VEGETABLES AND SPECIALTIES -- SUMMARY April 22, 1999 April 1999, ERS-VGS-277 Approved by the World Agricultural Outlook Board --------------------------------------------------------------------------- This SUMMARY is published by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20036-5831. The complete text of the report will be available electronically about 2 weeks following this summary release. --------------------------------------------------------------------------- Strong Prices To Spur Processing Tomato Output Tomato processors intend to contract for 17 percent more acreage in 1999. California, which now accounts for about 95 percent of the U.S. processing tomato crop, projects output to rise as much as 30 percent, with all other States projected to produce 10 percent more than a year ago. This increase is a reaction to sharply higher wholesale prices for tomato products caused by last year's weather-shortened crop and continued strong consumer demand. The average price for bulk tomato paste, the key raw ingredient used in the manufacture of tomato products like sauces, soups, ketchup, and juice, was up about 45 percent during the first quarter of 1999. This was the highest paste price since 1990, reflecting California's tight stocks. This spring, area for harvest of 13 selected fresh-market vegetables is 1 percent greater than a year ago. With quality and yields likely to improve over last year's weather-affected levels, available supplies are expected to exceed those of last year. Rising acreage for commodities such as broccoli, tomatoes, and head lettuce outweighed declining area for cabbage, carrots, and bell peppers. Spring melon acreage is up 1 percent, with cantaloupe continuing to trend higher and watermelon acreage sliding for the fifth consecutive year. In addition to these changes, sweet spring onion production is expected to rise strongly, with output forecast up in both Georgia and Texas and good yields expected in California and Arizona. Despite cool, rainy weather in March and early April in California, warm and dry weather has largely prevailed in major production areas this year, leaving above-average supplies of most vegetables. Fresh-market shipments were up during the first quarter for vegetables such as artichokes, asparagus, and tomatoes. With market volume continuing strong for fresh-market vegetables, first-half shipping-point prices are expected to average about a tenth below year-earlier levels. Following the lead of farm prices, fresh vegetable retail prices are also expected to average below year-earlier levels during the first 6 months of 1999. With shipments from domestic sources higher and import volume from Mexico down, the domestic share of the fresh-vegetable market improved during the 1999 winter season. Mexico's winter-shipping season was delayed for commodities like tomatoes as cool weather slowed crop maturity by several weeks. As a result, Florida, which enjoyed a strong production season, garnered a larger share of the winter tomato market--rebounding from about a third of winter tomato shipments in 1998 to about 47 percent in 1999. The value of fresh-market tomato imports increased 17 percent in 1998, while volume rose 14 percent. Tomato imports from Mexico rose 11 percent to 1.62 billion pounds. However, Mexico continued to lose market share, accounting for 87 percent of tomato import volume--down from 89 percent in 1997 and over 90 percent 3 years ago. Most of this share has been lost to countries selling greenhouse/hydroponic tomatoes. Although volume from Israel, Belgium, and the Netherlands continued to rise, most of the gain in this market segment came from Canada. The volume of fresh-market tomato imports from Canada rose 65 percent in 1998 to 136 million pounds. With Canada's greenhouse industry continuing its rapid expansion, the value of the Canadian dollar remaining weak, and strong U.S. demand for premium tomatoes, further double-digit increases are expected in 1999. Per capita use of all vegetables and melons totaled 449 pounds in 1998--down 1 pound from a year earlier. Declining fresh-market vegetable use (down 4 percent) outweighed rising per capita use of canning (up 1 percent) and freezing vegetables (up 1 percent). El Nino-related weather fronts brought above-average precipitation and below-average temperatures to many of the major vegetable-producing areas in 1998, reducing quality and yields, shifting harvest schedules, and ultimately raising prices. On the fresh-market side, significant declines in per capita use were experienced in head lettuce, cucumbers, carrots, and cabbage. Partially offsetting were increases in snap beans, asparagus, and broccoli. Processors of five selected vegetables (tomatoes, sweet corn, snap beans, green peas, and cucumbers) expect to contract for 1.4 million acres in 1999--up 12 percent from a year ago. Open-market purchases were higher than usual in 1998 due to reduced contracting in several minor vegetable-processing States. With less open-market buying expected this year, the total acreage increase (contract plus open market) may be closer to 3 percent, with most of this increase coming from tomatoes. Given average acreage losses and trend yields this coming season, output of the five leading processing vegetables could be 6 to 10 percent higher than a year ago and approach 17 million short tons. The U.S. trade surplus in potatoes increased nearly 7 percent in 1998, after 2 years of declines due to increasing imports of frozen french fries from Canada. Total U.S. potato exports were valued at $757 million in 1998, compared with $369 million in imports. Imports of fries from Canada continued to grow, but were more than offset by increased exports of potato chips and fries. The strong growth in chip exports was due to the poor fall-1998 potato crop in Europe. Exports of processed products, led by chips, will likely continue to benefit from the European shortage until the new crop is harvested this fall. A return to normal production in Europe this fall would likely lead to reduced chip exports toward the end of this year and into 2000. Despite relatively low prices, U.S. dry bean output may increase from last year's level. The U.S. Department of Agriculture's Prospective Plantings report indicated that dry bean growers plan to seed 2 percent more acres this spring. If realized, most of this increase will likely be in white beans (e.g. navy and limas) and in the smaller colored beans (e.g. red kidneys and cranberry). Acreage devoted to pintos, the top bean class, will likely fall due to burdensome stocks and deteriorating prices. With dry bean prices in general drifting lower into the spring planting season, some growers may decide to plant crops other than dry beans (e.g. soybeans in Michigan, wheat in North Dakota, etc.). Imports of mushrooms for all uses decreased in 1998. The fresh or chilled category rose 40 percent last year. Frozen and dried imports were higher, but whole, sliced, and the "all other" categories were lower. Mushroom imports were lower from China, Indonesia, Hong Kong, and Chile, but higher from Taiwan, Mexico, the Netherlands, India, and some others. Imports were valued at $141 million compared with $150 million in 1997. China was the major supplier, with $38 million, followed by Indonesia, Canada, and India. Printed copies of the Vegetables and Specialties Situation and Outlook report will be available in about 2 weeks. For more information contact Gary Lucier, 202-694-5253. This issue contains a special article entitled "The Role of Exports in the U.S. Fruit and Vegetable Industry." The text of the full report will also be available electronically via the ERS website at www.econ.ag.gov. END_OF_FILE