VEGETABLES AND SPECIALTIES May 01, 1998 May 1998, VGS-274 Approved by the World Agricultural Outlook Board --------------------------------------------------------------------------- VEGETABLES AND SPECIALTIES is published three times a year by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20036-5831. This release contains only the text of the report -- tables and graphics are not included. See supplemental data files in Lotus 123 (.WK1) format. Subscriptions to the printed version of the report are available from the ERS-NASS order desk. Call, toll-free, 1-800-999-6779 and ask for stock #VGS, $27/year. ERS-NASS accepts MasterCard and Visa. --------------------------------------------------------------------------- Contents Page Summary Industry Overview Fresh Vegetables Cash Receipts and Cost Indicators Processing Vegetables Potatoes Sweet Potatoes Dry Beans Mushrooms Special Articles Food Safety and Fresh Fruits and Vegetables: Is There a Difference Between Imported and Domestically Produced Products? Marketing Winter Vegetables from Mexico List of Tables Situation Coordinator Gary Lucier Voice: (202) 694-5253 FAX: (202) 694-5820 E-mail: GLucier@econ.ag.gov Principal Contributors Gary Lucier (202) 694-5253 Charles S. Plummer (Potatoes) (202) 694-5256 Doyle C. Johnson (Mushrooms) (202) 694-5248 Statistical Support Brenda Toland Editor Martha R. Evans Graphics, Table Design, and Layout Wynnice P. Napper Approved by the World Agricultural Outlook Board. Summary released April 24, 1998. The summary of the next Vegetables and Specialties Situation and Outlook is scheduled for release July 23, 1998. Summaries and text of Situation and Outlook reports may be accessed electronically; for details, call (202) 694-5050. The Vegetables and Specialties Situation and Outlook is published semi-annually (April and November) and supplemented by a yearbook (July). Summary Per capita use of fresh vegetables (excluding potatoes) increased 4 percent from a year earlier to 161 pounds in 1997. Record-high per capita use was experienced in several fresh-market vegetables, including carrots, cucumbers, romaine/leaf lettuce, cantaloupe, and tomatoes. Per capita use also remained strong for onions, peppers, cabbage, and garlic. In the 1990's, per capita use of fresh-market carrots has averaged 33 percent above the average of the 1980's. In 1997, per capita use of fresh carrots totaled 12.5 pounds, eclipsing the previous record set in the mid-1940's. Fresh-market carrot consumption is projected to increase again in 1998. Per capita use of all vegetables for processing (on a fresh-equivalent basis) declined 2 percent to 126.4 pounds in 1997. Canning vegetable use declined 1 percent to 103.9 pounds, led by lower use of tomatoes and sweet corn. Per capita use of vegetables for freezing (excluding potatoes) declined 4 percent to 22.5 pounds in 1997, as use of all commodities, with the exception of green peas, declined. This spring (primarily April to June), U.S. growers are likely to harvest 1 percent more acreage of fresh-market vegetables and melons than last year. Increased area in States, such as Florida (up 4 percent) and Texas (up 8 percent), outweighed a decline in California (down 1 percent). California accounts for 42 percent of spring vegetable area, followed by Florida with 24 percent. For consumers, increased spring-season vegetable acreage is not expected to translate into lower vegetable and melon prices. This winter, record-setting precipitation in the Salinas Valley, and heavy rains, winds, and cool temperatures in Florida, upset growers' spring-season planting schedules, while also slowing crop growth and affecting the quality of some items. As a result, several intermittent gaps in fresh vegetable supplies this spring will generally leave fresh vegetable retail prices well above year-earlier levels. The Asian financial crisis, economic recession, and associated currency devaluations have been a concern to the U.S. vegetable industry this year. Within the vegetable and melon sector, the processed vegetable industry has more at stake in the crisis than the fresh-market industry. U.S. exports of frozen vegetables, particularly french fries, are heavily concentrated in this part of the world. Over 60 percent of U.S. frozen vegetable exports (including potatoes) are shipped to Japan, South Korea, and four major Southeast Asian nations (Indonesia, the Philippines, Malaysia, and Thailand). In addition, 25 percent of dehydrated vegetables, and 23 percent of canned vegetable exports are sold to these nations. In total, the value of U.S. processed vegetable trade to these nations exceeds $500 million. On the fresh side of the market, Japan, South Korea, and the four major Southeast Asian countries together accounted for just 13 percent of U.S. fresh vegetable and melon export value in 1997. Processors of five selected vegetables (tomatoes, sweet corn, snap beans, green peas, and cucumbers) expect to contract for 1.4 million acres in 1998--up 3 percent from a year earlier. This increase largely reflects a combination of stronger processing tomato prices and the lack of attractive crop alternatives. Canneries and freezing firms each expect to increase contract area 3 percent. With the exception of green peas for canning (down 1 percent), processors expect to increase or maintain acreage for most of the major vegetables (both canning and freezing). Given average acreage losses and trend yields this coming season, output of the five leading processing vegetables could be 2 to 4 percent above last year and approach 16 million short tons. With March 1 processing tomato inventories 19 percent below a year earlier, wholesale tomato product prices remain firm. Prices are generally higher than a year earlier for most products, including sauces, ketchup, and paste. Some uncertainty surrounds this year's crop because of wet weather, planting delays, and the possibility of processors having to run later in the season when fall rains add the risk of a premature end to the season. The Economic Research Service projects potato planted acreage for 1998 (all seasons) to be between 1 percent below and 1 percent above last year. If little change in planted acreage is realized, recent-trend yields and average acreage abandonment would lead to total production for 1998 (all seasons) of about 460 million hundredweight. With record production in Canada and a return to average production in Europe during the fall of 1997, competition for export markets for potatoes and potato products will likely remain tight throughout much of 1998. Tight export markets in East and Southeast Asia are also likely to continue due to the economic crisis in several countries in the region. During the 6-month period ending in February 1998, U.S. french fry export volume to those regions was up just 3 percent from a year earlier. The anticipation of substantial purchases by Mexico this year injected optimism into some areas of the dry bean market. As a result, U.S. dry bean growers intend to plant 1.94 million acres in 1998--up 5 percent from a year ago and 1 percent more than the average of the 1990's. Most of the indicated gain is in North Dakota and Minnesota. In Michigan, where acreage is down 5 percent, heavy stocks and low prices for navy beans are forcing some growers to plant more economically attractive classes, such as black beans, or to consider alternative crops like soybeans. U.S. dry bean grower prices for the first 7 months of the 1997/98 marketing year averaged an estimated 25 percent below a year earlier. Imports of mushrooms for all uses increased in 1997 to nearly 164 million pounds compared with 153 million in 1996 and 174 million in 1995, the highest on record. The fresh or chilled category continued to rise, reaching 15 million pounds last year compared with 9.6 million in 1996. The sliced category also continues to trend upward as imports exceeded 30 million pounds last year. China, India, Indonesia, and Mexico supply most of the sliced mushrooms imported by the United States. Industry Overview The U.S. vegetable and melon industry is in the midst of an unusual spring market brought on by a combination of weather-related impacts and foreign-market developments. Due to the presence of a strong El Nino weather pattern, unusually heavy winter rains were experienced in California and Florida. The resulting disruptions to growers' planting schedules will likely cause supply gaps and unsettled prices for fresh vegetables throughout the spring. At the same time, the financial crisis and general economic recession in several key Asian export markets could cut into the value of exports. This may force some exporters to cut prices to maintain volume and market presence, or face declining sales in these markets. Some economic highlights for the U.S. vegetable and melon sector: o U.S. growers are likely to harvest 1 percent more acres of fresh-market vegetables and melons this spring than last year. Increased acreage in States such as Florida (up 4 percent) and Texas (up 8 percent) outweighed a decline in California (down 1 percent). o Despite increased area, spring fresh-market vegetable supplies will likely be reduced due to weather-reduced yields. As a result, f.o.b. shipping point prices during April-June are expected to be well above those of a year ago. o Contract area for the five leading processing vegetables is expected to rise 3 percent to 1.4 million acres in 1998. This increase is due largely to a combination of stronger processing tomato prices, the lack of strong crop alternatives, and the re-opening of previously closed vegetable processing plants. Canneries and freezing firms each expect to increase contract area 3 percent. o The first estimate of 1997 total per capita vegetable and melon use is 447 pounds--slightly higher than a year earlier. Strong supplies and lower prices propelled fresh vegetable use 4 percent higher, offsetting reduced processing vegetable consumption. Per capita use is projected to increase again in 1998. o Vegetable and melon exporters must battle a strong U.S. dollar, higher U.S. f.o.b. prices, and the financial crisis and weak economies in several key Asian nations to sell products this year. During the first 2 months of 1998, the total value of U.S. vegetable and melon exports rose 5 percent from a year earlier. o With potato prices only moderately higher this past winter, the Economic Research Service projects that fall-season potato growers will plant close to the same area as a year ago. With weather-reduced yields offsetting increased acreage, spring-season potato growers expect to produce 5 percent fewer potatoes than a year ago. o U.S. sweet potato growers intend to plant 1 percent less acreage this year. Given average growing weather, this could result in a crop similar in size to a year ago. With higher average prices in 1997, the value of the sweet potato crop increased 10 percent to an estimated $213 million. o U.S. dry bean growers expect to plant 5 percent more area this year, with acreage in Minnesota and North Dakota up substantially. Increased export activity is expected this year due to low stocks in Mexico. o U.S. mushroom growers have voted to continue the research, promotion, and consumer information program for another 5 years. Also, the United States International Trade Commission has initially found merit in the allegation by certain canners that imports from several nations have unfairly harmed the U.S. industry. The investigation will continue through this summer for final determination this fall. Fresh Vegetables Spring Outlook Acreage Down; Prices Higher This spring (primarily April to June), U.S. growers are likely to harvest 1 percent more fresh vegetable and melon acreage than last year (table 12). Increased acreage in States such as Florida (up 4 percent) and Texas (up 8 percent) outweighed a decline in California (down 1 percent). California accounts for 42 percent of spring vegetable area, followed by Florida with 24 percent. Some highlights of spring-season vegetable acreage includes: o 13 selected fresh-market vegetables, up 1 percent; o the three major melon crops, up 2 percent; o asparagus, up 6 percent; o spring onion acreage, up 4 percent; and o carrots, up 12 percent. With stronger domestic demand the past few years, asparagus acreage has been on the rise in California and Washington--the two leading fresh-market producing States. California's acreage is up 14 percent since 1996, while Washington's acreage has risen 7 percent. Although harvested acreage of spring onions is up this year, area planted is down 7 percent. The difference is in Texas where acreage abandonment is expected to be minimal. In 1997, Texas growers lost 35 percent of their spring onion acreage due to excessive rains. For fresh-market carrots, strong domestic demand, especially for fresh-cut and peeled products, is likely behind the rise in carrot acreage. California harvests 83 percent of the spring carrot acreage. For consumers, increased spring-season vegetable acreage is not expected to translate into lower vegetable and melon prices. This winter, record-setting precipitation in the Salinas Valley, and heavy rains, winds, and cool temperatures in Florida upset growers' spring-season planting schedules, while also slowing crop growth and affecting the quality of some items. As a result, several intermittent gaps in fresh vegetable supplies this spring will generally leave fresh vegetable retail prices well above year-earlier levels. Florida Frost Damage Minimal, But Rain and Wind a Problem In Florida, spring-season vegetable production (e.g. tomato, pepper, cucumber, snap beans, and squash) was not significantly impacted by the freezing weather of March 10-12. Damaging frost dipped as far south as northern Florida, where only a small percentage of tender crops like tomatoes and watermelon were in the ground at the time. Growers hit by frost were able to replace damaged plants. Most early-spring Florida vegetables come from growing areas in the southwestern and central portions of the State and were not hit by the frost but suffered bouts of heavy rain and cool, windy weather. Adverse weather slowed plant growth and reduced yields for crops like tomatoes, cucumbers, and peppers. The result will likely be periods of short supplies and higher prices for these items this spring. The condition of the Florida spring tomato crop was termed "fair" and "variable" in mid-April, with slow fruit set and variable sizing. This past winter, some quality problems and heavier than normal grade-out were noted in various vegetables due to wind scarring and heavy rains. In California, rains caused delays in planting the San Joaquin Valley acreage but did not affect the early desert crop. The delays should not have a major impact on the market because Florida's volume, which is also delayed, may be larger than normal during the time the gap occurs in May. California's spring acreage was cut 16 percent from the high levels of 1997, but was still well above the average of the past 3 years. Weather-related delays in Florida's traditional spring areas have prompted some growers to extend their winter season in southern areas of the State. Florida's spring-season tomato harvest comes largely from the Palmetto-Ruskin area in the West-Central part of the State. This area normally begins harvest around mid-April but did not begin until the end of April this year due to slow plant growth caused by the cool, wet winter. An extended winter harvest, together with larger volume from Mexico, prevented any early-spring price spikes in warm-season vegetables (such as tomatoes) this year. With short harvest delays likely in other (late spring-early summer) production areas, the delay in Florida's spring tomato harvest should not have a major impact on the market. Florida is the dominant tomato shipper in May (60 percent of the market) and June (40 percent), with California taking over in July (60 percent). California Supply Gaps Bring Higher Prices In California, intermittent supply gaps and price spikes are expected for cool-season spring vegetable crops (e.g. lettuce, broccoli, cauliflower, and celery) for most of this spring. Each year, the lettuce market enters a critical period at the start of April. This is when the transition takes place from winter desert production areas to Central Valley and coastal production areas. This year, the Imperial Valley of California finished on time in mid-March, and Yuma, Arizona shipments wound down around the second and third week of April. The transition from the desert areas was a bit rocky this year since crop growth in the Central and Salinas Valleys was about 2 weeks behind normal due to the cool, wet winter. As a result, the first of several expected intermittent price spikes in the lettuce and cauliflower markets occurred in early April as supplies declined and demand increased due to the approaching Easter and Passover holidays. This winter, after a cold snap in the desert caused a strong late December-early January surge in the shipping point price for head lettuce, prices remained relatively low ($4-$7 per carton) during February and March. However, during the April transition from the desert, prices surged as high as $20 per 50-pound carton before temporarily dropping back to $8 to $12 per carton as holiday demand ended. With shipments averaging 20 percent below a year earlier, iceberg lettuce prices began moving up again just after mid-month and remained in the $14 to $20 per carton range for the rest of the month. For leaf and romaine lettuce, continued strong demand and sporadic supplies kept prices high ($20-$40 per carton) all through April. Iceberg lettuce retail prices during the spring quarter will reflect shipping point prices. If the f.o.b. shipping point price averages between $20 and $30 per cwt, retail prices will likely range between 76 and 99 cents per pound. This compares with an average lettuce retail price of 61.9 cents per pound during the spring of 1997. Historical market highs (in nominal dollars) were reached in 1995 when rapidly melting mountain snows flooded lettuce fields along the Salinas River, causing spring quarter shipping point prices to average a record high $37 per cwt, while the retail price averaged $1.16 per pound. Given a product with a relatively short shelf life, the retail lettuce market has always been subject to significant variation. Today, a little more variation may be creeping into this market with a growing proportion of lettuce supplies now contracted by fresh-cut salad processors. With fresh -cut contracts generally being satisfied first, supply disruptions like those this spring can leave the retail market even shorter, adding significant variation to carton prices for lettuce. Although lettuce imports will likely rise this spring, the import market can only offer limited relief. Imports of lettuce typically amount to less than 1 percent of domestic use, with Mexico the main supplier. However, even a 55-fold increase in imports to 15 million pounds as happened during the April floods of 1995, still represents a small proportion of the 677 million pound average monthly demand. Onion Acreage Down Although harvested area for onions is expected to rise, U.S. onion growers planted 4 percent fewer acres for harvest during the spring of 1998. The entire decrease occurred in Georgia where wet fields hindered transplanting in November and December. The March cold snap in Georgia did not damage the Vidalia onion crop, but heavy rains during the growing season could reduce yields. Acreage of summer non-storage onions is up 8 percent, but despite prices well above year-earlier levels, summer storage-type onion growers expect to plant 3 percent fewer acres than a year ago. With the exception of Washington, all major States either cut acreage or remained even with a year ago. With proximity to West Coast export ports, onion acreage has been rising in the high-yielding Columbia Basin of Washington, and this trend is expected to continue this year with a 7-percent increase. Consumption Rising Led by strong growth in carrots, tomatoes, lettuce, and cantaloupe, per capita use of fresh vegetables increased 4 percent to 161 pounds in 1997. Record -high per capita use was experienced in several fresh-market vegetables, including carrots, cucumbers, romaine/leaf lettuce, cantaloupe, and tomatoes. Per capita use also remained strong for onions, peppers, cabbage, and garlic. A summary of selected commodities follows: Carrots: In the 1990's, per capita use of fresh-market carrots has averaged 33 percent above the average of the 1980's. In 1997, per capita use of fresh carrots totaled 12.5 pounds, eclipsing the previous record set in the mid-1940's. Carrot consumption is projected to increase again in 1998. What is driving carrot consumption higher? It is likely the result of several factors, including: o the convenience and portability of fresh-cut and peeled products; o rising nutritional awareness of consumers; o continued popularity of salads and salad bars; o economic expansion and lifestyle changes that fuel increases in away -from-home meals; o development of sweeter carrot varieties; o increased emphasis on new products. The versatility and portability of carrots as healthy snacks, salad ingredients, side dishes, juice mixtures, and even desserts has been key in the recent surge in demand. As a result of the increase in demand, both domestic production and imports have increased during the past few years. Worldwide, only China produces more carrots than the United States. Broccoli: Per capita use of fresh-market broccoli bottomed out in 1993 and has since risen 79 percent to a record 5.2 pounds in 1997. Broccoli use has risen for many of the same reasons that carrot use has surged. Broccoli has gained a reputation among consumers as a strong antioxidant and nutritional powerhouse high in vitamins A and C and fiber. Although fresh broccoli imports have tripled since 1994, foreign sources only account for about 5 percent of the 1.4 billion pounds of fresh broccoli use. Tomatoes: New varieties of field-grown tomatoes and rapidly rising imports of greenhouse/ hydroponic tomatoes have breathed new life into the fresh tomato market. Per capita use of fresh-market tomatoes rose for the sixth consecutive year to a record 19.0 pounds. If USDA statistics counted domestically grown hothouse tomatoes, per capita use would likely be at least another pound higher. Cucumbers: Per capita use of fresh-market cucumbers also increased for the sixth consecutive year to a record 6.3 pounds. With a strong economy since the early 1990's, salad vegetable consumption (including cucumbers) has been steadily rising. On the retail side, the success of pre-packaged green salads has likely helped sales of complementary salad vegetables such as tomatoes and cucumbers. Also, the popularity of products such as "burpless," European, and (to a lesser extent) imported hothouse cucumbers has also injected added interest to the cucumber category. Cantaloupe: Per capita use of cantaloupe totaled 11.7 pounds in 1997, up 10 percent from a year earlier, eclipsing the previous record of 11.2 pounds set in 1946. Sweeter varieties, better quality, and nutritional concerns have likely helped cantaloupe demand increase. In addition, a year-round demand for cantaloupe appears to be developing as indicated by a doubling of cantaloupe imports since 1993. Imports, which are heaviest during the winter and early spring, account for more than a quarter of cantaloupe use, with Mexico (36 percent of volume), Honduras (24 percent), and Guatemala (18 percent) the leading foreign suppliers. Cabbage: Although per capita use was not even close to the 27-pound record reached in the 1920's, use was up 1 pound from a year ago to 10.1 pounds. Fresh-market cabbage use totaled 2.7 billion pounds in 1997 and has averaged 5 percent higher on a per capita basis in the 1990's than the 1980's. Increased use during the 1990's likely reflects the popularity of various fresh-cut products containing cabbage, the enduring popularity of products like coleslaw, and the increased nutritional awareness of consumers. Asparagus: Fresh asparagus consumption has been on the rise, with per capita use reaching 0.7 pounds in 1997. Consumption of fresh asparagus peaked in the 1930's (1.4 pounds per person) and trended downward until reaching a low point in 1979 (0.3 pound per person). Fresh asparagus use has since been on a slow upward trend, with use now the highest since 1960. Strong economic growth with higher incomes in the 1980's and 90's, plus increased nutritional awareness (asparagus is a good source of folate, fiber, and vitamins A and C) have helped asparagus demand. Fresh Trade The Asian financial crisis, economic recession, and associated currency devaluations have been a concern to the U.S. vegetable industry this year. Any change in U.S. vegetable and melon exports would likely derive from two factors. The first is foreign currency devaluations, which increases the relative prices of U.S.-produced vegetables and melons exported to the affected nations. The second factor is the reduced economic growth within these nations, which could slow demand for U.S. vegetables and melons. A sustained reduction in U.S. export volume could also result in increased domestic supplies and weaker prices. The Asian countries of Japan, South Korea, Indonesia, the Philippines, Malaysia, and Thailand together accounted for 13 percent of U.S. fresh vegetable and melon export value in 1997. Aside from Japan and South Korea, U.S. fresh vegetable exports to these nations are relatively small ($1 million or less) with processed trade more important. Japan is by far the most important market for U.S. fresh vegetables within this group of countries, with 94 percent of the total. This area of the world, which also includes Taiwan, Singapore, and Hong Kong, has been a key growth market for U.S. fresh-market produce exports in the 1990's. Volume shipped to this region could decline in 1998, but the percentage drop is not expected to be as large as that seen during the Mexican economic crisis in 1995 and 1996. In 1995, U.S. fresh vegetable and melon exports to Mexico declined 64 percent but began rising once again in 1996 and 1997. U.S. fresh vegetable and melon exports to Mexico are expected to equal or exceed their 1994 level ($50 million) this year. Although the depth of decline in exports to Asia is not expected to be as large as experienced with Mexico, full recovery may take a little longer for the most affected nations (Thailand, Indonesia, and South Korea). In affected Asian markets, consumers faced with recessionary economic conditions will likely revert to conservative spending patterns, opting to increase savings rather than consumption. Although U.S. fresh vegetables tend to appeal to the more affluent in these countries, U.S. export volume may decline as even these consumers shift some purchases to cheaper local produce or other foods. During the first 2 months of 1998, the value of fresh vegetable and melon exports to Hong Kong (up 44 percent) and Japan (up 2 percent) continued to rise, but exports to most other nations in the region declined during the first 2 months of 1998. Partly offsetting these declines may be increased sales to Mexico and Canada. Sustaining or increasing volume to Canada during the first half of the year may prove difficult because of the weakness of the Canadian dollar and higher U.S. shipping-point prices. In March, the U.S. dollar was about 3 percent higher against the Canadian dollar (to 1.42 $Can) than it was in March of 1997. However, the U.S. dollar is expected to trend lower against the Canadian dollar through the end of the year. Total vegetable and melon (including pulses and seed) imports from Canada surged 25 percent in 1997, while U.S. exports to Canada also rose a strong 14 percent. Despite the strong increase in imports, the positive U.S. balance of vegetable and melon trade with Canada increased last year and now exceeds $630 million. In March, the U.S. dollar was up 5 percent against the Japanese yen to 129.08 yen per dollar, but the dollar is expected to trend slightly lower through the end of the year. The weak yen and soft Japanese economy may also hinder U.S. export growth in the newly opened fresh tomato market in Japan. In May of 1997, the U.S. fresh-market tomato industry finally gained entry to the Japanese market. As expected, exports started slowly with about 701,000 pounds being shipped to Japan last year. California and Florida are combining to ship tomatoes year round to Japan. U.S. tomatoes are sold primarily in the Tokyo and Osaka areas, with prices said to be competitive with native-grown tomatoes during much of the year. U.S. tomato exporters have targeted the foodservice industry to take advantage of the superior slicing characteristics of the U.S. product. Japan also imports fresh-market tomatoes from places such as South Korea, the Netherlands (hothouse tomatoes), and some from Canada (also hothouse varieties). Trade Sanctions Against Honduras The United States Trade Representative has suspended tariff preferences Honduras received under the Generalized System of Preferences and Caribbean Basin Initiative, due to repeated intellectual property rights violations. Sanctions include the loss of duty-free status for fresh-market cucumbers and watermelons exported to the United States after April 20. These items may still enter the United States under the Most Favored Nation duty rate. There will be no measurable impact on U.S. markets since imports of these products are small and largely come in during the winter months. For all of 1997, the United States imported $1.5 million of fresh-market watermelon and $0.8 million of fresh cucumbers from Honduras. Cantaloupe, not included in the sanctions, are the major vegetable and melon import from Honduras, with a total of $18.8 million received in 1997. *** BOX ITEM *** Fresh Sweet Corn Exports Revised The U.S. Department of Commerce's Bureau of the Census has revised U.S. fresh-market sweet corn (Schedule B number 0709.90.4500) export data for 1997 for the months of March, April, and May. The miscoded data under fresh sweet corn exports for the 3 months has been transferred to yellow field corn (Schedule B number 1005.90.2030). The changes for the 3 months of 1997 for fresh sweet corn exports follows: Month/country Reads Should read Metric tons March: Angola 7,851 0 Chad 5,390 0 Uganda 16,023 0 Mozambique 2,445 0 April: Angola 10,100 0 May: Angola 1,000 0 Rwanda 2,967 0 Kenya 4,690 0 ***** END BOX ******** Cash Receipts and Cost Indicators Cash Receipts The 1997 forecast for grower cash receipts from the sale of vegetables (including melons, potatoes, pulses, and mushrooms) indicates a 2-percent increase from a year earlier to $14.6 billion. Increased fresh vegetable, sweet potato, potato, and mushroom revenues more than offset reductions in processing vegetables and pulses. Receipts from the sale of fresh vegetables and melons increased 16 percent from the lows of a year earlier as prices rose 11 percent and output increased 5 percent. Despite the increase in prices, demand for fresh vegetables remained strong in 1997. In 1998, grower cash receipts are projected to rise 3 to 5 percent and exceed $15 billion for the first time as fresh vegetable revenues increase again and processing vegetables and dry bean receipts also rise. Grower Input Prices In 1998, prices paid by vegetable and melon farmers for production inputs are expected to rise 1 to 3 percent from a year earlier. Prices paid are expected to decline for fertilizer, fuel, and some farm services. However, more than offsetting these declines will be increases for seed, pesticides, labor, and custom services. In 1997, the average input costs of vegetable and melon growers increased an estimated 2.3 percent. This was a slightly larger increase than the average increase for all farmers due to a drop in feed prices (which are not considered as costs for vegetable growers). Marketing Costs in 1997 At the start of 1998, the Economic Research Service marketing cost index indicated that the prices for production items used by food processors, wholesalers, and retailers rose 1.7 percent from a year earlier. Among individual items, the largest increase was in short-term interest rates that were up nearly 6 percent from a year earlier. The cost of labor, one of the largest expense items in food marketing, rose an average of 3.2 percent. There has been little change in average prices paid for packaging and containers, transportation services, and electricity. Electricity and transportation vendors have been able to hold the line on their costs because of the reduction in world petroleum prices. The cost of paper box material, important to fresh and frozen vegetable shippers, has risen less than 1 percent despite strong demand and lower inventories of containerboard. Canneries also are enjoying low input price inflation, with the cost of metal cans up a little more than 1 percent and glass container costs down 3 percent. Processing Vegetables Outlook for 1998: Stronger Demand And Rising Supplies Moderate economic growth and low unemployment will continue to support food demand (including processed vegetables) in both the retail and foodservice industries in 1998. Retail sales at all food stores increased 2.1 percent to $432 billion in 1997. A similar increase is expected in 1998. The supermarket industry has been trying to bolster this performance and gain a share of the rising "away from home" food dollar by offering home meal replacements (items like rotisserie chicken, salad bars, etc). The strong economy has benefited the foodservice industry more than retail food stores. The National Restaurant Association expects industry sales to rise 4.7 percent to $336 billion in 1998. Inflation-adjusted sales are expected to show increases in the fast food, full-service, and commercial sectors of the foodservice industry. Despite strong economic growth last year, canned, frozen, and dehydrated vegetable demand was again relatively flat in 1997 (see per capita use section). On the supply side of the market, total supplies of canned vegetables (excluding tomatoes) were down 4 percent to 12.3 billion pounds. On balance, canned vegetable supplies have not changed greatly over the past 2 decades. The average supply during the 1970's was also 12.3 billion pounds. Virtually all of the growth in the canned vegetable sector has come from tomatoes, with most of this growth occurring since 1988. Canned vegetable supplies have risen 58 percent since 1988 as the industry expanded to take advantage of domestic and export market opportunities. Assuming the weather allows for at least average yields, tomato supplies will likely increase in 1998 as U.S. producers expand area 6 percent. Despite reduced supplies last year, wholesale canned vegetable prices as measured by the Producer Price Index were largely unchanged from a year ago during the first quarter of 1998. Frozen vegetable supplies (excluding potatoes) rose 2 percent to a record 11.2 billion pounds in 1997. Despite a larger supply, market shipments for the seven leading vegetables fell 1 percent during the 1996/97 season. With larger stocks, wholesale prices for frozen vegetables were down 1 percent from a year ago during the first quarter of 1998. Contract Area Up in 1998 Processors of five selected vegetables (tomatoes, sweet corn, snap beans, green peas, and cucumbers) expect to contract for 1.4 million acres in 1998--up 3 percent from a year earlier. This increase is due largely to a combination of stronger processing tomato prices, the lack of attractive crop alternatives, and the re-opening of previously closed vegetable processing plants. Canneries and freezing firms each expect to increase contract area 3 percent. With the exception of green peas for canning (down 1 percent), processors expect to increase or maintain acreage for most of the major vegetables (both canning and freezing). Given average acreage losses and trend yields this coming season, output of the five leading processing vegetables could be 2 to 4 percent above last year and approach 16 million short tons. Processing Tomato Output To Rise With higher prices caused largely by reduced inventories and strong export markets, tomato processors expect to contract for 6 percent more tonnage in 1998. California, which now accounts for about 95 percent of the U.S. processing tomato crop, expects output to rise 8 percent with all other States producing 21 percent less. California growers experienced flooded fields and an abnormally large amount of down time caused by excessive rains this winter and early spring. Weather was generally favorable for planting in the desert and most other southern growing areas this winter, but plantings were delayed by several weeks in northern growing areas. Some processors now expect a later start to the processing season and a later finish. However, open weather this spring and late into the summer, the use of early maturing varieties, and increased use of transplants could help overcome part of the delay caused by this winter's El Nino-driven rains. If rains continue into May, the incidence of crop disease may increase, which could impact yields and quality. With processing tomato inventories 19 percent below a year earlier on March 1, wholesale processed tomato product prices remain firm. Some uncertainty also surrounds this year's crop given planting delays and the possibility of having to run later in the season where fall rains could become a factor. Prices are generally higher than a year earlier across the board. First-quarter 1998 wholesale product prices compared with a year earlier include: o Ketchup, $13 per case of 6/10s--up 4 percent; o Tomato sauce, $10.75 per case of 6/10s--up 13 percent; o Diced (in juice), $11.75 per case of 6/10s--no change; o Industrial paste (in 300 gallon bins), $0.315 per pound--up 8 percent. Exports utilized 7 percent of U.S. processing tomato supplies in 1997, up from 2 percent in 1990. Exports of all processed tomato products totaled $241 million in 1997--10 percent greater than the previous year. Canada (44 percent of the total) and Japan (12 percent) continue to be the two leading export markets for U.S. processed tomato products. In addition to Japan ($29 million), other important Asian markets include South Korea ($12 million), Hong Kong ($6 million), the Philippines ($5 million), and Taiwan ($4 million). U.S. tomato product exports during the first 2 months of 1998 were 5 percent lower than a year earlier. Despite the small reduction in 1998 export figures, the Asian financial crisis may not have as big an impact on tomato product exports as other processed products. This may be due to the strong presence of ketchup and sauces, which are both important to a rapidly growing fast food industry in the region. Ketchup import volume (most all from Canada), which increased 43 percent in 1997, continued rising in the first 2 months of 1998, with volume 72 percent above year-earlier levels. Ketchup now accounts for 18 percent of tomato product imports, up from less than 1 percent in 1990. A substantial portion of this increase is likely a reflection of the changing business strategies of a major U.S. manufacturer, which in turn, was made feasible by a weak Canadian dollar and declining and now duty-free trade between the two countries. The processed vegetable industry has more at stake in the Asian financial crisis than the fresh-market industry. U.S. exports of frozen vegetables, particularly french fries, are heavily concentrated in this part of the world. Over 60 percent of U.S. frozen vegetable exports (including potatoes) are shipped to Japan, South Korea, and the four major Southeast Asian nations (Indonesia, the Philippines, Malaysia, and Thailand). In addition, 25 percent of dehydrated vegetables and 23 percent of canned vegetable exports are sold to these nations. In total, the value of U.S. processed vegetable trade to these nations exceeds $500 million. Sweet Corn Output To Rise Slightly Sweet corn canneries intend to contract for 5 percent more area in 1998 (table 19). Given trend yields and normal acreage losses, this suggests that production may only rise slightly from a year ago when yields were above average. Based on price movements and a small crop last year, it is likely that canned inventory positions are also lower than a year earlier. The opposite is true of the frozen sweet corn market. Stocks in cold storage on January 1 were the highest on record, but the frozen sweet corn market is an expanding market, whereas the canned corn market is a more mature market. Frozen stocks (on a cut-basis) on March 31 were up 3 percent from a year ago, and wholesale prices for foodservice packs (a case of 12-2.5 lb poly bags) were 9 percent lower. Despite these lower prices, plus the potential for reduced Asian exports, freezers intend to contract for 3 percent more acres in 1998. About 21 percent of canned and 11 percent of frozen sweet corn is exported, with Japan and Canada the two leading markets. Processing Per Capita Use Declines Per capita use of all vegetables for processing (on a fresh-equivalent basis) declined 2 percent to 126.4 pounds in 1997. Canning vegetable use declined 1 percent to 103.9 pounds led by reduced use of tomatoes and sweet corn. Major declines include: o tomatoes, down 2 percent to 72.7 pounds; o sweet corn, down 5 percent to 10.0 pounds; o green beans, down 3 percent to 3.7 pounds; o green peas, unchanged at 1.5 pounds; o cucumbers for pickles, up 29 percent to 5.3 pounds. Cucumbers for pickles were recovering from a short supply situation in 1996 caused partly by reduced harvested acreage in the Carolina's and poor yields in Texas. Increases in both production and imports, plus a sharp drawdown in stocks in 1997, helped meet demand. With stocks relatively low coming into this year, processors have contracted for 2 percent more acreage. Per capita use of vegetables for freezing (excluding potatoes) declined 4 percent to 22.5 pounds in 1997 as use of all commodities, with the exception of green peas, declined. The important changes in this sector include: o sweet corn, down 1 percent to 10.4 pounds; o broccoli, down 12 percent to 2.3 pounds; o carrots, down 11 percent to 2.5 pounds; o spinach, down 29 percent to 0.5 pounds; o green peas, up 5 percent to 2.0 pounds. At 183 million pounds, utilization of spinach for frozen products was nearly record high in 1996, possibly due to promotional efforts. By declining in 1997, use was moving back to the long-run average. Frozen broccoli utilization declined in 1997 as domestic production continued its slow decline. At the same time, imports fell 6 percent as Mexican growers experienced production problems with last year's broccoli crop. Potatoes Wet Weather Contributes to Lower Winter and Spring Production The 1998 winter-season potato crop is estimated to be down 5 percent from a year ago at nearly 3 million hundredweight (cwt). Harvested acreage increased 6 percent from a year ago in California but decreased 9 percent in Florida. Wet winter weather had a negative impact on potato crops in both States, delaying planting in some areas and damaging many fields that were planted early. Some areas were able to replant, but the wet conditions led to a later than normal end of the season in California and pushed yields down 8 percent from a year ago. Florida's yields, which were low early in the season, improved as the season progressed to result in a 3- percent increase from a year ago. The first estimate of the 1998 spring potato crop is 20.6 million cwt--down 5 percent from a year earlier and 8 percent below 2 years ago. Planted acreage was up more than 3 percent from last spring, but harvested acreage increased by only 2 percent from a year ago. As with the winter crop, abnormally wet weather was the major cause for increased abandoned acreage and decreased yields and production in many spring production States. Once again, planting was slowed in many areas, and excessive rains and flooding damaged some early-planted fields. Overall, yields are forecast 7 percent below a year ago, and continued wet weather could create some quality problems as well. Fresh Stocks Down, Frozen Stocks at Record Highs On April 1, the 15 major potato States held 129 million cwt of fresh potatoes, down 13 percent from last year's record high but 11 percent above 1996. April 1 stocks accounted for 32 percent of all 1997 fall production, down just 1 percent from last year. Lower production in the fall of 1997 and higher prices compared with a year ago have contributed to lower disappearance this season down 6 percent from last year's record. Processor use is down 8 percent for the season, but has picked up somewhat in recent months. Although February processing use was down 4 percent from last year, processing was up 4 percent in March. The recent increase in processing use has contributed to record-large stocks of frozen potato products. On March 1, french fry inventories again rose to over 1 billion pounds for the fifth time in the past year. The first time fry inventories in public warehouses were recorded at over 1 billion pounds was on November 1, 1996--the year of record fall production in the United States. On April 1, stocks of all frozen potatoes were up 9 percent from the previous April record set last year. French fry stocks were up 7 percent, while stocks of other frozen potato products were up 16 percent. Much of the recent fry inventory build-up has occurred in the Pacific States (California, Washington, and Oregon), specifically Washington and Oregon. In recent years, Pacific States have accounted for between 40 and 45 percent of fry inventories during the months of March and April. This spring, however, Pacific States have accounted for about 48 percent of fry inventories in the United States. With inventories at such high levels and a forecast for lower domestic consumption of fries in 1997/98 (table 29), exports are likely to become increasingly important to fry producers in the Pacific States (see trade section) this year. Prices Up in 1997/98 Following a year of the lowest prices since 1987/88, prices for the 1997/98 crop have rebounded significantly. Record production in 1996 caused grower prices to fall to $4.93 per cwt for the 1996/97 marketing year. Reduced production last fall has since helped to raise grower prices for all potatoes 19 percent above year-earlier levels for the 6-month period of September to February. Most of the increase is due to a dramatic rise in grower prices for fresh potatoes, up 53 percent from a year ago. Contracts with processors have limited the rise in prices for processing potatoes, which are only up 1 percent from the same period a year ago. Despite the significant increase in grower prices for fresh potatoes, retail prices have not realized similar dramatic increases. While the Producer Price Index for Irish potatoes for consumer use has averaged 43 percent above year-earlier levels for September through February, the Consumer Price Index was up only 8 percent. Average retail prices for fresh potatoes during the period were up only 6 percent. Unlike many other produce commodities, retail prices for fresh potatoes typically experience less percentage change from year to year despite fairly significant fluctuations in production and grower prices. On the processing side, fry contracts made prior to last fall are responsible for little fluctuation in prices for processing potatoes. With continuing high inventories and little change in the Producer Price Index for frozen fries (down 1 percent from a year ago), there may be little change in contract prices for the upcoming fall crop. Will Fall Acreage and Production Increase? Based on overall market conditions and estimates of current season prices, the Economic Research Service projects planted acreage for 1998 (all seasons) to be between 1 percent below and 1 percent above last year. If little change in planted acreage is realized, together with recent-trend yields and average acreage abandonment, total production for 1998 (all seasons) would be about 460 million cwt. However, with disappointing winter and spring crops due to the El Nino weather pattern, growers may be prone to plant more acreage this fall as a precaution to potentially continued unsettled weather patterns. The U.S. Department of Agriculture's first official estimate of planted acreage for fall potatoes will be released in July and should provide a clearer indication of production, prices, and trade potential in the coming year. Potato Trade Surplus Declines Slightly in 1997 In the fall of 1996, record U.S. potato production, record Canadian potato production (the Canadian record was again broken in 1997), and improved European production provided ample supplies and stiff competition in world markets. This increased competition contributed to a decrease in the U.S. trade surplus in potatoes and potato products in 1997 (the second consecutive year the trade surplus decreased). However, despite the $7-million decline in the trade surplus, total exports of fresh and processed potatoes did rise in 1997. Potato exports were valued at $644 million (up 5 percent from 1996), while imports were valued at $280 million (up 16 percent). Although french fries are still the most predominant item in potato exports, the upward trend in fry exports has slowed somewhat the past 2 years. French fry export volume increased just 3 percent from 1995 to 1996, but recovered its pace in 1997, rising 13 percent over 1996. This is a marked decline from the near 27 percent average annual growth seen in the previous 4 years and the 51 percent average annual growth during 1985-95. Growth in North American export markets for fries continued strong in 1997 (up 48 percent from 1996), but growth in East and Southeast Asian countries (includes Japan) slowed (up 13 percent). East and Southeast Asian countries still account for about 85 percent of U.S. french fry export volume and 83 percent of the value. Export value of potato chips also improved slightly in 1997 after decreasing for 2 years from a record high $200 million in 1994. Chip exports totaled $162 million in 1997, up nearly 2 percent from 1996. Major foreign markets for U.S. chips are Canada (25 percent of chip export value), Japan (17 percent), and Western Europe, with most product entering through Belgian ports (7 percent). Increased potato imports in 1997 can be largely attributed to more frozen french fries from Canada. Expanding Canadian raw potato production, combined with increasing processing capacity, continues to boost exports to the United States. In 1997, Canada exported nearly 650 million pounds of fries to the United States (up 53 percent from 1996) at a value of over $170 million (up 47 percent). The United States exported 40 million pounds of fries to Canada in 1997 valued at $18 million. Trade Outlook for 1998 With record production in Canada and a return to average production in Europe during the fall of 1997, competition for export markets for potatoes and potato products will likely remain tight throughout much of 1998. Tight export markets in East and Southeast Asia are also likely to continue due to the economic crisis in several countries in the region. During the 6-month period ending in February 1998, U.S. french fry export volume to those regions was up just 3 percent from a year earlier, and export value was down. Total U.S. french fry export volume to the world was up 5 percent during the 6-month period, while value was up nearly 2 percent. Sweet Potatoes Acreage Expected Down 2 Percent In 1998, U.S. sweet potato growers intend to plant 85,700 acres, down 1 percent from a year ago (table 38). Although increases are expected in Alabama and California, other major States plan to plant the same or less area than last year. North Carolina will continue to plant the greatest acreage (37 percent of the U.S. total), with Louisiana ranking second (25 percent). While total area planted has declined for 3 consecutive years, area planted in California has risen each of those years. Sweet potato acreage in California is now 24 percent higher than it was 4 years ago. California accounts for 15 percent of U.S. sweet potato production, up from 12 percent in 1990. Part of the westward acreage shift may reflect a per-unit cost advantage made possible by irrigated production and the highest yields in the country. Given trend yields (160 cwt) and average acreage losses, the 1998 crop could total around 13 million cwt--about the same as a year ago. With a smaller crop in 1997, the preliminary season-average price for the 1997 crop rose 14 percent to $16.40 per cwt. However, there have been pockets of weak prices in the market. For example, a larger crop in North Carolina last year has kept a lid on f.o.b. prices for 40-pound cartons of North Carolina Jewels. These have averaged slightly lower than a year earlier (table 39). Overall, fresh market shipment volume for the season through the end of March 1998 totaled 5 percent below the same period a year earlier. On average, about 75 percent of the crop is marketed by the end of March. Sweet potato shipments peak around Thanksgiving, with a smaller surge around the Easter and Passover holidays. Per capita use of sweet potatoes totaled 4.4 pounds in 1997, down 0.2 pound from a year earlier but the same as the average of the 1990's. Until the early 1990's, sweet potato use had been on a long-run decline that began in the early 1920's when sweet potato use was 29 pounds per capita. However, a combination of rising nutritional awareness among consumers and new products like sweet potato chips and sweet potato fries have helped stabilize demand and encouraged increased use. Dry Edible Beans Dry Bean Outlook for 1998 U.S. dry bean growers intend to plant 1.94 million acres in 1998 (table 40). If realized, this would be 5 percent more than a year ago and 1 percent more than the average of the 1990's. Most of the indicated gain is in North Dakota (up 17 percent to a record high) and Minnesota (up 18 percent). North Dakota primarily grows pinto and navy beans, while Minnesota grows kidneys, navies, and pintos. Nebraska (up 5 percent) and Utah (3 percent) also expected to plant more. Nebraska and Utah each grow pinto beans and Nebraska is also the principal producer of Great Northern beans, which are expected to see strong export growth to Iraq this year. Reduced area is expected in California (down 11 percent), Michigan (5 percent), and Colorado (4 percent). California is cutting acreage of lima beans due to large stocks. In Michigan, heavy stocks and low prices for navy beans are forcing some growers to plant more economically attractive classes, such as black beans, or to consider alternative crops like soybeans. Prices received by growers for the first 7 months of the 1997/98 marketing year averaged an estimated 25 percent below a year earlier (weighted average). Although the aggregate dry bean price is averaging well below a year earlier, grower prices have strengthened 30 percent from their harvest lows last fall. Most of the gain in prices came when Mexico, where bean production fell short last year, auctioned import licenses for up to 100,000 tons of beans during the year. It is likely that a majority of the beans exported to Mexico would be pinto or black beans. Pinto Beans: Based on the location of intended acreage increases (North Dakota and Minnesota), U.S. pinto bean production is likely to rise in 1998. Exports to Mexico are expected to increase sometime this year. It was likely that the auction of 100,000 metric tons of Mexican import permits at the start of 1998 lies behind much of the earlier optimism in the pinto bean market. Crop-year pinto bean dealer prices for the 1997/98 season averaged 12 percent below a year earlier through March. However, in January, pinto bean prices reacted to the auction of import permits. As a result, pinto prices during the first quarter averaged about 5 percent above the relatively strong levels of the previous year. Prices began softening in late March and will likely drift along at current levels until market volume increases. In the U.S. domestic market, pinto beans continue to account for the largest share of dry bean use--about 40 percent. U.S. per capita use of pinto beans rose slightly in 1997 to 3.6 pounds and is expected to maintain this level in 1998. Black Beans: Black beans are one of the most consumed beans in Mexico. The United States officially exported 35.6 million pounds of black beans to Mexico in 1997. Industry sources say several million pounds also cross the border each year unofficially. In 1998, CONASUPO (a Mexican cooperative) has been active in the market for black beans with several substantial purchases. With Mexico expected to continue importing substantial volumes of black beans this year, U.S. prices should remain firm. In April, dealer prices were running 28 percent above a year earlier. U.S. growers will likely respond to these prices by increasing area planted to black beans. The U.S. domestic market for black beans has also been expanding this decade, with per capita use in 1997 at 0.4 pounds--up from just 0.1 in 1990. Navy Beans: White beans such as navies and Great Northerns are lightly consumed in Mexico. However, the United States is a major supplier of navy beans to the United Kingdom. With continued large U.S. stocks, low U.S. navy bean prices, and a stronger British pound this year (0.602 pounds per dollar in March), exports to the United Kingdom are expected to rise. For the first 6 months of the crop year (Sept.-Feb.), navy bean exports are up 18 percent from a year earlier. With prices low, growers are not expected to increase navy acreage in 1998. Michigan, the leading State, likely will plant more black beans and fewer navy beans in 1998. It is unclear what growers in North Dakota, the second leading producer of navy beans will do, but overall acreage is up in the State. Per capita use of navy beans was 1.4 pounds in 1997 and is expected to remain about the same in 1998. Great Northern Beans: The major mover in this market for 1998 will be Iraq. With increased oil revenues expected this year, Iraq is back in the market for beans. Prior to the Gulf war, Iraq was the leading importer of U.S. Great Northern beans. Iraq imported 70.4 million pounds of U.S. Great Northerns in calendar 1997 and has purchased another 22 million pounds so far this year. Nebraska is expected to plant a few more Great Northerns in 1998 since the average price for the first 3 months of the calendar year is up 10 percent from a year earlier. On the domestic front, Great Northern demand is very stable, with per capita use at 0.5 pound, the same as a year earlier. The 1997/98 Situation Total supply of all bean classes in calendar 1997 rose 4 percent to 4.4 billion pounds due to larger production and imports. Although bean supplies are up this season, supply is still 9 percent below the record high experienced in 1991. For 1997, despite higher average retail prices for dry-pack beans, domestic use increased and propelled total dry bean use close to 2.1 billion pounds--5 percent higher than the previous year. The U.S. retail dry-pack bean price averaged 72 cents per pound--4 percent higher than a year earlier. Per capita use of all dry beans totaled an estimated 7.8 pounds in 1997, up from 7.5 pounds a year earlier. The outlook to the year 2000 suggests use will continue to move slowly upward as industry promotion efforts increase and consumers continue to move toward more healthful foods. Mushrooms Mushroom Imports Up in 1997, Fresh and Sliced Continue To Rise Imports of mushrooms for all uses increased in 1997 to nearly 164 million pounds compared with 153 million in 1996 and 174 million in 1995, the highest year on record. The fresh or chilled category continued to rise, reaching 15 million pounds last year compared with 9.6 million in 1996. The sliced category also continues to trend upward as imports exceeded 30 million pounds last year. Most of the sliced mushroom imports are supplied by China, India, Indonesia, and Mexico. Most other categories of imported mushrooms were also higher in 1997, including frozen, dried, whole, and straw mushrooms (table 49). Mushroom imports were higher from China, Indonesia, Taiwan, Mexico, and India, but lower from Hong Kong, Chile, and the Netherlands (table 48). Last year's mushroom imports were valued at $149.7 million (U.S. Dept. of Commerce, Customs Service), compared with $148.2 million in 1996. China was the major supplier with $55.1 million, followed by Indonesia ($34 million), Mexico ($8.2 million), and India ($8.1 million) (table 50). Preliminary projections are that world mushroom production for all uses will be nearly unchanged in 1997/98 at 4.7 billion pounds. Production in 1996/97 was estimated at a record 4.7 billion pounds (table 51). China's production is about 1.1 billion pounds or 24 percent of the world total, followed by the United States at 787 million pounds (17 percent), Netherlands (9 percent), France (8 percent), and United Kingdom (7 percent). The U.S. Department of Agriculture announced on March 20, 1998, that the "U.S. mushroom industry had voted to continue the industry funded promotion, research, and consumer information for fresh mushrooms." An industry -wide referendum was conducted February 24 through March 13 and 80 percent of those voting indicated they favored continuing the order, and they represented 70 percent of the volume of the mushrooms produced by those who voted. Approval of a majority of the voters, representing 50 percent of the volume of mushrooms produced and imported by those voting is required for continuation of the program. The order, which is directed by the Mushroom Council, will be in effect over the next 5 years. ********** BOX ITEM ********** USITC Determines Adverse Impact From Canned Imports In a preliminary determination, the U.S. International Trade Commission (USITC) has announced that an industry (canned mushroom) in the United States has been materially injured by reason of imports. These imports originate from Chile, China, India, and Indonesia and consist of certain preserved mushrooms that are alleged to be sold in the United States at less than fair value. For purposes of these investigations, certain prepared mushrooms are of the species Agaricus bisporus and Agaricus bitorquis, whether imported whole, sliced, diced, or as stems and pieces. "Preserved mushrooms" refers to mushrooms that have been prepared or preserved by cleaning, blanching, and sometimes slicing or cutting. These mushrooms are then packed and heated in containers, including but not limited to cans or glass jars, in a suitable medium that may include, but is not limited to, water, brine, or butter (butter sauce). Included within the scope of the investigations are "brined" mushrooms, which are presalted and packed in a heavy salt solution to provisionally preserve them for further processing. The USITC transmitted its determinations in these investigations to the Secretary of Commerce on February 20, 1998. The views of the Commission are contained in USITC Publication 3086 (February 1998), entitled "Certain Preserved Mushrooms from Chile, China, India, and Indonesia: Investigations No. 731-TA-776-779 (Preliminary)." The USITC also issued a final phase notice of scheduling which was published in the Federal Register. The USITC determined that the increased volume, market share, and declining prices of subject imports have adversely affected the domestic industry, particularly during the latter part of the period investigated, from 1996 through the interim 1997. Overall, domestic production, employment, and profitability declined over the period, and were lower in 1997 relative to 1996. The adverse impact of the imported products is also reflected in the number of confirmed instances of sales and revenues lost to those imports. As the volume of imports increased and import prices declined through the period of investigation, the domestic industry's sales volume dwindled and its unit sales values declined faster than its costs. ***** END OF BOX ***** Special article Food Safety and Fresh Fruits and Vegetables: Is There a Difference Between Imported and Domestically Produced Products? Glenn Zepp, Fred Kuchler, and Gary Lucier Abstract: Consumers and food handlers indicate that health risks due to bacterial contamination and pesticide residues rank high among their food concerns. However, scientists and regulatory personnel generally view contamination by microbial bacteria and naturally occurring toxins as greater dangers to human health than pesticide residues. Compared with animal products, in relatively few instances, fresh produce is identified as the vehicle carrying disease-causing pathogens. Yet, evidence suggests that fresh fruit and vegetables are becoming the conveyance for microbial pathogens more frequently than in the past. Foodborne illness outbreaks in the United States have been linked with both imported and domestically grown produce. There is no clear evidence that health risks due to pesticide residues or microbial bacterial contamination are greater with either imported or domestically grown produce. Keywords: Food safety, foodborne illness, fruits and vegetables, imports, HACCP, pesticide residues. Human nutrition research increasingly indicates that a well-balanced diet, rich in fruits and vegetables, promotes good health and may reduce the incidence of certain diseases. The Five-A-Day For Better Health campaign, jointly sponsored by the National Cancer Institute and the Produce for Better Health Foundation, representing the fruit and vegetable industry, urges Americans to consume at least five servings a day of fruits and vegetables. U.S. dietary guidelines go even further, suggesting five to nine servings a day as most beneficial (U.S. Department of Agriculture and U.S. Department of Health and Human Services). Fruits and vegetables provide vitamins, minerals, and the fiber essential to a balanced diet. Americans appear to be responding to this "eat more fruits and vegetables" message. Annual per capita consumption during the 1990's averaged 84 pounds (13 percent) more than during the 1980's. The gains have occurred among both fresh and processed items. Consumption has increased for fresh products such as grapes, bell peppers, carrots, and onions, as well as for processed items such as frozen sweet corn, broccoli and canned tomato products. The biggest gains, however, have occurred among fresh produce items. Despite the benefits derived from eating fruits and vegetables, consumers and others express concern about their food's safety due to pesticide residues and microbial pathogens in the food system. Such doubts are sometimes amplified due to uncertainty on the part of scientists about the long-term health risks from low-level intake of pesticides. In addition, an increasing--though still small--number of reported foodborne disease outbreaks are being traced to fresh produce. The Centers for Disease Control and Prevention (CDC) have identified fresh produce as the vehicle carrying a variety of pathogens linked with foodborne illness outbreaks in recent years (table A-1). Several of these outbreaks involved imported produce and have focused public attention on the safety of foreign-grown products. In October 1997, President Clinton proposed legislation to permit Food and Drug Administration (FDA) inspection of foreign food-safety practices and to halt imports of fruits and vegetables from countries that do not meet U.S. standards. The Federal Government, with input from the domestic and international agricultural community, intends to issue guidance on sound agricultural and manufacturing practices for fruits and vegetables within 1 year. The purpose of this article is to provide perspective on the relative importance of the various causes of foodborne risks as they relate to fruits and vegetables and to examine the available statistics for evidence of differences in food risks between imported and domestically produced product. Imports Rising Both the quantity of U.S. fresh fruit and vegetable imports and their share of domestic consumption are rising. Imports made up 21 percent of U.S. fresh produce consumption in 1996, up from 17 percent in 1990 (figure A-1). A substantial part of this increase was apples and summer stone fruits, such as peaches, plums, apricots, and nectarines from Southern Hemisphere countries. Newly harvested apples, for example, arrive from Chile and New Zealand during the spring and early summer and compete with U.S. apples held in storage. Also, Chile supplies summer fruits to the United States during the winter and early spring, when cold weather precludes growing these commodities domestically. The United States is also importing more of its fresh vegetables, primarily from Mexico, Canada, and Central American countries. Mexico has long been a major supplier of winter-fresh vegetables such as tomatoes, peppers, cucumbers, squash, eggplant, and green beans. However, during the 1980's and 1990's, Mexico and several Central and South American countries expanded their U.S. trade in frozen products such as broccoli, cauliflower, and snow peas and fresh products such as raspberries and asparagus. Total imports accounted for 16.4 percent of all (fresh and processed) fruit and vegetable consumption in 1996, but there are substantial differences among products (table A-2). Iceberg lettuce imports, for example, account for less than 1 percent of consumption, whereas virtually all of the bananas consumed in the United States are imported. Risk Highest from Microbes And Natural Toxins Scientists and regulatory personnel generally view contamination by microbial bacteria and naturally occurring toxins as the greatest foodborne dangers to human health. Epidemiologic data from the Centers for Disease Control and Prevention (CDC) indicate that microbial pathogens caused 79 percent of the 2,423 reported foodborne disease outbreaks and 90 percent of the 77,373 cases of associated illness in the United States between 1988 and 1992 (Bean et.al.). CDC defines a foodborne-disease outbreak as the occurrence of two or more cases of a similar illness resulting from the ingestion of a common food. The outbreaks reported by CDC, however, represent only a small fraction of the total number of foodborne illnesses each year. The Council for Agriculture and Science Technology estimates that microbial pathogens in food cause between 6.5 and 33 million cases of human illnesses in the United States and up to 9,000 deaths annually (CAST, 1994). The CDC data indicate that fruits and vegetables were the vehicle of transmission for 64 (6 percent) of the 1,072 outbreaks for which a specific food was identified (table A-3). Five percent of the illnesses from these outbreaks were linked with fruits and vegetables, as were 22 percent of the deaths. In over half of the reported outbreaks, however, the food carrying the pathogen remains unknown. Not all of the outbreaks linked with fruits and vegetables, however, are tied to fresh produce. More than a third of the outbreaks were botulism poisoning caused by Clostridium botulinum. Although the spores of C. botulinum are commonly found in soil, botulism poisoning is usually associated with consuming improperly canned vegetables. Botulism poisoning involves a highly potent toxin that can cause death if not treated immediately and properly. In addition, the CDC recorded six outbreaks associated with consuming mushrooms. All but one of these was due to consuming poisonous wild mushrooms. Several types of wild mushrooms produce highly poisonous natural toxins that cause illness or death when they are confused with edible species and eaten. Despite the relative infrequency of fresh produce being identified as the vehicle for foodborne disease, there is evidence that fruits and vegetables are becoming a more frequent carrier. One reason may be that several foodborne infectious agents have been either newly described or newly associated with fruit and vegetable transmission in the last 20 years (Tauxe, 1997). E. coli O157:H7, for example, first identified as a pathogen in 1982 and originally linked with hamburger, showed that it could survive in low acid products when unpasteurized apple juice was identified as the vehicle for an outbreak in 1993. And, Cyclospora, known previously only as a cyanobacterialike organism, received its current classification in 1992, and emerged as a foodborne pathogen in outbreaks traced to imported Guatemalan raspberries in 1996. Imported vs. Domestically Grown The available data are not detailed enough to identify differences in the safety of imported and domestically produced products. CDC investigations of foodborne outbreaks have identified both imported and domestically grown produce as vehicles for microbial pathogens. The Guatemalan raspberry incident was highly publicized and raised consumer awareness of the potential for imported produce to bear foodborne pathogens. An outbreak of Hepatitis-A in 1997, linked with strawberries grown in Mexico and frozen in the United States, further spotlighted imported produce. At the same time, outbreaks of foodborne diseases were linked with domestically grown products. A 1997 E. coli O157:H7 outbreak involving unpasteurized apple juice in several Western States and an outbreak involving cider in the Northeast are two examples. Other foodborne outbreaks have involved cantaloupe, watermelons, tomatoes, fresh basil, alfalfa sprouts, and lettuce. The fact that the point of contamination can not always be determined complicates comparing the safety of imported and domestically produced products. In the case involving frozen strawberries, for example, the raw produce was grown in Mexico, but the berries were processed in a plant in the United States. It has not been determined whether contamination occurred before the berries entered the United States or whether it occurred during processing in this country. Contamination of fresh produce can occur anywhere in the production and marketing chain, including during production-oriented processes like irrigating (polluted water, manure), harvesting and packing (workers with unsanitary hands due to lack of proper sanitation), and washing (polluted water). However, foodborne illnesses are most frequently attributable to food handling and preparation practices, the most common being improper holding temperatures (Bean et.al.). Poor personal hygiene of food handlers, inadequate cooking, and contaminated equipment also are frequently implicated with foodborne illnesses. The CDC reports several outbreaks of illnesses associated with fresh fruits and vegetables cross-contaminated when they were sliced on unsanitized surfaces following meat and poultry. Monitoring for Microbial Contaminants The Food and Drug Administration (FDA), an agency of the U.S. Department of Health and Human Services' Public Health Service, is responsible for ensuring the safety and wholesomeness of all foods sold in interstate commerce except for meat, poultry, and eggs, which are under USDA jurisdiction. FDA conducts research on contamination detection and prevention practices and sets standards for enforcing federal regulations and guidelines on food sanitation and safety. It also monitors the safety of the food system by inspecting manufacturing plants and feed mills producing medicated or nutritionally -supplemented animal feeds that are part of the human food chain. The FDA uses a combination of plant inspections and information dissemination to minimize foodborne pathogens. Traditionally, the food industry and its regulators have depended on spot-checks of manufacturing conditions and random sampling of final products to ensure the safety of domestically produced food. This system is now being augmented by a relatively new strategy known as Hazard Analysis Critical Control Points, or HACCP, which emphasizes prevention of food safety hazards. HACCP involves identifying critical points in a food production process where potential hazards can be controlled or eliminated. Then measurable standards that insure safe food are developed for these critical points and the processes monitored to insure that the standards are met. Each of these steps has to be based on sound scientific and technical knowledge, such as published microbiological studies. Although the use of HACCP procedures in the fresh produce industry is voluntary, a number of producers, packers, and processors follow HACCP -like practices. One reason is that the produce industry has a considerable financial incentive to avoid microbial contamination of their products. Foodborne outbreaks can result in widespread adverse publicity for the industry producing the commodity identified as the vehicle. Such publicity raises consumer concerns about the safety of the commodity and results in reduced sales. Publicity surrounding the outbreaks of Cyclospora in 1996 and Hepatitis-A in the spring of 1997 reportedly diminished consumer demand for raspberries and strawberries, respectively, in those seasons. FDA also has the responsibility for insuring the safety of imported fruits and vegetables. By law, imported products must meet the same standards as domestic goods. The bulk of FDA-regulated imports are cleared for immediate distribution based on the Agency's review of the shipments records. If a problem is suspected, inspectors then physically examine or take a sample for laboratory analysis. However, only a small portion of imported produce is actually sampled as it enters the country. Pesticide Concerns Appear Excessive Pesticide residues in the food chain and their effects on human health is a controversial and complicated subject and has received considerable debate in the past 30 years. Surveys routinely show that consumers are very concerned that pesticide residues in foods will compromise their health. In a nationally representative USDA survey of meal planners and preparers, 22 percent of the respondents indicated that pesticide residues were their greatest health concern (Unnevehr, et al., 1995). Forty-three percent identified bacterial contamination as their major concern. Risk perception studies indicate that concerns about pesticide dietary risks may be out of proportion with the actual danger. For distant future events, individuals have difficulty evaluating risks and often overstate them. For example, in a study of attitudes towards (low probability) risks associated with the use of household chemicals, Viscusi and Magat (1987) found that consumers overestimated the actual dangers. This finding was consistent with an earlier study by Lichtenstein and others (1978), which found that individuals overestimate risks associated with a wide class of low-probability fatality events. Risks from pesticides include cancers, and risk assessors typically measure probabilities of cancer from pesticide dietary intake in cases per million population (National Research Council, 1987). Compared with most other tabulated causes of death and illness, cancer from pesticide dietary intake is clearly a low-probability risk and, if the findings of risk perception studies apply widely, are likely to be overestimated by consumers. That many consumers express concern with pesticide residues in their food is not surprising because of the extensive news coverage the topic receives. From 1969-1995, the three major television networks showed 493 evening news stories on pesticides, devoting 873 minutes to the topic. This was more than to any other foodborne hazard (tabulated from the Vanderbilt Television News Archive). Pesticide news stories appeared every year during this time, while there were relatively few news stories about microbial contamination until 1985 (an outbreak of Salmonella was reported and since 1993 E. coli contamination of hamburger was reported). Ambiguity over the nature of pesticide risks in news stories may also help to confuse consumer perception of the hazards. More than half of the television news coverages did not identify who or what was at risk (consumers, farm workers, environmental quality, or other). However, the continuous flow of information has served to frequently remind consumers that there may be reasons for concern with pesticides. Are Imported Fruits and Vegetables More Risky Than Domestic? The available data on pesticide residues does not provide a clear answer to the question of whether there are differences in the safety of imported and domestically grown produce. FDA's regulatory monitoring program has typically shown that imported produce violates tolerance limits more frequently than domestically grown produce (FDA, 1993). However, this greater frequency of violations in itself, does not reveal whether there is a difference in the level of health risk. To answer health risk questions, one needs to know the amount of specific pesticides ingested and the toxicity of each (Chaisson et.al., 1991). To distinguish health risks of domestic and imported produce, the critical question is the level of exposure to each chemical from each source. Both FDA and USDA have pesticide sampling programs that provide information for a limited number of commodities about the amount of specific pesticides in imported and domestic produce (Roy, et al., 1995, and USDA, AMS, 1997). Results from these programs indicate that some pesticide residues were detected only in domestic produce; some were found only in imported products; and some were found in both, sometimes at clearly different levels. Because different chemicals have different health effects, there is no obvious way to compare the safety of imported and domestic products when they contain different types of pesticides. Even when the same pesticides are found on imported and domestic products, differences in health risks are not much clearer. Studies of pesticide residues in imported and domestic grapes and peaches, for example, do not reveal whether imports are riskier than domestic food because the domestic fruit contained higher levels of some residues while the imported product contained higher levels for others (Kuchler et al., 1996). Scientists have not reached a consensus on how to sum the total effects when more than one type of chemical is present in the food. Frequently, the pesticides detected in fresh fruits are ones added after harvest in order to retard rot during storage and transportation. Virtually all of the residues found on bananas, for example, and 88-90 percent of residues on citrus were the result of post harvest treatments (Kuchler, et al., 1996). If packinghouse operators have incentive to treat domestically produced fruit destined for domestic markets, there likely is a greater incentive to treat when fruit is grown outside the United States, as such produce must survive a longer transportation period. To a large extent, it is the use of post-harvest fungicides that make importing fruit economically feasible. Some scientists ignore differences between domestic and imported food, arguing that conventionally produced foods pose virtually zero risks from pesticides (Ames and Gold, 1996). Thus, they argue that any concerns with pesticides in foods are misplaced--that concerns with toxicity are unfounded because the results of toxicity experiments on rodents fed large doses of pesticides cannot be extrapolated to low human dietary intake. On the other hand, scientific evidence about low dose pesticide potency (ability to generate adverse health outcome) cannot yet prove a chemical is safe. Whether the intake of pesticide mixtures amplifies carcinogenic potency or whether pesticides function as endocrine disrupters are not likely to be well understood for many years. As scientists cannot prove chemicals to be safe, some critics may argue that pesticides are hazardous. They can use the existence of uncertainty to argue that food does not meet reasonable levels of safety (see, for example, Center for Science in the Public Interest, 1997). Conclusion Scientists and regulatory personnel generally view contamination by microbial bacteria and naturally occurring toxins as the greatest foodborne dangers to human health. However, there is no clear evidence of differences in the safety of imported and domestically produced products. Both imported and domestically grown produce have been linked with outbreaks of foodborne illnesses. Compared with animal products, fresh produce is identified as the vehicle carrying disease-causing pathogens in relatively few instances. Yet, evidence suggests that fresh fruits and vegetables are becoming the conveyance for microbial pathogens more frequently than in the past. Risk studies indicate that consumer concern about pesticide dietary risks may well be out of proportion with the actual danger. Compared with most other tabulated causes of death and illness, cancer from pesticide dietary intake appears to be a low-probability risk. Although FDA's regulatory monitoring program has typically shown that imported produce violates pesticide residue tolerance limits more frequently than domestically grown produce, the data do not answer the question of whether there are differences in health risks for imported and domestically grown produce. References Bean, Nancy H., Joy Goulding, Christopher Lao, and Frederick Angulo. Surveillance for Foodborne-Disease Outbreaks-United States, 1988-1992." Morbidity and Mortality Weekly Report, Vol 45/ No. SS-5. October 25, 1996. CAST Report. Foodborne Pathogens: Risks and Consequences. Task Force Report No. 122, Washington DC: Council for Agricultural Science and Technology, Sept. 1994. Center for Science in the Public Interest. "How To Avoid Pesticides." Nutrition Action Health Letter 24(5):1,4-7. June 1997. Chaisson, C. F., B. Petersen, and J.S. Douglass. Pesticides in Food--A Guide for Professionals. American Dietetic Association. Chicago. 1991. FDA. Food and Drug Administration Pesticide Program-Residue Monitoring-1992. Journal of the Association of Official Analytical Chemists International. 76(5):127A-148A. 1993. Kuchler, F., K. Ralston, L. Unnevehr, and R. Chandran. Pesticide Residues: Reducing Dietary Risks. Agricultural Economic Report Number 728, ERS, USDA, January 1996. Lichtenstein, S., P. Slovic, B. Fischhoff, M. Layman, and B. Combs. Judged Frequency of Lethal Events. Journal of Experimental Psychology: Human Learning and Memory. 4:551-578. 1978. National Research Council. Regulating Pesticides in Food: The Delaney Paradox. National Academy Press. Washington, D.C. 1987. Roy, R., and others. A U.S. Food and Drug Administration Pesticide Program: Incidence/Level Monitoring of Domestic and Imported Pears and Tomatoes. Journal of the Association of Official Analytical Chemists International. 78(4):930-940. 1995. Tauxe, Robert V. Emerging Foodborne Diseases: An Evolving Public Health Challenge. Emerging Infectious Diseases, 3(4): 425-434. December 1997. Unnevehr, L., S. Crutchfield, T. Roberts, and F. Kuchler. Economic Issues Associated with Food Safety. ERS Staff Paper Number 9506, Feb. 1995. U.S. Department of Agriculture and U.S. Department of Health and Human Services. Nutrition and Your Health: Dietary Guidelines for Americans. Fourth edition. Home and Garden Bulletin 232. 1995. USDA. Pesticide Data Program Annual Summary Calendar Year 1995. Agricultural Marketing Service. 1997. Vanderbilt Television News Archive. . Accessed May-July 1996. Viscusi, W.K. and W.A. Magat. Learning About Risk: Consumer and Worker Responses to Hazard Warnings. Harvard University Press. Cambridge. 1987. Special Article Marketing Winter Vegetables from Mexico by Linda Calvin and Ver¢nica Barrios 1/ Abstract: The North American winter vegetable industry is highly integrated, with Mexican production suppling a large part of U.S. winter consumption needs. Imports from Mexico undergo a rigorous inspection procedure before entering the United States. In addition to Mexican firms, many U.S. firms are also involved in sourcing winter vegetables from Mexico. To compete well, both U.S. and Mexican firms must adapt to the changing market pressures which reward firms that can source from many locations to provide a year-round supply and vertically integrated or coordinated firms that can control quality and pursue aggressive marketing. Keywords: Winter vegetables, tomatoes, Mexico, market structure, border inspections, distributors, sourcing. Introduction The winter vegetable export industry of western Mexico, centered in Sinaloa, is an important component of a highly integrated North American produce market. The industry is driven by U.S. consumer demand for fresh vegetables during the winter months and Mexican growers produce to meet U.S. import requirements. Both Florida and Mexico grow, and compete, for the U.S. winter market when there is no other domestic source due to cold weather and very few imports from other sources. During the October-June season, Mexican winter vegetables (tomatoes, bell peppers, cucumbers, summer-type squash, snap beans, and eggplant) account for a large portion of the available U.S. supply. From 1992/93 to 1996/97, Mexican winter vegetables ranged from an average of 23 percent of the snap bean supply during the October-June season to 76 percent of cherry tomatoes (table B-1). Over the same time period, Florida and Mexico together averaged at least 95 percent of the U.S. market for all the winter vegetables. This article discusses how winter vegetables from Mexico are marketed to the United States. Understanding the structure of Mexican marketing in an integrated industry is important because change can affect all the players, Mexican or U.S. This study relies mainly on interviews with a limited number of distributors in Nogales, Arizona, several producers in Culiac n, Sinaloa, and industry organizations. The paper begins with an overview of structural changes in the North American produce industry that affect both American and Mexican producers and marketers. After a brief account of production in Mexico, we review how produce is shipped to Nogales, Arizona, the main distribution center and describe the border crossing process. Finally, we discuss the role of distributors in Nogales, the methods used for sourcing production in Mexico, and final sales. ********** BOX ITEM ************* The research presented in this article was conducted under the auspices of the Mexico Emerging Markets Project. The project's goal is to strengthen the capability of the Mexican Agricultural Secretariat (SAGAR) to provide data and analyses on issues facing Mexican agriculture in the post-NAFTA environment. This work furthered that goal by enabling SAGAR and USDA economists to collaboratively investigate the changing inter-relationship of their countries' agricultural sectors. For further information on this project, contact John Jinkins, Project Manager, at (202) 694-5234 or JJINKINS@ECON.AG.GOV. ********* END BOX ************* Structural Changes in the North American Produce Industry The produce industry has been changing rapidly in response to market forces. In an integrated industry, both Mexican and U.S. producers must adapt to the changes or lose market share. In the United States, there has been a consolidation of the major buyers in the food industry and in response an increased concentration of suppliers to maintain marketing strength. Many shippers must invest to develop the marketing skills required by these powerful firms that often want special packing, product differentiation, and promotional support (Wilson, Thompson, and Cook). Large customers often prefer to deal with a few key suppliers throughout the year. This has led to increased pressure for extended season or year-round sourcing. With changes in communications and transportation, it is possible to source commodities from many areas. Producers must find locations with good production potential to fill many marketing windows. Many U.S. firms source from Mexico and other countries to fill this need and consolidate their marketing position in the U.S. market. Mexican firms can produce winter vegetables in Sinaloa and in Baja California during the summer. The competition for supplies has increased, and there are a range of methods used to fill that demand, including contracting for production and joint ventures with other growers. The pressures to coordinate year-round production, often in far-flung locations, are forcing more firms to become vertically integrated or coordinated. Also, large retail buyers with exacting standards require quality and consistency which are easier to achieve in a vertically integrated or coordinated operation. In the United States, grower-shippers have become more important in the produce industry. These large firms control growing, packing and cooling facilities, transportation, sales, and promotion of production (Carman, Cook, and Sexton). Similarly, a few large Mexican growers have forward integrated into sales of their products at the distributing center in Nogales, Arizona. Mexican grower-owned distributors in Nogales are similar to the U.S. grower-shipper but with sales separated from production by 700 kilometers. Mexican firms have diversified from just growing for the U.S. market to being major players in a multi-national business. The success of the extended shelf life (ESL) tomato has also provided additional impetus for Mexican firms to provide this popular product year round and compete with U.S. firms that offer year-round supplies. Thompson and Wilson, in their 1995-96 survey of fresh tomato grower/shippers in California, Florida, and Mexico, found 10 of 31 firms shipped at least 8 months of the year and seven of those shipped 11-12 months. Of this last group, three were from California, and two each from Florida and Mexico. Firms achieve this goal by producing on their own land and/or through contracting or joint ventures with producers in different geographic areas. Not all firms are likely to achieve year-round supplies because it is difficult to compete with low-cost U.S. production scattered throughout many States during the summer months. Typically, Florida expanded to California and East Coast States for summer production, California expanded to Sinaloa for winter production, and California and Mexico expanded to Baja California for summer production. Now the patterns are even more diverse as several Florida firms have joint ventures with Mexican firms. Being able to source from both Florida and Mexico during the winter reduces the risk of not having adequate supplies in the case of bad weather in one location. Winter Vegetable Production in Mexico Winter vegetables for the U.S. market are produced mainly in Sinaloa (figure B-1). Growers produce to U.S. market standards and use sophisticated technology which is not universal in other parts of Mexico. Tomatoes and other winter vegetables are important Mexican exports, with tomatoes accounting for 17 percent of the value of agricultural exports from 1988-1997. Table B-2 shows U.S. imports of Mexican winter vegetables. Imports of tomatoes averaged an annual increase of 19 percent from 1990-97. Other winter vegetables showed average annual increases of 8-9 percent. Increases in exports have been driven by many factors, including increased consumer demand in the United States for fresh vegetables, technological advances in Mexico such as the ESL tomato, decreased tariffs under the North American Free Trade Agreement (NAFTA), and the peso devaluation in December 1994, which made the export market relatively more attractive to Mexican producers. Over time, Mexican producers have sought to extend their season by locating other producing areas in Mexico that can produce for potentially profitable market windows just before and after the main Sinaloa season. Tomato production in Baja California also provides firms with a summer supply so tomatoes can be shipped year round from Mexico. Figure B-2 shows the lengthening of the season. The winter vegetables have always accounted for the bulk of the agricultural trade through Nogales during the October-June season. Table B-3 shows the top 25 imports of fresh fruits and vegetables through Nogales from the 1994/95 through 1996/97 seasons. The winter vegetables are in the top 14 products in terms of volume. Many nontraditional crops are becoming increasingly important in Nogales trade. Some of these products, mangoes and grapes for example, are shipped in the spring or summer which allows firms to extend their selling season and spread fixed business costs over more sales. While only a few firms can source and market a particular product 12 months of the year, others can extend their market season by selling other crops. The winter vegetable industry in Sinaloa is driven by the export market. Growers produce to U.S. standards so they can export, but they sell to both the U.S. and Mexican markets depending on where profit is highest. Vegetables for export are produced under contract with distributors in Nogales, Arizona. Producers grow, harvest, and pack the vegetables and then deliver them to the distributors in Nogales. Growers generally export their highest quality product and sell lower quality production to the domestic market. Some of the winter vegetables, however, such as cherry tomatoes, eggplant, and bell peppers, have limited Mexican demand which reduces marketing options. Domestic sales are generally cash sales at the packinghouse, which is a useful means of improving cash flow during the harvest season. Transportation to Nogales, Arizona and the Border Crossing Process Horticultural products destined for the U.S. market are sent to Nogales, Arizona--700 kilometers from Culiac n, Sinaloa. Nogales, Mexico, and Nogales, Arizona, effectively form one city divided by an international border. Most of the production travels by temperature-controlled trucks, although a small portion goes by rail. Trucks are loaded at the packinghouses and arrive in Nogales, Mexico, the next morning after the 12-18 hour trip. As soon as the truck leaves the packinghouse, information is sent electronically to Nogales to the customs brokers and the distributor who begins selling the product, often even before it has actually arrived. After clearing Mexican and U.S. customs, the trucks deliver their loads to Nogales, Arizona distributors and then most of them return to Mexico. The Mexican growers' organization for the state of Sinaloa, Confederaci¢n de Asociaciones Agr¡colas del Estado de Sinaloa (CAADES), has a section dedicated to supporting the vegetable export industry, the Commission for the Investigation and Defense of Vegetables, which is active in facilitating the export process. In the past, all Mexican produce went to the CAADES inspection compound upon arrival in Nogales, Mexico. For a fee, CAADES: O weighs each truck to ensure it meets U.S. weight standards; O prepares paperwork for the truck (documents of compliance with U.S. safety standards, insurance, and license plates) which is required for driving in the United States; O provides a place for Agricultural Marketing Service (AMS) inspections; O provides information on CAADES recommendations regarding minimum quality standards or shipping quantities; and O records the shipment and notifies distributors. 2/ There are now six private competing centers in Nogales, Mexico to provide these services. This is the last stop to resolve any problems with the product and vehicle before crossing the border. After producing for the U.S. market, and incurring transportation expenses to Nogales, growers try to ensure that the product will cross the border with no problem. Some centers provide additional services such as unloading product that would exceed the U.S. weight limits, providing a new cab or truck repairs to ensure safety compliance, repacking facilities for products that don't meet the grade, and packing or palletizing services. AMS Inspection Florida tomato marketing during the winter season is governed by Federal Marketing Order Number 966, which mandates minimum size and grade standards. Section 8(e), an amendment to the Agricultural Marketing Agreement Act of 1937, provides that if a commodity is listed in the section and is regulated by a Federal marketing order which imposes regulations regarding grade, size, quality, or maturity, the same or comparable requirements can be imposed on imports of that commodity. Winter tomatoes from Mexico, but not roma, cherry, or greenhouse tomatoes, are inspected at the border for quality, condition, and size by representatives of AMS. 3/ All loads of tomatoes are inspected. Tomatoes are partially unloaded, giving inspectors the option to select samples from any location in the truck. On average, about 1 percent of the containers are sampled. Less than one-half percent of total shipments inspected fail to meet the standards. If a load does not meet the minimum quality requirements, it will often be repacked and then reinspected, or sold in Mexico. AMS inspects tomatoes at the CAADES center or one of the other six inspection centers in Nogales, Mexico. AMS will also inspect tomatoes at warehouses in Nogales, Arizona if there are adequate facilities. About 60-70 percent of the inspections take place in Mexico. Inspection for a full load of tomatoes costs about $70-$80 and is based on a flat fee per package. There is no comparable inspection failure rate for Florida because the AMS inspectors go directly to the packinghouse and only tomatoes that meet the grade are shipped. Packers in Florida also pay for AMS inspections. In Nogales, AMS will also inspect a load of any fruit and vegetable, for a fee, if requested. A grower or distributor may request this impartial inspection in cases where the grade is uncertain and must be established before sale or if the condition of a load is under dispute. Mexican and U.S. Customs Customs brokers clear merchandise through customs. Each truck uses both a Mexican and a U.S. customs broker to clear customs. A truck must clear Mexican customs and present the export document of record and pay a user's fee. Mexican customs brokers charge a maximum rate of 0.18 percent of the value of the shipment. Then a truck must clear U.S. Customs. All the paperwork has been sent in advance to the U.S. customs broker and been electronically transmitted to U.S. Customs, the Food and Drug Administration, USDA, and the Arizona Department of Motor Vehicles. When the truck arrives at the border, the paperwork has been filed and the decision on whether to require further inspections has been made. U.S. Customs is in charge of collecting tariffs, dealing with tariff-rate quotas, and currently with monitoring the tomato suspension agreement. With NAFTA, all U.S. tariffs on horticultural products will be eliminated over a period of 15 years. The tariffs on winter vegetables, however, were quite low before NAFTA (table B-4). The winter vegetable tariffs are specific tariffs, and the ad valorem value of the tariffs has eroded over time. Tariffs were eliminated immediately for some less sensitive crops and time periods. For more sensitive crops and time periods, the tariff is phased out over a 15-year period. Other crops have phase-out periods of 5 and 10 years. The tariffs on winter vegetables vary by season. To further protect sensitive commodities under NAFTA, tariff-rate quotas were introduced. A specified amount of a commodity is allowed to enter the country during a certain time period at the reduced tariff rate, but any amount over the quota is charged the pre-NAFTA tariff rate or Most Favored Nation tariff rate, whichever is lower at the time of over-quota trade. The United States has two tariff-rate quotas for tomatoes (quotas differ by season) and one each for eggplant and squash (table B-5). The tariff-rate quota grows by a compounded 3-percent annual rate until the tariff is phased out. With the exception of squash in the first year of NAFTA, the tariff-rate quotas have always been filled. Tomato trade is further regulated by a dumping case brought against Mexican producers by Florida tomato producers. On October 28, 1996, the U.S. Department of Commerce announced a 5-year agreement with principal Mexican producers/exporters which suspended the antidumping duty investigation. The suspension agreement established a reference price, or minimum price, for all signatories which covers most Mexican fresh-market tomatoes exported to the United States. The net price, after rebates, discounts, etc., of Mexican tomatoes cannot fall below the reference price of $5.17 per 25-pound box, or 20.68 cents per pound. Food and Drug Administration (FDA) Imports must meet domestic pesticide residue standards and FDA tests that residue levels are within acceptable tolerances, and no unauthorized chemical residues are present. FDA reviews the paperwork for a random sample of 30 percent of the shipments for possible inspection. The decision to inspect is not completely random and depends also on other factors, such as the shipper and the past history of residue violations. Of the 3 percent of total shipments tested in Nogales, about 3 percent of them fail. In 1997 there were 22 entries for raw agricultural products that failed the tests and no shipments of bell peppers, cucumbers, tomatoes, summer-type squash, or eggplant failed. Information on shipments that fail is posted on the internet and the Mexican Government is notified of the problem. See Zepp, Kuchler, and Lucier for a discussion of comparing pesticide residue levels of domestic and imported produce. When a load is selected randomly for inspection, FDA pays for the testing. Once a load from a particular grower has failed, all shipments are tested and there must be five consecutive problem-free shipments (the grower must pay for these inspections at a private facility) before the grower is eligible again for the regular sampling regime. All shipments that fail the test are destroyed to prevent them from entering the United States. In October 1997, President Clinton proposed legislation to permit FDA inspection of foreign food-safety practices and to halt imports of fruits and vegetables from countries that do not meet U.S. standards. The Federal Government, with input from the domestic and international agricultural community, intends to issue guidance on sound agricultural and manufacturing practices for fruits and vegetables within 1 year. Animal and Plant Health Inspection Service (APHIS) The APHIS inspection ensures that a product is allowed entry into the United States and that no observable pests enter. APHIS has identified 23 agricultural commodities that have no problematic pests associated with them, and if these products cross the border in a closed vehicle, as opposed to an open truck, they are eligible for the border cargo release program and are sampled at the reduced rate of 5 percent of the loads. Shippers can prefile commodities in the border cargo release program and if they are not going to be inspected, APHIS releases these loads. All of the winter vegetable commodities, except snap beans, are in the border cargo release program. 4/ All other commodities that are not in the border cargo release program are inspected at a higher rate. Commodities that enter the United States under an APHIS phytosanitary work plan have special inspection procedures. 5/ Nogales Distributors Once a load of produce clears customs, it is delivered to a distributor where the product will be warehoused until sold. There are about 60 distributors in Nogales, Arizona (with approximately 120 dealers and brokers). Distributors in Nogales are U.S. companies, although they may be owned by Mexican growers. They receive product from Mexico and sell to U.S., Canadian, and other buyers. Distributors of winter vegetables generally source in similar ways. They mainly source from Mexico via contracts with growers although there are other options which are discussed below. A grower sells through a distributor, not to a distributor. The distributor does not take title to the product and represents the growers' product for a selling commission. Over time, the ownership of Nogales distributorships has changed. While the industry was once dominated by U.S. distributors, U.S. firms play a less critical role now and are largely indistinguishable from their Mexican -owned counterparts. While there are numerous very strong U.S. distributors, there is obviously a strong incentive for Mexican firms to own or control their own distributorship. In the United States, large grower-shippers sell directly from their packinghouses. Mexican growers don't have that option since their product must still be shipped to Nogales and clear all the inspection hurdles before it is ready to sell. Distributors in Nogales are a critical step in the marketing chain for Mexican products, and many of them are just the marketing arms of large Mexican growers. Instead of just sending their product off to be marketed by someone else in another country, growers with distributorships control their product through the final sale. The distributorship can be owned by the grower or a family member so the operation is vertically integrated or coordinated. All distributors can sell, but sophisticated marketing requires more time and investment. The bigger U.S. and Mexican firms can both market well and acquire the more desirable sales. Despite the obvious advantage of controlling final sales, growers must consider whether they are willing to make the investment in marketing that is required to make a distributorship profitable. The issue of marketing may explain the joint ventures in marketing between large Mexican and U.S. firms. The Fresh Produce Association of the Americas is an organization of distributors in Nogales. Table B-6 indicates the number of distributors that are members of this organization and some of their characteristics. This organization represents most of the distributors in Nogales, but the statistics cannot be taken as representative of the entire industry. The number of distributors ranges from 15 for eggplants to 40 for tomatoes. Most distributors handle more than one product. The top 10 distributors for each commodity control from 68 percent of the total shipments for tomatoes to 95 percent for eggplants. This concentration of distributors (which would usually be called shippers in other places) is common for U.S. production too. Thompson and Wilson found that 15 grower-shippers in California shipped about 80 percent of tomatoes in that State and nine grower-shippers in Florida accounted for about 75 percent of shipments there. Most distributors represent very few growers per crop and a large number represent just one grower, however, a distributor may sell a number of commodities and therefore represent a larger group of growers. With the exception of squash, the average number of growers a distributor represents for a particular crop ranges from 2.6 to 4.4 each. For tomatoes, cucumbers, eggplant, and snap beans, the largest grower for each distributorship represents at least 83 percent of total product represented. Squash distributors, on average, represent 10.7 growers, and the largest grower averages just 59 percent of a distributor's total supplies. There are many squash growers because it is a very easy crop to grow, matures in 35 days, and can be grown early in the season and be followed with another crop. For other crops, production is much more concentrated. Distributors can be broken down into three broad categories: distributors importing to complement their domestic production, distributors with no production in Mexico or the United States, and Nogales-based Mexican grower-owned distributors. Table B-7 shows the types of firm by commodity. 6/ At least 60 percent of all imports, except squash, pass through Mexican grower-owned distributors. These firms import over 70 percent of the peppers, cucumbers, and eggplants. Mexican grower-owned distributors are very important for winter vegetables but do not play such a dominant role for all commodities imported from Mexico. Firms with no production in either country import from 14 to 36 percent of the winter vegetables with the highest market share for squash and snap beans. Distributors importing to augment domestic U.S. production import from 1 to 23 percent of the winter vegetables, with the largest market share for tomatoes. Sourcing There are many ways for Nogales firms to source winter vegetables. Some Mexican grower-owned distributors only sell production from their own farms in Mexico but even these firms use marketing contracts to procure the commodities. Table B-6 shows the percent of distributors that sell only their own production, ranging from an average of 18 percent for squash to 48 percent for snap bean growers. Mexican-owned distributors that sell more than their own product, and other firms that source from Mexico, also use marketing contracts to acquire product from growers. Joint ventures are also used. Purchasing on the spot market is relatively rare. Although there are no available statistics that would show how common the various types of sourcing are, contracting is regarded as the most common. A distributor may use only one method, several methods simultaneously, or may use different methods in different years. With a range of methods, firms can choose business activities to match their risk preferences. It also allows firms to take advantage of a variety of business opportunities. A marketing contract is typically set up before a farmer plants a crop and is usually required for a Mexican grower seeking credit from a Mexican bank. The exact arrangements vary between the grower and distributor. The distributor wants good-quality product to sell since they sell on commission, generally 10 to 12 percent of the f.o.b. Nogales, Arizona, price, although grower -owned distributors may charge their own growers a rate as low as 8 percent. Very few commission rates exceed 12 percent. The commission rate depends on many factors, including the volume of product sold, crop type, credit extended to the grower, and inputs and technical assistance provided. The importance of these services has varied over time and continues to vary by type of grower and crop. Fixed elements in most contracts include the provision that the distributor receives money from the sale of the product and that the distributor can sell any way that they see fit--direct sales, consignment, etc. (although the suspension agreement for tomatoes has made consignment sales more difficult). 7/ At the end of the season, the distributor subtracts money already advanced to the grower from sales and returns the rest to the grower. Contracts are generally for 1 year for an entire crop and the grower is responsible for any losses. When the Mexican winter vegetable industry was less developed than it is now, U.S. distributors played a more critical role. U.S. distributors searched for growers and provided them with infrastructure--credit, technology, and marketing knowledge. Credit has always been an important element of a contract, but as the Mexican credit market has matured, the credit role of the distributor has declined somewhat. Growers can get credit through their distributor, self finance, or get credit through Mexican banks, including preferential credit through Bancomext. Smaller farmers are perhaps more likely to depend on their distributor for financing. The amount of credit provided by distributors varies from year to year depending on other conditions. Distributors would like to provide as little cash as possible, and growers would like as much as possible. Technical assistance has also become less important as the winter vegetable industry in Sinaloa has become increasingly sophisticated. Growers in Sinaloa are well educated and have access to the best technology available from many sources around the world. In the case of the ESL tomato, Mexican growers are leading the way with a new technology. Large Mexican firms are also investing heavily in greenhouse production. Most companies that sell agricultural inputs or services have offices in Sinaloa to sell their product. For some other crops the technological assistance is still important. Joint ventures are also an important method of sourcing from Mexico. There are joint ventures in marketing and joint ventures in growing. Joint ventures in marketing allow Mexican firms to benefit from well-known U.S. brand names. Joint ventures in growing seem to be particularly common for crops grown in areas along the border where U.S. firms can have a more direct impact on production. The importance of joint ventures appears to fluctuate with the changing perceptions of growers and distributors about risk, profitability, and recent business experiences. Although it is not very common for distributors to buy winter vegetables on the spot market, it occasionally occurs. When the Florida or Mexico season starts late or ends early, there are potential opportunities to buy products in other parts of Mexico to fill the gap and make a profitable trade. However, since the produce market is very volatile, it is unusual when a firm can spot an opportunity for such a trade, and arrange to have the product packed in acceptable containers and transported to Nogales before the opportunity has passed. The produce industry began this way with U.S. firms going to Mexico to buy what was available. This method of sourcing is still used for some watermelon trade. 8/ U.S. firms can buy land in Mexico, but it appears to be quite rare. Laws prohibit buying large tracts of land, which limits interest of many potential investors. Since 1992, corporations, both Mexican and U.S., are allowed to buy land, which allows an organization to combine land for up to eight partners. No foreigner can own land within 50 kilometers of the coast or 100 kilometers of a land border. Outside of these areas, an individual may own up to 100 hectares of land for row crops and up to 300 hectares of land for orchards (Cook and Shwedel). Some U.S. firms also lease land in Mexico, but this seems to be more common for crops grown closer to the U.S.-Mexico border. Sales Produce from Mexico and the United States have the same potential markets--retail and foodservice--and once winter vegetables leave Nogales and enter the U.S. supply they are largely indistinguishable from other produce. A distributor may sell directly to the final buyers or via wholesalers, with or without the use of brokers. Brokers negotiate the purchase of produce for a buyer or seller. They may additionally inspect, consolidate the load, and arrange shipping for a purchase. Brokers call various distributors to find the product that best fits the customer's needs. Many buyers have established relationships with brokers and trust them to find the best deal. With many distributors in Nogales, shopping around for the best deal is a specialized business. Estimates of how much of the produce passing through Nogales is sold through a broker, as opposed to direct sales through the distributor, range from about 30 percent up to over 50 percent. In periods of excess supply, distributors rely more heavily on brokers to find buyers. Ideally, a distributor would like to have sales to all types of markets to best cope with the variety of products produced in any season. Factors that affect the types of market channels a distributor uses include length of marketing season, quality, consistency, handling issues, variety of products, and merchandising ability. 9/ Firms with a larger season have more flexibility about selling at a low price at certain times if they can recoup their losses at some other point in the season (Thompson and Wilson). Larger firms that have the resources to market well instead of just sell have an advantage. More sophisticated marketing may require providing retail promotional materials and differentiated products which may include new varieties or presentations of products, brands, or products with special food safety attributes, such as private testing for residues. Summary The North American winter vegetable market is a highly integrated market driven by U.S. consumer demand for fresh vegetables in the winter and Mexican growers who can augment the U.S. supply. A large portion of the U.S. winter vegetable supply comes from Mexico and growers there produce to the specifications required by the U.S. market. Over time, the role of Mexican growers has grown. Instead of just growing for the U.S. market, many Mexican growers now operate integrated firms that market their product through their own distributorships in Nogales, Arizona. Structural change in the North American produce industry will continue to put competitive pressure on all firms to adapt to new and rapidly changing business environments. Sourcing from many locations is becoming increasingly important for both large U.S. and Mexican firms to assure year-round availability demanded by many buyers. Growers and distributors on both sides of the border will continue to search out profitable opportunities in this highly integrated market. REFERENCES Carman, Hoy, Roberta Cook, and Richard Sexton. "Marketing California's Agricultural Production." In California Agriculture: Issues and Challenges, Jerome B. Siebert, ed., Berkeley: University of California, Giannini Foundation of Agricultural Economics, 1997. Cook, Roberta, and Ken Shwedel. "Mexico Frees Agricultural Investment." U.S.-Mexico Free Trade Satellite Conference Proceedings Leaflet Series, Leaflet No.10, Southern Rural Development Center, Mississippi State University, November 1992. Thompson, Gary, and Paul Wilson. "The Organizational Structure of the North American Fresh Tomato Market: Implications for Seasonal Trade Disputes." Agribusiness, Vol. 13, No. 5, pp: 533-547, 1997. Wilson, Paul, Gary Thompson, and Roberta Cook. "Mother Nature, Business Strategy, and Fresh Produce." Choices, First Quarter, 1997, pp. 18-25. Zepp, Glenn, Fred Kuchler, and Gary Lucier. "Food Safety and Fresh Fruits and Vegetables: Is There a Difference Between Imported and Domestically Produced Products?" In Vegetables and Specialties Situation and Outlook, USDA, Economic Research Service, VGS-274, April 1998. Footnotes 1/ Linda Calvin is an agricultural economist with the Specialty Crops Branch, Market and Trade Economics Division, Economic Research Service, USDA. Ver¢nica Barrios is an economist with the Direcci¢n General de Estudios del Sector Agropecuario, Secretar¡a de Agricultura, Ganader¡a, y Desarrollo Rural, Mexico. The views expressed here do not necessarily reflect those of the Mexican Secretariat of Agriculture. 2/ In periods of low price, CAADES will recommend actions to alleviate the problem such as shipping only higher quality products or reducing shipments for a period of time. 3/ Other imported fruits and vegetables that must be inspected at the border to comply with U.S. marketing orders include onions, citrus, and grapes during the Coachella, California marketing season. Citrus is always inspected in the United States since it also requires an APHIS inspection. APHIS inspects citrus in Mexico and the seal on the load must not be broken before it reaches the U.S. side of the border. 4/ The crops eligible for the border release program include asparagus, bananas (excluding flowers), bitter melon, Chinese beans (not green, garden or snap beans), cactus fruit, cactus pads, cantaloupes, chayotes, coconuts, cucumbers, eggplants, grapes, tomatillos, jicama, limes, melons, onions, peas, peppers, squash, strawberries, tomatoes, and watermelons. 5/ Oranges and mangoes both enter the United States under a phytosanitary work plan which specifies the inspection procedure. Orange imports come from a fruit-fly free zone in Sonora where the trailer is sealed after loading. At the border, 10 boxes are selected out of the load and five pieces of fruit are cut to inspect for evidence of fruit fly. For mangoes, the trailer is also sealed in Mexico after the fruit has been treated with a hot water bath. Originally 100 percent of the loads were inspected. Since there have been no problems, inspections have been reduced to only 5 percent of the loads, but they are more rigorous with inspectors off loading the truck to select boxes instead of just taking some off the back of the truck. 6/ These figures must be taken as a general indication only since it is sometimes difficult to categorize firms accurately. 7/ For a fresh product that goes to a processor, like pickling cucumbers, the contract is quite different. The price is specified as well as the quantity. The processor, distributor, and grower all sign the contract. 8/ While firms will generally have contracts with melon producers, there are a lot of very small melon growers. Distributors have employees in Mexico to buy melons on the spot market. In some cases, growers bring loads of unpacked melons to the border where firms bid for the product. 9/ For tomatoes, distribution handling is important. For fresh green tomatoes, repackers are an important market. Repackers buy green tomatoes, ripen them with ethylene gas, sort and repack the tomatoes for retail and food service buyers. Vine ripe tomatoes are also occasionally repacked. End Footnotes List of Tables Table Page 1. U.S. vegetable industry: Area, production, value, unit value, and trade, 1996-98 2. Selected fresh vegetables: U.S. trade volume, 1995-97 3. Domestic utilization of selected processing vegetables 4. Potatoes: U.S. retail prices, by type, 1985-98 5. Fresh vegetables: U.S. f.o.b. shipping point prices, by month, 1993-98 6. Commercial vegetables and potatoes: Indexes of prices received by U.S. growers, by month, 1992-98 7. Vegetables: Producer Price Indexes, by month, 1992-98 8. Vegetables: Consumer Price Indexes, by month, 1992-98 9. Fresh vegetables: U.S. average retail prices, by month, 1992-98 10. Fresh vegetables: U.S. area, production, and value, 1995-97 11. Winter-season fresh vegetables: U.S. harvested area, selected crops, 1993-98 12. Spring-season fresh vegetables: U.S. harvested area, selected crops, 1993-98 13. Fresh vegetables: U.S. shipments, by quarter, 1996-98 14. Fresh vegetables: U.S. import volume and value, by country, 1997 15. Fresh vegetables: U.S. export volume and value, by country, 1997 16. Vegetables: U.S. farm cash receipts, 1988-96 17. Representative wholesale prices for selected fresh-market vegetables and melons in Chicago, 1997-98 18. Supermarket sales of selected processed vegetables, 1989-96 19. Processing vegetables: Selected U.S. contract plantings, 1993-95 average, 1996-98 20. Processing vegetables: U.S. acreage, production, and value, 1995-97 21. Canned vegetables: Quarterly wholesale price trends,1990-98 22. Selected canned vegetables: U.S. import volume and value, by country, 1997 23. Selected canned vegetables: U.S. export volume and value, by country, 1997 24. Frozen vegetables: U.S. carryover, pack, seasonal supply, shipments, 1991/92-1997/98 25. Frozen vegetables: Quarterly wholesale price trends, 1994-98 26. Frozen vegetables: U.S. cold storage holdings, January 1, 1994-98 27. Selected frozen vegetables: U.S. import volume and value, by country, 1997 28. Selected frozen vegetables: U.S. export volume and value, by country, 1997 29. Frozen french fry crop-year supply and use, 1993/94-1997/98 30. Winter-season potatoes: U.S. acreage, yield, and production, 1988 -92 average, 1993-98 31. Spring-season potatoes: U.S. acreage, yield, and production, 1988 -92 average, 1993-98 32. Domestic shipments of U.S. potatoes, 1986-98 33. Fall potatoes: March 1 stocks, by area, 1984/85-1997/98 34. U.S. potato shipments: Season total through March 30 35. Potatoes: Processing use through December 1, monthly and season total, major States, 1985/86-1997/98 36. Potatoes and pulses: Prices received by U.S. growers, by month, 1991 -98 37. Potatoes: U.S. export volume and value to selected destinations, 1997 38. Sweet potatoes: U.S. planted acreage, 1991-95 average, 1996-97, indicated 1998 39. Sweet potatoes: Shipping-point prices, by State, selected weeks, 40-lb cartons, 1992-98 40. Dry edible beans: U.S. planted acreage, 1990-94 average, 1995 -98 41. Dry edible beans: U.S. production, by State, by class, 1997 42. Dry edible beans: Season-average wholesale price, by class, 1986/ 87-1997/98 43. Dry edible beans: U.S. trade volume, by quarter, 1996-97 44. Selected dry peas, lentils, and beans: U.S. export volume and value, by country, 1997 45. Vegetable imports: U.S. value, by group, by month, 1994-98 46. Vegetable exports: U.S. value, by group, by month, 1994-98 47. U.S. per capita use of selected, commercially produced, fresh and processing vegetables and melons, 1990-98 48. Mushrooms: Quantity of imports, by leading countries, 1992-97 49. Mushrooms: Quantity of imports, by product category, 1992-97 50. Mushrooms: Value of imports, by product category and country, 1997 51. Mushrooms: World production, all uses, ranked by top 20 countries, 1991 -96 A-1. Foodbourne disease outbreaks traced to fresh produce, 1990-96 A-2. U.S. fresh fruit and vegetable consumption and import shares, selected products, 1996 A-3. Reported foodbourne disease outbreaks, cases of illness, and deaths, 1988-92 B-1. Market share of Florida, Mexico, and others in winter vegetable market, October-June B-2. U.S. winter vegetable imports from Mexico, 1990-97 B-3. Top 25 fresh fruit and vegetable imports from Mexico through Nogales B-4. U.S. tariffs on imports of fresh vegetables from Mexico B-5. U.S. tariff rate quotas for fresh vegetables from Mexico B-6. Characteristics of members of the Fresh Produce Association of the Americas B-7. Types of Nogales distributors END_OF_FILE