal dollar (before inflation) increase forecast in the year ahead. Quick service restaurants account for about a third of foodservice sales. Quick service restaurant sales are expected to total $97 billion this year and the industry is projecting a further 6-percent nominal gain in the year ahead. Wholesale prices for bulk tomato paste (55 gal drums) continued flat into the fourth quarter at 38 to 39 cents per pound--unchanged for most of this year but about 5 percent lower than a year ago. With supplies marginally greater than a year ago due to slightly larger carryin stocks, there will be little incentive to change wholesale prices significantly for most products in the coming year. Assuming domestic and export demand continues strong and prices are maintained at or above current levels, it may provide enough incentive for acreage to be increased slightly for the 1996/97 season. Processed Vegetable Exports Up, Imports Down Through August, U.S. exports of canned vegetables (including tomatoes) increased 15 percent to $298 million (table 5). Most of the gain in exports is due largely to greater movement of sweet corn (up 23 percent), cucumber/gherkin pickles (up 54 percent), and vegetable mixtures (up 34 percent). Sweet corn, which accounts for 30 percent of canned vegetable exports, increased due mostly to larger volumes sold in the United Kingdom, Germany, and South Korea. During the same period, total canned vegetable imports declined 13 percent to $212 million as U.S. firms purchased fewer offshore artichokes (down 41 percent) and green peas (down 56 percent). Across the board increases led U.S. frozen vegetable exports (excluding potatoes) to rise 14 percent to $92 million during January to August 1995. Sweet corn, which accounts for 38 percent of frozen exports, rose 5 percent to $35 million as volume increased nearly 7 percent. Exports to Japan, which accounts for 63 percent of the U.S. total, rose 3 percent while volume sent to Mexico was cut in half by the peso devaluation. Imports of frozen vegetables declined 15 percent to $144 million during the January to August period. With the exception of broccoli, which accounts for 47 percent of frozen vegetable imports, most frozen import categories declined. Broccoli imports rose 10 percent to $68 million, with more than 90 percent coming from Mexico. Imports now account for 55 percent of frozen broccoli supply compared with just 7 percent in 1980. Tomato Product Exports and Imports Up U.S. exports of processed tomato products totaled $135 million during January-August 1995, up 8 percent from the same period a year ago. A 2-percent decline in average value per unit helped spur a 10-percent increase in export volume. Canada continues to be the major export market, accounting for 50 percent of the value of U.S. processed tomato products. Japan (16 percent), Italy (4 percent), Hong Kong (3 percent), and Mexico (3 percent), round out the top 5 foreign markets. Largely reflecting the impact of the weak peso, exports to Mexico declined 45 percent from a year ago. However, increased sales to Italy, the Netherlands, Norway, and Brazil were more than offsetting. In calendar 1994, about 5 percent (0.93 million short tons) of total supply was exported. In 1995, close to 6 percent (1 million short tons) of tomato products are expected to be shipped to other countries. Through August of this year, tomato sauces accounted for 36 percent of exports, closely followed by tomato paste (34 percent). Tomato ketchup exports are up 16 percent through August mostly as a result of sharply increased sales to Canada ($0.6 million in 1994 to $3.6 million in 1995). Through August, $55.3 million of processed tomato products had been imported, up 9 percent from a year ago. Imports accounted for 2 percent of supply in 1994. Tomato paste (29 percent), canned whole tomatoes (28 percent), and tomato sauces (27 percent) accounted for the largest share of tomato product import value with Mexico (whole and paste), Chile (whole and paste), and Canada (whole, paste, sauce) the leading sources. Morocco, a relatively new source for tomato sauces, shipped $5 million in tomato sauces to the United States during the first 8 months of 1995, up from $0.8 million during the same period a year ago. Cash Receipts Vegetable Receipts Fell 1 Percent in 1994 Grower cash receipts from the sale of vegetables and melons (including potatoes, pulses, and mushrooms) fell 1 percent in 1994 to $13.0 billion (table 30). This follows the nominal dollar record-high of a year ago. After adjusting for inflation, cash receipts fell 3 percent. With other crop receipts rising in 1994, the share of U.S. crop receipts accounted for by vegetables fell to 14 percent, compared with almost 15 percent in 1993. In 1995, with sharply higher prices outweighing reduced output, vegetable receipts are expected to increase, with fresh vegetables expected to lead. California growers accounted for 34 percent of U.S. vegetable receipts, down from 35 percent in 1993. Although California receipts rose substantially for commodities such as broccoli (up 23 percent), garlic (up 55 percent), and processing tomatoes (up 24 percent), declines for many other vegetables in California outweighed these gains. A combination of reduced output and lower prices dropped grower receipts for commodities such as iceberg lettuce (down 25 percent), fresh-market tomatoes (7 percent), and processing onions (10 percent). This left vegetable receipts for California down 2 percent. Buffeted by losses from severe weather, Florida vegetable receipts for 1994 declined 14 percent to $1.4 billion--11 percent of the nation's vegetable cash receipts. Led by fresh-market tomatoes, vegetable receipts account for 36 percent of the State's crop cash receipts and 28 percent of total farm cash receipts. Receipts fell for most vegetables with notable declines in fresh-market tomatoes (29 percent), cucumbers (35 percent), and snap beans (26 percent). Fresh-market tomato receipts declined for the third consecutive year after peaking in 1992 at over $800 million. Despite the decline last year, Florida's vegetable industry continues to maintain its share of industry revenue. Florida's share of U.S. vegetable receipts for the past 5 years (1990-94) was the same as for the previous 5 years at about 12.5 percent. With large marketings from consecutive record crops and stronger prices through much of 1994, grower cash receipts for potatoes increased 9 percent to $2.5 billion (table 31). Processing, particularly freezing uses, continued to drive potato demand. Idaho and Washington collectively accounted for 40 percent of U.S. potato cash receipts in 1994. A record-large crop pushed Idaho potato receipts up 4 percent to $576 million while larger marketings in Washington outweighed lower prices and resulted in 1 percent greater receipts to a nominal dollar high. Colorado growers enjoyed a 17-percent gain in potato cash receipts to a near record $129 million as marketings continued strong from back-to-back record crops. Despite larger production in 1994, low stocks in many bean classes led to stronger prices and a 10-percent gain in dry edible bean receipts to $568 million (table 32). Michigan (up 24 percent), Nebraska (up 18 percent), and California (up 20 percent) were the leading States for dry bean receipts. Colorado, which produces primarily pinto beans, experienced a 16-percent decline in receipts due to low pinto bean prices. Potatoes Fall Crop Down The first estimate of U.S. fall-season potato production is 402 million cwt, down 5 percent from last year's record crop (table 6). Harvested acreage was estimated to be slightly below a year earlier while per-acre yields declined 5 percent to 334 cwt after setting consecutive record highs the previous 4 years. Fall-season yields also averaged below the 1960-94 trend of 341 cwt per acre. Yields were down in all major production areas with the most notable declines in Washington (down 6 percent), Maine (12 percent), North Dakota (13 percent), and Colorado (11 percent). In many areas, especially in the West, the season got off to a late start due to a cool, rainy spring. Parts of Idaho suffered through a June frost which set plant growth back 2 to 3 weeks. Production in the 10 Western States was estimated to be 275 million cwt, 8 percent less than last fall. Although crops were smaller, size profiles were average and quality was good in most areas. With the exception of Nevada, production declined in every Western State. In Idaho, yields were actually a bit better than expected given the early season weather-related adversity, as good fall weather allowed harvest to be delayed and provided critical bulking time. Idaho yields averaged 330 cwt, down 3 percent from last year's record but on trend for the State (trend yield for 1995 is 330 cwt). In Washington, a combination of both lower yields and acreage left output down 9 percent to 81 million cwt. After 2 consecutive record crops, Colorado's fall crop was down 8 percent as yields were cut 11 percent by a weather-shortened growing season. Production in the eight Central States was estimated to have increased slightly as a 4-percent gain in harvested acreage was almost offset by a 4-percent drop in per-acre yields. Wisconsin produced a record-large crop of 27 million cwt, up 5 percent from last year. Lower yields in Wisconsin were outweighed by a 9 percent increase in acreage, the largest harvested area since 1947. Although the crop in North Dakota was affected by adverse weather which left production down 12 percent, growing conditions in Michigan and parts of Minnesota were excellent this year and led to strong yields. As a result, production in Michigan rose 16 percent to 17 million cwt (the highest since 1934) while record-high yields and increased area pushed Minnesota's crop up 6 percent to 21 million cwt (the highest since 1928). In the five Eastern States, fall potato production was estimated at 30 million cwt, 3 percent below a year ago. Despite a 2-percent gain in acreage, output fell as average per-acre yields dropped 6 percent. Lower production in Maine outweighed increases in Pennsylvania (up 8 percent) and New York (up 2 percent). Maine, which accounted for 56 percent of fall production in Eastern States, experienced a 9-percent decline in output to 17 million cwt--the lowest since 1922. Eastern growers will likely be facing increased competition from record-large crops in eastern Canada. Shipments from Canada have already begun to show substantial increases over low year-ago levels. Thus, although U.S. grower prices will likely average well above a year ago, price advances in eastern fresh markets may be tempered by the additional import volume. Record Potato Utilization in 1994/95 The fourth consecutive record potato crop in 1994 led to record-large use of potatoes in 1994/95 (table 7). Although production was up 9 percent, demand continued strong, which helped to limit the decline in the season average price to just 10 percent. About 91 percent of the crop was sold, with shrinkage and loss pegged at about 8 percent--up slightly from an average of 7.3 percent the previous 5 seasons. Some of the highlights were as follows: O Use of fresh-market potatoes increased 8 percent to 134.3 million cwt, the most since 1965. With the exception of the 1993 season, fresh use has increased annually since 1988. Despite the increase, fresh use accounted for 28.8 percent of the crop, the lowest on record. Fresh utilization will likely decline in 1995/96 due to the smaller crop, higher prices, and continued strong processing demand. o Processing utilization rose 8 percent to a record 261.4 million cwt. This was the sixth consecutive increase. Processing accounted for 55.9 percent of the crop, down from the record 56.5 a year ago. o Although every potato processing category registered gains in 1994/95, frozen products accounted for most of the gain. With restaurant and export demand strong, utilization of potatoes for freezing jumped 11 percent, the largest gain since 1984. Utilization for french fries increased 13 percent, with fries accounting for 84 percent of the potatoes frozen. With a smaller crop, utilization for frozen products may level off or fall slightly in 1995/96. o With a large crop and expanding domestic and export markets, potatoes used for dehydration increased 1 percent to a record 41.4 million cwt. With a smaller crop and higher raw potato prices in the coming season, utilization for dehydration may decline slightly during the 1995/96 season. o Utilization of potatoes for chips and shoestring potato chips increased for the fifth consecutive year. Chip use represented 7.9 percent of the potato crop, the lowest since 1961. With a smaller crop and continued strong demand for frying potatoes, utilization for chipping may decline for the first time since 1989. Per Capita Use Continues To Rise Based on 1994 crop utilization data, per capita use of potatoes (fresh equivalent basis) totaled 140.8 pounds, 3 percent higher than in 1993 and the highest since 1935 (table 8). Most of the increase was for processing potatoes. While potatoes used in the fresh market fell 1 percent to 49.1 pounds per person, processing use rose 5 percent to 91.7 pounds. The majority of the increase in processing use was for frozen french fries and other frozen products which surged 9 percent to a record 59.4 pounds. French fry use may fall slightly in 1995 as surging exports consume much of the additional output. Most of the additional export demand in 1995 was from Europe and Asia, with the European sales increases not expected to be sustained. Imports of frozen fries from Canada will likely rise substantially over the next 6 months due to the large crop in eastern Canada and lower supplies in the U.S. in the face of continuing strong demand. Imports now account for over 2 pounds of U.S. per capita use of freezing potatoes. Potato Exports Up, Imports Steady Between January and August 1995, U.S. potato exports increased 16 percent to $430 million (table 40). Most of this gain was due to a 46-percent increase in french fry exports and a 54-percent jump in potato flake exports. French fry exports account for 42 percent of potato export value while flakes comprise another 7 percent. Although exports to a majority of countries increased, much of the gain in fry and flake exports was due to increased sales to European countries such as the United Kingdom, France, the Netherlands, and Spain. The European potato crop was short and of poor processing quality last year, forcing many countries to look to the U.S. for supplies of frozen and dehydrated potatoes. Exports to more traditional markets such as Japan and South Korea also increased. On a fresh- weight-equivalent basis, potato exports totaled close to 26 million cwt, up about a fifth from the previous year. After several years of strong growth, the volume of potato chip exports declined 1 percent through August. Lower chip prices left export value down 9 percent. Japan, with 36 percent of volume, was the top destination for U.S. potato chip exports, surpassing last year's leaders, Canada and Mexico. However, while potato chip export volume to Japan surged 132 percent, volume to Mexico fell 98 percent as the peso devaluation hit the chip market hard. To the north, exports to Canada were unchanged, accounting for 16 percent of the U.S. total. U.S. potato imports through August totaled $111 million, unchanged from a year ago. Frozen french fry imports accounted for 55 percent of the total with nearly all coming from Canada. Imports of fresh-market potatoes through August fell 56 percent from a year ago to $13.8 million as supplies in Canada, the primary foreign supplier of fresh potatoes, were tight last year. In the coming year, imports from Canada are expected to be up substantially due mostly to large crops in eastern Canada and the lure of higher prices in the United States. The equivalent of 6 million cwt of fresh potatoes was imported this year through August in the form of potato starch--up 10 percent from a year ago. The value of food grade and industrial potato starch imports increased 52 percent to $11.8 million. The Netherlands (52 percent of the total), Germany (22 percent), and Denmark (18 percent) are the major starch suppliers. Although low in past years, the U.S. did not import any potato chips during the first 8 months of 1995. Sweet Potatoes Production Up, Prices Down in 1994 Because of record high yields last year, the final estimate for 1994 sweet potato production was 13.4 million cwt, the largest crop since 1985, and up 21 percent from 1993. Higher yields were realized in most States, including North Carolina and Louisiana--the top two producers. The large crop brought the season-average grower price down somewhat to $14.00 per cwt. Acreage Up, But Production Likely Down in 1995 U.S. sweet potato acreage for harvest in 1995 was estimated to be 83,600 acres, up 1 percent from 1994 (table 9). North Carolina, the largest sweet potato-producing State, expected a decline of 3 percent in harvested area, while Louisiana, the second largest producer, expected an increase of nearly 11 percent. The number three producer of sweet potatoes, California, expected a 2-percent decline in harvested area this year. Overall yields for the country are likely to be down this year, but how much remains to be seen. Crop conditions as of late October were mostly fair to good in North Carolina, but only fair in Louisiana. Growers in California reportedly found yields down from a year ago. If U.S. sweet potato yields were to fall 10 percent from a year ago, and return to a 5-year average of 146 cwt per acre, production would be approximately 12.2 million cwt. A more significant drop to 140 cwt per acre, would result in production of about 11.7 million cwt. The season-average price for 1995 is likely to be higher than in 1994. Early-season demand in North Carolina and Louisiana was termed moderate to good, which is somewhat better than the same time a year ago. Consumer interest in sweet potatoes may be rising due to increased awareness of the sweet potato's excellent nutritional value, and successful promotional campaigns. Partly because of stronger consumer interest, early shipping point prices were 10 to 20 percent higher than a year ago in Louisiana, and 20 to 25 percent higher in North Carolina. Prices for jumbos were also noticeably higher than the same time a year ago, particularly in North Carolina. Pulses Dry Bean Production To Top 30 Million Cwt U.S. dry bean production is forecast at 30.6 million cwt, 5 percent above 1994 (table 43). This is the result of a 3-percent increase in harvested acreage, and a slight increase in per-acre yields. Although overall increases in production are expected, many areas experienced late planting and development of dry beans, which pushed harvest progress 2 to 3 weeks behind normal. Hard freezes hit the Mountain and Plains States in late September, killing immature vines in many fields. Snow covered some fields in Colorado, Kansas, Wyoming, and Nebraska. However, much of the overall expected increase in yields for the country can be attributed to a 31-percent increase in Michigan. Many other States anticipate a decline in yields this year. In Michigan, excellent yields and an 8-percent increase in harvested dry bean acreage from last year will result in a sizeable increase in production. The forecast is for 6.6 million cwt, a 42-percent increase from a year ago, placing Michigan just ahead of North Dakota as the leading State in dry bean production (table 43). Some other States with expected increases in production are: California (14 percent), North Dakota (7 percent), Nebraska (7 percent), and Minnesota (6 percent). Significant decreases in output are expected in Idaho (24 percent) and Colorado (17 percent). Estimates of 1995 harvested acreage by bean class will be released by USDA in December. However, estimates for planted acreage by class show that pinto beans account for the largest amount of total dry bean acreage, at 41 percent (table 41). Navy beans rank second with 25 percent. The largest percentage increases in acreage from 1994 were for Great Northerns (up 49 percent), blackeyes (up 28 percent), and navy beans (up 20 percent). Several States are major producers of pinto beans, with the top two usually being North Dakota and Colorado. Michigan is the top producer of navy beans, and Nebraska is the main producer of Great Northerns. Pinto bean production will most likely decline this year, as yields are not likely to offset the decrease in acreage. However, significant increases in navy bean acreage, combined with excellent yields in Michigan, will likely result in a large increase in navy bean production. An increase in Great Northern bean production can also be expected as a result of the increase in Great Northern acreage. Lower Prices for 1994 Likely To Carry Into 1995 With improved production and increased stocks for the 1994/95 and 1995/96 seasons, overall dry bean prices have been lower for calendar year 1995 compared with 1994. However, prices for several classes of beans, such as Great Northern, navy, large lima, garbanzo, and black beans, actually increased in 1995. Therefore, it is likely that much of the price decline for dry beans can be attributed to a sizeable drop in pinto bean prices. Pinto beans account for nearly 45 percent of dry bean production and 48 percent of dry bean consumption in the United States. Wholesale pinto bean prices for the first 3 quarters of 1995 were 30 percent below the same period in 1994 (table 44). Great Northerns averaged $39.56 per cwt for the first 3 quarters of 1995, up 21 percent, while navy beans averaged $31.85, up 49 percent. Dry bean prices are likely to continue to average below year-earlier levels into 1996 due to increased production and rising stocks. Net Trade Up in 1995 Through the first 3 quarters of 1995, export volume is up 36 percent from the same period a year ago (table 45). Significant increases have been reported for many bean classes. Garbanzo bean exports are up over 350 percent, with 26 percent of volume being shipped to Colombia. Pinto beans, which account for about 40 percent of dry bean exports, are up 84 percent for the first 3 quarters of 1995, with significant quantities going to Zaire (21 percent) and Haiti (20 percent). Navys, Great Northerns, blacks, and baby limas have also witnessed substantial increases in exports during 1995. Imports of dry beans have also risen for the first 3 quarters of 1995, but overall net trade (exports minus imports) is up 40 percent. Exports into 1996 are still in question due to uncertainties in funding levels for the PL-480 (Food for Peace) program. Commercial sales have been above a year ago and are expected to continue higher for the coming year due to lower dry bean prices and crop shortages in major competing countries. However, gains in commercial sales may not offset projected declines in PL-480 volume. This may result in a decrease in net dry bean trade for the coming year. U.S. Dry Pea and Lentil Production Rises Dramatically Excellent growing conditions helped to produce a record 3.6 million cwt of dry green peas (regular green) in 1995 (table 47). This is a 97-percent increase from a year ago, when growers were plagued by drought, and nearly 12 percent above the previous high set in 1989. Rainy weather during harvest did cause some bleaching problems in some areas, but the industry estimates that most of the crop will grade No. 2 or better. With stocks up, prices for green peas are expected to decline in the year ahead. Yellow pea production also increased significantly (226 percent) from 1994 because of a 137-percent increase in acreage, combined with excellent yields. Good growing conditions caused production of regular lentils to rise slightly in 1995, despite a 26- percent reduction in planted acreage. Lentil quality is good, with the industry estimating most of the 1995 crop grading U.S. No. 1 or better. Mushrooms Mushroom Sales Volume Sets Record in 1994/95 The volume of sales of 1994/95 mushrooms increased 4 percent from the previous year, setting a record at 789 million pounds (table 48). Sales volume for agaricus mushrooms, which account for about 99 percent of the U.S. crop rose 4 percent to 781 million pounds. Specialty mushroom volume fell 5 percent in 1994/95 after 5 years of continuous growth. Within the specialty group, Shiitake sales fell 6 percent to 5.25 million pounds, and Oyster mushrooms fell 12 percent to 1.71 million pounds. Other specialty varieties, however, continued to trend upward in 1994/95, increasing 14 percent to 1.04 million pounds. Most of the decline in specialty mushroom output resulted from small growers exiting the industry. Pennsylvania continues to be the major producer of agaricus mushrooms with its share remaining at about 47 percent of total production. In 1994/95, Pennsylvania produced 354.5 million pounds of mushrooms, down less than 1 percent from a year ago. California, the second largest mushroom State, produced 134.9 million pounds, a 9-percent increase from the previous year. Output also increased in Florida, Ohio, and Michigan. About 68 percent of agaricus mushrooms were sold in the fresh market in 1994/95. The remaining 32 percent were processed. These market shares have remained fairly constant throughout the nineties. Over half of Pennsylvania mushrooms are sold fresh, with the State accounting for 34 percent of U.S. fresh-market mushroom sales. About 85 percent of California production is sold fresh, accounting for 22 percent of fresh-market mushrooms. Pennsylvania, where the majority of mushroom processors are located, produced 69 percent of the processing mushrooms and California produced 8 percent. Value of Sales and Price Up in 1994/95 Sales of agaricus mushrooms increased 6 percent in 1994/95, totaling $731 million. Grower prices rose 2 cents per pound from the previous year to 93.6 cents. Fresh market prices rose 2 percent to $1.05 per pound and processing mushroom prices rose 3 percent to 68.4 cents per pound. Specialty mushroom prices rose 4 percent to $3.54 per pound. Both Shiitake and Oyster mushroom prices were up in 1994/95, but other specialty mushroom prices fell. Estimated Production Up Slightly in 1995/96 Mushroom production is forecast up 1 percent for 1995/96, with most of the growth expected in Pennsylvania. U.S. producers intend to use 141 million square feet of growing area this year. About 76 percent of this area would be planted to fresh-market mushrooms. Pennsylvania growers are still dealing with the green mold fungal problem which also affected production in 1993/94. Several growers have lost complete crops as the mold spread over entire beds. Other growers in the State have increased area to make up for the loss. Mushroom yields have been growing steadily over the last 4 years, at a rate of 1.1 percent a year. Assuming continued growth at this rate, yields for 1995/96 would increase to 6.06 pounds per square foot, and overall production would increase to approximately 855 million pounds. Exports Fall As Imports Rise U.S. exports of mushrooms declined 19 percent in the first 3 quarters of 1995 (table 49). Canada continues to be the major export market for U.S. fresh mushrooms. Imports grew 3 percent during the first 3 quarters, with fresh mushroom imports increasing 48 percent. Most came from Canada. Canned mushroom imports from China increased, putting downward pressure on U.S. canned mushroom prices. Special Article Chilean Horticultural Exports and the U.S. Horticulture Industry Boyd M. Buxton Abstract: Chile is a major supplier of horticultural commodities to the United States. Its potential accession to the North American Free Trade Agreement (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 imposed on 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. The following December, President Clinton and leaders of Canada and Mexico met with leaders of Chile and agreed to begin talks that could lead to Chile's accession into NAFTA. Because Chile is an important supplier of horticultural commodities and products to the United States, its possible accession to NAFTA raises questions about the 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. Chile's share of these imports rose from 1.7 percent or $40 million in 1980 to 7 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 U.S. fresh fruit imports (excluding bananas) in 1993 and 1994 (table A-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 fruit, 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 was 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. The value of Chile's wine and dry onion exports, although a relatively small share of total U.S. imports, is also significant. In terms of total value, fresh grapes were by far Chile's leading horticultural export to the United States. Far behind grapes were peaches, apple juice, processed tomatoes, and plums. In 1994, nine commodities--grapes, peaches, apples, apple juice, avocados, kiwifruit, pears, plums, and processed tomatoes--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 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 A-2). 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 supplies 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 because 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 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 A-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 A-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 significant exception is U.S. lemons. U.S. authorities are working with Chile to change existing phytosanitary barriers for additional U.S. horticultural commodities, including apples, pears, grapes, kiwifruit, 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. 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, processed vegetables, and wine. Eliminating the relatively high tariffs on these competitive products would 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. List of Tables Table1. U.S. vegetable industry: Area, production, value, unit value, and trade, 1993-1996, 2000, and ave annual growth 2. Fresh vegetables: Percent of U.S. supply accounted for by trade, 1975,1980, 1985, 1990-95 3. Selected fresh vegetables: U.S. trade, 1993-95 4. U.S. onions: Harvested area and production, 1993-95 5. Value of U.S. processed vegetable trade, 1994-95 6. Potatoes: State acreage and production of fall crop, 1993, 1994, and indicated 1995 7. U.S. potatoes: Utilization by crop year, 1989-94 8. Potatoes: U.S. per capita utilization, by category, 1985-96 9. Sweet potatoes: Acreage harvested, 1989-93 average, 1994, and indicated 1995 10. U.S. fresh vegetables: Harvested area, by seasons, for selected crops, 1993-95 11. Representative wholesale prices for selected fresh-market vegetables and melons in Chicago, 1995 12. Fresh vegetables, including potatoes: Monthly retail price index, 1985-95 13. Fresh vegetables: Monthly average prices received by U.S. growers, 1991-95 14. Commercial vegetables and potatoes and dry edible beans: Monthly average index of prices received by U.S. growers, 1975-95 15. Selected fresh vegetables: U.S. shipments, by quarters, 1994 and 1995 16. Fresh vegetables: Quarterly trade volume, 1993-95 17. Selected fresh vegetables: U.S. export volume and value, by selected country, January-September, 1993-95 18. Frozen vegetables: Percent of U.S. supply accounted for by trade, 1975,1980, 1985, 1990-95 19. Supermarket sales, unit prices, and product concentration of selected pickled vegetables, 1993-94 20. Processing vegetables: Contract acreage, yield, and production, 1990-92 average, 1993,1994, and indicated 1995 21. Selected frozen vegetables: Carryover, pack, seasonal supply, and shipments, 1991/92-1995/96 22. Processed vegetables: Monthly index of wholesale and retail prices, 1986-95 23. Canned vegetables: Quarterly wholesale price trends, 1988-95 24. Frozen vegetables: Quarterly wholesale price trends, 1991-95 25. Frozen vegetables: October 1 cold storage holdings, 1990-95 26. Quarterly producer price index, pickles and pickle products, 1980-95 27. Processed vegetables: Quarterly wholesale price indexes, 1994-95 28. Canned vegetables: U.S. quarterly trade volume, 1993-95 29. Frozen vegetables: U.S. quarterly trade volume, 1993-95 30. Vegetable cash receipts: Leading States, 1985-89 average, and 1990-94 31. Potato cash receipts: Leading States, 1985-89 average and 1990-94 32. Dry bean cash receipts: Leading States, 1985-89 average and 1990-94 33. Potatoes: Seasonal acreage, yield, and production, 1993, 1994, and indicated 1995 34. Potatoes and pulses: Monthly average prices received by U.S. growers, 1989-95 35. Fresh potatoes: Monthly and annual average retail price index, 1985-95 36. Retail potato prices: Fresh, frozen, and chips, 1986-95 37. Frozen french fries: Monthly and annual average producer price index, 1985-95 38. Potatoes: U.S. quarterly trade volume in fresh-weight equivalent, 1994-95 39. Frozen french fries: Monthly and annual U.S. exports, 1986-95 40. U.S. potatoes: Value of trade by product, January-September, 1991-95 41. Dry edible beans: Planted acres by class, 1991-93 average, 1994, and indicated 1995 42. Dry edible beans: Acreage harvested, 1989-93 average, 1994 and indicated 1995 43. Dry edible beans: Production, 1989-93 average, 1994, and indicated 1995 44. Dry edible beans: Quarterly wholesale prices by class, 1994-95 45. Dry edible beans: U.S. quarterly trade volume, 1994-95 46. Dry peas and lentils: Planted acreage, 1990-95 47. Dry peas and lentils: Production, 1990-95 48. All mushrooms combined: Number of growers, volume, and value of sales, 1987/88-1994/95 49. Mushrooms: U.S. quarterly trade volume, 1994-95 50. U.S. agaricus mushrooms: Production, price, and value, selected States,1992/93-1994/95 51. Selected vegetable production in leading countries and world, 1980,1985, and 1990-94 End end end