VEGETABLES AND SPECIALTIES May 5, 1997 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-271. Please note that this release contains only the text of VEGETABLES AND SPECIALTIES--tables and graphics are not included. See supplemental data files in .wk1 format. Subscriptions 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, $18/year. ERS-NASS accepts MasterCard and Visa. ============================================================================== Contents Summary Industry Overview Fresh Vegetables Processing Vegetables Potatoes Sweet Potatoes Pulses Mushrooms Per Capita Use Special Articles "Organically Grown" Vegetables: U.S. Acreage and Markets Expand During the 1990's U.S. Imports of Mexican Winter Vegetables Under NAFTA List of Tables Situation Coordinator Gary Lucier Voice: (202) 219-0117 FAX: (202) 501-6782 E-mail: Glucier@econ.ag.gov Principal Contributors Gary Lucier (202) 219-0117 Charles S. Plummer (202) 219-0717 John Love (202) 219-1268 Doyle C. Johnson (202) 219-501-7159 Statistical Support Brenda Toland ADP Support Patricia Bailey and Stacy Jones Editor Martha R. Evans Graphics, Table Design, and Layout Wynnice P. Napper Summary released April 24, 1997. The summary of the next Vegetables and Specialties Situation and Outlook is scheduled for release July 24, 1997. The Vegetables and Specialties Situation and Outlook is published semi-annually (April and November) and supplemented by a yearbook (July). Summary The first estimate of 1996 per capita vegetable and melon use is 441 pounds--up 2 percent from a year earlier. Most of the gain originated in the fresh market where prices were lower and supply stronger. Fresh vegetable and melon use (excluding potatoes) increased 5 percent from a year earlier to 153 pounds per person--the highest since the mid-1940's. Increased fresh use was widespread in 1996 with use of watermelon, cantaloup, carrots, bell peppers, and sweet corn accounting for most of the gain. This spring (primarily April to June), U.S. growers are likely to harvest 3 percent fewer acres of fresh market vegetables and melons than last year. This spring-season acreage includes a decline of 4 percent for the 13 selected fresh-market vegetables, a downturn of 3 percent for melon crops, an increase of 2 percent for asparagus, and a cut of 3 percent in onion acreage. Among these 18 crops, only four are expected to show acreage increases--asparagus, snap beans, head lettuce, and cantaloup. Lettuce acreage increased 5 percent as growers responded to high prices while the crop was being planted this winter (spring lettuce can take 3 months or more to mature). Snap bean area rose 9 percent, also in response to higher prices this winter following the January freeze in Florida, with all freeze-killed area replanted. Per capita use of fresh-market snap beans has been increasing during the 1990's, reaching 1.7 pounds in 1995 after bottoming out at 1.1 to 1.2 pounds in the 1980's and early 1990's. In 1996, the value of U.S. vegetable and melon exports (including pulses and seed) fell 2 percent to $2.8 billion as volume increased less than 1 percent compared with 1995. Export volume was expected to increase more, with average export prices dropping 8 percent in 1996. While the value of canned and frozen exports increased, fresh vegetables and melons declined as prices fell. The value of U.S. vegetable and melon imports rose 12 percent. With the exception of mushrooms, all categories increased in 1996 and most continued to rise through early 1997. Contract acreage for the five leading processing vegetables (tomatoes, sweet corn, snap beans, green peas, and cucumbers) is expected to decline 3 percent to 1.35 million acres in 1997. This drop comes after a 9-percent decline in planted acreage a year earlier. While green pea area is expected to increase, acreage for tomatoes, sweet corn, snap beans, and cucumbers for pickles is expected to decline. With higher wholesale prices for sweet corn, snap beans, and green peas since last fall, frozen vegetable processors expect to contract for 11 percent more acres in 1997. Green pea acreage for freezing is expected to jump 34 percent as processors seek to replenish stocks drawn down to the lowest levels since 1989. As a result of strong supplies in the face of stable demand, wholesale prices for canned and frozen vegetables during the first quarter of 1997 each averaged just 1 percent higher than a year ago. Prices also rose 2 percent for dried and dehydrated vegetables. In 1997, U.S. tomato processors are expected to contract for 10.3 million short tons of tomatoes from 300,360 acres. Contract production is expected to be down 9 percent from a year ago and reflects lower wholesale prices for tomato products over the past year. Wholesale prices have been depressed by record-large stocks resulting from large packs the past few years. Also, domestic use has apparently slowed recently with most of the growth in use coming from export demand. Exports now account for close to 6 percent of total domestic supply (production plus imports plus beginning stocks)--up from 2 percent in 1990. Domestic use is estimated at just under 10 million short tons (fresh-weight basis) for calendar 1996. The first estimate of the 1997 spring potato crop was 22.5 million cwt--up slightly from a year earlier. The increase came despite a 5-percent decrease in harvested area, attributed to high stocks of fall potatoes and low overall grower prices. Spring-season yield forecasts were up nearly 6 percent from last year, with nearly all producing areas realizing gains. Due to the record-large potato crop last fall, grower prices for all potatoes during the September to February period averaged 29 percent below year-earlier levels. Fresh-market potato prices averaged 50 percent below a year ago, while contracts with processors have prevented a similar plummet for processing potatoes (down 7 percent). Despite a strong crop in the fall of 1995, overall U.S. exports of potatoes and potato products (on a fresh-weight basis) in calendar year 1996 declined from 1995 levels, while imports rose. Slight gains in fresh and frozen potato exports were offset by declines in potato chips and dehydrated products. Higher U.S. grower prices during calendar year 1996 combined with strong output in Canada and improved production in Europe to negatively impact U.S. potato trade flow. Although potato export volume was down nearly 7 percent, higher prices helped minimize the decline in total export value. Potato exports were valued at $612 million (down 1 percent from 1995), while imports were valued at $242 million (up 34 percent). With reduced domestic output and lower world stocks, dry bean prices are expected to average above a year earlier and provide growers the signal to increase acreage. Preliminary surveys indicate that dry bean growers expect to increase area 6 percent to 1.9 million acres in 1997. The traditional signals to increase area and production were rather weak this year. This weakness stems from the prevalence of relatively strong prices for competing grains (especially wheat and soybeans), lower prices for two major bean classes (navy and Great Northern), and moderately high domestic stocks for several classes. Industry Overview Over the coming decade, fresh vegetable and melon output is projected to continue on the trend exhibited thus far in the 1990's. This slow, steady rate of growth is closer to the long-run growth curve for the industry than the rapid growth trend exhibited during the 1980's. In 1997, responding to lower prices during 1996, fresh-market vegetable growers are expected to reduce acreage. Given trend yields, reduced area would result in flat or slightly lower supplies. Lower supplies and consistent demand should result in slightly higher prices throughout the marketing chain. Grower returns, which declined in 1996, are projected to recover last year's losses and return to 1995's record high. o This spring (primarily April to June), U.S. growers are likely to harvest 3 percent fewer acres of fresh market vegetables and melons than last year. Prices received by commercial vegetable growers during April-June are expected to average around those of a year ago. o The United States now imports about 11 percent of its total fresh vegetable supply, with Mexico the major foreign supplier. During 1990-94, imports accounted for 8 percent of fresh vegetable supply. Import penetration is strongest for eggplant (43 percent), cucumbers (37 percent), and asparagus (35 percent) but has grown most rapidly for tomatoes (37 percent). o In 1996, total volume of U.S. fresh vegetable and melon exports increased less than 1 percent compared with 1995. However, the volume of fresh vegetable and melon imports rose 17 percent from a year earlier. Increased imports have apparently boosted U.S. consumption of fresh vegetables in recent years. o The first estimate of 1996 per capita vegetable and melon use is 441 pounds--up 2 percent from a year earlier. Most of the gain originated in the fresh market where prices were lower and supply stronger. Fresh vegetable and melon use (excluding potatoes) increased 5 percent to 153 pounds per person--likely the highest since the mid-1940's. o Contract acreage for the five leading processing vegeta- bles is expected to decline 3 percent to 1.35 million acres in 1997. Acreage for tomatoes (down 12 percent), sweet corn (8 percent), snap beans (4 percent), and cucumbers for pickles (3 percent) is expected to decline while green pea area increases 17 percent. o As a result of strong supplies in the face of stable demand, wholesale prices for canned and frozen vegetables during the first quarter of 1997 each averaged just 1 percent higher than a year ago. Prices also rose 2 percent for dried and dehydrated vegetables. o After experiencing weak prices resulting from last fall's record potato crop, potato growers are expected to plant fewer acres this fall. With higher yields offsetting reduced acreage, spring potato growers expect to produce about the same size crop as a year ago--22.5 million hundredweight (cwt). o Due to the record-large potato crop last fall, grower prices for all potatoes during the September to February period averaged 29 percent below year-earlier levels. Fresh-market potato prices averaged 50 percent below a year ago, while contracts with processors have prevented a similar plummet for processing potatoes (down 7 percent). o U.S. dry bean growers expect to plant 6 percent more area this year with acreage in Minnesota, North Dakota, and Idaho up substantially. The longer cold weather and floods keep growers out of the fields, the greater the chance that dry bean area will increase even more as growers of crops like field corn shift to shorter season crops. Fresh Vegetables Spring Outlook Acreage Down, Prices Stable This spring (primarily April to June), U.S. growers are likely to harvest 3 percent fewer acres of fresh- market vegetables and melons than last year (table 12). This spring-season acreage includes: o 13 selected fresh-market vegetables, down 4 percent; o the 3 major melon crops, down 3 percent; o asparagus, up 2 percent; and o onion acreage, down 3 percent. Among these 18 crops, only four are expected to show acreage increases--asparagus, snap beans, head lettuce, and cantaloup. Area for all other vegetables is either lower or unchanged. Lettuce acreage increased 5 percent as growers responded to high prices while the crop was being planted this winter (spring lettuce can take 3 months or more to mature). Snap bean area rose 9 percent also in response to high prices this winter following the January freeze in Florida, with all freeze-killed area replanted. Possibly reflecting increased ethnic diversity and rising interest in stir-fry cooking, per capita use of fresh- market snap beans has been increasing during the 1990's, reaching 1.7 pounds in 1995 after bottoming out at 1.1 to 1.2 pounds in the 1980's and early 1990's. Four States account for 81 percent of spring fresh-market vegetable, onion, and melon acreage: o California, up 1 percent to 179,600 acres; o Florida, down 7 percent to 99,700 acres; o Texas, down 12 percent to 56,100 acres; o Arizona, up 16 percent to 22,200 acres. Florida, which accounts for about half of spring tomato area, expects to harvest 8 percent less area in 1997. Some of the early spring area was damaged by the January freeze, but the crop in most areas of the State was rated fair or good in mid-April. Reflecting low prices last spring, Florida growers reduced watermelon acreage 12 percent. Reduced supplies and higher prices are expected for watermelon this spring. Despite continued strong interest in watermelon (particularly the seedless varieties), per capita use may decline for the first time in 4 years as domestic production drops. In California, spring acreage for honeydew melons (up 20 percent) and cantaloup (up 18 percent) are each up sharply. Cantaloup production and imports were record high last year while strong demand kept current dollar prices near year-earlier record-highs. Cantaloup is available year round, but market volume begins to build in March with imports from Mexico and Central America. Imports peak in April and rapidly decline as U.S. producers enter the market. Cantaloup shipments peak in May and June with most volume coming from California and Texas. The newer cantaloup varieties with higher sugar content appear to have found favor with consumers the past 2 years. Total domestic use of cantaloup reached a record 2.8 billion pounds in 1996 and could come close to 3 billion pounds in 1997. Per capita use reached 10.6 pounds last year and is expected to reach 11 pounds in 1997. The direct impact from the January Florida freeze has passed. Prices (largely for tomatoes) surged in March as the market entered a supply gap caused by the severe cold. Since the freeze, the weather has been warm and relatively dry in both Florida and California, with excellent crop growth. Thus, despite the reduction in acreage, strong per-acre yields should provide adequate supplies in most markets. Grower prices during April to June can be volatile but such volatility is usually associated with an unusual weather event such as flooding or severe cold. Assuming no such event occurs, prices received by commercial vegetable growers during April-June are expected to average around those of a year ago. Prices during the second quarter last year were around the average of the previous 5 years. Spring Onion Crop Up? Although acreage for harvest is expected to be down 3 percent this spring, production of sweet spring-season onions could exceed that of a year ago. A repeat of last spring's poor yields in California and in Arizona is not expected this season. In addition, Georgia expects a full recovery from last year's poor Vidalia onion crop. The Georgia onion crop is expected to jump 75 percent with strong per-acre yields and a 5-percent increase in harvested acreage. Growers of summer storage onions, which are marketed through the winter and account for 52 percent of the U.S. onion crop, expect to plant 1 percent more area in 1997. Although grower prices for storage onions have been low the past 2 seasons, alternative crops like wheat and barley have not taken land out of onions. In addition, extremely low potato prices this year offer little incentive to enter or expand into that market this year. January Freeze in Florida A hard freeze surprised western, central, and southern areas of Florida on the mornings of January 18 and 19. The freeze caused substantial damage to tender warm-season vegetables like squash, snap beans, bell peppers, and tomatoes. The freeze was also felt in the prime winter vegetable export region around Sinaloa, Mexico where cold temperatures resulted in bloom drop on tomato and pepper plants. The bloom drop in both Mexico and Florida caused shipping point prices for tomatoes in March to more than double to around $20 per 25- pound box. In Florida, temperatures sank lower and crop damage was far more severe in gulf coast areas and in southern parts of the State than in eastern areas. Shipping point prices for most tender vegetables in Florida rose substantially after the freeze as fields in Ft. Myers/Immokalee and Homestead received heavy damage. Snap beans and squash suffered the greatest losses with nearly all acreage in the southwest destroyed and a majority of the acreage in Dade County heavily damaged or destroyed. About half of Florida's fresh-market tomatoes suffered some frost damage, ranging from complete defoliation to loss of blooms. Fruit from damaged plants was salvaged for sale and this volume helped keep market prices from rising as much as might be anticipated from such a severe weather event. The freeze caused retail prices during February and March to be higher than expected prior to the freeze. Despite the freeze, first-quarter fresh vegetable retail prices averaged just 1 percent above a year earlier. This reflects the moderating influences of low potato and lettuce prices, plus the comparison with high prices last March for tomatoes. Despite Freeze, Florida's Market Share Higher Despite the damage caused by the January freeze, Florida's share of the market for six major fresh vegetables (tomatoes, bell peppers, cucumbers, squash, snap beans, and eggplant) has increased during the 1996/97 season through March (season largely begins in late September). Florida shipped an estimated 12.2 million hundredweight (cwt) through the end of March for a 26-percent share of the U.S. market--up from an estimated 18 percent a year earlier. Mexico shipped 23.5 million cwt for a 50-percent share of the market. Other areas (largely California) held 24 percent of the market. Shipments from Mexico were up 5 percent from a year ago, but market share declined as Florida's volume improved for each of the six commodities-- recovering from the effects of poor weather a year ago. Mexican growers increased shipments of tomatoes (up 10 percent), squash (up 7 percent), and snap beans (up 5 percent) but shipped less bell peppers (down 2 percent) and eggplant (down 10 percent). Mexico shipped the same amount of cucumbers as a year earlier (4.8 million cwt). Because of problems in reporting last season's tomato shipments in Florida, no comparable data for last year are available. However, despite the freeze, evidence suggests that tomato shipments from Florida are well above year-earlier levels. Fresh Vegetable Shipments From Canada Most of the focus on the North American Free Trade Agreement (NAFTA) and U.S. imports of fresh vegetables has centered on Mexico and competition with Florida growers. However, concerns have recently been raised by some northern summer- and fall-season vegetable growers over increased imports and low prices. Some have laid the blame for low prices at the feet of imports from Canada--the second leading import source for U.S. fresh vegetables. Michigan is representative of northern summer and fall producing States. As a leading producer of a wide variety of vegetables, the State also provides good market shipment data. A cursory look at shipment data for 1995 and 1996 for Michigan, the United States, and Canada revealed the following: o Canada's exports to the United States were substantially greater between 1995 and 1996 for dry bulb onions (up 144 percent) and table potatoes (up 45 percent). At the same time, shipments from Michigan were lower while U.S.-level shipments were about the same. o For fresh celery, Canada's shipments fell 6 percent while Michigan's volume jumped 16 percent. U.S. volume also rose 11 percent, leading to lower prices. o For fresh carrots, Michigan's shipments fell 32 percent and imports from Canada fell 7 percent while U.S. volume rose 2 percent, keeping prices low. o For bell peppers, Michigan shipments nearly doubled, U.S. shipments rose 29 percent, and imports from Canada rose 6 percent with all the increase coming from greenhouse operations selling outside of Michigan's season. o For cucumbers, Michigan's volume rose 11 percent while U.S. shipments dropped 3 percent. Imports from Canada rose 26 percent, but most of the gain came from greenhouse cucumbers with August the only month in Michigan's shipping season that field-grown volume may have risen. Based on these observations, it appears that Canadian shipments of onions and potatoes may have been large enough to have contributed to lower prices for northern U.S. onion and potato growers in 1996. However, for other vegetables, imports from Canada were either lower than a year earlier or they largely occurred outside the usual market window of northern growers. Also, Canada's expanding greenhouse vegetable industry likely accounted for an increased share of the volume of tomatoes, bell peppers, and cucumbers exported to the United States in 1996. Fresh Exports Affected By Prices and Exchange Rates In 1996, the total volume of U.S. fresh vegetable and melon exports increased less than 1 percent compared with 1995. Export volume was expected to increase more, with average export prices dropping 8 percent in 1996. Total value decreased 7.5 percent in 1996 to $950 million. In 1992 and 1994, average export-price declines of 5 percent spurred volume increases of about 12 percent. The U.S. dollar gained strength against the Japanese yen and remained relatively strong against the Canadian dollar in 1996. The U.S. dollar appreciated against the yen for the first time in 5 years, increasing 16 percent to 109 yen in 1996. The U.S. dollar had weakened against the yen steadily since 1990, aiding U.S. exporters. A stronger U.S. dollar puts upward pressure on the price of U.S. fresh vegetables in the Japanese market. The U.S. dollar exchanged at an average rate of 1.36 Canadian dollars in 1996, unchanged from the previous 2 years and up from an average 1.15 Canadian dollars in 1990 and 1991. Canada is the largest market for U.S. fresh vegetable exports, although market share has declined from over 80 percent in 1990 to 70 percent in 1996. The big gainer has been Japan, having increased from a 6-percent share to 18 percent in 1996. The U.S. fresh vegetable industry benefits from increased exports. Increased demand raises grower prices by removing supplies from the domestic market. Exports used about 8 percent of U.S. fresh vegetable supplies (including imports) in 1996. A 10-percent increase in export demand amounts to about 4 million cwt or about 1 percent of U.S. production. The short-run supply of fresh vegetables in the U.S. market is inelastic--meaning a small shift in demand produces a proportionately larger change in price. A demand increase of 1 percent due to a 10-percent increase in exports puts significant upward pressure on prices. For this reason, the large role of Canadian demand for U.S. vegetables is important to the U.S. domestic market. The U.S. vegetables most likely affected by changes in Japanese demand include asparagus, broccoli, celery, sweet corn, and lettuce. Japan accounts for about 5 percent of exports for these items, and they accounted for about 30 percent of total U.S. fresh-vegetable exports shipped to Japan in 1996. Japan has been an important market for U.S. onions, accounting for about 40 percent of U.S. onion exports, depending on Japanese weather and crop conditions. Fresh Vegetable Imports Boost U.S. Consumption Increased imports have apparently boosted U.S. consumption of fresh vegetables in recent years. Apparent domestic consumption--measured by subtracting exports from production and imports-- increased 18 percent during 1990 to 1996. But, imports increased 70 percent, and the share of imports in consumption increased from 8.4 percent in 1990 to 12 percent in 1996. Although U.S. production of fresh-market vegetables increased during the 6 years by 14 percent, exports increased more than twice as fast (33 percent), contributing to the rising share of imports in the U.S. domestic market. In 1996, a combined increase in U.S. domestic production and imports led to a 6-percent increase in total consumption (5 percent on a per capita basis). Per capita consumption of fresh vegetables in the United States jumped in 1994 to 146 pounds after averaging 140 pounds during 1989 to 1993. Much of the 1994 increase is attributable to increased U.S. domestic production and stable retail prices (inflation-adjusted). By contrast, the increase in apparent consumption was sustained in 1995 by higher imports from Mexico offsetting weather- reduced crops in Florida and California. The price pressure from increased domestic and imported supplies available for domestic consumption in 1996 was not mitigated by increased export demand. Fresh vegetable exports increased only slightly in 1996 over 1995. Consequently, U.S. retail prices for fresh vegetables fell 2 percent and grower prices fell about 15 percent from a year earlier. The sharp decline in grower prices for fresh-market vegetables contributed to a drop of $855 million in U.S. farm value from the fresh vegetable sector. Total farm value of fresh-market vegetable production decreased from $7.6 billion in 1995 to $6.7 billion in 1996. Market Access Program At $90 Million USDA's Market Access Program (MAP) has been funded at $90 million for 1997. This cost-share program will help 64 U.S. trade organizations conduct export promotion activities. Most of the funding this year (and all of it next year) is geared toward small- and medium-sized U.S. food companies, cooperatives, and exporters. Close to $3 million of the 1997 MAP funds were allocated to the vegetable (including potatoes and pulses) industry. Some of the allocations were as follows: o National Potato Research and Promotion Board, $1.3 million; o USA Dry Pea and Lentil Council, $551,000; o National Dry Bean Council, $307,000; o USA Tomato, $482,000; o Asparagus USA, $163,000. In addition, several broad-based agricultural councils and associations with MAP allocations totaling nearly $10 million also may promote vegetables directly or indirectly in the course of their activities. Processing Vegetables Outlook for 1997 A year ago, the economy and food demand (particularly restaurant sales) were hampered by severe winter weather. This year, although a relatively mild winter in most major metropolitan areas provided a strong start for January food sales, sales growth was not sustained in February. Despite the slow start, continued strong economic growth in the U.S. economy is expected to underpin demand for food, including processing vegetables, for the remainder of the year. Economic factors such as low unemployment and rising real disposable incomes favor stronger sales in both foodservice and retail outlets. Partly because of the severe winter a year ago, overall demand for processed vegetables was relatively flat last year. On the supply side, total supplies of canned vegetables (excluding tomatoes) for 1996 were down 1 percent to 12.7 billion pounds--equal to the long-run trend for the year. Frozen vegetable supplies (excluding potatoes) were also down slightly to 10.9 billion pounds--the second largest supply on record after 1995. Shipments for the seven major freezing vegetables during the 1995/96 season were up fractionally (table 24). As a result of strong supplies in the face of stable demand, wholesale prices for canned and frozen vegetables during the first quarter of 1997 each averaged just 1 percent higher than a year ago. Prices rose 2 percent for dried and dehydrated vegetables. While prices received by vegetable processors did not change greatly, the inputs used in canning and freezing vegetables rose slightly. Based on data from the Economic Research Service food marketing cost index, prices paid for inputs used in processing changed as follows: o The overall cost index increased 1.4 percent; o Hourly earnings and benefits for labor used in food processing rose 2.5 percent; o Fuel and power costs rose 5.8 percent; o Prices for paperboard boxes and containers fell 7.2 percent; o The cost of metal cans fell 1.3 percent while glass containers dropped 0.7 percent; o Costs for transportation services fell 1.6 percent; and o Advertising costs increased 4.1 percent. In addition to these general costs, processors also had to pay growers more for the raw commodities for processing. Strong competition from high-priced field corn, soybeans, and wheat, particularly in the upper Midwest, forced processors to offer more attractive contract prices to processing vegetable growers last year. For example, the average price at the processing plant door increased for sweet corn for canning (up 5 percent), cucumbers for pickles (up 12 percent), and green peas for canning (up 6 percent). With competitive pressure from field crops (except soybeans) a bit lower this year, overall average contract prices may not change much from a year ago. Consolidation in the vegetable processing industry the past several years is increasing concentration. Processor margins have been severely squeezed the past few years, resulting in several mergers and plant closures. With maturing or declining demand for several canned vegetables (i.e., sweet corn, beets, sauerkraut, and snap beans), further restructuring and/or consolidations are possible over the next several years. Food Sales Rise in 1996 In 1996, sales at all retail food stores (including specialty food stores) increased 3.3 percent, with real (inflation-adjusted) sales down slightly. On the food service side, preliminary data indicate that restaurant (eating and drinking places) sales rose just 2 percent last year with "full menu" restaurants (up 2.3 percent) continuing to outperform "chain" restaurants (up 0.9 percent) and "fast food" establishments (up 0.3 percent). Full menu restaurants accounted for 54 percent of the $238 billion in eating and drinking place sales with fast food establishments accounting for 39 percent. Contract Acreage Down for 1997 Contract acreage for the five leading processing vegetables (tomatoes, sweet corn, snap beans, green peas, and cucumbers) is expected to decline 3 percent to 1.35 million acres in 1997 (table 19). This drop comes after a 9-percent decline in planted acreage a year earlier. Acreage for tomatoes (down 12 percent), sweet corn (8 percent), snap beans (4 percent), and cucumbers for pickles (3 percent) is expected to decline while green pea area increases 17 percent. Given yields at least matching the average of the past 3 years and average acreage abandonment, output of the five principal vegetables for processing could fall as much as 10 percent from the 16.5 million short tons produced in 1996. Excluding tomato production, which accounts for about 65 percent of processing vegetable output, output is forecast to decline 5 to 7 percent in 1997. With higher wholesale prices for sweet corn, snap beans, and green peas since last fall, frozen vegetable processors expect to contract for 11 percent more acres in 1997. Green pea acreage for freezing is expected to jump 34 percent as processors seek to replenish stocks drawn down to the lowest levels since 1989. Canners (excluding tomatoes) are expected to reduce contract acreage 8 percent, with sweet corn dropping the most. Intended contract acreage for sweet corn is expected to decline 13 percent with wholesale prices during the first quarter at the lowest levels in a decade. The two major sweet corn pro- cessing States, Minnesota and Wisconsin, account for more than half of the acreage and are each contracting for less product. The late arrival of spring in some areas of the Midwest may delay planting. If planting is not done in a staggered fashion, "bunching" of acreage at harvest could result. This tends to lead to higher than normal acreage abandonment since short-term harvesting and processing capacity can be exceeded, forcing processors to bypass acreage which has gone past maturity. Large Tomato Inventories Lead To Reduced Area In 1997, U.S. tomato processors are expected to contract for 10.3 million short tons of tomatoes from 300,360 acres. Contract production is expected to be down 9 percent from a year ago and reflects lower wholesale prices for tomato products over the past year (table 21). Wholesale prices have been depressed by record-large stocks resulting from large packs the past few years. Also, domestic use has apparently slowed recently with most of the growth in use coming from export demand. Exports now account for close to 6 percent of total domestic supply (production plus imports plus beginning stocks)--up from 2 percent in 1990. Domestic use is estimated at just under 10 million short tons (fresh-weight basis) for calendar 1996. Although apparently slowed of late, average domestic use of processing tomatoes during the 1990's is estimated to be 28 percent above the average of the 1980's--a rate of growth far exceeding that of the population (9 percent). During the 1980's, domestic use averaged 12 percent higher--just over the 10 percent growth in population. Stiff competition in the processing tomato industry during the late 1980's and early 1990's led to a shake out in the U.S. industry, leaving the more efficient and lower cost processors. Together with improvements in tomato varieties, this allowed nominal dollar raw tomato prices during the 1990's to average 4 percent lower than during the 1980's. Continued low prices, new product introductions, and recent health claims associated with lycopene in tomatoes (with processing tomatoes singled out as strong carriers), could help jump-start domestic demand in the coming year. The California Tomato Growers Association (representing the majority of processing tomato growers) and tomato processors have agreed upon an average field price of $51 per short ton for red ripe tomatoes for the 1997 season. This price is down from the $53 per ton average negotiated last year but is about the same as 2 years ago. A combination of burdensome inventories and low product prices on the processor side, and higher production costs on the grower side, made the negotiating process more contentious than usual this year. By agreement with both parties, a third party mediator was called in and managed to successfully facilitate the price negotiations. The lower price for the coming crop reflects the soft wholesale prices which have been prevalent in the market since last fall. For example, reported prices for fancy 31 percent tomato paste in 55-gallon drums averaged $0.30 per pound during the first quarter of 1997, down 17 percent from a year earlier and the third consecutive annual decline (table 19). Processed Exports and Imports Up Canned vegetable export value increased 7 percent to $488 million in 1996 (table 46). Important increases were realized for: o sweet corn, up 9 percent to $146 million; o tomato paste, up 4 percent to $77 million; o tomato sauces, up 14 percent to $81 million; o vegetable juices, up 32 percent to $12 million. Gains in tomato product exports were mostly a reflection of large domestic supplies and very low domestic prices. Japan continued to be the largest market for canned sweet corn, ac- counting for 32 percent of the total followed by Taiwan (13 percent) and Hong Kong (12 percent). Canned export volume rose 9 percent in 1996. Canned vegetable imports rose 5 percent to $342 million in 1996 (table 45). Increases in canned commodities such as artichokes (up 7 percent to $46 million) and cucumbers for pickles (up 23 percent to $15 million) outweighed declines in such canned items as bamboo shoots (down 8 percent to $25 million), and tomato products (down 15 percent to $67 million). Imports of canned water chestnuts, the largest canned vegetable import and a root vegetable not generally grown commercially in the United States, were stable at $98 million. Canned import volume only rose fractionally in 1996. The value of frozen vegetable exports (excluding potatoes) increased 3 percent to $146 million while imports rose 5 percent to $230 million in 1996. Export volume remained unchanged at 783 million pounds (fresh-weight basis) while import quantity (fresh weight) increased 6 percent to 1.1 billion pounds. Sweet corn is the largest category and accounts for a third of frozen vegetable exports. Last year, despite the same or lower unit prices and a 3-percent increase in sales to Japan, export volume fell 7 percent and value declined 6 percent as exports to places like Mexico, Australia, Taiwan, and the European Union were lower. About 68 percent of frozen corn exports went to Japan in 1996, up from around 60 percent in the early 1990's. Excluding potatoes, frozen broccoli accounts for 45 percent of U.S. frozen vegetable imports. After rising 12 percent in 1995, the value of frozen broccoli imports, largely from Mexico and Guatemala, rose just 1 percent in 1996 to $105 million. Since 1993, imports from Guatemala (up 39 percent) have risen faster than those from Mexico (up 19 percent). Guatemala now holds about 12 percent of the U.S. frozen broccoli import market, while Mexico has 88 percent. Imports of frozen broccoli now account for about 63 percent of U.S. supply compared with 46 percent in 1990 and 19 percent in 1985. Cutting and trimming broccoli for freezing tends to be labor intensive and has driven the industry to countries where labor is cheaper. Potatoes Spring Production Up Slightly, Winter Lower The first estimate of the 1997 spring potato crop was 22.5 million cwt--up slightly from a year earlier. The increase came despite a 5-percent decrease in harvested area, attributed to high stocks of fall potatoes and low overall grower prices. Spring-season yields were up nearly 6 percent from last year, with nearly all producing areas realizing gains. The 1997 winter-season potato crop is forecast down nearly 4 percent from a year ago at 3.2 million cwt. Harvested acreage was the same as a year ago in Florida, and increased 16 percent in California. Yields were down from a year ago in both States, with an overall decrease of 9 percent. A January frost in Dade County, Florida killed some acreage and reduced early yields. Despite decreased yields, good quality is expected in both States. Fresh Stocks Record Highs On April 1, potato stocks were up 23 percent from 1996, to a record high 143 million cwt (figure 16). April 1 stocks represented 32 percent of all fall production, up 2 percent from last year. Low prices and strong demand have disappearance at a record high, 7 percent above the last 2 years. Processor use is up 7 percent for the season, and was up 5 percent for the month of March. Stocks of all frozen potatoes on April 1 were unchanged from last year. French fry stocks were up 2 percent, while stocks of other frozen potato products were down 7 percent. Pacific and Mountain States continue to hold the largest share of U.S. fry (69 percent of the total) and other frozen (62 percent of the total) inventories. However, East and West North Central States have increased capacity and holdings of fries, accounting for 23 percent of total U.S. inventory on April 1, up from 22 percent a year earlier. Prices Down Significantly in 1996/97 Due to the record-large potato crop last fall, grower prices for all potatoes during the September to February period averaged 29 percent below year earlier levels. Fresh-market potato prices averaged 50 percent below a year ago, while contracts with processors have prevented a similar plummet for processing potatoes. Although grower prices for fresh potatoes have dropped dramatically from last season, retail prices have not realized similar declines. While the producer price index for fresh potatoes averaged 44 percent below year-earlier levels for September through February, the consumer price index was down only 6 percent. Average retail prices for fresh potatoes during the period were down about 10 percent. On the processing side, fry contracts made prior to last season have helped sustain prices for processing potatoes. For the September to February period, grower prices for processing potatoes were down only 7 percent from a year earlier. The producer price index for french fry processors is averaging slightly above a year ago, and retail prices are also slightly higher. However, with higher inventory and depressed prices for the fresh market this season, contract prices may be lower for the upcoming fall crop. Declines in Acreage and Production Likely This Fall Based on preliminary estimates of current season prices, Economic Research Service forecasts indicate planted acreage for 1997 is likely to decline 4 to 6 percent from last year. Together with trend yields and average acreage abandonment, lower acreage could leave total production between 445 and 465 million cwt down nearly 8 percent from 1996. USDA's first official estimate of planted acreage for fall potatoes will be released in July and will provide a much clearer indication of market potential in the coming year. Potato Trade Surplus Decreases in 1996 Despite a strong crop in the fall of 1995, overall U.S. exports of potatoes and potato products (on a fresh weight basis) in calendar year 1996 declined from 1995 levels, while imports rose. Slight gains in fresh and frozen potato exports were offset by declines in potato chip and dehydrated products. Higher U.S. grower prices during calendar year 1996 combined with strong output in Canada and improved production in Europe to negatively impact U.S. potato trade flow. Although potato export volume was down nearly 7 percent, higher prices helped minimize the decline in total export value. Potato exports were valued at $612 million (down 1 percent from 1995), while imports were valued at $242 million (up 34 percent). Increases in potato imports can be largely attributed to increases in fresh and frozen potato products from Canada. Large Canadian raw potato production, combined with increasing processing capacity, has boosted exports to the United States in recent years. In addition, Canadian processors have recently been awarded contracts to supply a U.S. fast- food chain with french fries. Increasing imports from Canada have again raised trade dispute issues, and have led to a fact- finding investigation by the International Trade Commission (ITC). Some of the factors being examined include Canadian aid for construction of storage, water treatment, and processing facilities, changes in exchange rates, and production costs. A preliminary report will be issued by July 15, 1997. Increased imports from Canada have stirred trade-dispute issues in the past (see the November 1996 issue of Potato Facts for a brief description of other trade dispute issues). For a closer look at U.S./Canada potato trade since USCFTA and NAFTA, see the box on this page. Though still the most predominant item in potato exports, the upward trend in french fry exports seems to be slowing. French fry export volume was up less than 3 percent in 1996, a marked decline in growth from recent years. Export markets in North America, Japan (where U.S. fries account for an estimated 75 percent of total supply), and the Pacific Rim continued strong in 1996. However, strengthened production in the Netherlands and other European countries caused dramatic decreases in exports to Europe. Trade Outlook for 1997 With excellent production in both Canada and Europe in the fall of 1996, competition for export markets for potatoes and potato products could be tight well into 1997. However, low prices for U.S. potatoes may help to boost the quantity exported, but may cut into profit margins. For the first 2 months of 1997, fresh and seed export volume rose 15 percent from a year ago (value declined 18 percent), while frozen exports were up 32 percent (value up 33 percent). ---------- BOX ---------------- Update on U.S./Canada Potato Trade Prior to the United States and Canada Free Trade Agreement (USCFTA), U.S. tariffs were 0.77 cents per kilogram on all fresh and seed potatoes, 17.5 percent on frozen potatoes, and 10 percent on frozen french fries, potato chips, and other prepared potatoes. Before USCFTA, the Canadian tariff on fresh and seed potatoes was $7.72 per metric ton, and the tariff on frozen french fries and other prepared potatoes was 10 percent. With USCFTA (enacted on Jan 1, 1989), the U.S. and Canadian tariffs on fresh and processed potatoes are being phased out until falling to zero in 1998. USCFTA includes a snapback to Most Favored Nation tariff levels until 2008 to protect producers of commodities hurt by trade. NAFTA had no effect on USCFTA regarding potatoes. U.S. fresh and seed potato exports to Canada have trended up slightly since 1989, with substantial variation ranging from a low of 292 million pounds (in 1991) to a high of 584 million pounds (in 1994). Exports of frozen french fries to Canada surged in 1990 to 69 million pounds product weight--up from 2 million pounds in 1989. Fry exports came down in 1991, and have averaged 17 million pounds for the 1991-96 period. U.S. exports of potato chips have also benefited from the USCFTA. During the pre-USCFTA period of 1981-88, chip exports to Canada averaged 3 million pounds product weight annually. For the post-USCFTA period of 1989-96, chip exports to Canada averaged nearly 19 million pounds. U.S. fresh and seed potato imports from Canada have varied substantially since 1989, ranging from a low of 401 million pounds in 1992, to a high of 986 million pounds in 1996. The average for the 8-year period was 674 million pounds, 65 percent above the average for the 8 years prior to USCFTA (1981-88). Traditionally, a large percent of the imported fresh potatoes from Canada have come from Prince Edward Island (PEI), and have been distributed primarily along the East Coast of the United States. Shippers throughout the United States have noticed stiff competition from PEI in eastern markets in recent years. Increased fresh and seed imports from Canada in recent years are due to several strong Canadian crops, the weak Canadian dollar, poor yields in Maine during several years, and strong overall demand and prices in the United States. Total french fry imports from Canada have steadily increased since USCFTA. In 1988, fry imports from Canada were 101 million pounds product weight. In 1989, fry imports fell to 94 million pounds, but then rose steadily to 423 million pounds in 1996. The majority of imports currently come from Eastern Canada, where processors have benefited from the declining exchange rate, as well as transportation cost advantages over competing firms in the Pacific Northwest in shipping to East Coast markets. However, Manitoba (a province in mid-western Canada) is also a fast-growing potato and french fry producing/exporting region benefiting from exchange rates and a central location to large U.S. markets. Other potential factors for expanding exports are being examined in the ITC investigation. If it is concluded that no changes need be made to current trade policies/agreements, french fry imports from Canada will likely continue to increase in 1997. ---------------- End Box ---------------- Sweet Potatoes Acreage Expected Down 2 Percent In 1997, U.S. sweet potato growers intend to plant 87,600 acres, down 2 percent from a year ago (table 38). Although slight increases are expected in California, Texas, and Mississippi, other States plan to plant the same or less area than last year. North Carolina will continue to plant the greatest acreage (37 percent of the U.S. total), with Louisiana ranking second (25 percent). Over the past several years, planted acreage has been relatively constant while per-acre yields have increased. Given trend yields (160 cwt), the 1997 crop could total around 13 million cwt, just below the 13.6 million cwt produced in 1996. Because of the large crop last year, the preliminary season-average price for the 1996 crop fell 8 percent to $14.70 per cwt. Despite the larger 1996 crop, F.O.B. prices for 40-pound cartons of Louisiana and North Carolina Jewels have averaged about the same as a year earlier (table 39). Fresh market shipment volume for the season through the end of March 1997 is 3 percent below the same period a year earlier. Pulses Dry Bean Outlook for 1997/98 With reduced domestic output and lower world stocks, season- average dry bean prices are expected to average above a year earlier and provide U.S. dry bean growers the signal to increase acreage. Preliminary surveys indicate that dry bean growers expect to increase area 6 percent to 1.9 million acres in 1997 (table 40). The traditional signals to increase area and production were rather weak this year. This weakness stems from: o the prevalence of relatively strong prices for competing grains (especially wheat and soybeans) in the coming year; o lower prices for two major bean classes, navy and Great Northern; o limited overall increases for dry bean prices in general, with spring-season prices expected to average below the unusually high levels of a year ago; o moderately large domestic stocks for several classes. Strong soybean prices could affect dry bean acreage in Michigan while wheat prices could influence dry bean area in Colorado and Nebraska. Soybean prices are projected to average between $7.10 and $7.50 per bushel in 1996/97 (the midpoint would be up 8 percent from 1995/96 but up a fourth from 1994/95) while all wheat is expected to average between $4.30 and $4.40 per bushel (down slightly from 1995/96 but 26 percent higher than 1994/95). Although field corn prices are down from last season, they are projected to be about a fourth above those of 1994/95. For areas with potatoes, potato prices have been extremely low this year and will not present potatoes as an attractive alternative crop this year. However, the longer cold weather and floods keep growers out of the fields in the Midwest, the greater the chance that dry bean area will increase even more since dry beans are a fairly short-season crop. The wild card this year may be low dry bean stocks in several major bean exporting countries. If this translates into stronger U.S. export volume later this spring, prices will respond and increase the likelihood of additional acreage coming in. However, if dry bean prices remain on the weak track apparent in early April, the expected returns from dry beans will likely not be strong enough to pull much land away from corn, soybeans, and wheat. As usual, the market situation varies from class to class. Despite reduced output in the industry last year, estimates suggest that overall dry bean stocks do not appear to have changed much from a year earlier. While January 1 stocks for pintos, navies, and Great Northerns each appear to be above a year ago, reduced inventories of limas, blacks, and kidneys were offsetting. Ample bean inventories in several classes combined with the absence of new export opportunities likely contributed to the soft market during late winter and early spring. The Price Situation So far in the 1996/97 marketing year, U.S. dry edible bean prices are averaging above a year earlier. During March, although prices weakened from February levels, the average U.S. grower price across all classes was $22.30 per cwt--up 12 percent from a year earlier. As usual, the price situation was not uniform across States or classes. During the 1995/96 season, Nebraska growers received slightly higher prices than the previous year, while the U.S. market as a whole was lower. This season, Nebraska dry bean grower prices are projected to average 5 to 10 percent below a year earlier as stronger pinto and light red kidney prices are outweighed by lower Great Northern prices. At the beginning of April, grower prices for pintos in North Dakota were averaging around $18 per cwt, 6 percent higher than a year earlier. Light red kidneys in Colorado and Nebraska were averaging $32 per cwt, 60 percent higher than a year earlier and the strongest among the non-California bean classes at the time. However, prices for Great Northerns were on the other end of the scale during early April, with grower prices (at $18 per cwt) down 41 percent from a year earlier. Despite estimated aggregate January 1 stocks below a year earlier, U.S. average grower prices for dry edible beans are expected to average below a year earlier through the summer. It is unlikely that grower prices this spring will match the unusual highs of last spring. The price surge last spring was primarily caused by strong Mexican interest in pinto beans, which boosted pinto prices 50 percent during April to July. Any significant price advances this spring and early summer will depend on stronger export demand. Export Value Flat, Imports Up in 1996 The United States remains a strong net exporter of dry edible beans. In calendar year 1996, exports (excluding seed) totaled $202 million compared with $203 million in 1995. With higher domestic prices and a strengthening dollar discouraging offshore buyers in 1996, export volume declined. The reduced volume generally offset the effect of higher prices, leaving export value largely unchanged. Export value declined for pinto, navy, and Great Northern beans, while black beans, baby lima, and light red kidneys increased. Pinto export volume declined 30 percent during calendar 1996 to 1.83 million cwt. Exports dropped as surging sales to Mexico (up 603 percent) were outweighed by large reductions in concessionary sales to such countries as Haiti (down 63 percent), Angola (down 55 percent), and others. Much of this decline can be traced to higher prices as the average export value for pintos jumped 26 percent to $26.50 per cwt in 1996. In 1997, early indications point to larger pinto bean output which should boost stocks and weaken pinto prices this fall. Lower prices should help U.S. pinto beans become more competitive in world export markets in 1997/98. For Great Northerns, export volume fared better than for pintos. Great Northern export volume fell just 2 percent as a 9-percent reduction in average export value ($24.20 per cwt) helped offset the surging value of the U.S. dollar. Increased sales volume to France (up 30 percent), Japan (up 42 percent), and Spain (up 24 percent) were about offset by reduced sales to Turkey (none in 1996), Greece (down 42 percent), and Belgium (down 55 percent). With prices lower this year, Great Northern exports are expected to register moderate gains. While exports were largely marking time in 1996, import value totaled $28 million, up 10 percent from 1995. Dry bean imports continued to creep upward with much of the gain coming from garbanzo beans. The volume of garbanzo imports jumped 28 percent in 1996 to 287,000 cwt. The volume of processed (canned) garbanzo bean imports rose just 3 percent to 2.5 million pounds. The surge in dry garbanzo imports is likely related to both tight domestic supplies and associated higher prices in 1995/96 and the strong U.S. dollar. In the year ahead, with domestic garbanzo stocks at high levels (the equivalent of about 4 months domestic use), lower domestic prices should begin to cut into imports and U.S. acreage. Mushrooms Mushroom Imports Fell in 1996, But Fresh Up Sharply Although imports of mushrooms for all uses decreased 12 percent in 1996 to about 153 million pounds, fresh mushroom imports increased dramatically to reach 9.6 million pounds, compared with 5.5 million in 1995. Imports of most other mushroom products declined in 1996, including frozen, dried, straw, whole, and other unspecified categories. The provisionally preserved and sliced mushroom import categories were higher last year (table 49). Imports from Mainland China decreased in 1996 to 70.2 million pounds compared with 75.4 million pounds in 1995, the record year for imports from that country. Imports were also lower from most other countries except Taiwan and Mexico (table 48). Last year's mushroom imports were valued at $148.2 million (U.S. Dept. of Commerce, Customs Service), compared with $196.4 million in 1995. China was the major supplier of mushrooms to the United States with about one-third of the total, or nearly $56 million. Indonesia supplied $31.6 million followed by Mexico ($9.7 million), Canada ($9.5 million), and Chile ($9.0 million). Other major suppliers include Hong Kong, Taiwan, Japan, India, and Colombia. Canada is the major supplier of fresh mushrooms to the United States (table 50). According to the most recent data published by the Food and Agriculture Organization of the United Nations and U.S. production data published by USDA's National Agricultural Statistics Service, world production of mushrooms for all uses reached a record 4.5 billion pounds in 1995, slightly higher than the 1994 production level. World mushroom production is steadily trending upward. China is the world's leading mushroom producer with 1.12 billion pounds, followed by the United States with 787 million pounds, Netherlands (441 million), France (362 million), and the United Kingdom (295 million) (table 51). Per Capita Use Per Capita Vegetable Use Up in 1996 The first estimate of 1996 per capita vegetable and melon use is 441 pounds--up 2 percent from a year earlier (table 47). Most of the gain originated in the fresh market where prices were lower and supply stronger. Fresh vegetable and melon use (excluding potatoes) increased 5 percent to 153 pounds per person--the highest since the mid-1940's. Increasing fresh use was widespread in 1996 with use of watermelon, cantaloup, carrots, bell peppers, and sweet corn accounting for most of the gain. Watermelon use totaled 17.4 pounds in 1996--the highest since the late 1950's. Watermelon use began rising in 1992 due to a combination of strong industry promotion efforts and increased availability of improved seedless and icebox varieties. Until these twin movers entered the industry, use averaged around 12.5 pounds during the 1970's and 80's (figure 21). The surging popularity of baby-cut and fresh-cut carrots continues to drive fresh carrot use higher (figure 22). In 1996, fresh carrot use rose 13 percent to 10.2 pounds compared with an average of 6.2 pounds in the 1970's, 7.5 pounds during the 1980's, and 8.6 pounds during the 1990's. Bell pepper use also continues to trend upward. Per capita use of bell peppers reached a record 7.1 pounds in 1996 (figure 22). This was 13 percent higher than a year ago and compares with 2.6 pounds during the 1970's and 3.7 pounds in the 1980's. Like onions, bell peppers are not a major plate vegetable but are now widely used in a several popular products. A long-time pizza topping, bell peppers, also an ingredient in salsa, are found on most salad bars, and are widely used in sandwich shops and in various ethnic dishes. Per capita use of vegetables for freezing (excluding potatoes) rose 3 percent to 23.5 pounds (fresh-weight basis). If potatoes were included, per capita use of vegetables for freezing would be 83.7 pounds. Because of the complexity and size of the potato industry, the Economic Research Service generally analyzes potatoes as a separate industry and rarely combines it with other vegetables. Excluding potatoes, sweet corn is the highest volume vegetable consumed in frozen form. In 1996, per capita use of sweet corn totaled 10.5 pounds, the same as a year earlier but up from 6.1 pounds in the 1970's and the 7.4- pound average of the 1980's. Frozen use "caught up" with canned corn use for the first time in 1995 and both are now at 10.5 pounds per person (the equivalent of 2.8 billion pounds). Driven partly by consumer awareness of the nutritional aspects of broccoli, use of frozen broccoli continues to maintain an upward trend. Per capita use totaled 2.6 pounds in 1996, the same as a year earlier but well above the 1.1 pound average of the 1970's and the 1.9 pounds of the 1980's. Most of this growth was underwritten by imports as domestic output continues to be supplanted by increasing imports, mostly from Mexico. Producing frozen broccoli packs is a labor intensive operation which has moved from higher cost California plants to lower cost Mexican operations (largely in partnership with U.S. firms). About 63 percent of frozen broccoli supply is now imported. Per capita use of vegetables for canning (excluding potatoes) declined 2 percent to 105.1 pounds (fresh-weight basis). Use of processing tomatoes, which accounts for nearly three-fourths of canned vegetable use, declined 2 percent to 74.2 pounds during calendar year 1996. Because of the popularity of pizza and pasta dishes, tomato product use has been strong in the 1990's, averaging 75.2 pounds per person compared with 63.5 pounds during the 1980's. However, domestic use appears to have plateaued the past few years despite relatively low tomato product prices. Sweet potato use continues to creep upward. Per capita use of sweet potatoes totaled 4.7 pounds in 1996, up 4 percent from a year earlier and 7 percent higher than the average of the 1990's. Dry edible bean use fell 4 percent to 7.5 pounds after peaking at 7.8 pounds the previous 2 years. Most of the decline came in navy beans as domestic use dropped to 1.2 pounds per person. However, despite this decline, increased advertising has apparently spurred use in the 1990's after navy bean use had bottomed out in the late 1980's. Special article "Organically Grown" Vegetables: U.S. Acreage and Markets Expand During the 1990's Catherine Greene and Linda Calvin Abstract: Organic farming systems, which focus on ecologically-sound production practices, have been gaining ground among U.S. vegetable growers during much of the 1990's. Over 5,000 U.S. farmers were operating under organic methods in 1995, and the majority of these growers were producing fruits and vegetables. With 18,000 acres, Texas is the leading organic vegetable State with over 10 percent of vegetable acreage certified organic in 1995. Organic produce generally receives a price premium. Keywords: Organic, vegetables, markets, certified acreage, price premium. Organic farming systems, which focus on ecologically-friendly production practices, have been gaining ground among U.S. vegetable growers during much of the 1990's. By 1995, over 5,000 U.S. farmers were operating under organic methods, and the majority of these growers were producing fruits and vegetables (Dunn). Over 1 percent of total vegetable acreage in the United States was certified by State and private agencies as organically grown in 1994 (table A-1). There are currently no national standards for certified organic production. There are approximately 11 state and 33 private organic certification agencies in the United States that conduct "third party" certification to confirm that growers are adhering to organic production standards (USDA). Many certification agencies have similar standards, especially for crop production. Congress passed the Organic Foods Production Act of 1990 in order to establish national standards for organically grown commodities, assure consumers that these commodities meet a consistent standard, and to facilitate interstate commerce in organically grown fresh and processed food. This legislation requires that all except the smallest organic growers will have to be certified by a State or private agency accredited under national standards currently being developed by USDA. Farmers who use organic methods, but don't use certifying agencies to confirm that they are using these methods, are not included in these estimates, and would likely increase the number of organic farmers in the United States substantially. According to the Organic Farming Research Foundation, a nonprofit organic research organization, at least 6,000 additional farmers meet general organic certification requirements in the United States but do not certify their crops. Certified Acreage Increasing The top seven vegetable States ranked by 1994 cash receipts-- California, Florida, Washington, Idaho, Michigan, Wisconsin, and Texas--each have certifying agencies working with organic growers. In California, the largest certifier is California Certified Organic Farmers (CCOF), which has been operating for over 24 years and is the oldest certifier in the United States. In Wisconsin, a State chapter of the national Organic Crop Improvement Association is the largest certifier. The major certifiers in Florida and Michigan are also private agencies-- Florida Certified Organic Growers and Consumers and Organic Growers of Michigan--while the major certifiers in Washington, Idaho, and Texas are the State Agriculture Departments which began operating organic certification programs during the late 1980's. Five of these major certifying agencies in the top vegetable States are currently able to provide estimates or reports on the vegetable acres that they certified during the 1990's (table A-2). Only the largest certifier in each State is included in the table. Half a dozen national certifying agencies operate in multiple States, making organic acreage estimates based on the major certifier in a State a lower bound estimate. For example, five national and international certifiers provide services in California in addition to CCOF, and some of these agencies certify organic vegetable acreage in the State. The Organic Growers of Michigan, Washington Department of Agriculture, and Quality Assurance International, a national private certifier which certifies several hundred vegetable growers in dozens of States, were unable to report acreage because they do not currently maintain a database or for other reasons. When the Organic Foods Production Act of 1990 is implemented, public access to certification documents and laboratory analyses that pertain to certification will be required. Total organic vegetable acreage certified by the five reporting agencies in California, Florida, Idaho, Wisconsin, and Texas was a little over 1 percent of total vegetable acreage in 1994, and increased to 1.5 percent in 1995. Acreage certified by CCOF in 1995--which doesn't include uncertified organic acreage or acreage certified by a national certifier--was a little over 1 percent of total California vegetable acreage. Certified acreage in Florida, Idaho, and Wisconsin was well under 1 percent, while Texas organic acreage was over 10 percent of the total vegetable acreage (table A-1). In California, the proportion of organic production varied by commodity market, with CCOF certified carrot acreage accounting for about 2 percent of the total and organic tomatoes for processing at only about 0.5 percent. Texas has more certified organic vegetable acreage than the other top vegetable States (18,000 acres in 1996) (table A-2). California was second with 13,765 organic vegetable acres certified by CCOF in 1996. Florida Certified Organic Growers and Consumers certified 1,312 acres in organic vegetables last year, and Idaho and Wisconsin certifiers each had just over 900 acres. All five of these States showed increases in certified organic acreage between 1993 and 1996 (table A-2). Increases ranged from 10 to 25 percent in Idaho and Texas to about 80 percent in California and Florida, and organic acreage nearly tripled in Wisconsin during this period. Certified organic green peas and sweet corn for processing in Wisconsin rose from virtually no acreage in 1993 to 288 and 242 acres, respectively, last year. Demand for organic vegetables for processing--for baby food, frozen dinners, and other markets--is also growing in the organic industry. "Organically Grown" Labels: Promoting Ecological Farming In 1995, the National Organic Standards Board (NOSB), which was appointed by the Secretary of Agriculture to help implement the Organic Foods Production Act of 1990, developed a recommendation for the definition of organic agriculture. The NOSB definition says: "Organic agriculture is an ecological production management system that promotes and enhances biodiversity, biological cycles, and soil biological activity. It is based on minimal use of off-farm inputs and on management practices that restore, maintain and enhance ecological harmony. Organic' is a labeling term that denotes products produced under the authority of the Organic Foods Production Act. The principal guidelines for organic production are to use materials and practices that enhance the ecological balance of natural systems and that integrate the parts of the farming system into an ecological whole" (NOSB, April 1995). Organic farming systems focus on biological and cultural methods for pest management and use organic processes such as green manure' (legumes), animal manure, compost, and crop rotation to provide the major source of crop nutrients. These systems virtually exclude the use of synthetic pesticides and fertilizers. Emerging research on consumer food demand in the United States and Europe suggests that many organic consumers are interested in environmental protection. Recent consumer surveys of food shoppers in various parts of the United States found that their concerns about the potential impacts of pesticide use on the environment, groundwater, wildlife, and/or agricultural workers, were generally ranked as high or higher than other concerns (Bruhn, et al.,1992; Weaver, Evans and Luloff, 1992; and Cuperus, Owen, Criswell and Henneberry, 1996). Two consumer surveys that included large percentages of organic food purchasers, one targeting shoppers at a New York natural foods cooperative (Goldman and Clancy, 1991) and the other targeting people who purchase environmentally friendly products in Northern Ireland (Davies, Titterington and Cochrane, 1995), found that environmental protection was a high-ranking concern. And a survey of retailers and wholesalers of produce in New Jersey found that "the environment" and "lowering health risks" were their two leading reasons for carrying organic produce (Morgan, Barbour and Greene, 1990). Price Premiums In Wholesale Markets Vary by Commodity Organic produce receives a premium but it varies by commodity. Using the Organic Wholesale Market Report data from September 1990, Morgan, Barbour, and Greene reported wholesale price premiums for organic vegetables ranging from 5 percent for green chard to 183 percent for eggplant. Organic lettuce price premiums ranged from 7 to 79 percent for different varieties and the organic carrot price premium was 122 percent. The Organic Wholesale Market Report was published from September 1985 to the early 1990's by the Committee for Sustainable Agriculture in California. To correctly assess current organic premiums, price data need to be collected for products that are otherwise similar, except for the organic determination. Both regular and organic products are sold in wholesale markets, but with one exception, USDA does not record comparable prices. For several years, USDA's Agricultural Marketing Service (AMS) has collected data on prices for organic mesclun mix (salad mix of baby lettuces and greens), carrots, and occasionally other commodities in the Boston wholesale market. While there is at least one private source of data on organic produce prices, this AMS example is the only current source of public information. Data for organic mesclun and carrots were collected because these two products have the largest volume of all organic produce in the Boston wholesale market. The data are collected for the same type of product, on the same day, in the same market. These data are unique but any conclusions must be qualified. The supply of organic produce is smaller than the volume of regular produce, therefore, the organic prices are based on a very thin market. Much of the organic produce, like regular produce, is sold directly to large retailers, further reducing the volume of product in the wholesale market. Organic mesclun prices are higher than regular mesclun, but not by much (figure A-1). In 1996, regular mesclun from California or Arizona cost an average of $8.64 per 3-pound carton (ranging from $7.50 to $10.00) and organic cost $9.72 per 3-pound carton (ranging from $7.75 to $10.75). The monthly organic premium averaged 14 percent, ranging from 8 percent in November to 22 percent in December. Mesclun is a relatively new commercial crop in the United States. Initially mesclun was a very small market; it was produced organically and garnered high prices. Other producers entered the mesclun market, attracted by high returns. The new growers expanded into both the organic and regular mesclun market. AMS observes that currently perhaps 30 percent of the mesclun in the Boston wholesale market is organic. Mesclun prices declined and the premium between organic and regular mesclun narrowed. Industry insiders say that as long as there is a large supply of regular mesclun, organic prices will continue to be low too. The market will bear a very small premium for organic mesclun. As the gap between organic and regular mesclun prices decreased, many organic mesclun producers could remain in the market because variable production costs are not much higher than for regular mesclun. Since the lettuces and greens are harvested when quite small, they aren't in the ground very long and are less prone to insect and disease problems than other organic crops. Some industry experts think the organic share of the mesclun market will continue to decrease, as other organic crops, which yield a higher return on relatively expensive certified organic land, become more attractive. The price premium for organic carrots is much larger (figure A-2). Regular carrot prices are fairly constant throughout the year; the 1996 price for a container of 24 2-pound film bags of California medium-large carrots averaged $11.43 and ranged from $9.75 to $13.00. The organic prices varied more than regular carrot prices. Organic carrots of the same size from California were not available in all time periods, and not at all in the months of June and October. The 1996 organic price averaged $25.83 and ranged from $17.50 to $33.50. The monthly organic premiums in 1996 averaged 110 percent, ranging from 52 percent in August to 157 percent in December. Demand for organic carrots is strong and the supply relatively small, with occasional shortages reported in the Boston wholesale market. AMS observes that perhaps 10 percent of the carrots in the Boston wholesale market are organic, but industry experts report that organic carrot acreage is increasing. The supply of California organic carrots is not consistent, which explains the high price variability compared with regular carrots. Carrots require specific types of soil, unlike mesclun which is a much more flexible crop. When certified organic acreage is in scarce supply, acreage with the specific type of soil appropriate for carrots may be even more limited. Carrots are a root crop and they tend to be exposed to many more pest problems than the lettuces and greens in mesclun mix. Organic Market's Appeal Includes Diverse Opportunities Many certifying agencies in the United States are reporting larger average sizes for organic operations. In Texas, for example, there were 134 certified fruit and vegetable producers with 15,327 acres in 1993 compared with 104 producers with nearly 20,000 acres in 1996. Idaho had 64 certified organic vegetable growers with 820 acres in 1993, and 32 growers with 905 acres in 1996. And both CCOF and the California Department of Agriculture, which registers organic growers who are certified as well as those who aren't, report increases in the average acreage per grower managed organically during the 1990's. At the same time, many organic producers across the United States are remaining small and growing vegetables to market directly to consumers. Along with the renaissance in farmer's markets during the 1990's, a new form of direct marketing-- consumer supported agriculture associations (CSAs)--has taken off. In CSAs, consumers generally contract with producers before the farming season starts for a set fee in exchange for weekly provisions of produce during the upcoming season. The number of CSAs in the United States has risen from 397 in 1993 to 523 in 1996, with over 50 each in California, New York, and Wisconsin (Bio-Dynamic Farming and Gardening Association, 1996). Vegetables are the most prevalent type of commodity grown in CSAs, and the majority of them are managed under organic production systems. Implementation of national organic standards under the Organic Foods Production Act of 1990 will reduce information and transaction costs in the organic food market, and will facilitate interstate and international trade. And increased USDA and other research on biological pest management and nutrient cycling will help lower costs of production for organic producers in the United States. As vegetable processors and others less familiar with organic production methods begin to enter the market, the public sector could fill an important educational role by providing mentoring and other assistance to transitioning conventional growers. For example, new public/private demonstration programs, such as the Biologically Integrated Orchard Systems project in California and the Agricultural Research Service area wide program in the Pacific Northwest, are providing technical assistance, financial incentives, and other support to help growers learn to use less chemical-intensive management systems. References Bio-Dynamic Farming and Gardening Association, Inc. (1996). "1997 Community Supported Agriculture (CSA)," Kimberton, Pa. Bruhn, Christine M., and Katherine Diaz-Knauf, Nancy Feldman, Jan Harwood, Genevieve Ho, Ernestine Ivans, Laurel Kubin, Cathi Lamp, Mary Marshall, Susan Osaki, Gwendolyn Stanford, Yvonne Steinbring, Isela Valdez, Eunice Williamson and Evelyn Wunderlich (1992). "Consumer Food Safety Concerns and Interest in Pesticide-Related Information," Journal of Food Safety, Vol. 12, p. 253-262. Cuperus, Gerrit, Greg Owen, Jim T. Criswell, and Shida Henneberry (1996). "Food Safety Perceptions and Practices: Implications for Extension," American Entomologist, Winter. Davies, Anne, Albert J. Titterington and Clive Cochrane (1995). "Who buys organic food? A profile of the purchasers of organic food in Northern Ireland,"British Food Journal, Vol 97, No.10. Dunn, Julie Anton (1996). "International Organic Market Report," BioFair, Camara de Comercio de Costa Rica, November. Goldman, Barbara and Katherine L. Clancy (1991). "A survey of organic produce purchases and related attitudes of food cooperative shoppers" American Journal of Alternative Agriculture, Vol. 6, No. 2. Morgan, Jennifer, Bruce Barbour, and Catherine Greene (1990). "Expanding the Organic Produce Niche: Issues and Obstacles," Vegetables and Specialties: Situation and Outlook Report, U.S. Department of Agriculture, Economic Research Service, VGS-263. National Organic Standards Board and National Organic Program Staff (1995). "Summary of NOSB Recommendations for Materials Considered at Orlando, Florida," April 1995,". Organic Farming Research Foundation (1996). "1995 National Organic Farmers's Survey Results." Santa Cruz, CA: OFRF, April. U.S. Department of Agriculture (1995). Organic Food and Fiber: An Analysis of 1994 Certified Production in the United States, U. S. Department of Agriculture, Agricultural Marketing Service, Transportation and Marketing Division. Weaver, Robert D., David J. Evans and A.E. Luloff (1992). "Pesticide Use in Tomato Production: Consumer Concerns and Willingness-to-Pay," Agribusiness, Vol 8, No. 2. Special article U.S. Imports of Mexican Winter Vegetables Under NAFTA Linda Calvin and Gary Lucier Abstract: During the first 3 years of NAFTA, the quantity of U.S. vegetable imports from Mexico increased, with the rise ranging from 42 percent for bell peppers to 71 percent for tomatoes. The 1995 economic crisis and peso devaluation in Mexico may have had the most widespread impact on winter vegetable trade during the first 3 years of NAFTA. However, weather in Florida and technological advancements in Mexico also impacted vegetable trade under NAFTA. In the first year of NAFTA, U.S. imports of Mexican tomatoes totaled 376,034 metric tons, down 6 percent from the previous year. In 1995, U.S. imports of Mexican tomatoes climbed by 58 percent and imports for 1996 were up 16 percent to 685,681 metric tons. The winter and spring/summer quotas were filled in both 1995 and 1996. The winter tomato quota ending February 28, 1997 was also filled. Keywords: NAFTA, Mexico, vegetables, Florida, tomatoes, imports. Mexico is the main import source of winter vegetables for the United States. In 1993, the year before the North American Free Trade Agreement (NAFTA) began, Mexico supplied 96 percent of all tomato imports, 83 percent of bell peppers, 90 percent of cucumbers, 93 percent of squash, 99 percent of eggplant, and 94 percent of snap beans. The impact of NAFTA on trade in these commodities is of great interest. During the first 3 years of NAFTA, imports increased, ranging from 42 percent for bell peppers to 71 percent for tomatoes (table B-1). Despite the growth in imports, Mexico's share of U.S. tomato imports fell slightly to 93 percent in 1996, as countries like the Netherlands and Canada increased shipments of greenhouse/hydroponic tomatoes to the United States. Factors Affecting Vegetable Trade: 1994-96 Comparative advantage is critical for understanding the winter vegetable trade and is a far more important factor than trade policy. Comparative advantage is determined by relative resource endowments and technological capacity which influence the economics of producing various commodities in different areas. With NAFTA, all tariffs will be eliminated over a period of 15 years. The tariffs on winter vegetables, however, were quite low before NAFTA (table B-2). The winter vegetable tariffs are specific tariffs and the ad valorem value of the tariffs has eroded over time. Tariffs were eliminated immediately for some less sensitive periods; cherry tomatoes enter duty free from December 1 through April 30, cucumbers from July 1 through August 31 and from December 1 through the end of February, and eggplant from July 1 through September 30 and from December 1 through March 31. For more sensitive time periods, such as cucumbers from March 1 to May 31 and from October 1 through November 30, the tariff is phased out over a 15-year period. Other crops have phase out periods of 5 and 10 years. To further protect sensitive crops, tariff-rate quotas were introduced. A specified amount of a commodity is allowed to enter the country during a certain time period at the reduced tariff rate, but any amount over the quota is charged the pre- NAFTA tariff rate or Most Favored Nation tariff rate, whichever is lower at the time of over-quota trade. The United States has two tariff-rate quotas for tomatoes (quotas differ by season) and one each for eggplant and squash (table B-3). The tariff-rate quota grows by a compounded 3-percent annual rate until the tariff is phased out. Weather is a very important factor in trade in winter vegetables. Production of winter vegetable crops is concentrated in Florida and Sinaloa, Mexico. Weather conditions in each area can have a serious impact on the total supply and trade of a product. For example, at the beginning of the 1994/95 winter vegetable season, Hurricane Gordon damaged crops in Florida. During the same season, Sinaloa had exceptionally good weather conditions and very large crops. The 1995 economic crisis and peso devaluation in Mexico may have had the most widespread impact on winter vegetable trade during the first 3 years of NAFTA. The Mexican economic crisis had several short run impacts on Mexican producers. First, the Mexican domestic market contracted drastically. Since producers in Sinaloa can ship to either the domestic or export markets, reduced domestic market opportunities made the United States a much more attractive and critical market. In addition, the devaluation of the Mexican peso made prices in the United States more attractive to Mexican producers. U.S. demand for fresh vegetables has been on the rise since the 1980's. At the same time, domestic production has not kept pace the past few years during the winter months due to a series of adverse weather conditions. Imports, largely from Mexico, have allowed wholesalers and retailers to increase supply to meet the expanding consumer demand. Rise in Fresh Tomato Imports Not Directly Related to NAFTA U.S. fresh tomato imports have increased dramatically the past 2 years. In 1994, the first year of NAFTA, U.S. imports of Mexican tomatoes totaled 376,034 metric tons, down 6 percent from the previous year (figure B-1). The March-July 14,tariff- rate quota was only 86 percent filled. In 1995, U.S. imports of Mexican tomatoes climbed by 58 percent and imports for 1996 were up 16 percent to 685,681 metric tons. The winter and spring/summer quotas were filled in both 1995 and 1996. The winter quota ending February 28, 1997 was also filled. Much of the increase in tomato imports can be attributed to factors unrelated to NAFTA. The Mexican economic crisis in the 1994/95 season forced Mexican producers, who faced a sharply diminished domestic market, to ship more of their product to the United States where prices were more attractive. Weather also had an effect on tomato trade in the first 3 years of NAFTA. At the beginning of the 1994/95 season, Tropical Storm Gordon damaged crops in Florida, reducing shipments. During the same season, Sinaloa experienced unusually favorable weather conditions, and production reportedly exceeded expectations by 15-20 percent. Florida's production was again disrupted at the start of the 1995/96 season by cold and rainy weather. Cold weather in February 1996 decreased supplies in the important growing areas of Immokalee and Homestead. Adoption of new tomato varieties in Mexico has resulted in a significant change in trade. In the last few years, Mexican tomato exporters in Sinaloa and Baja, California have successfully adopted new technology to produce vine-ripe extended shelf-life (ESL) tomatoes. During the winter and spring, the Mexican vine-ripe tomatoes from Sinaloa compete against Florida's mature green tomatoes. Current varieties of ESL tomatoes do not grow well in Florida because heavy rains cause the tomatoes to crack on the vine. An ESL vine-ripe tomato lasts a week longer in storage than a mature green tomato, reducing waste and marketing costs. A vine-ripened tomato is bright red and firm which is considered an important factor in fresh-market consumer demand. Supermarkets desire a larger supply of vine-ripe tomatoes, while the foodservice industry demands the firmer mature green tomato for slicing. The market is becoming more segmented and Mexican and U.S. tomatoes are not always perfect substitutes. Development of the ESL tomato in Mexico may help explain the growth of imports from Mexico during the rest of the year as well. Traditionally, the majority of tomatoes from Mexico entered the country during December through April. Imports during the rest of the year are still small in comparison, but the volume has increased substantially since 1993 as consumers have indicated a preference for vine-ripe tomatoes (figure B-1). The U.S. market share of the winter tomato market (excluding cherry tomatoes) has decreased since the 1991/92 season (figure B-2). The U.S. share in 1991/92 was quite high due to poor weather conditions in Mexico, but market share has also declined since 1992/93. The Mexican share has increased, particularly in 1994/95 and 1995/96. Bell Pepper Imports Rise Along With Domestic Use In 1994, total U.S. bell pepper imports from Mexico were 96,713 metric tons, down 4 percent from the previous year (figure B-3). In 1995, imports of bell peppers increased 20 percent to 116,173 metric tons. The increase was due in part to the peso devaluation. In addition, Florida production was down 20 percent in 1995. In 1996, imports were 143,734 metric tons. U.S. per capita use of bell peppers has risen a third during the 1990's to 6 pounds per person. Almost all Mexican bell pepper exports to the United States occur between December and April. During the winter vegetable seasons of 1989/90 to 1992/93, Mexico accounted for 28 to 38 percent of the U.S. market. By 1995/96, Mexico's share of winter-season shipments had increased to 66 percent of the U.S. market as U.S. production declined (figure B-2). Cucumber Imports Important In Winter Cucumber imports from Mexico have increased steadily since 1991. In 1994, U.S. cucumber imports from Mexico increased 12 percent to 228,229 metric tons (figure B-3). Of all the winter vegetables, cucumbers had the highest pre-NAFTA ad valorem equivalent tariff, 19.60 percent during the highest tariff season. In 1995, cucumber imports from Mexico only increased 5 percent, while imports of other winter vegetables increased substantially. Since Mexican cucumbers already dominated the midwinter market, it was more difficult for cucumber imports to increase than for some other winter vegetables. During the months of December, January, and February almost all cucumbers in the U.S. market come from Mexico. In 1996, cucumber imports were 293,753 metric tons. Imports are important in the U.S. fresh cucumber market, with about 36 percent of supply imported during the 1990's, almost all from Mexico. During the winter vegetable season of 1989/90 to 1992/93, Mexico accounted for 40 to 47 percent of the U.S. market. By 1995/96, Mexico supplied 64 percent of the market (figure B-2). Part of this relatively large reliance on imports is due to low domestic production during the winter months. Cucumbers suffer chilling injury at temperatures below 50 degrees--a common occurrence in Florida during the winter. Mexico The Leading Source For Squash Imports U.S. squash imports from Mexico have been increasing slowly over many years (figure B-3). U.S. winter production of squash has decreased 44 percent since 1990. In the first year of NAFTA, Mexican exports to the United States totaled 99,257 metric tons, an 11-percent increase over the previous year. In 1995, Mexican exports to the United States increased 14 percent, but the quota was only 87 percent filled. Imports for 1996 were 135,440 metric tons, 20 percent above 1995. The 1996 quota was filled on May 6, 1996. During the 1990's, the United States received 97 percent of fresh squash imports from Mexico with a minor amount coming from Canada during the summer months. Over 80 percent of squash enters the country between November and April and competes primarily with squash produced in Florida. During the winter vegetable seasons of 1989/90 to 1992/93, Mexico accounted for 59 to 65 percent of the U.S. market. By 1995/96, Mexican imports reached an 80-percent market share during the winter season (figure B-2). Steady Gains in Eggplant Imports Imports of Mexican eggplant have increased steadily since 1992 (figure B-3). From 1991 to 1996, total U.S. shipments of eggplant decreased 46 percent. U.S. imports of Mexican eggplant increased 17 percent in 1994 and another 15 percent in 1995. Imports in 1996 totaled 29,780 metric tons, up 24 percent from 1995. In each year of NAFTA the eggplant quota was filled. During the winter vegetable seasons of 1989/90 to 1992/93, Mexico accounted for 42 to 52 percent of the U.S. eggplant market. In 1995/96, Mexico's share reached 72 percent of the market. Mexico's Share of Snap Bean Market Smallest In 1994, the United States imported 9,623 metric tons of Mexican fresh snap beans, down 10 percent from the previous year (figure B-3). In 1995, imports from Mexico increased sharply by 61 percent. Florida production increased 34 percent over the previous year. Of all the winter vegetables, Mexico's share of the U.S. market has been the smallest for snap beans, only 14 to 20 percent during the 1989/90 to 1992/93 winter vegetable seasons. In the 1995/96 winter season, imports of Mexican snap beans represented 32 percent of the market (figure B-2). With the peso devaluation, it was easier for hand-picked Mexican snap beans to compete with machine-harvested Florida snap beans. In 1996, the United States imported 17,124 metric tons of Mexican snap beans, 10 percent more than during 1995. Trade Disputes Under NAFTA In April 1995, Florida growers petitioned the U.S. International Trade Commission (USITC) to seek economic relief from increased tomato imports. The petition was rejected on the basis that a crop could not be given special treatment on the basis of seasonality. In March 1996, Florida growers, joined by growers from several other States and the Florida Department of Agriculture, petitioned the USITC again under the U.S. trade law for economic relief against import surges of fresh tomatoes and bell peppers. Tomatoes and bell peppers account for the majority of the value of the Florida winter vegetable market. On July 2, the USITC found that imports of fresh tomatoes and bell peppers were not a substantial cause of serious injury or threat of serious injury to the U.S. industries. A second petition was filed in April 1996 with the U.S. Department of Commerce, charging Mexico with dumping tomatoes on the U.S. market at below fair-market value prices and materially injuring the domestic industry. On October 28, 1996, the U.S. Department of Commerce announced a negotiated plan with principal Mexican producers/exporters to settle the anti-dumping investigation. On November 1, 1996, the U.S. Department of Commerce suspended the anti-dumping investigation. The Department of Commerce had determined that fresh tomatoes from Mexico were likely to sell in the United States at less than "fair value." As long as the negotiated settlement is honored, the dumping investigation remains suspended. The negotiated plan will run from November 1, 1996 to September 30, 1997, establishing a reference price or minimum price, covering most Mexican fresh-market tomatoes exported to the United States. The net price (after rebates and discounts) of Mexican tomatoes cannot fall below the reference price of $5.17 per 25-pound box, or 20.68 cents per pound. This price represents the lowest average monthly price for fresh-market tomatoes from Mexico observed at the U.S.-Mexico border during the base period of 1992-94. This price can be adjusted periodically to accommodate changes in the U.S. market. Greenhouse-grown cocktail type tomatoes are exempted from the agreement since they are viewed as a separate market from field grown tomatoes. Over 85 percent of the Mexican producers/exporters signed the negotiated agreement. Non-signatories are not covered by the agreement. U.S. Customs will examine the tomato shipments from non-signatories to insure that product from signatories is not included, thereby circumventing the agreement. Since it went into effect, the reference price system has not been tested by sustained low market prices. Already, Florida tomato growers and handlers have discussed ways to prevent a reduction in the reference price. The Florida Tomato Exchange, a nonprofit cooperative agricultural association which handles a majority of the fresh tomatoes sold in Florida, has reached an agreed-upon floor price of $5.35 per 25-lb carton. The Exchange would impose a fine of $1 per carton on members who sold tomatoes for less than this price. List of Tables Table Number 1. U.S. vegetable industry: Area, production, value, unit value, and trade, 1995-97 02. Selected fresh vegetables: U.S. trade, volume, 1995-96 03. Domestic utilization of selected processing vegetables 04. Potatoes: U.S. retail prices, by type, 1985-97 05. Fresh vegetables: Prices received by U.S. growers, by month, 1992-97 06. Commercial vegetables and potatoes: Indexes of prices received by U.S. growers, by month, 1992-97 07. Vegetables: Producer Price Indexes, by month, 1992-97 08. Vegetables: Consumer Price Indexes, by month, 1992-97 09. Fresh vegetables: U.S. average retail prices, by month, 1991-97 10. Fresh vegetables: U.S. area, production, and value, 1994-96 11. Winter-season fresh: U.S. harvested area, selected crops, 1993-97 12. Spring-season fresh vegetables: U.S. harvested area, selected crops, 1993-1997 13. Fresh vegetables: U.S. shipments, by quarter, 1995-97 14. Selected fresh vegetables: U.S. import volume and value, by region or country, 1996 15. Selected fresh vegetables: U.S. export volume and value, by region or country, 1996 16. Vegetables: U.S. farm cash receipts, 1987-95 17. Representative wholesale prices for selected fresh-market vegetables and melons in Chicago, 1996-97 18. Supermarket sales of selected processed vegetables, 1989-96 19. Processing vegetables: Selected U.S. contract plantings, 1992-94 average, and 1995-1997 20. Processing vegetables: U.S. acreage, production, and value, 1994-96 21. Canned vegetables: Quarterly wholesale price trends, 1989-97 22. Selected canned vegetables: U.S. import volume and value, by region or country, 1996 23. Selected canned vegetables: U.S. export volume and value, by region or country, 1996 24. Frozen vegetables: U.S. carryover, pack, seasonal supply, shipments, 1990/91-1996/97 25. Frozen vegetables: Quarterly wholesale price trends, 1994-97 26. Frozen vegetables: U.S. cold storage holdings, January 1, 1994-97 27. Selected frozen vegetables: U.S. import volume and value, by region or country, 1996 28. Selected frozen vegetables: U.S. export volume and value, by region or country, 1996 29. Frozen french fry crop-year supply and use, 1993/94-1996/97 30. Winter-season potatoes: U.S. acreage, yield, and production, 1987/91 average, 1992/97 31. Spring-season potatoes: U.S. acreage, yield, and production, 1987/91 average, 1992/97 32. Domestic shipments of U.S. potatoes, 1986-97 33. Fall Potatoes: March 1 stocks, by area, 1983/84-1996/97 34. U.S. potato shipments: Season total through March 30 35. Potatoes: Processing use through December 1, monthly and seasonal totals, major States, 1985/86-1996/97 36. Potatoes and pulses: Prices received by U.S. growers, by month, 1990-97 37. Potatoes: U.S. export volume and value, by region or country, 1996 38. Sweet potatoes: U.S. planted acreage, 1990-1994 average, 1995-1996, indicated 1997 39. Sweet potatoes: Shipping-point prices, by State, selected weeks, 40-lb, cartons, 1992-97 40. Dry edible beans: U.S. planted acreage, 1989-93 average, 1994-97 41. Dry edible beans: U.S. production, by State, by class, 1996 42. Dry edible beans: Season-average wholesale price, by class, 1986/87-1996/97 43. Dry edible beans: U.S. trade volume, by quarter, 1995-96 44. Selected dry peas, lentils, and beans: U.S. export volume and value, by region or country, 1996 45. Vegetable imports: U.S. value, by group, by month, 1993-97 46. Vegetable exports: U.S. value, by group, by month, 1993-97 47. U.S. per capita use of selected, commercially produced, fresh, and processing vegetables and melons, 1989-97 48. Mushrooms: Quantity of imports, by leading countries, 1992-96 49. Mushrooms: Quantity of imports, by product category, 1992-96 50. Mushrooms: Value of imports by product category and country, 1996 51. Mushrooms: World production, all uses, ranked by top 20 countries, 1991-95 Special Article Tables A-1. Certified organic and total vegetable acreage, Major States and U.S., 1994-95 A-2. Certified Organic Vegetable Acreage, Top Vegetable States, Major Certifiers, 1993-1996 B-1. U.S. fresh vegetable imports from Mexico, 1993-96 B-2. U.S. tariffs on imports of fresh vegetables from Mexico B-3. U.S. tariff rate quotas for Mexican vegetables END_OF_FILE