VEGETABLES AND SPECIALTIES -- SUMMARY November 18, 1997 November 1997, VGS-273s Approved by the World Agricultural Outlook Board ------------------------------------------------------------------------------ This SUMMARY is published by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20005-4788. The complete text of VEGETABLES AND SPECIALTIES will be available 1-2 weeks following this summary release. ------------------------------------------------------------------------------ Fall Fresh Vegetable Retail Prices To Rise 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. Other special topics covered in this issue of the Vegetables and Specialties Situation and Outlook report include the role of imports in the U.S. fruit and vegetables market and a commodity highlight for asparagus. Printed copies of the Vegetables and Specialties Situation and Outlook will be available in about a week. For more information contact Gary Lucier 202-694-5253 or Charles Plumer 202-694-5256. The text of the report will also be available electronically, for details call 202-694-5050.