VEGETABLES AND MELON YEARBOOK -- SUMMARY July 25, 2003 July 2003, ERS-VGS-2003 Approved by the World Agricultural Outlook Board ---------------------------------------------------------------------- This Vegetables and Melons Situation and Outlook SUMMARY is published by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20036-5831. The complete report will be available electronically about 1 week following this summary release. ---------------------------------------------------------------------- Per Capita Use To Rise in 2003 In 2003, per capita vegetable and melon disappearance (also referred to as use or consumption) is forecast to rise 1 percent to 445 pounds. Increased consumption is expected for most major categories, including fresh, canning, and freezing vegetables. Among the top five vegetables, increases are expected for potatoes, tomatoes, sweet corn, and lettuce, while per capita use of onions is expected to decline, given smaller spring and summer crops this year. A small reduction is also expected for dry edible beans as 2003 production declines. Canned and frozen vegetables are expected to rise 1 to 2 percent as the economy begins to improve, output remains strong, and prices remain soft. Both fresh (table stock) and processing potato uses are expected to rise in 2003 as retail prices for fresh-market and frozen potato products average below year-earlier levels. In 2002, per capita vegetable and melon use declined 2 pounds to 439 pounds. Lower fresh-market use (excluding potatoes) outweighed gains in canning and freezing use. According to preliminary data, per capita use of potatoes, the largest vegetable category, likely declined 2 percent to 135 pounds, reflecting higher prices stemming from the short 2001 fall potato crop. Highlights in annual consumption trends for 2002 include: O Use of all tomatoes recovered from the 2001 lows by rising 5 percent to 87 pounds per person (fresh equivalent basis). For the second time in 4 years, per capita use of fresh-market tomatoes reached a record-high--18.3 pounds. Per capita use of processing tomatoes rose 5 percent to 69 pounds--reclaiming much of the volume lost to the 2001 recession; O Despite little change in supplies, the fresh-market onion industry posted its second-highest per capita use at 18.7 pounds (18.8 pounds were recorded in 1997), as export volume fell and storage losses remained low; O Fresh-market cucumber use posted a near record-high 6.7 pounds per person (the record is 6.8 pounds set in 1999), and pickling use fully recovered from the lows of 2001, which saw use drop to the lowest since 1952; O Record-high production and increased imports pushed per capita U.S. cantaloup consumption up to 11.3 pounds--second only to the 1999 record of 11.5 pounds. Per capita cantaloup use during the 2000s is averaging 16 percent above the 1990s; O Bell pepper use rose 3 percent to 7.0 pounds--the third highest on record (the 1996 record is 7.1 pounds). With the exception of the 1960s (when use was unchanged from the 1950s), bell pepper consumption has averaged higher each decade since the 1920s; O Fresh-market spinach consumption reached 1.5 pounds in 2002--the second highest over the past 50 years. Fresh use, which peaked at 2.9 pounds in 1939, bottomed out in the early 1970s at 0.3 pound per person and has been trending higher since with the popularity of salads in the 1970s and 80s and the more recent success of fresh-cut salads and bagged baby spinach; O According to preliminary data, per capita use of fresh-market potatoes may have reached its lowest level since fresh utilization data were first made available in 1959. Fresh use during the early 2000s is averaging about 5 percent below both the 1980s and 1990s averages and is 12 percent lower than the 1970s. Along with the effects of the slow economy the past 2 years, the increasing number of alternatives to potatoes (e.g. rice, pasta, and sweet potatoes) and the popularity of reduced-carbohydrate diets may be weighing heavily on fresh potato use. Vegetable Output Rises in 2002 Total U.S. vegetable and melon output rose 5 percent in 2002, rebounding from the large decline of a year earlier when reduced acreage and below-average yields cut production 8 percent. Although vegetable output increased in 2002, it was only the third highest on record behind both 2000 and the 1999 peak. In 2002, increased production for dry edible beans (up 53 percent), potatoes (up 6 percent), processing tomatoes (up 26 percent), and fresh tomatoes (up 5 percent) outweighed smaller crops for lettuce (down 4 percent), sweet potatoes (down 12 percent), and broccoli (down 9 percent). For the second consecutive year, fresh-market vegetable and melon production declined 1 percent, reflecting both sluggish demand and weather-reduced winter and spring yields. Canning vegetable production averaged about one-fifth higher than the previous year, led by a 26- percent gain in tomatoes for processing. Increased harvested acreage (up 4 percent) and better yields pushed U.S. potato output higher in 2002, while a 38-percent increase in harvested area (with record-high acreage in North Dakota) and favorable weather in Michigan helped drive a dry bean production rebound from the drought-shortened 2001 crop. Fresh Market Prices Up During the first 6 months of 2003, shipping-point prices (a proxy for grower prices) averaged 22 percent below the record-highs of a year earlier as generally good weather during the first quarter led to good supplies and low prices for most leafy crops. After the first quarter of 2003 averaged 44 percent below a year earlier, spells of cool, wet weather afflicted most growing areas, slowing growth, disrupting harvest schedules, and pushing second-quarter fresh-market prices 17 percent above a year earlier. In 2002, shipping-point prices for fresh-market vegetables and melons increased 9 percent from a year earlier. All of the gain came during the first and last quarters as shipping-point prices averaged 52 percent above a year earlier during January-March and 7 percent higher during October-December. Cold temperatures in the primary winter producing regions of California and Arizona interfered with the production and marketing of leafy crops such as lettuce and broccoli. Following these winter price surges, fresh-market prices during April- September then averaged 12 percent below a year earlier, reflecting the generally favorable weather that prevailed last spring and summer. For the year, lower shipping-point prices for asparagus (down 21 percent), celery (down 10 percent), and cantaloup (down 7 percent) were outweighed by higher prices for broccoli (up 21 percent), head lettuce (up 20 percent), and cauliflower (up 12 percent). Retail prices for fresh-market vegetables (including potatoes) in 2002 averaged 6 percent above a year earlier, with prices up 8 percent during January-June and 5 percent higher during the last half of the year. With the exception of tomatoes, consumers paid more for each of the major vegetables in 2002, led by potatoes (up 26 percent) and lettuce (up 9 percent). The percentage increase in the 2002 average fresh-market potato retail price was the largest since 1989 when consumers paid 31 percent more for potatoes than the previous year due to the effects of the 1988 Midwestern drought. The short potato crop in 2001 was a reaction to low grower prices and water shortages in Western States--both of which limited planted area. In 2003, retail prices for potatoes and most other fresh-market vegetables will likely average below a year ago, with the exception of tomatoes. Consumer prices for fresh-market tomatoes are expected to average 3-5 percent higher due largely to weather-reduced yields over the first-half of the year. In calendar year 2002, continued weak demand in some key export markets and U.S. demand for lower-cost processed imports allowed the trade deficit in vegetable crops (includes melons, pulses, potatoes, and planting seed) to continue expanding. While the value of U.S. exports increased 2 percent to $3.3 billion, imports rose 6 percent to $4.8 billion. Exports last exceeded imports in 1995. In 2002, U.S. vegetable, melon, and pulse imports from Mexico declined 1 percent, and Mexico’s share of U.S. import value fell from 47 to 43 percent. Except for 2002, Mexico has been losing market share (largely to Canada) over the past few years. However, the decline in 2002 was the result of reduced melon shipments (down 34 percent to $90 million) caused by continued problems with salmonella on cantaloupes. Imports from Canada rose 11 percent in 2002, driven largely by fresh greenhouse vegetables, fresh and frozen potatoes, processed sweet corn, and dry beans. Canada’s share of the U.S. vegetable, melon, pulse, and seed import markets increased from 24 to 25 percent in 2002. With increased shipments of fresh garlic (up from $5 million to $21 million) and canned mushrooms, imports from China (including Hong Kong) increased 25 percent to $184 million--4 percent of the U.S. import market. In 2002, the United States exported nearly 8 percent of its fresh- market vegetable and melon supplies (production plus imports)--largely unchanged over the past decade. On the other side of the ledger, higher fresh-market domestic prices again increased the incentive to export to the United States, with the import share of consumption rising from 15 to 16 percent--equal to 1998’s record-high. Monthly import volume has remained above year-earlier levels since June 2002. Processing Output Up in 2002; Expected To Decline in 2003 Processors of five major vegetables (tomatoes, sweet corn, snap beans, green peas, and cucumbers for pickles) have contracted 1.28 million acres in 2003--up 1 percent from the comparable producing States of a year ago. Area earmarked for both canning and freezing-type vegetables is expected to decline (for comparable States) from a year ago. Area for tomatoes, the largest single processing vegetable, will be 4- percent lower than a year ago as lackluster wholesale prices, continued weakness in the world economy, and the prospect of larger world supplies in the coming year prompted processors to scale back earlier intentions. Contract area for comparable States was greater for green peas (up 3 percent) and cucumbers for pickles (up 22 percent), but lower for snap beans (down 12 percent) and sweet corn (down 4 percent). Assuming average acreage losses and trend yields this coming season, output of the five leading processing vegetables could be down 3 to 5 percent from a year ago and total nearly 16 million short tons. Output of canning vegetables could fall 3 to 5 percent in 2003, while output for freezing could decline 2 to 4 percent. Average retail prices for processed vegetables (frozen, canned, and dried) increased less than 1 percent during the first 6 months of 2003, reflecting a combination of the slow economy and higher marketing costs. Green peas: The first estimate of 2003 contract production for processing green peas indicated a 19-percent increase from a year earlier to 411,820 short tons. Estimated area for harvest was up from a year earlier, with generally lower acreage in the East and increased area in the West. Per acre yields are expected to rise 9 percent to 1.78 tons per acre--the first increase since the 2000 record-high. Green pea production is expected to increase 16 percent in Minnesota, the top producing State and 33 percent in Washington--the second leading State. Wholesale prices for both canned and frozen green peas have been running about the same as a year earlier. Tomatoes: The 3-percent reduction expected in the 2003 tomato crop follows a 26-percent increase in 2002. Acreage was up 13 percent in 2002 and yields rose 11 percent from the weather-reduced 2001 levels. Further adding to domestic supplies in calendar 2002 was a 37-percent increase in import volume, with sauces rising 59 percent and accounting for the majority of the gain. Imports accounted for nearly 8 percent of consumption in 2002--the highest share since 1989. Exports also increased, rising 2 percent to 2.5 billion pounds (fresh- weight equivalent)--6 percent of available supply (production plus imports and beginning stocks). Calendar year 2002 per capita use of processing tomatoes increased 5 percent to an estimated 69.0 pounds (fresh-weight)--recovering from the recession-impacted lows of 2001. Sweet corn: Production of processing sweet corn declined 2 percent in 2002 as canning corn dropped 6 percent, while output of sweet corn destined for frozen products increased 2 percent. Imports of canned sweet corn increased for the sixth consecutive year--rising 8 percent, with Canada supplying 69 percent and Thailand 30 percent. Even as domestic production declined for the third consecutive year, imports reached a record-high in 2002 and now account for about 5 percent of consumption. Exports, the primary market for 19 percent of supplies, declined for the fifth consecutive year--falling 3 percent to the lowest level since 1991. Continued softness in the export market, particularly Japan, remains critical to an industry which faces declining long-run domestic demand. In 2002, per capita use of canning corn likely fell below 8 pounds for the first time in decades. Fresh Output Down in 2002; Summer 2003 Area Down This summer (largely July-September), fresh-market vegetable (excluding melons) area for harvest is forecast to decline 2 percent from a year earlier to 308,100 acres. For the most part, increased area for sweet corn, broccoli, and cauliflower was outweighed by reductions in crops such as head lettuce, tomatoes, carrots, and cabbage. Reduced summer area follows an increase in both winter and spring vegetable area. During the summer quarter of 2002 (July- September), prices received by growers and shippers of fresh-market vegetables and melons averaged 12-percent below the record-highs of a year earlier. Although vegetable area was down, melon area for harvest is expected to rise 2 percent this summer due to a 5-percent gain in watermelon area. Growers in California, accounting for 48 percent of this year’s summer-season vegetable and melon area (unchanged from a year earlier), reduced acreage 1 percent. New York, the second leading summer-season producer, with 12 percent of acreage, expects to harvest 7-percent less area than a year ago, due largely to yet another unusually cool, wet spring which hindered planting. With U.S. fresh- market area lower and yields in many areas struggling to maintain the average of the past few years, market volume will likely remain below that of a year ago. Assuming some pickup in economic activity, summer- season fresh-market vegetable prices are likely to average about one- tenth above the lows of the past year. In 2002, fresh-market output (excluding melons) was reduced and shipping-point prices averaged 9 percent above those of the previous year. Some of the 2002 fresh-market highlights for selected crops follow: Head lettuce: Lower yields (down 4 percent), particularly in winter production areas hit by heavy frosts, pulled head lettuce production down 4 percent in 2002. Import volume, which is normally less than 1 percent of consumption, jumped 133 percent to 107 million pounds--the highest on record and representing 2 percent of lettuce consumption. About 40 percent of imports entered during March and April (largely from Mexico) when domestic supplies were reduced. Export volume, unhindered by higher prices, jumped 12 percent, recovering from two poor years in 2000 and 2001. About 6 percent of supplies were exported in 2002. Shipping-point prices rose 20 percent to $21.50 per hundredweight (cwt)--the highest since 1995. Total consumption was an estimated 6.5 billion pounds in 2002--the equivalent of 22.4 pounds per capita, down 5 percent from a year earlier. Tomatoes: Field tomato production rose 5 percent in 2002 to 3.73 billion pounds as national per-acre yields recovered from their 2001 lows. After moderating in 1999 and 2000, import volume (field and hothouse) increased for the second consecutive year, rising 4 percent to a record 1.9 billion pounds. Import share of consumption remained at 34 percent for 2001 and 2002. For the second consecutive year after reaching its pinnacle, tomato export volume dropped 17 percent to 332 million pounds. Spurred by the large crop and increased imports, estimated domestic consumption reached a record-high 5.3 billion pounds in 2002, with per capita use also record-high at 18.3 pounds. Based on industry estimates of production, including domestically- produced hothouse tomato production would add another pound to tomato per capita use. Onions: U.S. fresh-market onion production changed little in 2002 (remaining at 5.85 billion pounds) as slightly higher yields offset slightly lower area harvested. Imports declined 5 percent from last year’s record-high and accounted for 11 percent of domestic consumption--down from nearly 13 percent the previous year. The majority of the volume was shipped from Mexico (58 percent of the total), Canada (20 percent), and Peru (16 percent). Exports fell for the second consecutive year, dropping 11 percent to 639 million pounds as volume shipped to Japan, typically the top export destination, declined 34 percent due to a weak economy and competition with other exporting nations, such as China. With fewer onions shipped overseas, domestic per capita use of fresh-market onions increased 5 percent to 18.7 pounds--the second highest on record (18.8 in 1997). Bell peppers: U.S. bell pepper production rose 1 percent in 2002 to 1.62 billion pounds as production in Florida, the second leading producer, increased 10 percent. Reflecting rising demand, imports jumped 16 percent to a record 551 million pounds--8 percent of domestic consumption. Mexico was the source for two-thirds of import volume followed by Canada (17 percent) and the Netherlands (10 percent). Bell pepper consumption rose 5 percent, reaching an estimated 2 billion pounds for the first time. On a per capita basis, consumption was the third highest on record at 7.0 pounds. Output of Summer Potatoes, Dry Peas, and Lentils Expected Higher in 2003 Potatoes: U.S. fall-season potato growers expect to harvest 2 percent fewer acres in 2003. Harvested area is expected to be lower for the top two States, Idaho (down 4 percent) and Washington (down 3 percent), but higher for North Dakota (up 8 percent) and Maine (up 2 percent). During the March to May period, when most fall-season potatoes were being planted, U.S. shipping-point prices for all potatoes averaged $7.11 per cwt, 14-percent below the highs of a year ago but 35-percent above 2 years ago. Despite lower potato prices at planting time, summer-season potato growers expect to increase harvested area about 7 percent this year. With per-acre yields expected to be 2-percent higher, summer potato production is expected to rise 9 percent. The summer crop typically accounts for close to 4 percent of all potato production, with Texas, California, and Colorado the leading States. In 2002, greater harvested area (up 4 percent) and stronger yields (up 1 percent) left total U.S. potato production up 6 percent from a year earlier to 463 million cwt, but 10-percent smaller than the record- high 2000 crop. Production was generally lower in Central and Eastern States but higher in the West. California fall-season growers had adequate irrigation water in the Tule Lake basin, and responded with record production. Colorado’s total production was up 29 percent from a year ago, as they too had sufficient water supplies to last through a hot summer. In Idaho, the leading potato State, production increased 11 percent from a year earlier due to increased acreage and yields. Despite lower yields in Washington, the second-leading producing State, production rose 1 percent as harvested area increased. Total domestic potato shipments (fresh, seed, chipping) fell 2 percent from a year earlier during calendar 2002 and have been running about 1 percent above a year earlier so far in 2003. Prices in the United States were relatively attractive in 2002, which caused import volume of fresh-market potatoes (excluding seed) from Canada to increase 27 percent from the previous year’s low levels. At the same time, the volume of frozen potato imports from Canada continued to climb to another record-high, rising 12 percent from a year earlier to 1.44 billion pounds. Imports now account for 18 percent of frozen potato consumption compared with 3 percent in 1992. The preliminary season- average farm price received for all U.S. 2002-crop potatoes was estimated at $6.82 per cwt, down 2 percent from the previous season. Sweet potatoes: In 2002, heavy rains from Tropical Storm Isadore and Hurricane Lili in late September and early October, and further heavy rains in October and November damaged crops and reduced yields in Louisiana last fall. Areas in Mississippi also reported extensive acreage losses from the flooding rains. The preliminary season-average price for 2002-crop sweet potatoes is $17.00/cwt, up 10 percent from the 2001 crop--largely the result of the 12-percent decline in production last fall. Despite higher prices for the 2002/03 crop, U.S. sweet potato growers planted 3 percent fewer acres in 2003 than a year ago, with Louisiana and Mississippi accounting for much of the decline. Barring weather-related acreage losses like those of 2002, U.S. harvested area in 2003 could reach 91,000 acres--up 9 percent from a year ago. Higher production and lower prices in 2003 could push per capita use of sweet potatoes back up to 4 pounds, after it had dropped to 3.8 pounds in 2002 (due to the small crop). Although international trade has traditionally played a minor role in the industry, export volume, which rose 9 percent in 2002, has been steadily rising since 1989. About 4 percent of supply is now being shipped to nations such as Canada and the United Kingdom. Dry beans: In 2003, U.S. dry bean growers expect to harvest 1.4 million acres--17 percent fewer than a year earlier. This was a response to weak dry bean prices stemming from the larger 2002 crop, stagnant domestic and export demand, and more attractive prices and revenue streams for alternative crops. With a few exceptions, such as Great Northern beans and blackeye beans, production is expected to decline and prices rise for most dry bean classes in 2003. In 2002, increased dry bean plantings and recovery from the 2001 drought increased harvested acreage 38 percent to 1.73 million acres. With yields up 11 percent to 17.4 cwt, dry bean production rose 53 percent to 30 million cwt. With the exception of Great Northern, garbanzo, and blackeye beans, production was higher across all dry bean classes. With output up, stocks for most classes were largely replenished, and grower and dealer prices fell. The preliminary 2002/03 season-average price for all dry beans was estimated at $17 per cwt--down 23 percent from the previous season. The farm value of dry bean production reached $520 million--up 21 percent from a year earlier and the highest since 1999. Calendar year export volume declined for the fourth consecutive year in 2002, falling 7 percent to 713 million pounds--18 percent of available supply. With smaller supplies in early 2002 due to the drought-shortened 2001 crop, imports began to rise for a few classes such as black beans. Imports jumped 28 percent in 2002 and accounted for nearly 12 percent of domestic consumption--a record high. Thus far in the 2000s, imports have averaged 9 percent of consumption, compared with 4 percent in both the 1980s and 1990s. With a larger crop, smaller exports, and lower prices, per capita dry bean use in 2002 totaled 7.4 pounds--up 0.2 pound from a year earlier. Dry peas and lentils: In 2002, area planted and harvested increased for both dry peas and lentils. Reduced yields (well below trend) caused by dry weather in both the Pacific Northwest and the upper Midwest, left production below year-earlier levels for lentils and limited the increase for dry edible peas. Dry green pea output increased 16 percent but remained well below the average of the previous 5 years. Yellow pea production increased 21 percent and is expected to continue on the upward trend in 2003, which began in the late 1990s. Lentil production (all types) declined 17 percent in 2002, helping to fuel both the strong price trend experienced in the 2002/03 marketing year and a portion of the acreage response expected this year (up by one-third). The preliminary season-average price for all dry edible peas (up 37 percent to $7.10 per cwt) and all lentils (up 27 percent to $12.10 per cwt) each increased in 2002/03. As a result, the value of U.S. dry pea and lentil production (including wrinkled seed peas and Austrian winter peas) totaled $68 million in the 2002 season- -up 17 percent from a year earlier and the highest since 1998. Dry pea and lentil crops were each estimated at $30 million, with wrinkled seed peas ($6 million) and Austrian winter peas ($2 million) accounting for lesser amounts. Mushrooms: During the 2001/02 crop year (July-June), total U.S. mushroom sales volume declined 1 percent to 851 million pounds. Volume of fresh-market Agaricus mushrooms, which accounted for 83 percent of all Agaricus sales, rose less than 1 percent to 695 million pounds. Agaricus processing volume declined 7 percent and is now 100 million pounds below the 1992/93 peak. The industry continues to move toward fresh-market uses, with the outlets for processed products becoming somewhat more limited. One of the brighter segments of the mushroom industry has been Brown Agaricus mushrooms (including portobello and crimini varieties). Browns have been one of the fastest growing segments of the mushroom industry over the past several years. These varieties now account for 93 million pounds in sales--11 percent of total Agaricus volume. Volume has more than doubled since 1998/99 when brown Agaricus sales totaled 50 million pounds. The farm value of total mushroom production during 2001/02 totaled $912 million, up 5 percent from a year earlier.