1. Fruit and Vegetable Situation and Outlook Atlanta, Georgia, September 22-24 Deacue Fields Associate Professor/Extension Economist Department of Ag Economics and Rural Soc. Auburn University fieldde@auburn.edu 2008 Southern Outlook Conference

2. Top U.S. Horticultural Producers 1. California 2. Florida 3. Texas 4. Arizona 5. Michigan 6. New York 7. Washington 8. Oregon

3. US Farm Cash Receipts for Crops, 2006

5. Fruit and Nut Index of prices received by fruit and tree nut growers in April fell 10% from April 2007. Sharply lower orange prices relative to 07 contributed Fresh-market orange prices were down 67 % in April from a year ago. April prices for strawberries, lemons, apples, and grapefruit fell. California is forecast to increase its strawberry production by 2% to 2.2 billion pounds, a new record Florida’s winter crop was affected by a freeze and is estimated to be down 22% Banana prices are strong due a number of banana-producing countries experiencing unfavorable weather and high shipping cost Lower U.S. imports during the 1st quarter, along with high fuel

6. Fruit and Nut NASS estimates 740,000 acres were planted to almonds in 2007 (615,000 bearing) Large number of nonbearing acres suggest a continued trend toward increasing bearing acreage U.S. demand for papaya is growing an average 12%annually since 1990 Mango imports in the U.S. continue to follow an upward path, increasing an average of 4 % annually since 2000. The first forecast for the 2008/09 almond crop is exceed last year’s record crop by 6 percent.

7. Fruit and Nut U.S. fresh orange and strawberry exports are significantly higher than last season with volumes through March up 54 % and 26 %, respectively. July forecast for U.S. peach production in 2008 was set at 2.19 billion pounds, down 3 % from a year ago. Production decline is attributed mainly to a smaller crop in California South Carolina and Georgia crop is expected to almost double with 110 and 70 million pounds Grower prices for fresh peaches averaged 47.4 cents per pound in May and 27.3 cents in June, 16 % and 4 % higher than in May and June last year

9. State 2005200620072008200520062007 Million poundsCents per pound Alabama 241862040.451.552.5 Arkansas 1080 5551.565 California 1,7381,4241,8981,62016.11917.5 Georgia 8082267037.244.641 Kentucky 22025063105 Louisiana 111186.5 95 North Carolina 121111242.548.456.5 Oklahoma 442450.55579.5 South Carolina 1501202511035.237.556.5 Tennessee 441/46470.51/ Texas 1831711848297.5 United States 2,3692,0202,2572,19422.42622.6 Source: USDA, National Agricultural Statistics Service Peaches: Total production and season-average price, 2005-07, and indicated 2008 production

10. U.S. vegetables and melon production about 2 % of all harvested cropland, but generates 16 % of all farm cash receipts and 8% of U.S. farm export value during 2004-06 Vegetable and Melon Production

11. Specialized Vegetable and Melon Farms: Regional distribution,2006

12. Vegetable Industry Retail prices increased by 3% for fresh market vegetables The farm value share of the retail cost of all fresh vegetables increased 4 % in 2007 to an estimated 19.6 % Summer fresh market acreage for harvest down 6% Snap beans (-21), broccoli (-3), cabbage (-13), Cauliflower (-2), Sweet corn (-3), lettuce (-12), tomato (-6)) 2008 Potato acreage estimated down 8% - lowest since 1951 June avg. price was $18.61/cwt – highest on record Area for harvest of 3 leading melon crops, down 8% Area in GA down 11% due to drought July wholesale prices up 42%

13. Vegetable Industry Processors of the 5 leading vegetables (tomatoes, sweet corn, snap beans, green peas, and cucumbers) have contracted 1.2 million acres Tomato contract area down 7% Production of the major vegetables used for processing increased 12 % to 17.8 million short tons in 2007 The value of production for processing vegetables rose 20 percent to $1.65 billion. Domestic demand for chile peppers increasing 563 million pounds fresh market were imported in 07 Imports accounted for 76% of U.S. consumption in 07

14. Salmonella Outbreak Since April 1,401 people have been infected with Salmonella in 43 states. Cost Florida tomato growers over $40 million Average tomato prices during June and July were 76% higher than 07 Retail price for field-grown tomatoes avg. $1.53/lb and organic $2.90/lb After tracing the outbreak to a pepper in Northeastern Mexico, U.S. grown jalapeno and serrano peppers were cleared.

16. Vegetable Exports Processed exports increase rapidly due to weak dollar and strong wholesale price (Canada-32%, Japan -12%, Italy – 7%, Mexico - 7%, and Hong Kong – 5%) Processed imports increased by 14%

18. 200720082007-08 Change CommodityMarchAprilMarchAprilMarchApril ----------------------Dollars per box---------------------------Percent------ Citrus Fruit Grapefruit, all2.912.13.142.89 7.937.6 Grapefruit, fresh7.788.079.48.73 20.88.2 Lemons, all8.689.1839.7728.18 358.2207 Lemons, fresh37.7136.7145.943.2 21.717.7 Oranges, all10.5810.626.076.21 -42.6-41.5 Oranges, fresh21.2221.237.627.04 -64.1-66.8 Noncitrus fruit Apples, fresh0.2920.2810.3440.335 17.819.2 Pears, fresh0.2720.2990.2560.246 -5.9-17.7 Strawberries, fresh0.8890.6460.9530.621 7.2-3.9 Monthly fruit prices received by growers, United States

19. Production Expenses The largest vegetable and melon farms (those with more than $1 million in sales) averaged $2.9 million in total cash expenses. Cash expenses for all farms and ranches with more than $1 million in sales averaged about 40 percent less Average input prices increased 25 % between 1998-2000 and 2004-06, while average prices received by commercial vegetable growers increased by about 11 % during this period.

20. Production Expenses Annual variable expenses across all specialized vegetable and melon farms averaged $240,510 per farm—79 percent of total cash and noncash expenses Hired labor) was the single largest expense item Agricultural chemicals (including fertilizers) were the second-largest expense - accounting for about 21 % of total variable expense

21. Top Five Inputs In Terms of Price Gains 1. Fuels (up 99 percent) 2. Fertilizer (up 47 percent) 3. Seeds and transplants (up 38 percent) 4. Farm machinery (up 27 percent) 5. Wage rates (up 23 percent)

22. Cash expense shares: Specialized vegetable and melon farms, 2006

23. Organic Situation In 2005 the US retailed $13.8 billion in organic food 95% of world organic retail sales from the EU and US. Organic share of retail sales increased from 0.8% in 1997 to 1.9% in 2003, and 2.5% in 2005. Organic standards were implemented by the US in 2002 In the US demand trends suggest organic food sales of $23.8 billion by 2010. In 2001 there were 2.3 million acres of certified organic land in the US Approximately 46% of organic food is handled by mass market channel

24. Natural vs Organic Natural Production means producers claim to produce with no man made chemicals. With natural production there is limited ability to assure consumers that products were actually produced with no synthetic chemicals Organic certification was developed to reduce fraud by those claiming “organic” production. Do Consumer Care? Consumers are beginning to substitute fuel for organics.

25. 2008 Farm Bill The Food, Conservation, and Energy Act of 2008, includes a title that is specific to specialty crops and organics First inclusion in Farm Bill Title focuses mostly on the health and well-being of specialty crop production. The USDA allotted $28.4 million for research and extension projects of specialty crops for the 2008 fiscal year.

26. 2008 Farm Bill An additional $50 million in funding will be allotted during the four other fiscal years, covering 2009-2012. The total funding will amount to $230 million. Projects must pertain to 1 of 5 areas: 1. Research in plant breeding, genetics and genomics to improve crop characteristics. 2. Threats from pests and diseases, including threats to specialty crop pollinators 3. Efforts to improve production efficiency, productivity, and profitability over the long term (including specialty crop policy and marketing). 4. New innovations and technology, including improved mechanization and technologies that delay or inhibit ripening 5. Methods to prevent, detect, monitor, control, and respond to potential food safety hazards in the production and processing of specialty crops, including fresh produce.”

27. 2008 Farm Bill Each State is to receive $100,000 or 1/3 of 1% of total funding for each fiscal year, whichever is higher. Includes specialty crops as part of each Census of Agriculture. Expands market news activities to provide timely price information on fruits and vegetables. Authorizes additional $9 million annually for FY 2008-12 Adds an agri-tourism promotion program to categories of farmer-to-consumer direct marketing activities eligible for funding. Provides mandatory CCC funding of: $3 million for FY 2008, $5 million/year for FY 2009-10, $10 million/year for FY 2011-12 Authorizes grants to improve cost-effectiveness and address intermodal deficiencies of transporting specialty crops to local, regional, and international markets.

28. MALTAG Regional, Multi-state committee comprised primarily of Ag Economist who work with Specialty Crops Group has been working on specialty crop issues such as Organics, Production Costs, Financial Management, Budgeting and Planning, and Risk Management since 2002. The group is poised to compete for specialty crop funding and expand on past efforts