VEGETABLES AND SPECIALTIES -- SUMMARY November 17, 1999 November 1999, ERS-VGS-279 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. --------------------------------------------------------------------------- Fresh Vegetable Prices Average Lower in 1999 Despite cool, rainy spring weather in California, the summer drought in the East, and hurricanes in the South, f.o.b. shipping-point prices for U.S. commercial vegetables and melons averaged 8 percent below a year earlier during the first 10 months of 1999. During this time, average fresh vegetable shipping-point prices were the lowest since 1994. With farm prices lower, retail prices for all fresh-market vegetables averaged 3 percent below those of a year earlier during the first 10 months of 1999. If potato prices, which were 5 percent higher in 1999, were excluded from the retail price index, a larger decline would have been evident. Through October 1999, retail prices averaged below the previous year for most major items, including lettuce (down 12 percent), broccoli (10 percent), peppers (10 percent), cabbage (9 percent), celery (4 percent), and tomatoes (3 percent). Retail prices for carrots increased 1 percent due largely to weather-reduced supplies this past winter and spring. In the year ahead, assuming growers reduce acreage in response to low prices, both shipping-point and retail prices for fresh-market vegetables are likely to average above the lows of this past year. One benefit of the sustained low prices this year is expected to be increased per capita use of fresh-market vegetables and melons. Per capita use of all vegetables and melons is expected to reach a record 455 pounds in 1999 up 4 pounds from 1998. Use of fresh vegetables and melons (excluding potatoes, sweet potatoes, and mushrooms) is forecast to total a record high 165 pounds per person. Per capita use of potatoes (fresh-weight basis) for calendar 1998 totaled 140.8 pounds, down less than 1 percent from 1997, and 4 percent below the record high set in 1996. Fresh use declined slightly, and processing use just edged ahead of 1997's level. Total per capita use has averaged 141.3 pounds for the past 5 years (1994-98), 8 percent above the average of the previous 5 years. The forecasts for 1999 and 2000 are 144.9 pounds and 142.8 pounds per capita. The first estimate of U.S. fall-season potato production is 435.6 million hundredweight (cwt), up less than 1 percent from last year and up 3 percent from 1997. The slight increase occurred despite a 3-percent decrease in harvested acreage, as per acre yields rose 4 percent from a year ago. Large crops in Washington and Wisconsin more than made up for a smaller crop in Idaho. The quality of the crop is expected to be good, and the marginally larger crop should combine with continued strong demand to improve season-average grower prices in 1999/2000. This fall (primarily October to December), persistently low shipping-point prices for fresh-market vegetables likely contributed to U.S. growers' decision to harvest 1 percent fewer acres of fresh-market vegetables and melons than a year ago. California (64 percent), Florida (20 percent), and Arizona (5 percent) account for the majority of fall-season vegetable and melon acreage. While California's acreage increased slightly, area in Florida is estimated to be down 5 percent from a year earlier the fourth consecutive annual decline. Florida's fall season acreage is now 13 percent below that of 1995. The majority of fall-season vegetables escaped damage when Hurricane Irene hit south Florida in October. However, a reduced volume of winter-season crops from south Florida may be experienced in December and early January due to Irene. During January to October, shipping-point prices averaged lower for tomatoes (down 17 percent) due to a combination of larger domestic field production and increasing competition in the retail market from domestic and imported greenhouse-grown product. Although domestic tomato output is likely up this year, imports have been lower. Fresh-market tomato import volume from January through August was down 19 percent from a year ago and was 4 percent lower than 2 years ago. Tomato import volume from Mexico was 24 percent below a year earlier during the first 8 months of 1999, but volume from Canada (largely greenhouse product) jumped 30 percent. Spurred by low stocks and strong wholesale prices, tomato processors have harvested a record-large crop this year. According to delivery information from the California Processing Tomato Advisory Board, 12.24 million tons of tomatoes were delivered to processors in the State this season. Adding an expected 0.5 million tons from other States would result in a U.S. processing tomato crop exceeding the 1994 record by 10 percent. With excellent weather (warm and dry) allowing an unusually large (record-large) volume to be harvested late in the season (after October 1), the California crop substantially exceeded both industry and U.S. Department of Agriculture estimates. For 1999, wholesale prices for canned vegetables and juices are forecast slightly lower than a year ago. In the coming year, larger supplies of tomato products and several other canned vegetables will likely leave wholesale prices for canned vegetables and juices at or below those of 1999. Wholesale prices for frozen vegetables are forecast 1 percent higher in 1999, with little or no increase expected in 2000 due to continuing high stocks, lackluster exports, and stodgy domestic retail demand. After rising about 12 percent in 1999, wholesale prices for dried and dehydrated vegetable products are expected to average below year-earlier levels in 2000 due to much improved garlic and onion crops in California. Unlike last year when the cool, wet spring severely damaged these California crops, larger crops this year have settled prices. These lower prices should also help stem the flow of imported product during the 1999/2000 marketing year. In September, Hurricane Floyd hit eastern North Carolina, causing extensive damage to the sweet potato crop. Rains and flooding from the hurricane and again later from Hurricane Irene inundated the major eastern sweet potato growing counties in the State. Although a fifth of the crop had already been harvested prior to the flooding, most of the unharvested area had standing water on it for varying periods of time. As of November 8, f.o.b. shipping-point prices for 40-pound cartons of cured U.S. number one medium sweet potatoes from North Carolina were about $14.50 per carton up 38 percent from the low levels of a year ago. This season through November 13, shipment volume from North Carolina was down slightly from a year ago. A 4-percent increase in yields is expected to outweigh a 1-percent decline in harvested acreage and push 1999 dry edible bean production up 3 percent to 31.8 million cwt. Although area for harvest increased or remained steady in 13 of the 17 surveyed States, the national acreage declined due largely to a 15-percent drop in North Dakota's dry bean area. Dry bean grower prices averaged 10 percent below a year earlier during the first 10 months of 1999. The failure of Mexico to auction import certificates in January for calendar year 1999 trade virtually halted U.S. dry bean movement into Mexico during the first 7 months of 1999. This created a drag on markets and was especially serious for growers and dealers of pinto and black beans. During periods of oversupply, the industry relies heavily on export markets. With exports down, dealer prices declined during the first half of the year, with black beans down 39 percent from a year earlier and pintos down 16 percent. Per capita use of all mushrooms has moved from 3.70 pounds in 1990 to an estimated 4.10 pounds in 1999. Much of the gain in total mushroom demand since 1990 has been the result of rising fresh use. Fresh use has been gaining due to a combination of factors, including the rising popularity of specialty mushrooms, industry promotional efforts, and increased use of fresh mushrooms in the foodservice industry, such as by pizza chains. In 1998, while use of mushrooms for processing declined due to reduced imports, fresh use continued to rise. Per capita use of fresh-market mushrooms increased 6 percent to 2.49 pounds during the 1998 crop year. The outlook for 1999/2000 points to the likelihood of a fifth consecutive annual increase, with fresh use exceeding 2.5 pounds. 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 or Charles Plummer, 202-694-5256. This report includes two special articles entitled, "Modeling the U.S. Processing Tomato Industry" and "The F.O.B.-Retail Price Relationship for Selected Fresh Vegetables." The text of the report will also be available electronically via the ERS website at www.econ.ag.gov. END_OF_FILE