VEGETABLES AND SPECIALTIES December 9, 1997 November 1997, VGS-273 Approved by the World Agricultural Outlook Board ------------------------------------------------------------------------------ VEGETABLES AND SPECIALTIES is published three times a year by the Economic Research Service, U.S. Department of Agriculture, 1800 M St., N.W., Washington, DC 20036-5831. This release contains only the text of VEGETABLES AND SPECIALTIES -- tables and graphics are not included. See supplemental data files in zipped Lotus 123 (.WK1) file format. Subscriptions to the published report are available from the ERS-NASS order desk. Call, toll-free, 1-800-999-6779 and ask for stock #VGS, $27/year. ERS-NASS accepts MasterCard and Visa. For further information on ERS products and services, call (202) 694-5050. ------------------------------------------------------------------------------ Contents Summary Fresh Market Vegetables Processing Vegetables Potatoes Pulses Mushrooms Special Articles Import Penetration in the U.S. Fruit and Vegetable Industry The U.S. Asparagus Industry in a Global Environment: A Commodity Highlight List of Tables Situation Coordinator Gary Lucier Voice: (202) 694-5253 FAX: (202) 694-5820 E-mail: GLucier@econ.ag.gov Principal Contributors Gary Lucier (202) 694-5253 Charles S. Plummer (potatoes) (202) 694-5256 Statistical Support Brenda Toland Editor Martha R. Evans Graphics, Table Design, and Layout Wynnice Pointer- Napper Summary released November 18, 1997. The summary of the next Vegetables and Specialties Situation and Outlook is scheduled for release April 24, 1998. See back cover for subscription information. Summary Retail prices for some fresh-market vegetables and potatoes are expected to increase this fall, as U.S. growers reduced harvested area from a year ago. Retail prices for fresh vegetables and potatoes increased about 5 percent this summer compared with a year earlier. However, a 3-percent decrease during the spring and a small increase during the winter have left the average consumer price index (CPI) nearly the same as a year earlier through September. A likely increase in the fall CPI for fresh vegetables will put the annual average 1 to 2 percent above 1996. Total area harvested of fresh vegetables (excluding potatoes) is forecast down 2 percent. Lower acreage of fall-season potatoes is the main factor behind an 8-percent decrease in the forecast potato output. Area for harvest of tomatoes, lettuce, broccoli, and cauliflower is nearly unchanged; bell peppers and sweet corn are forecast lower. Sweet corn acreage is forecast down 23 percent in California and Florida, as growers switched to other crops after last year's poor fall-season prices. Growers in California's Imperial Valley replanted some cool-season crops, such as broccoli, after Hurricane Nora spread heavy rain across the normally dry desert region. As a result, reduced supplies and volatile prices for leafy green vegetables are likely to be seen into early January. Increased carrot acreage this fall is mostly due to continued strong demand and the opening of a new fresh-cut carrot operation in California. Melon area is forecast up 10 percent also on continued strong demand. Per capita use of cantaloupe, at 10.6 pounds in 1996, is up 15 percent from 1990 and is 34 percent higher than the 1980's. USDA's November estimate of U.S. fall-season potato production is 418 million hundredweight (cwt), down 8 percent from last year's record crop, but 4 percent above fall 1995. Decreased harvested area (down 7 percent from last fall) and lower yields (down 1 percent to 360 cwt per acre) contributed to the reduced output. The reduction in acreage and production was expected, as record production and relatively low grower prices for the 1996 crop prompted growers to cut back in 1997. However, despite the reductions from a year ago, 1997 fall production was still 2 percent above the average of the five previous fall seasons. The National Climate Prediction Center is forecasting an El Nino weather pattern that could bring a wetter and cooler-than-normal winter to the southern half of the United States. This has potential significance for U.S. winter fresh vegetable supplies and prices since most fresh vegetables come Florida, California, Arizona, Texas, and Mexico during the winter months. Limited past experience suggests the presence of a strong El Nino increases the odds of an unsettled weather pattern. This, in turn, could bring higher fresh vegetable prices during the first half of 1998. At the same time, higher prices are expected for potatoes (the most heavily weighted item in the vegetable CPI), processed tomato products, and some canned vegetables. Prices for some frozen vegetables like sweet corn and green peas may be lower. U.S. imports of fresh-market tomatoes are up 2 percent through the first 8 months of 1997 compared with a year ago. The gain was due mostly to increases from the Netherlands, Canada, and Israel. Imports from Mexico declined 2 percent. Greenhouse and hydroponic tomatoes from domestic and import sources are taking market share away from field-grown product. Growth is expected to continue in this category over the next year, as increased supplies allow retailers to price greenhouse tomatoes competitively, and consumers with increased disposable income can afford the added value of top-quality tomatoes. Export markets are increasingly important to several leafy green vegetable markets. For example, close to 21 percent of fresh-market broccoli supplies are now exported--up from 17 percent in 1990. Canada is the leading destination for fresh broccoli, taking 58 percent of U.S. exports. Japan is also an important market for U.S. broccoli, with export volume up 8 percent through the first 8 months of 1997 compared with a year earlier. Spinach exports go mainly to Canada. Canada is also the top export market for celery and lettuce, but substantial volume also moves to Hong Kong, Mexico, and Taiwan. With worldwide supply of processed tomato products reduced, U.S. wholesale prices are expected to rise moderately in the coming year. Production of processed tomatoes is forecast down in most Mediterranean countries. Production in Italy, Greece, and Spain is forecast down 16 percent. The tight world supplies of paste are supporting U.S. wholesale prices for bulk tomato paste. With further increases in paste prices expected in the months ahead, higher prices for other tomato products (most of which are remanufactured from bulk paste) will likely follow. Dry edible bean area for harvest was up 2 percent in 1997 from last year's 1.7 million acres due to higher prices for some bean classes and lower prices for competing crops. Acreage was up or unchanged in 14 of the 17 major States this year. Excessive rains and flooding in early July in the Red River Valley of North Dakota and Minnesota caused about 100,000 acres of dry beans to be abandoned. Per capita consumption of mushrooms has been slowly trending upward for the past 2 decades. Fresh-market and processing mushroom consumption increased until the mid-1980's. While growth in fresh-market mushroom use has continued slowly, processing use has remained largely the same. Today, fresh market mushroom use stands at 2.1 pounds per person versus 1.9 pounds for processing. Fresh Market Vegetables Fall Acreage Down, Prices Up This fall (primarily October to December), U.S. fresh vegetable growers expect to harvest 2 percent fewer acres of vegetables than a year ago. Area for harvest of cool season crops like lettuce, carrots, and broccoli is expected to remain unchanged while warm season crop area (e.g. tomatoes, bell peppers, snap beans) declines 4 percent. Most of the decline in warm season vegetables is due to a 23-percent cut in fall sweet corn acreage. Sweet corn growers in California and Florida switched to other crops after last year's poor fall-season prices. Carrot acreage is up 5 percent this fall due to continued strong demand and the entry of a new fresh-processing carrot operation in California. Melon area is expected to increase 10 percent also on continued strong demand. Per capita use of cantaloupe is now at 10.6 pounds, up 15 percent from 1990 and a third higher than use in the 1980's. Growers in California's Imperial Valley replanted some cool-season crops, such as broccoli, after Hurricane Nora spread heavy rain across the normally dry desert region. As a result, reduced supplies and volatile prices for leafy green vegetables are likely to be seen into early January. Retail prices for some fresh-market vegetables and potatoes are expected to increase this fall, as U.S. growers reduced harvested area from a year ago. Retail prices for fresh vegetables and potatoes increased about 5 percent this summer, compared with a year earlier. However, a 3-percent decrease during the spring and a small increase during the winter have left the average consumer price index (CPI) nearly the same as a year earlier through September. A likely increase in the fall CPI for fresh vegetables will put the annual average 1 to 2 percent above 1996. El Nino and Winter Vegetables The National Climate Prediction Center is forecasting an El Nino weather pattern that could bring a wetter and cooler-than-normal winter to the southern half of the U.S. This year's potential El Nino is drawing comparisons to strong El Nino events in 1957, 1972, and 1982-83. This has potential significance for U.S. winter fresh vegetable supplies and prices since most fresh vegetables come from Florida, California, Arizona, Texas, and Mexico during the winter months. In the winter of 1982/83, heavy rains hit almost all U.S. winter vegetable areas, affecting planting and harvesting schedules, delaying growth, reducing yields, and affecting produce quality. However, market volume remained near normal with help from larger shipments from Mexico, spurred in part by devaluation of the peso in February and August of 1982. Fresh vegetable prices averaged below a year earlier in January and February of 1983. However, with wet weather interrupting planting schedules and the normal flow of product to market, grower and retail prices averaged above the previous year from March through June of 1983. Although no one can be certain what the weather will be like this winter, limited past experience suggests the presence of a strong El Nino increases the odds of an unsettled weather pattern. This, in turn, could bring higher fresh vegetable prices during the first half of 1998. At the same time, higher prices are expected for potatoes (the most heavily weighted item in the vegetable CPI), processed tomato products, and some canned vegetables. Prices for some frozen vegetables like sweet corn and green peas may be lower. Fresh-Market Tomato Trade: Imports and Exports Rise U.S. imports of fresh market tomatoes are up 2 percent through the first 8 months of 1997 compared with a year ago. Imports from Mexico actually declined 2 percent during this time, partly due to the impact of bad weather on output. Mexico's share of the U.S. tomato import market declined to just under 90 percent during the first 8 months of 1997 compared with 93 percent a year ago. Most of the increase in imports was due to hothouse production from countries such as the Netherlands, Canada, and Israel (figure 5). Greenhouse and hydroponic tomatoes from domestic and import sources appear to be taking market share away from field-grown product. Growth is expected to continue in this category over the next year, with lower retail prices for greenhouse product expected as market supplies increase. Fresh tomato export volume increased 20 percent during the first 8 months of 1997. Substantial volume moved to Mexico for the first time since the peso devaluation. U.S. shippers sold 26 million pounds of fresh market tomatoes in Mexico through August compared with 3 million a year ago. Exports to Canada, which accounted for 85 percent of volume shipped, were up 6 percent. U.S. Horticultural Trade With Asia Volatile currency and stock markets in Asia have drawn attention to the potential impacts of these changes on U.S. horticultural trade. The first currency devaluations, beginning in late summer, sent financial shock waves from the epicenter of Southeast Asia to the emerging markets of Central and Eastern Europe. As the Southeast Asian currencies of Thailand (baht), Malaysia (ringhit), Phillipines (peso), and Indonesia (rupiah) devaluated and stock markets were rocked by shaky investor confidence, hopes dimmed for continued strong growth in Asian demand and economic development. U.S. export sales are usually priced in dollar terms. When converted into a devalued currency, the importer and ultimately the consumer will pay a higher domestic price for U.S. goods. Sales volume will consequently be weakened. Similarly, a U.S. importer can expect to see increased supplies offered by producer-countries with weakened currencies. And increased imports put pressure on U.S. growers to keep a lid on domestic prices to remain competitive in the U.S. market. U.S. horticultural exports to Asia averaged $3.2 billion during 1994 to 1996, while exports to other countries averaged $5.5 billion. This large and diverse region includes West Asia (e.g. Israel), South Asia (e.g. India), Japan, China, Southeast Asia (e.g. Indonesia), and other East Asia (e.g. Hong Kong). The 1994-96 share of U.S. horticultural exports to Asia averaged 37 percent, growing from 31 percent in 1990. Although, Southeast Asia is a relatively minor market for U.S. horticultural exporters, the region's share has increased from 3 percent in 1990 to 4.6 percent in 1996. Asia averaged a 12-percent share of total U.S. horticultural imports from 1994 to 1996. Asia's presence in the U.S. horticultural market has decreased under competition with Mexico and Canada. The Mexico- Canada share increased from 26 percent in 1990 to 30 percent in 1996. Southeast Asia's share of the U.S. market, at 5 percent in 1996, has fared similarly with the rest of Asia. Prominent examples of Southeast Asian products in U.S. markets include pineapples and pineapple juice, coconuts and coconut meat, and cashew nuts. Notable U.S. exports to Southeast Asia include apples, grapes, almonds, celery, lettuce, and frozen potato products. Fresh fruit outweighs processed fruit exports to the region; but processed vegetables outweigh fresh vegetables. Leafy Green Vegetables: Trade Slanted Toward Exports Leafy greens are an important component of the U.S. vegetable sector, accounting for $2.4 billion (16 percent) of all vegetable cash receipts. In many ways, they represent the foundation of the vegetable industry because of the association with salads, sandwiches, and garnishes on various dishes. Leafy greens include such vegetables as iceberg lettuce, romaine lettuce, leaf lettuces, cabbage, celery, spinach, endive/escarole, kale, collards, mustard greens, and broccoli. Lettuces of all types (the U.S. is second in world lettuce output) account for the largest share of leafy green vegetable supply and use. The U.S. is a net exporter of leafy green vegetables. Looking just at the fresh side of the market, exports of the major leafy greens were valued at $296 million in 1996 while imports totaled just $35 million. On the fresh export side, broccoli at $85 million, head lettuce at $82 million, and other lettuces at $58 million were the largest. Looking at imports, fresh cabbage was the largest at $8 million followed by fresh broccoli at $7 million. Compared with several other major vegetables like tomatoes and bell peppers, imports do not play a significant role in most fresh leafy green markets. While imports of fresh tomatoes, for example, account for 37 percent of use, leafy green imports account for less than 5 percent of domestic use. In fact, only one-half of 1 percent of domestic iceberg lettuce consumption comes from imports. Export markets are increasingly important to several leafy green vegetable markets. For example, close to 21 percent of fresh-market broccoli supplies are now exported--up from 17 percent in 1990. Canada is the leading destination for fresh broccoli, taking 58 percent of U.S. exports. Japan is also an important market for U.S. broccoli, with export volume up 8 percent through the first 8 months of 1997 compared with a year earlier. Spinach exports go mainly to Canada. Canada is also the top export market for celery and lettuce, but substantial volume also moves to Hong Kong, Mexico, and Taiwan. Processing Vegetables Canned Tomato Supplies Down, Prices Rise World production of tomatoes for processing is down in 1997. In the United States, which accounts for a little more than a third of the world crop, contract production was down 11 percent to about 10.0 million short tons. Reduced area in California accounted for most of the decline with the California Processing Tomato Advisory Board reporting that 9.3 million short tons were processed this season. Another 0.6 million tons were expected to be produced in other States. Because of cool, wet weather in the Mediterranean area, production was also reported around a fifth lower by Amitom, an association representing about 40 percent of the world's processing tomato output. This group has members in Spain, France, Greece, Israel, Italy, Portugal, Tunisia, and Turkey. With worldwide supply reduced, U.S. wholesale prices for finished tomato products are expected to rise moderately in the coming year. However, in early November f.o.b. wholesale prices are at or below year-earlier levels for the majority of tomato products. For example, food service size (6 number 10 cans) fancy 33 percent ketchup was listed at $11.25 per case compared with $14.50 a year ago, while a retail size (24 number 300 cans) case of tomato sauce was unchanged from a year ago at around $7.25. Because of tight world supplies, U.S. wholesale prices for bulk tomato paste have begun to firm. With further increases in paste prices expected in the months ahead, higher prices for tomato products (most of which are remanufactured from bulk paste) will likely follow. Wholesale Prices: Canned Down, Frozen Flat Partly offseting expected higher prices for tomato products, prices for other canned vegetables are expected to remain below year-earlier levels into early 1998. With improved supplies and lower prices for snap beans, sweet corn, and green peas, wholesale prices for all canned vegetables and juices are averaging about 2 percent below a year earlier. Retail-sized cases of canned sweet corn and snap beans were averaging about 10 percent below a year earlier in early November. Canned green pea prices were also below a year earlier, with food service sizes running nearly 20 percent lower. Through the third quarter, wholesale prices for frozen vegetables remained steady with no change from a year ago. However, some weakening in prices for cut corn and green peas (each down 4 to 5 percent) was evident in early November. Given October 1 stocks of frozen vegetables 3 percent above a year earlier, a small reduction in frozen vegetable prices this winter is likely. Wholesale prices for dried and dehydrated vegetables (down 7 percent) were also lower this fall due to lower prices for dry beans and peas. Some strengthening in dry bean prices is possible this winter assuming current low prices spur increased exports, helping to reduce stocks. Potatoes Lower Acreage and Yields Reduce Potato Crop USDA's November estimate of U.S. fall-season potato production is 418 million hundredweight (cwt), down 8 percent from last year's record crop, but 4 percent above fall 1995. Decreased harvested area (down 7 percent from last fall) and lower yields (down 1 percent to 360 cwt per acre) contributed to the reduced output. The reduction in acreage and production was expected, as record production and relatively low grower prices for the 1996 crop ($4.93 per cwt for all seasons) prompted growers to cut back in 1997. However, despite the reductions from a year ago, 1997 fall production was still 2 percent above the average of the five previous fall seasons. In the five Eastern States, fall potato production was estimated at nearly 32 million cwt, 7 percent below last year, but 6 percent above 2 years ago. Harvested acreage and yield were both down from last year (6 and 2 percent, respectively). A cool, wet spring delayed early planting, and dry summer weather stunted growth and reduced sizing. In the eight Central States, production was 96 million cwt, down 10 percent from last year, but 1 percent above 1995. Overall, harvested acreage and yields fell as heavy summer rains flooded many fields in North Dakota and Minnesota. In Nebraska, production surged 73 percent above a year ago due to sharply higher acreage and a good growing season. The 10 Western States produced 289 million cwt this fall, down 7 percent from last year, but 4 percent above 1995. Harvest started late as processors worked to finish up potatoes from the huge 1996 crop. Weather was generally good, and growers were able to finish harvest early. Production in Idaho and Washington was down 5 and 7 percent, respectively, from a year ago due to decreased acreage. Late-blight, which threatened much of the Idaho crop earlier this season, never materialized as a significant problem. Prices Expected Higher in 1997/98 With lower production this fall, stocks of fresh potatoes will likely average below a year ago throughout the marketing season. Last year's record production pushed fresh stocks to record high levels, with 103 million cwt in storage on May 1, 1997--17 percent above the previous record set in May 1995. Cold storage holdings of frozen potato products (fries and other frozen) are also at record highs--on October 1, holdings were estimated to be 14 percent above the previous record-high of a year-earlier. These large inventories have frozen processors off to a slow start in processing this year's crop. As a result, open-market purchases of new crop potatoes by processors were limited early in the 1997/98 crop year. This caused fresh stocks to stay high early in the marketing season and prices to remain lower than anticipated. Increases in grower prices will depend on several key factors: consumer demand for fresh potatoes, processor demand later in the marketing year, and trade in fresh and processed products. With a lull in processing usage due to high stocks and an abundance of fresh product this fall, retailers will likely use holiday promotions in an attempt to increase consumer demand for fresh potatoes. In addition to strong domestic supplies, Canadian potato production is record-high, increasing for the fourth consecutive year. This will likely result in increased imports of fresh and processed potatoes from Canada, and could limit the rise in U.S. prices. Prices will likely remain relatively low into early 1998, but should rise later in the marketing season (until the fall harvest of 1998). Given these factors, the 1997/98 season-average price for all potatoes will likely be between $5.80 and $6.80 per cwt, compared with $4.93 in 1996/97 and $6.77 in 1995/96. If domestic demand does not increase, and if export potential is hampered by a strong U.S. dollar and competition from Canada and the Netherlands, the average price will likely be on the low end of the range. Utilization of the 1996/97 Crop Last year's record potato production of 499 million cwt resulted in the largest quantity of potatoes sold in a marketing year--7 percent above the previous record set in 1994/95 (table 7). Fresh use rose 6 percent from a year earlier to 131 million cwt. Processors used a record 283 million cwt of raw potatoes, 11 percent above 1995/96, and 8 percent above the previous record set in 1994/95. However, despite the increased utilization, relatively low prices caused total grower sales to fall to $2.2 billion (down from 2.8 billion in 1995/96). Utilization for frozen french fries for the 1996/97 crop was up 13 percent from a year earlier, accounting for 51 percent of processing use. Utilization for dehydrating was up 20 percent from last year, while fresh use increased by 6 percent. Over the last decade, utilization for french fries and dehydration have realized the largest percentage increases of any sales category (other than livestock feed), increasing by 50 and 91 percent, respectively, since 1986. With continued strong demand for potato flakes, dehydration use may continue to increase for the 1997/98 crop. Increased use of potatoes for french fries in 1997/98 is less likely and will depend strongly on export demand. Per Capita Use Up in 1996 Per capita use of potatoes (fresh-weight basis) for calendar 1996 totaled 142.8 pounds, 4 percent higher than 1995, and the highest since 1929 (table 8). Fresh use declined slightly, and processing use surged to a record high 94 pounds, up 8 percent from 1995. Most of the gain in processing use was in frozen and dehydrated products (up 8 and 17 percent respectively). With sustained strong production and demand by processors over the past several years, per capita use has grown by nearly 14 percent since 1990. However, with a smaller crop and frozen processors slowing production due to increasing stocks, per capita use could decline slightly in 1997 and 1998. As stocks of frozen products grow, fresh consumption may increase slightly if shippers and retailers move more potatoes to the fresh market, keeping fresh prices down. Pulses Dry Bean Crop Up, Prices Down Dry edible bean harvested area was up 2 percent in 1997 from last year's 1.7 million acres due to higher prices for some bean classes and lower prices for competing crops. Acreage was up or unchanged in 14 of the 17 major States this year. Excessive rains and flooding in early July in the Red River Valley of North Dakota and Minnesota caused about 100,000 acres of dry beans to be abandoned. Although production by class was not available at this writing, it appears that much of the gain in output came from smaller bean classes such as blacks, limas, and kidneys. Looking ahead, with stronger output and rising stocks for some classes this year, prices will likely decline somewhat this fall and into early 1998, signaling a modest reduction in area and production in 1998. However, over the longer run, dry bean production is expected to remain on its slow growth trend into the next century, buoyed by domestic and export market demand. The Future of Dry Bean Demand Per capita use of dry beans declined in 1996, but lower prices through much of 1997 may have spurred a small increase in use. Despite the decline in 1996, the 3-year moving average of use increased again for the seventh consecutive year in 1996. However, the gains have gotten smaller and domestic per capita use may be temporarily losing a little steam--perhaps reaching a temporary plateau of around 7.7 to 7.8 pounds. Several factors could be at work here. One might be the extremely strong general economy, with low-income consumers switching to more costly sources of protein. Another could be the maturing of the Mexican/Southwestern food phenomenon since we also see a similar stabilizing trend in Chile pepper use. Despite the apparent slowdown in recent use, the basic fundamentals underlying the dry bean market (favorable population trends, consumer health consciousness, and low product cost) still suggest increases in use are likely in the coming years. One of the most important population trends is growth in the Hispanic market. The Hispanic market is important for several classes of colored beans. Although several other demand factors have been involved, growth in this segment of the U.S. population does coincide with growth in per capita use of such bean classes as pintos and blacks. The proportion of Hispanics in the U.S. population increased 53 percent during the 1980's and is expected to increase 36 percent in the 1990's. Today, people of Hispanic origin account for 10 percent of the U.S. population, up from 6 percent in 1980. The Census Bureau estimates that by the year 2020, Hispanics will account for 15 percent of the U.S. population. This may bode well for producers of colored beans, assuming of course that traditional diets continue to prevail in these families. It is unclear at this point how increasing affluence over time within this group will eventually affect their diet. Mushrooms Mushroom Use Is Changing Per capita consumption of mushrooms has been slowly trending upward for the past 2 decades. Fresh-market and processing mushroom consumption increased until the mid-1980's. While growth in fresh-market mushroom use has continued slowly, processing use has remained largely the same. Today, fresh market mushroom use stands at 2.1 pounds per person versus 1.9 pounds for processing. One factor slowing demand for processing mushrooms is changing consumer lifestyles and preferences. Years ago, Americans prepared and consumed more of their meals at home. Today, people eat more meals at restaurants or purchase ready to serve meals from places like supermarkets. This trend is reflected in an increasing share of the food dollar spent on away from home meals. This is important to processed mushroom demand since people are cooking less at home and are thus using fewer ingredients like canned mushrooms. Mushrooms are not alone in experiencing reduced demand, as many other canned vegetables have also experienced declining use over time. The fresh side of the mushroom industry is doing relatively better due to the prevalence of mushrooms on salad bars and consumer interest in the new specialty mushroom varieties like Shiitake and Oyster. The recent decision by several major pizza chains to switch from using processed mushrooms as pizza toppings to fresh mushrooms also further enhances the position of fresh mushrooms in the market. Agriculture is a very competitive and highly innovative industry. While grower prices for processing mushrooms are only 2 percent higher today than in the 1985/86 season, yields per foot have increased substantially over time. As a result, the dollar volume received per square foot of growing space for all mushrooms during the 1996/97 season was 41 percent higher in the United States (48 percent higher in Pennsylvania) than in 1985/86. This is also happening across much of U.S. agriculture. Better yielding varieties and careful grower management has led to strong gains in productivity and is the reason growers in many areas of agriculture can remain viable in the face of little or no increases in the nominal dollar prices received. At the same time that demand may be fading, imports of canned mushrooms have increased during the 1990's. In calendar year 1996, the volume of canned mushrooms was 33 percent higher than in 1990. However, canned mushroom import volume has actually declined about 10 percent since the mid-1980's. Although China accounts for the majority of U.S. canned mushroom imports, it is one of several sources. China is the world's leading producer of mushrooms, well ahead of the United States, which is second. Imports accounted for 56 percent of processed mushroom consumption in 1996, compared with 48 percent in 1990 and 63 percent in 1985 and a high of 66 percent in 1986. In comparison, imports only account for 2 percent of fresh-market mushroom consumption. Special article Import Penetration in the U.S. Fruit and Vegetable Industry Gary Lucier, Susan Pollack, and Agnes Perez Abstract: The United States imported 16.4 percent of the fruits and vegetables consumed during 1996. The United States receives more than half of all vegetable and melon imports from Mexico, with the majority being fresh-market products and frozen products a distant second. Canada is the second leading foreign supplier, with about 15 percent of U.S. import value. Imports of fresh fruit rose from 34.7 percent of fresh domestic consumption in 1990 to 38.3 percent in 1996. Bananas accounted for over half of fresh fruit imports. Costa Rica, Ecuador, Honduras, and Colombia are the major suppliers to the U.S. market for fresh and processed fruit (excluding juice). Excluding bananas, imports rose from 11.6 percent to 14.9 percent in 1996 with Chile providing about 23 percent of imported fruit. Keywords: Vegetables, fruit, imports, trade, consumption. The United States imported 16.4 percent of all fruits and vegetables consumed domestically during 1996 (table B-1). As international trade agreements are reached and barriers to trade slowly come down around the globe, industries like those involved with U.S. fruits and vegetables begin to look to the world for growth opportunities. Not only do U.S. growers look to exports, but shippers and other handlers look to other countries for new products like tropical fruits and for commodities like fresh winter-season cucumbers that will fill the seasonal needs of U.S. consumers. Increasingly, imports of products like fresh tomatoes occur year-round and not just during the time that U.S. production is low. One reason for this is that importers are also looking for commodities that are lower cost, which would allow them to better compete against domestically grown product. This article will examine the extent to which imports have penetrated U.S. fruit and vegetable markets in the 1990's. The major commodities impacted by imports will be addressed and the leading import sources for these items will be identified. Mexico Is Top Vegetable Source In terms of value, the U.S. receives more than half (53 percent) of all vegetable, melon, and pulse imports from Mexico with the majority being fresh-market products and frozen products a distant second. Canada is the second leading foreign supplier, with about 15 percent of the U.S. import market. Because of the obvious transportation advantages, Mexico and Canada have historically been the top two suppliers. Before the embargo in 1961, Cuba was also a leading supplier of fresh vegetables (particularly tomatoes and cucumbers) to the United States. Rounding out the top five import sources today are China (5 percent), the Netherlands (4 percent), and Costa Rica (3 percent). China is the third leading vegetable supplier with such products as canned mushrooms, bamboo shoots, and mung beans predominating. In terms of value, fresh vegetables and melons account for the largest share of imports with about $1.9 billion in 1996. There is a definite seasonal pattern to fresh vegetable imports, with two-thirds of import volume arriving between December and April when U.S. production is low and limited to the southern portions of the country. The majority of these imports are tender warm season vegetables like tomatoes, peppers, squash, and cucumbers. Cool season crops like leafy green vegetables and carrots grow abundantly and cheaply in California, Arizona, and Texas during the winter months. As a result, imports of these items are very low compared with the warm season crops. Vegetable Imports on the Rise In 1996, imports accounted for 8.7 percent of total U.S. vegetable and melon consumption--up from 6.9 percent in 1990. Although imports of all aggregate categories except canned vegetables and dry beans have increased since 1990, much of the gain was due to fresh-market vegetables (table B-2). Fresh market vegetable imports have been under heavy scrutiny since the implementation of the North American Free Trade Agreement (NAFTA) in 1994. During the first year of NAFTA, the import share of consumption for fresh vegetables and melons remained steady at 10.0 percent. However, following the devaluation of the Mexican peso in December 1994, U.S. imports of Mexican vegetables rose sharply. Mexican growers increased shipments to the United States partly because of poor domestic demand and more attractive prices in the United States. Largely as a result of increased volume from Mexico, fresh vegetable import share rose to 12.2 percent during 1995 and 13.6 percent in 1996. A much smaller increase is expected for 1997 as an improved Mexican economy leads to stronger demand there. In terms of processing vegetables, canned imports are relatively low due to a highly mechanized and relatively low-cost domestic industry. Tomato products are the leading canned item and imports of items like paste and sauce are much lower today than in 1990 due to increasing efficiency (new plants, lower costs) in the domestic industry. This has helped push back canned vegetable import penetration to 4.2 percent, down from 6.4 percent in 1990. Frozen vegetable imports continue to increase. Imports of frozen vegetables (excluding potatoes) now account for close to 17 percent of consumption--up from 14.1 percent in 1990. Broccoli accounts for a majority (54 percent) of the 750 million pounds of frozen vegetable imports. Most frozen broccoli comes from Mexico (with smaller amounts from Guatemala). Frozen broccoli has the highest degree of import penetration among all vegetables, with 78 percent of consumption coming from imports. Cutting broccoli into florets is a labor-intensive task. To cut costs, the industry basically moved from California to Mexico in the late 1980's and early 1990's. Banana Exporting Countries Dominate U.S. Fruit Import Market Costa Rica, Ecuador, Honduras, and Colombia are the major suppliers of bananas to the U.S. market and therefore are the major sources of fruit imports (excluding juice). Bananas accounted for about 66 percent of all fresh, canned, and frozen fruit imports in 1996. Fresh bananas are sold year round in the U.S. market, and Americans consume more bananas than any other fresh fruit. Excluding bananas, Chile provided about 23 percent of imported fruit in 1996. Other major sources include Mexico--13 percent, Costa Rica--8 percent, Thailand--7 percent, and Canada--7 percent. Latin America provides the majority of fresh and frozen fruit products because these countries can take advantage of their proximity to the United States to ship fruit at lower cost and still maintain quality. Southeast Asian countries provide the largest share of canned fruit products, and Brazil is the largest source of juice imports, followed by Argentina, Mexico, Germany, and Chile. Brazil and Mexico supply citrus juice, Argentina is the leading source for apple and grape juice, and Germany and Chile supply apple juice. The Philippines and Thailand are the major suppliers of pineapple juice, providing the bulk of pineapple juice consumed in the U.S. market. The Philippines, Brazil, India, and Mexico are the major suppliers of tropical nut products such as coconut meat, Brazil nuts, and cashews. Mexico also is a foreign source of pecans. Until 1996, juice (including wine) has been the major U.S. fruit import (in fresh-weight equivalent). In 1996, imports fell, accounting for 21 percent of the juice consumed, down from 35 percent in 1990. Fresh fruit imports are now the largest category. About 10 billion pounds of fresh fruit was imported in 1996, 3 billion pounds excluding bananas. The non-banana imports are mostly winter noncitrus fruit from Chile and tropical fruit from Mexico and Costa Rica. Chilean imports during the U.S. winter provide grapes and stonefruit (peaches, plums, nectarines) that largely complement--rather than compete with--the U.S. noncitrus industries. At the same time, grape and stonefruit imports from Chile compete with domestically produced citrus which once dominated the winter fresh fruit market. Imports of Mexican and Costa Rican tropical fruit help provide fruit that cannot be produced in sufficient quantities domestically to meet expanding consumer demand. Imports Increasingly Important In Fruit Consumption, Except Juice Imports of fresh fruit rose from 34.7 percent of fresh domestic consumption in 1990 to 38.3 percent in 1996. Excluding bananas, imports rose from 11.6 percent to 14.9 percent during this time. Canned imports have increased 25 percent to 27.8 percent of canned fruit consumption. Frozen and dried fruit imports have also increased; only juice imports as a portion of consumption have declined. Chilean imports of winter fresh fruit into the United States began in the mid-1980s. Since 1985, Chilean imports have increased 85 percent. Grapes make up the largest portion of Chilean winter fruit entering the United States. Grape imports rose from 32 percent in 1985 to 40 percent in 1996. About 67 percent of grape imports arrive during November through March. In 1975, only 8 percent of the grapes consumed domestically were imported. From March through May, grapes in the U.S. market are mostly from Mexico, providing a continuous supply until southern California grapes are harvested. Other fruit coming from Chile include peaches, plums, pears, and avocados. Tropical fruit have been growing in popularity in the United States during the nineties. Production of tropical fruit domestically is limited to parts of southern Florida, southern California, and Hawaii. Hawaii's production has declined over the years as diseases have limited its production of pineapples and papayas. The presence of the Mediterranean fruit fly in Hawaii prevents banana shipments elsewhere in the United States. In Florida, Hurricane Andrew in 1992 damaged mango, lime, and avocado trees, drastically reducing domestic supplies. California produces most of the domestic avocado crop and is able to supply the market year round. Mexico has become the major supplier of many tropical fruit. Almost all the mangos, papayas, and limes consumed in the United States come from Mexico. Fresh pineapples are mostly imported from Costa Rica, with lesser quantities shipped from Honduras and Mexico. Chile is presently the major source of imported avocados, entering the U.S. market from November through March. Beginning this November, Mexican avocados will be imported during the winter months into Northeastern and Midwestern States, providing an additional source of avocados. Canned pineapple made up 26 percent of domestic canned fruit consumption in 1996, but accounted for 82 percent of canned fruit imports. Canned pineapple imports grew 12 percent between 1990 and 1996, however, they have grown 43 percent since 1980 due to declining output from Hawaii. While Latin America provides most of fresh pineapple supplies for the U.S. market, Southeast Asia provides most of the processed pineapple products. The Philippines, Thailand, and Indonesia are the major suppliers of canned pineapple. Dried fruit accounts for only a small portion of domestic fruit consumption, and imports constitute only a small portion of dried fruit in the U.S. market. Raisins comprise the largest category among dried fruit, and most raisins come from California grapes. Dried apricots are dependent on imports, mostly from Turkey. Imports accounted for only about 10 percent of frozen fruit consumption in 1996. Frozen fruit is only a small portion of domestic fruit consumption, and imports often fluctuate to supplement domestic supplies following small crops. During low production years, more fruit is likely to go to the fresh market where growers can receive higher prices and less will be sent to processing. Imports help supplement stocks the following year to maintain steady supply. Strawberries are the largest category of frozen fruit, accounting for about 30 percent of frozen fruit consumption in 1996. Frozen strawberry imports have declined from a high in the late 1970s, when 37 percent of consumption was imported, to an average of 17 percent since 1994. Most frozen strawberry imports come from Mexico. Frozen raspberry imports rose from less than 10 percent of consumption in the late seventies and early eighties and peaked around 1986-87. In 1994/95, frozen raspberry imports have averaged about 19 percent of consumption. Imports rose again in 1996 to supplement domestic supplies that were only about two-thirds the size of the previous year's. Juice constitutes the only fruit category where imports are showing a declining importance in domestic consumption. Because juice consumption is an important component of total fruit consumption, the decline in overall juice imports is the major factor leading to lower total fruit import proportion in 1996. Certain juices, such as pineapple depend on imports to meet domestic needs, because the United States does not produce enough of the fruit to meet consumer demand. Most other juice imports, however, supplement domestic stocks, both in response to reduced crop production and as domestic consumption of these juices have increased. Declining juice imports the last few years is due mostly to lower orange juice imports. Periodically over the years, orange juice imports, mostly from Brazil, with lesser amounts from Mexico and Belize, have helped alleviate production shortfalls resulting from crop losses from freeze damage. In response to two consecutive freezes in the late eighties, Florida growers, who produce 95 percent of the U.S. orange juice supply, planted new, higher yielding groves in the southern part of the State. Now that these plantings are commercially productive, Florida is producing record-sized crops and therefore record quantities of orange juice. The need for imported orange juice has diminished since Florida is now able to meet most of domestic orange juice demand. Florida will still import from Brazil during the early months of its season, to blend with its orange juice, but is unlikely to import as much as in the past, keeping juice imports around present levels. The U.S. Asparagus Industry in a Global Environment: A Commodity Highlight Linda Calvin and Roberta Cook Abstract: The United States is one of the world's largest producers and consumers of fresh asparagus. In the past, fresh asparagus was consumed in the United States only in the first half of the year when domestic product was available. Because of soaring imports--up 74 percent in the 1990's--fresh asparagus is now readily available year-round. In 1980, the United States imported just 8 percent of the fresh asparagus supply, but by 1996, that share had increased to 40 percent. Mexico has always been the largest source of U.S. imports, but many new countries are also entering the market. Keywords: Asparagus, industry, trade, imports, exports, consumption. The U.S. is one of the world's largest producers and consumers of fresh asparagus. In the past, fresh asparagus was consumed in the U.S. only in the first half of the year when domestic product was available. Now thanks to soaring imports--up 74 percent in the 1990's--fresh asparagus is available year-round. But imports arrive not only during the off-season. They also come in during the U.S. season beginning in January, reducing the early-season price premium. Because U.S. demand is flat, the growth of fresh and processed asparagus imports poses serious challenges to the U.S. industry. Total per capita asparagus consumption has been nearly constant in the 1990's at 1 pound total consumption, with 0.6 pound consumed fresh. In 1980, the U.S. imported just 8 percent of the fresh asparagus supply, but by 1996, that share had increased to 40 percent. Mexico has always been the largest source of U.S. imports, but many new countries are entering the market. Asparagus is a labor-intensive, high-value crop that is very attractive to countries with ample labor supplies and the appropriate growing conditions. Peru, in particular, has become one of the world's largest producers and exporters of asparagus. Recent investment in China hints at considerable growth potential there too. U.S. asparagus production has declined since 1989, due in part to some California producers switching to more profitable annual crops. Poor weather conditions in California in 1995 and 1996 also reduced production. Recent plantings in California are starting to mature, which should boost supply in the next few years. Under these conditions, U.S. producers should expect downward pressure on prices. With the rapid growth of asparagus imports from other countries, off-season suppliers may also experience downward price pressure. U.S. Output Trending Lower In 1997, U.S. asparagus production was 198 million pounds, 21 percent below the record 250 million in 1989. About 61 percent of U.S. asparagus production was marketed in fresh form in 1997, compared with only 37 percent from 1975 to 1979 (table B-1). During the 1990's the shares of asparagus production going to processed and fresh uses have remained fairly constant. California has traditionally been the largest U.S. asparagus producer, but Washington surpassed it as the nation's leading producer in 1995 (table B-2). In 1997, Washington accounted for 42 percent of total production compared with California's 41 percent. Michigan's share was 13 percent. New Jersey, Illinois, Indiana, Maryland, Minnesota, and Oregon combined accounted for 4 percent of production. With the exception of 1992, U.S. asparagus production has declined steadily from 1989 to 1997, due mostly to lower output in California. Acreage in California's Imperial County, with the earliest U.S. asparagus production, declined as production grew in the neighboring Mexican state of Sonora, which has an overlapping shipping season. Between 1989 and 1996, imports from all sources during the month of January increased 191 percent, lowering early-season prices and putting competitive pressure on producers (figure B-1). The Imperial County industry appears to have stabilized, however, with acreage virtually unchanged in the last 3 years. In the Salinas area, asparagus has declined as farmers switched to more profitable annual crops. The Stockton-Delta area is expected to remain the leading growing region in California, due to lower production costs relative to the Salinas area and Imperial County. Recent planting in the Stockton-Delta area could raise total California harvested area to about 34,000 acres in 1998 (when current plantings mature), up 18 percent from 1996. California is the most important State for fresh production, with virtually the entire crop sold in the fresh market. California accounted for 69 percent of the total U.S. production for the fresh market (California fresh production is reported along with small amounts of production from Indiana, Maryland, Minnesota, and Oregon). Washington accounted for 26 percent of fresh production, while New Jersey and Michigan jointly accounted for about 5 percent. U.S. processed output includes canned (29 percent of total production) and frozen (11 percent). Washington State is the largest producer of asparagus for the processed market, with 67 percent of the total processed asparagus pack in 1997. Michigan accounted for most of the rest. The bulk of California's crop is shipped to the fresh market from late February through May, with the largest shipments in March and April. Small amounts of asparagus are available beginning in January from Imperial County. California producers receive higher returns than those of other states because they sell to the fresh market and are the earliest domestic producers. Agronomic conditions for asparagus are very good in Washington, and average State yields are high. Producers depend on high yields rather than on the early season that gives their California counterparts an edge in the fresh market. About 55 percent of Washington's crop is canned, and less than 10 percent is frozen. Washington specializes in whole spears, which command a higher value in the marketplace but are more labor-intensive than other processed products. Most of Michigan production is processed, with about two-thirds of the processed asparagus canned and one-third frozen. Michigan is second to Washington in canned production, but recently surpassed it as the largest producer of frozen asparagus. Unlike Washington's processed asparagus, most of Michigan's asparagus is processed into cuts and tips, which are lower value and less labor-intensive products. Higher Fresh Imports Keep Consumption Steady With the exception of 1984 and 1994, U.S. imports of fresh asparagus have grown each year since 1980, turning the U.S. from a net exporter up through 1982 to a net importer by 1990. Since the late 1980's, increasing imports of fresh asparagus have offset declining U.S. fresh-market production, while exports have been relatively flat (figure B-2). U.S. consumption of fresh asparagus has been fairly constant, fluctuating between 147 million pounds in 1990 to 156 million pounds in 1996. The rise in consumption that occurred in the off-season merely offset the decline in consumption during the traditional spring season. Seasonal demand has flattened somewhat in recent years, but consumption still peaks in the spring. If California output rebounds in future years, prices will be lower and spring consumption may increase. Imports usually peak in February, when the supply from northwestern Mexico is at its highest level (figure B-3). Imports drop sharply during the spring as U.S. production increases, then begin increasing again in July when most U.S. supplies dry up. Shipments from the Bajio region of the central Mexican state of Guanajuato are at peak levels in late summer. Imports from Peru are strongest from September through December, but continue into the new year. Imports from Chile peak in October. Traditionally, most fresh asparagus imports come from Mexico (table B-3). In 1980, almost all imports came from Mexico, but its share has trended downward, sinking to 53 percent in 1996 as Peru and Chile began filling the off-season void. In the first 8 months of 1997, Mexico's market share continued to erode as total imports increased 20 percent and imports from Mexico rose 16 percent. Most of Mexico's winter export production is shipped from the northwestern states of Sonora and Baja California from January through early April, with a small quantity from Baja California Sur in October and November. From 1989 to 1996, harvested area in Sonora and Baja California Sur has increased but area in Baja California has decreased. In 1996, just over half of Mexico's fresh asparagus exports to the U.S. were in February and March. Once the Stockton Delta area of California reaches full production and U.S. prices fall, Mexican exports decrease drastically. Production from the Bajio is shipped from late June through September. Mexico's sizable shipments to the U.S. occur despite relatively high U.S. tariffs. The North American Free Trade Agreement (NAFTA) should improve Mexico's position as a source of U.S. imports. Before implementation of NAFTA, the U.S. assessed a 25-percent tariff on fresh green asparagus imports from Mexico. Now the tariff schedule varies by time of year. For the month of January, the tariff was reduced immediately in 1994 to 17.5 percent from 25 percent and is being phased out over 15 years. For February 1 to June 30, the most sensitive period for U.S. producers, the 25-percent tariff declines to zero over a 15 year period. From July 1 to December 31, the 25-percent tariff is being phased out over 5 years. Mexico has a transportation advantage over other countries and will eventually be on the same tariff footing as most other foreign competitors who pay no duty (i.e., countries benefitting from the Caribbean Basin Initiative and Andean Trade Preference Act). Chile and Argentina are the only other Latin American asparagus exporters that still pay duties. In 1996, the duty on asparagus from these countries was 23.8 percent during most of the year (23.1 percent in 1997). The only exception was a 5-percent duty assessed on asparagus arriving by air between September 15 and November 15. Peru has rapidly emerged as one of the world's largest asparagus producers and exporters, aided by climatic conditions permitting year-round production. Peru also enjoys duty-free access to the U.S. market through U.S. trade concessions under the Andean Trade Preference Act which was implemented for Peru in 1993. The Peruvian fresh green asparagus industry began in 1985 in Ica, south of Lima, as an U.S. Agency for International Development-sponsored technical assistance project. Before this project, Peru only produced white asparagus in La Libertad on the northern coast. U.S. asparagus experts were brought in to provide technical advice. Several U.S. firms agreed to market Peruvian production. Peru is the second-largest foreign supplier of fresh-market asparagus to the United States. Between 1989 and 1996, U.S. imports of fresh asparagus from Peru grew from 2 million pounds to 23 million, reaching 31 percent of total U.S. fresh asparagus imports. In 1996, 74 percent of Peru's fresh exports to the U.S. were shipped during September through December when there is very little production. However, during the first eight months of 1997, exports from Peru increased 46 percent over the same period in 1996: in July imports increased 189 percent and in August they increased 90 percent. Typically, U.S. supply in July and August is the lowest of the year and it may be that Peru intends to target this potentially profitable niche, competing with Mexico. Export growth is expected to slow, however, now that there are more competitors for the maturing U.S. off-season market. In 1996, 79 percent of Peruvian fresh asparagus exports were shipped to the United States. Other important markets included Spain, the Netherlands, and the United Kingdom. Fresh exports represented 18 percent of Peru's total asparagus export volume in 1996. Most of Peru's processed asparagus production is exported--primarily canned white asparagus packed in glass, sold mainly to the European market. The frozen industry is also growing rapidly, with more green frozen product being shipped to the U.S. market. Chile is the third-largest supplier to the United States. In 1989 Chile provided 12 percent of U.S. fresh asparagus imports, slipping to just 8 percent in 1996. Chile's competitiveness declined due to rising labor costs, the appreciation of its currency relative to the dollar, and increased supply from Peru during Chile's export season. Chile's asparagus area fell from 6,960 hectares in 1981 to 4,150 in 1996. Furthermore, among the major suppliers, only Chile is still subject to the full duty during most of the year. In 1996, 87 percent of Chile's asparagus shipments to the U.S. arrived during the September 15-November 15 period when the duty is only 5 percent if the asparagus is transported to the United States by air. If NAFTA were extended to Chile, the change in tariff regime would improve Chile's competitive position. In the 1995/96 season, 80 percent of Chile's fresh asparagus exports went to the United States and 17 percent went to Europe. Other Latin American countries such as Colombia, Guatemala, Ecuador, Argentina, and Costa Rica have also increased exports to the United States. Colombian exports of fresh asparagus to the United States grew from 8,766 pounds in 1990 to 2.7 million in 1996. Despite rapid growth in these countries, their shares of the market remain very small. Collectively they accounted for only 8 percent of imports in 1996. When the U.S. tariff (during July 1-December 31) on Mexican imports is eliminated in 1998, South and Central American exporters will likely face additional competitive pressures. Japan Leads U.S. Fresh Asparagus Exports After rapid export growth in the 1980's, U.S. fresh asparagus exports showed modest increases from 1991 to 1994 but fell in the last 2 years as California production declined. During the 1990's, fresh asparagus exports ranged from 27 to 37 percent of fresh domestic production. Japan and Canada are the most important markets, accounting for 44 and 32 percent of U.S. fresh asparagus exports in 1996. The health of the Japanese economy is very important for the U.S. asparagus industry. The U.S. share of Japanese imports has fallen as Japan has experienced increased growth in imports from other sources, mainly during the U.S. off-season (table B-5). In addition to the United States, the Philippines, Australia, Mexico, Thailand, and New Zealand are important sources of Japanese asparagus imports. Asparagus from the United States represented 24 percent of Japanese imports in 1996 compared to 40 percent in 1989. The United States is the largest source of imports in Japan in April and May (figure B-4). The Philippines bypassed the United States in 1996 to become the largest source of Japanese asparagus imports. Like the asparagus industry in Peru, the Philippine industry has grown rapidly. Almost all production is marketed fresh to Japan. Japanese imports from the Philippines grew from 9 metric tons in 1989 to 6,817 metric tons in 1996, which was 31 percent of total imports. Philippine asparagus is harvested year round although volume is lower from February through May. The Philippines is the largest source of imports to Japan in December through January and June through September, both periods of relatively low U.S. supply. Dole developed the Philippines asparagus export industry to complement production from other areas and so provide a year-round source for the Japanese market. Dole owns packing facilities in the Philippines and contracts with local farmers who must grow to Dole's requirements. Technical and financing assistance are provided for farmers. One Japanese company also sources asparagus from the Philippines. Peru and China Vie for Processed Markets Only 9 percent of the U.S. asparagus crop was frozen in 1996. While asparagus destined for frozen product declined from an average of 23 million pounds in the 1980's to 20 million in the 1990's, average imports increased, keeping consumption relatively constant at 0.1 pound per person. Imports accounted for 25 percent of domestic consumption in 1996, compared with an import share in the 1980's averaging only 5 percent. U.S. frozen asparagus imports totaled 2.7 million pounds in 1996, with Peru the dominant supplier with 61 percent of total imports (table B-7). During the 1990's, Peru rapidly developed as a major player in the global frozen green asparagus industry. Since Peru's green asparagus industry is a dual-usage industry, firms can divert product from the fresh to frozen market when fresh-market prices are low. Washington State has become uncompetitive relative to Peru in the production of frozen whole spears. Michigan may soon face similar competition from Peru, eroding the position of the entire U.S. frozen industry. Peru's position in frozen green asparagus strengthened in the 1990's at the expense of Mexico (now at 10 percent of total imports) and Chile (6 percent). On the other hand, China, which accounted for 23 percent of U.S. imports in 1996, looms on the horizon with great potential. China is believed to be the world's largest producer of asparagus although statistics are scarce. Japanese investment in China's asparagus sector is providing an infusion of new technology and capital for both canned and frozen product, which may have important competitive implications for the global processed asparagus market by the turn of the century. In addition, many industry observers feel China has the potential to develop a fresh green asparagus export industry. U.S. exports of frozen asparagus, which totaled 0.5 million pounds in 1996, are destined primarily for Canada (88 percent of total exports). Other markets include Sweden, Australia, Japan, and South Korea. Frozen asparagus export data are not available for earlier years. The U.S. has become less competitive in the Japanese market as Peru's frozen asparagus exports have soared. Just over one-third of U.S. asparagus was for canning in 1996. Canned production has trended up slightly from an average of 68 million pounds in the 1980's to 73 million in the 1990's. During this period, lower imports and higher exports offset gains in U.S. production, with domestic consumption marginally lower. Per capita consumption of canned asparagus has remained relatively constant during the 1990's at an average of 0.3 pound. The United States is a net exporter of canned asparagus, all green, while canned imports are primarily white (white asparagus is more labor-intensive). U.S. trade in canned asparagus is relatively small. In the 1990's, only 4 percent of canned asparagus consumption was imported, down from 8 percent during the 1980's. China is the primary source of U.S. canned asparagus imports, with a 57-percent share in 1996 compared with Peru's 25 percent (table B-8). Canada and New Zealand were the third- and fourth-largest sources of imports, with shares of 7 and 4 percent. Canned exports have increased from 5 percent of total U.S. canned supply in the 1980's to 7 percent in the 1990's. In 1996, U.S. exports totaled 7 million pounds, the highest level of canned asparagus exports since 1970 (table B-9). During the 1990's Australia developed into the largest market for U.S. canned asparagus exports, absorbing 33 percent of the total in 1996, while England moved into second place with 28 percent. Other markets include Japan (9 percent of total exports), Iceland (8 percent), and Canada (4 percent). Outlook for the U.S. Industry The U.S. asparagus industry faces a mature domestic market and a global industry with strong competitors in fresh and frozen produce and potential competitors in canned product. The U.S. industry's share of global production declined in the 1990's, due to an acreage decline and weather problems in California, combined with expanded off-shore production. Given the proliferation in fresh produce items now available to consumers--the average U.S. supermarket handles 340 fresh produce items--increased investment in promotion and product innovation may be essential to stimulate demand for fresh asparagus relative to the attractive substitutes. Promotion and product innovation are complicated, however, when there are several domestic and foreign suppliers to a market. When one producing group invests to expand consumer demand, all suppliers, including importers, may benefit. List of Tables 1. Fresh vegetables: Percent of U.S. consumption accounted for by trade, 1975, 1980, 1985, 1990-97 1/ 2. Selected fresh vegetables: U.S. trade, 1995-97 3. U.S. onions: Harvested area and production, 1995-97 4. Value of U.S. processed vegetable trade, 1996-97 1/ 5. Potatoes: State acreage and production of fall crop, 1995, 1996, and indicated 1997 1/ 6. U.S. potatoes: Utilization by crop year, 1991-96 7. U.S. potatoes: Utilization by crop year, 1991-96 8. Potatoes, U.S. per capita utilization, by category, 1985-98 1/ 9. Sweet potatoes: Acreage harvested, 1990-94 average; 1995; and indicated 1996 10. U.S. fresh vegetables: Harvested area, by seasons, for selected crops, 1995-97 11. Representative wholesale prices for selected fresh-market vegetables and melons in Chicago, 1997 12. Fresh vegetables, including potatoes: Monthly retail price index, 1986-97 13. Fresh vegetables: Monthly average prices received by U.S. growers, 1992-97 1/ 14. Commercial vegetables and potatoes and dry edible beans: Monthly average index of prices received by U.S. growers, 1975-97 1/ 15. Selected fresh vegetables: U.S. shipments, by quarters, 1996 and 1997 1/ 16. Fresh vegetables: Quarterly trade volume, 1995-97 17. Selected fresh vegetables: U.S. export volume and value, by selected country, January-September,1995-1997 1/ 18. Mexican fresh-market vegetable production: Selected commodities 19. Frozen vegetables: Percent of U.S. supply accounted for by trade, 1980, 1985, 1990-97 1/ 20. Processing vegetables: Contract acreage, yield, and production, 1992-94 average, 1995, 1996, and indicated 1997 1/ 21. Selected frozen vegetables: Carryover, pack, seasonal supply, and shipments, 1992/93-1997/98 22. Processed vegetables: Monthly index of wholesale and retail prices, 1987-97 23. Canned vegetables: Quarterly wholesale price trends, 1989-97 1/ 24. Frozen vegetables: Quarterly wholesale price trends, 1992-97 1/ 25. Frozen vegetables: October 1 cold storage holdings, 1990-97 26. Quarterly producer price index, pickles and pickle products, 1980-97 27. Processed vegetables: Quarterly wholesale price indexes, 1996-97 28. Canned vegetables: U.S. quarterly trade volume, 1995-97 29. Frozen vegetables: U.S. quarterly trade volume, 1995-97 30. Vegetable cash receipts: Leading States, 1990-96 31. Potato cash receipts: Leading States, 1990-96 32. Dry bean cash receipts: Leading States, 1990-96 33. Potatoes: Seasonal acreage, yield, and production, 1995, 1996, and indicated 1997 34. Potatoes and pulses: Monthly average prices received by U.S. growers, 1990-97 1/ 35. Fresh potatoes: Monthly and annual average retail price index, 1986-97 36. Retail potato prices: Fresh, frozen, and chips, 1985-97 37. Frozen French fries: Monthly and annual average producer price index, 1985-97 38. Potatoes: U.S. quarterly trade volume in fresh-weight equivalent, 1996-97 1/ 39. Frozen French fries: Monthly and annual U.S. exports, 1986-97 1/ 40. U.S. potatoes: Value of trade by product, January-September, 1993-97 1/ 41. Dry edible beans: Planted acres by class, 1992-94 average, 1995-96, and indicated 1997 42. Dry edible beans: Acreage harvested, 1991-95 average, 1996, and indicated 1997 43. Dry edible beans: Production, 1991-95 average, 1996, and indicated 1997 44. Dry edible beans: Quarterly wholesale prices by class, 1996-97 1/ 45. Dry edible beans: U.S. quarterly trade volume, 1996-97 46. Dry peas and lentils: Planted acreage, 1992-97 47. Dry peas and lentils: Production, 1992-97 48. All mushrooms combined: Number of growers, volume, and value of sales, 1987/88-1996/97 1/ 49. Mushrooms: U.S. quarterly trade volume, 1996-97 50. U.S. agaricus mushrooms: Production, price, and value, selected States, 1994/95-1996/97 51. Selected vegetable production in leading countries and world, 1980, 1985, and 1990-96 1/ Special Article Tables A-1. Fruit and vegetable imports as a percent of consumption, 1996 1/ A-2. Fruit and vegetable imports as a percent of consumption, 1996 1/ B-1. U.S. asparagus production and utilization B-2. U.S. asparagus production by State B-3. U.S. fresh asparagus imports by source B-4. Asparagus production in Mexico, Peru, and Chile B-5. U.S. fresh asparagus exports B-6. Japanese asparagus imports, by source B-7. U.S. imports of frozen asparagus by source B-8. U.S. imports of canned asparagus B-9. U.S. exports of canned asparagus END_OF_FILE