A Fresh Look at Produce Production and Marketing: The Dish … · 2014-08-26 · Geographic concentration of production (due to climate) limits ... Top 5 Countries, 2006-2010 (other

DR. ROBERTA COOK Dept. of Agricultural and Resource Economics

University of California Davis for

Monsanto/Seminis Woodland Field Day August 13, 2014

A Fresh Look at Produce Production and Marketing: The Dish on Today’s

Global Trends

Agenda •  Location of production •  Fresh produce basics •  International trade

•  Selected food industry trends •  Consumer demand trends •  Commodity examples •  Conclusions

Location of production matters! •  It’s all about seasonality – which crop, where, when – whether imported or domestic.

•  Imports, usually off-season, play important role for many, but not all crops.

•  Each commodity has its own story to tell! •  California biggest producer of most produce crops; for many crops CA is the only US producer, over 200 crops grown.

•  CA has a Mediterranean climate.

Leading US Fresh Market Vegetable States,* 2013: Geographic concentration of production (due to climate) limits local sourcing, yet it is growing in the summer/fall

Source: Vegetables 2013 Summary, USDA/NASS, March 27, 2014

Area Harvested Production Value

State % of Total

State

% of Total

State

% of Total

CA 45 CA 49 CA 52 FL 11 FL 9 FL 12 AZ 7 AZ 7 AZ 9 GA 6 GA 5 GA 4 NY 4 WA 4 NY 3

Other 27 Other 26 Other 19 *Excludes potatoes

Market Shares of Leading USA Fresh Fruit Producing States,* 2009

*Excludes tree nuts. Source: USDA/ERS, Gary Lucier.

Percent State U.S. Total

California 53% Washington – leads in apples, pears, cherries 21% Florida 8% Oregon 2% Michigan 2% Other 10% All U.S. fresh fruit 100%

Fresh Produce Industry Size

•  In 2012, California produced approximately:

•  $6.7 billion of fresh fruit •  $5.8 billion of fresh vegetables •  totaling $12.5 billion in farm gate

value.*

*Excludes tree nuts, processing tomatoes and other fruits and vegetables sold in canned, frozen and dried forms. Source: Compiled by Roberta Cook from CDFA California Agricultural Statistics Review 2013-2014.

Seasonality of Naturipe Farms berry production locations trawberries

Califor-n i a Florida

Mexi co

Mexico

Chile Florida

Georgia Califor-nia

Norrh Carolina Indiana

New Jersey Michigan

Oregon Bri~lsh Columbia

Was hington

Uruguay

Ar-gen~ina

aspberrles

Mexi co

Califor-ni a

Mexico Guatemala

Californi a N . Carolina Georgia Oregon

ran berries Quebec Halifax Wisconsin

M ay

J an. M arch April May

_L_ ! I +

_____________ Organic also available

Peak of Season

June

June

Fresh Produce Basics •  Shipping patterns are well established based on ideal

growing locations in each season. •  Generally harvested and shipped daily; weather

affects supply and demand. Markets are volatile! •  Most growers do not market their own production,

they have agreements with shippers or distributors to be their marketers.

•  Most shippers are family-owned forward-integrated grower-shippers, supplementing their own production with that of other growers.

U.S. Fresh Fruit and Vegetable1 Value Chain, Estimated Dollar Sales, Billions, 2010

institutional wholesalers food service

establishments

supermarkets and other retail outlets

consumers

exports

farms shippers Retailer distribution

centers

produce and general-line wholesalers

farm & public markets

imports

$6.1 $26.82

$12.3

$51.157

$122.132 $69.175

$1.800 Sources: Compilations by Kristen Park, Roberta Cook, and Edward McLaughlin based on U.S. Retail Census, ERS/USDA, NASS/USDA, U.S. Department of Commerce, and other data.

1 Excludes nuts and pulses

USA Fresh Produce Industry Size •  Produce shippers focus more on retail than foodservice markets since quantity (vs $) sold thru retail channels is much larger than foodservice.

•  Biggest contributors to foodservice produce sales are potatoes, lettuce and tomatoes and these are high per capita consumption items. Foodservice shares for most fresh produce are low. Seasonality, perishability, price volatility are obstacles. But this is changing!

Fresh Produce Basics • Buyers seek yr-round supply.

• Imports increasingly handled by U.S. grower-shippers

that import during the off-season. Same requirements

for foreign and domestic growers.

• Major food safety requirements, higher cost structure.

• Shippers emphasizing sustainable farming practices.

• Quality, color, shape, flavor, as differentiators,

growing role of proprietary seeds.

Fresh Produce Basics • Cold chain management critical. • More attention placed on reducing waste. • Shippers have big investments. • Price takers. • Growers and shippers require substantial capitalization to withstand low markets.

• Buyer consolidation induces shipper consolidation. • Larger firms have greater ability to invest in food safety infrastructure, R&D to increase efficiency and sustainability, new varieties, etc.

Role of branding in fresh produce marketing • Commodity vs consumer brand marketing perspective. • Traditionally, few produce items were branded (beyond Chiquita, Del Monte and Dole).

• Development of fresh-cut industry introduced brands. • Difficult to brand produce items with intra- and inter-seasonal variations in quality.

• Most produce still sold on random-weight basis (vs UPC codes) so less data as compared with CPG items and supplier not identified.

• Shippers often didn’t have consistent distribution in specific chains week in week out.

Role of branding in fresh produce marketing • Hard to get ROI on investments in branding. • Under-investment in consumer marketing in produce. • Role of generic marketing/advertising programs. • Growth in social media making it less costly to reach target consumers with marketing messages.

• For larger grower-shippers consumer marketing may make sense.

• Traceability changing things (PTI). • Incentives are becoming more aligned to improve quality and flavor and educate consumers about how to use and prepare fresh produce.

Fresh Produce Basics

Growing Role of Technology • Information technology • Big data • Precision farming • Sensors • Drones • New varieties • Mobile • Consumer insights • Social media aids in targeting consumers • Supply chain-wide data sharing

International Trade in Fresh Produce

•  Story of diversification of sources of supply and the types of products imported/consumed.

•  Provides more redundancy which large

foodservice users require to put something on the menu. This may increase produce on foodservice menus.

•  Exporters are generally large, professional

firms.

Fresh fruit and vegetable imports as a share of U.S. fresh utilization/consumption, 2012

Item %

Vegetables, excl. melons and potatoes Melons Potatoes

25.0 30.5 7.0

Fruit, all Excluding Bananas

49.4 33.7

Source: Economic Research Service, USDA.

0 2,000 4,000 6,000 8,000

10,000 12,000 14,000 16,000

Thou

sand

s

Imports: Fresh Veg

Imports: Other Fresh Fruit

Imports: Bananas/plantains

Exports: Fresh Veg

Exports: Fresh Fruit

US Fresh Produce International Trade: Imports and Exports, by Key Category, $Millions US, 1994-2013

Source: US GATS online queries, BICO-10.

Value Shares of Total U.S. Fresh Fruit Imports, by Product

Source: Imports Contribute to Year-Round Fresh Fruit Availability, FTS-356-01, Dec. 2013, ERS/USDA

59

16 7 3 1 3 5 3

28 16

13 12 11 7 4 2

Bananas Grapes Other tropical*

Berries Avocados Citrus Apples & Pears

Stone fruits**

1990-92 2010-12

* includes pineapples, mangos, papayas, durians ** includes apricots, cherries, peaches, plums

Value Shares of Total U.S. Fresh Fruit Imports, by Region: Mexico Wins!


56

23 13

3 5

34 26

33

3 5

Equatorial countries*

Southern Hemisphere countries**

Mexico Canada Others

1990-92 2010-12

* Equatorial countries include Costa Rica, Guatemala, Ecuador, Colombia, and Honduras ** Southern Hemisphere countries include Chile, Argentina, Peru, New Zealand, Brazil, South Africa, and Australia

Example: Seasonal Relationship between Imported and Domestic Grapes, 2010-12 Average


-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Import shipments Domestic shipments

in 100,000 pounds

Chile leads imports, then Mexico, Peru emerging

• N. American fresh veg trade mainly intra-

NAFTA! •  77% of US fresh vegetable exports go to Canada, then Mexico, 8%. Extra-NAFTA exports fragmented.

•  Veggies often more perishable than many fruits which makes proximity to market important.

•  In contrast, fresh fruit trade is diverse both in terms of countries of origin and destination markets.

US Fresh Produce Trade

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

2006 2007 2008 2009 2010

Other Canada Japan Mexico Hong Kong S. Korea

thou

sand

US

dolla

rs U.S. Exports of Fresh Fruit, Top 5 Countries, 2006-2010 (other is the 2nd largest category, so diverse mkts)

Source: US GATS, online data queries.

• In 2013, fresh produce imports from Mexico totaled

$7.8B (54% of total fresh produce imports), including: • $4.6B fresh veg (67% of total fresh veg imports), and • $3.2B fresh fruit (38% of total fresh fruit imports). • Mexico is a powerhouse fresh fruit and veg exporter and is an integral part of the North American fresh produce supply chain for certain commodities. Most of its exports go to the USA (unlike Chile whose markets are truly global).

US Fresh Produce Trade

• Tomatoes, bell peppers, chile peppers, cucumbers,

eggplant, green beans, asparagus, brussel sprouts, watermelon, limes, avocados, mangoes, table grapes, papaya, blackberries, raspberries (and emerging in blueberries and strawberries), green onions, sugar snap peas, cilantro many tropical and specialty fruit/veg, both Mexican and Asian.

• NOT important in leafy greens, broccoli, cauliflower, celery, onions, potatoes, apples, pears, cherries, kiwi, peaches/nectarines/plums, oranges, tangerines, grapefruit, bananas.

Mexico’s Role in US Fresh Produce Trade

• The relatively strong competitiveness of the US industry is because more than being labor-intensive, fruit/veg are knowledge, technology, capital, and marketing-intensive. LOCATION!

• However, protected culture, which is technology and capital-intensive is emerging elsewhere.

• US growers face an ever more complex regulatory environment. • Labor availability is increasingly problematic, everywhere. Efforts to mechanize will grow.

Relative Competitiveness of US Fresh Fruit and Veg Industry

Some Comments on China

China’s share of world horticultural exports grew from 2.5% in 2001 (after it joined the WTO) to 5.6% in 2011. However, this is led by processed hort products vs fresh. China will not be an important source of fresh produce for the USA, rather it is a growing export market for US producers.

Source: ARE Update Sep/Oct 2013 17(1):9-11

Select Food Industry Trends

Growth of Sales at Traditional Foodstores, 2000–2011, in Current and Constant Dollars (2000 base)

percent

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5

5.5

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Current $ Inflation adjusted $

Sources: USDA, ERS calculations using data from U.S. Census Bureau, Economic Census of Retail Trade, Merchandise Line Sales, 1997, 2002, 2007; and Bureau of Labor Statistics, Consumer Price Index, 2000-11.

•  In 2009, the quantity of food sold in food stores declined.

•  “I buy only what I need.” Consumers are increasingly concerned about waste; negative impact on fresh produce demand.

•  Plus, consumption rates of fresh produce increase markedly with income level. So, more low income people means a challenging environment for the produce industry.

•  Economic growth should stimulate produce demand.

Consumer Behavior

The economic downturn accelerates pace of change in the food marketing system

•  More than originating new trends, it intensified pre-existing forces, such as channel blurring.

•  Margin pressure at all levels of the food system! •  Many produce suppliers facing lower profits. •  Need for major investments in info tech systems. •  In aftermath, mergers are up again (food

retailers, foodservice, and mergers or joint marketing arrangements between shippers).

US Grocery Market Shares, by Key Channel, 1998 vs. 2013

Source: Willard Bishop, Competitive Edge, August 2014

15%

39%

46% 90%

8%

2% Nontraditional mass – club - drug supercenter - dollar

Traditional conv supermarket, fresh format, ltd assortment, super warehouse, other

Convenience with and without

gas

2013 1998

shopping habits Millennials shop a variety of retailers to meet their in-‐the-‐moment needs

Source: Outlook on the Millennial Consumer 2014, a presentaBon for PMA from the Hartman Group No. of Retailers Shopped for Groceries in

the Past 90 Days

Most Millennials spread their shopping across many channels and retailers •  Lack of planning results in more trips •  Higher use of all channels than older

cohorts Especially true for specialty channels – 46% of Millennials vs. 32% of Boomers

Millennials Gen X Boomers

9.0 7.1 6.3

Myth BusBng: Millennials don’t just shop at cool and unconvenBonal retailers. While they love these stores, many shop at more mainstream retailers most of the Bme and reserve specialty channels for special occasions.

Emerging marketing channels for fresh produce

•  Convenience store potential, drug stores, dollar

stores. •  E-commerce. Click ‘n collect, delivery, in-store

pickup, other models emerging. Amazon Fresh foray in Los Angeles.

•  Major initiative to increase fresh produce on foodservice menus despite the barriers.

•  Growing international trade provides more redundancy in supply which may help large foodservice users to add produce items to the menu.

Fresh Produce Consumption Trends

4.8 8.8 6.7

10.2

22.1 18.2

0.2 2.4 3.8

11.2

17.8 14.2

Weekly $ sales/store

Weekly quantity sold/store Organic Fruit Organic

Veg

Fresh-cut, Organic and Total Fruit and Vegetable Sales in Select US Food Retailers, % Change 2013 vs 2012

All FruitVeg*

Freshcut Fruit Salads

Fresh Cut Veg

*Excludes other produce (such as salad dressings, toppings, etc.), which is 10% of produce dept sales dollars and 5% of quantity.

Source: FreshFacts® on Retail, Trends 2013, Perishables Group and United Fresh Foundation.

Consumer Behavior •  Higher income and socially conscious foodies are

driving demand; their preferences lean to organic, convenience (fresh-cut), flavor, local.

•  For mainstream consumers, positive attitudes about

wellness benefits of fresh produce not translating into higher purchases. Improved flavor might help.

•  Perception that produce costs more and may be

wasted. Better shelf-life might help. •  47.6 million people on food stamps (SNAP) in

FY2012-13 (vs 17.3 in 2000) for cost of $79.8M.

Initiatives to Increase Consumption

•  More forces are in play to educate consumers about the benefits of fresh produce (MyPlate, salad bars in schools, PBH, govt and private efforts to increase awareness of fruit/veg health benefits.

•  Culinary Institute of America and Harvard School of Public Health Dept of Nutrition Initiative: Menus of Change, The Business of Healthy, Sustainable, Delicious Food Choices. This is designed to introduce more fresh produce on foodservice menus.

•  In the meantime, let’s look at how important income is to produce consumption.

Distribution of U.S. Households by Income Level, Share of Total Fresh Produce Expenditures/Income Level & Ave. Fresh Produce Expenditures/Income Level, 2012

Source: Calculations by Roberta Cook from the Food Institute’s Demographics of Consumer Food Spending, 2014.

$478 14%

$254 8%

$409 17%

$339 13%

$ = Average fresh produce expenditures per income group

% = Percent of total fresh produce expenditures contributed by each income group

$819 31% <$15,000

15%

$15,000-$29,999

18%

$30,000-$49,999

20%

$50,000-$69,999

14%

$70,000-$99,999

14%

$100,000+ 19%

Share of Households

$594 18%

Factors affecting demand for fresh produce

•  Commodity price, consumer income, prices of

substitutes and complements, population growth rates, ethnicity, culture

•  Quality: appearance, flavor, color, shape and size; more breeder emphasis on flavor

•  Info on produce selection, ripening, recipes •  Convenience in prep, usage and consumption;

packaging role •  Shelf-life, postharvest technology •  Consistent availability, year-round supply

Per Capita Consumption of Fruits and Vegetables, All Product Forms

•  Changes in total consumption mask significant changes in:

•  product form •  product mix •  diversity within product segments

0

50

100

150

200

250

300

350

400

450 19

76

1978

19

80

1982

19

84

1986

19

88

1990

19

92

1994

19

96

1998

20

00

2002

20

04

2006

20

08

2010

20

12

Processed Veg, Excl. Potatoes

Processed Potatoes

Fresh Potatoes

Fresh Veg, Excl Melon and Potato

Fresh includes fresh-cut and bulk.

Processed includes frozen, dried and canned.

Fresh includes fresh-cut and bulk.

Processed includes frozen, dried and canned. 81 36

Source: USDA/ERS, Vegetables and Melons Situation and Outlook Yearbook, May 30, 2014; compiled by Dr. Roberta Cook, UC Davis, fresh and processed sweet potato share of total sweet potatoes is estimated; processed vegetables includes lentils and dry peas, and excludes dry beans.

U.S. Per Capita Vegetable Utilization/Consumption, Excluding Melons, 1976-2013P, (all channels,

foodservice and retail), pounds

Poun

ds p

er c

apita 380

343

145

119

U.S. Per Capita Disappearance of Select Fresh Vegetables, 1985-2013P

(includes fresh-cut and bulk)

Pounds per capita P=Preliminary

Source: USDA/ERS, Vegetables and Pulses Yearbook May 30, 2014.

0

5

10

15

Bell pepper Broccoli Sweet corn Cucumber

Culture has shiXed from a reacBve HEALTH paradigm to a proacBve WELLNESS culture

Past:

REACTIVE HEALTH

“Do as I say!”

CondiBon management • Externally measured •

AuthoritaBve • Compliance • Crisis • Quick fixes • Control • AsceBcism

Source: Outlook on the Millennial Consumer 2014, a presentaBon for PMA from the Hartman Group

BE HEALTHY

listen to your doctor!

listen to your mom!

proper nutriBon! take your

vitamins!

avoid germs!

lose weight! exercise!

ConBnued: Culture has shiXed from a reacBve HEALTH paradigm to a proacBve WELLNESS culture

Now:

PROACTIVE WELLNESS

“Know thyself”

PreventaBve • Internally validated • Self-‐assessed • Common sense • HolisBc • Integrated • Balanced energy • Fun and

enjoyment


Shoppers seek several claims in tandem, revealing motivation

Source: FMI U.S. Grocery Shopper Trends 2014. Regularly = at least “fairly often”

48 41

37 35

33 33 32 31 30

28 24

22 22 21 20

18 11

Whole grain Low sodium Low sugar High fiber

No preservatives No trans fats

No chemical additives Low calorie No/Low fat

No HFCS Natural

Non-GMO Low cholesterol Heart healthy

Antioxidant-rich Certified organic

Gluten-free

Percent of Shoppers

Good fiber

No neg. ingreds.

Minimal processing

Heart healthy

Positive nutrition

28

26

25

25

21

19

20

15

19

17

13

11

are minimally processed

contain only recognized ingred's

are locally grown/produced

have shortest ingred. list

2013 2010 2007

Percent of Shoppers

Source: The Hartman Group Health and Wellness Reports, 2007-‐2013

When shopping, about ¼ of consumers look for food and beverages that . . .

Frequency of Purchases of Locally Grown Products

79%

11% 10%

Occasionally Always Never

Source: FMI U.S. Grocery Shopper Trends 2014

food choices QuesBon: How important is each factor in deciding what food you eat?


52

44

41

41

39

36

51

39

37

29

33

32

45

36

29

19

31

26

made with natural ingredients

no GMOs

no allergens

made with organic ingred.

grown locally

manufactured locally

Millennials Gen X Boomers

Percent of

Commodity Example: Lettuce

0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000

1960

19

62

1964

19

66

1968

19

70

1972

19

74

1976

19

78

1980

19

82

1984

19

86

1988

19

90

1992

19

94

1996

19

98

2000

20

02

2004

20

06

2008

20

10

2012

U.S. Iceberg Lettuce Market, 1960-2013: Case of declining demand; International trade not a factor; Production based in

coastal CA and shifts to CA/AZ desert in winter Million pounds

Production Total Consumption/ Utilization

Exports Imports

Sources: USDA/ERS, Vegetables and Pulses Yearbook Data/#89011/May 30, 2014 as of 1990, and USDA/ERS, U.S. Lettuce Statistics, 2011 for prior years.

0

1,000

2,000

3,000

4,000

5,000 19

89

1990

19

91

1992

19

93

1994

19

95

1996

19

97

1998

19

99

2000

20

01

2002

20

03

2004

20

05

2006

20

07

2008

20

09

2010

20

11

2012

20

13

Million pounds

Production Total Consumption/ Utilization

Exports Imports

Sources: USDA/ERS, Vegetables and Pulses Yearbook Data/#89011/May 30, 2014 as of 1990, and USDA/ERS, U.S. Lettuce Statistics, 2011 for prior years.

U.S. Fresh Romaine & Leaf Lettuce Market, 1990-2013Forecast

Head Lettuce

Romaine

Leaf

0 5

10 15 20 25 30 35

1985

19

86

1987

19

88

1989

19

90

1991

19

92

1993

19

94

1995

19

96

1997

19

98

1999

20

00

2001

20

02

2003

20

04

2005

20

06

2007

20

08

2009

20

10

2011

20

12

2013

P

7.7 3.6

Lbs.

Per

Cap

ita

U.S. Per Capita Utilization/Consumption of Lettuce, by Type, 1985-2013P (includes fresh-cut and

bulk, foodservice and retail)

All-23.8

12.5

Source: USDA/ERS, Vegetables and Pulses Yearbook May 30, 2014 and unpublished ERS data for leaf and romaine.

Lettuce innovation: cross between iceberg and romaine

Growth of the Hothouse Tomato Industry in the US, Canada and

Mexico: Game changer

Pounds per capita

P=Preliminary Sources: USDA/ERS, Vegetables and Pulses Yearbook Data May 30, 2014.

0

5

10

15

20

25

US Per Capita Utilization/Consumption of Fresh Tomatoes (1985-2013P)

US Fresh Tomato Retail Market Shares (in Lbs) by Key Type, 2013: Story of Market Transformation

Source: FreshLook Marketing

Roma 27%

TOV 22% Grape

14%

Vine Ripe 12%

GH 9%

[CATEGORY NAME]

[VALUE]*

[CATEGORY NAME] [VALUE]

[CATEGORY NAME] [VALUE]

*Mainly mature green

Y.E.L.O. Youth, Energy, Life, Om…™

Specialty and Greenhouse Tomatoes

0

500

1000

1500

2000

2500

Fresh Field Tomato Production in CA and FL,* 1982-2013: Case of declining retail demand for mature green tomatoes, lower

growth in foodservice demand and loss in competitiveness

million pounds

Florida

California

Source: USDA/NASS. *excludes other states and greenhouse

0

1000

2000

3000

4000

5000

6000

7000 19

90

1991

19

92

1993

19

94

1995

19

96

1997

19

98

1999

20

00

2001

20

02

2003

20

04

2005

20

06

2007

20

08

2009

20

10

2011

20

12

2013

P

U.S. Fresh Tomato Market, 1990-2013: Case of growing import dependence, led by product differentiation and technological innovation (protected culture); Mexico primary import source

million pounds

Consumption

Production

Imports Exports

Sources: USDA/ERS, Vegetables and Pulses Yearbook Data May 30, 2014.

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2009 2010 2011 2012 2013

Poun

ds (M

illions

)

Cherry Grape Hothouse Roma Round Total

Sources: US Department of Commerce. US Census Bureau, Foreign Trade Statistics and ERS calculations.

Total US Tomato Imports, by Key Tomato Type, All Countries, 2009-2013 (millions of pounds): Product Differentiation

•  Margin pressure puts emphasis on streamlining the supply chain, more collaborative relationships between buyers and suppliers. Should reduce waste and benefit consumers.

•  Technology will improve yields, water and input efficiency, supply chain efficiency and cost control.

•  Local will grow, but CA will remain the dominant US producer of most fresh produce crops due to Mediterranean climate.

•  Consumer demand for fresh produce should grow as the economy improves.

•  More efforts to stimulate fresh produce consumption – both public and private – may gain traction.

•  Innovation will improve flavor, shelf-life and performance.

Conclusions

Supplemental Information

California Drought Impact on Fresh Produce

Source: Labor, Water and California Agriculture in 2014, Goodhue and Martin, ARE Update, Giannini Foundation of Agricultural Economics, University of California

Average Value of Water Used in CA, Based on Value of Crop Sales, 2012

0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000

Vegetables Fresh Tomatoes Deciduous fruits

Citrus Almonds & Pistachios Processing Tomatoes

Grapes Onions and Garlic

Grain Corn

Safflower Cotton

Dry Beans Alfalfa

Other Field Rice

Pasture

Water value ($/acre foot)

•  Growers will divert water to higher value crops, which protects fresh fruit and veg crops from major reductions.

•  The drought effect is worst south of the Delta and leafy greens, celery, broccoli, cauliflower are largely not grown there.

•  Summer production of fresh market tomatoes, melons, peppers, are important in the central valley, as well as orchards and vineyards.

•  South of the Delta most growers have ground water sources which mitigate loss of surface deliveries.

•  No major changes expected in 2014.

Water

California Drought Impact on Fresh Produce

•  In the central valley (the main area affected), about 1% of fruit/nut and veg acreage may be fallowed, according to a major longstanding UC Davis economic model, the Statewide Agricultural Production (SWAP) model.

•  Water quality is declining due to drawdown of ground water and higher salinity.

•  Drought hasn’t reduced produce production yet, impact to be felt in 2015 if don’t get big winter snowpack.

California Drought There is plenty of supply to handle more fresh produce on foodservice menus. Prices will continue to depend a lot on daily weather - affects yields, quality, TIMING of production, seasonal overlaps, and demand. Higher energy, water pumping, and labor costs, but grower-shippers are price takers and can’t pass on many costs. Over time, CA will see major changes in crop mix, fresh produce will still be the star!

SWAP Estimated Changes in Irrigated Crop Area: 2014

Source: Prelim. 2014 Drought Economic Impact Estimates in Central Valley Agriculture, CDFA Report May 16, 2014

Sacramento Valley, SD,

and ED

San Joaquin Valley

Tulare Lake Basin

Central Valley Total

Feed Crops -83,481 -39,269 -23,967 -146,718

Vegetables -3,801 -2,638 -3,838 -10,277

Trees & Vines -8,931 -7,514 -24,483 -40,929

Grains -40,785 -20,105 -35,105 -95,995

Other Field Crops -13,523 -55,883 -45,501 -114,907

Region Total -150,521 -125,409 -132,894 -408,825

Misc. Supplemental Information

US Fresh Tomato Imports, All Types, by Key Country, 2009-2013, million pounds

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Mexico Canada Other Countries Total

Millions

2009 2010 2011 2012 2013

Sources: US Department of Commerce. US Census Bureau, Foreign Trade Statistics and ERS calculations.

Source: ARE Update Sep/Oct 2013 17(1):9-11

Export and Import Trade Annual Growth Rates of China’s Labor-Intensive Agricultural Products,

2001–2011

Aquaculture Livestock Horticulture

Exports 13.3% 7.7% 18.0%

Imports 13.5% 15.8% 21.0%

China’s Trade Balance with the U.S. in Horticulture*

62

91

135

181

188

250

275

273

310

397

389

44

50

50

73

140

137

119

153

216

248

349

18

41

85

107

48

112

157 120 94

149

40

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Exports to US Imports from US

million current U.S. dollars

*Processed and fresh fruit/veg, nuts, flowers and ornamentals. Source: ARE Update Sep/Oct 2013 17(1):9-11

0

200

400

600

800

1,000

1,200

1,400

1,600

2004 2006 2012

California Mexico Chile Other*

*Peru emerging

Million

poun

ds Avocado sources of supply in the U.S. market: Availability of Mexican supply displaces Chile and expands total market size

Source: Hass Avocado Board, online data queries.

Fresh Noncitrus, Incl Melon

Fresh Citrus

Process Citrus

Process Noncitrus

0

50

100

150

200

250

300

350 19

76

1977

19

78

1979

19

80

1981

19

82

1983

19

84

1985

19

86

1987

19

88

1989

19

90

1991

19

92

1993

19

94

1995

19

96

1997

19

98

1999

20

00

2001

20

02

2003

20

04

2005

20

06

2007

20

08

2009

20

10

2011

20

12

(frozen, dried and canned)

US Per Capita Total Fruit Disappearance/Consumption, Including Melons, Pounds 1976-2012,

(all channels, foodservice and retail)

Poun

ds p

er c

apita

282 97

53

24 108

282

73 29

102

78

Source: Fruit and Tree Nuts Yearbook, ERS/USDA, 11-19-13.

Fresh includes fresh-cut and commodity.

Obstacles to Fresh Produce in Foodservice •  Seasonality •  Perishability •  Price volatility •  Seasonal shoulders especially risky •  Labor for prep •  Even the largest fresh produce suppliers are

small relative to food manufacturers •  Sourcing often not as direct as for retail •  Variations in quality, flavor

Documents

A Fresh Look at Produce Production and Marketing: The Dish … · 2014-08-26 · Geographic concentration of production (due to climate) limits ... Top 5 Countries, 2006-2010 (other