FRUIT AND TREE NUTS September 06, 2001 September 2001, ERS-FTS-292 Approved by the World Agricultural Outlook Board ----------------------------------------------------------------------- FRUIT AND TREE NUTS is published three times a year (includes yearbook) by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20036-5831. This release contains only the text of FRUIT AND TREE NUTS -- tables and graphics are not included. Subscriptions to the printed version of this report are available from the USDA order desk. Call, toll-free, 1-800-999-6779 and ask for stock # SUB-FTS-4036, $36/year. ERS accepts MasterCard and Visa. ------------------------------------------------------------------------- Summary Grower prices for many fruit crops averaged higher than a year ago this summer due to decreased production. Included here are grapes, peaches, strawberries, fresh oranges, and fresh grapefruit. Reduced acreage on some crops and weather-related problems, including hailstorms, freezing temperatures, and below- average rainfall, all partly contributed to lower production in 2001. The grower price index for fruit and nuts in July 2001 averaged 12 percent higher than the July 2000 index. Grower prices are likely to remain above a year ago through most of the second half of the year as the anticipated smaller crops of apples and pears this fall could lead to higher prices. Meanwhile, grower prices for most tree nuts will likely average lower in 2001/02 as larger crops are expected for most of the major crops. Decreased supplies mean consumers will pay higher prices for most fresh fruit throughout the second half of 2001. Higher retail prices for grapefruit, lemons, bananas, peaches, strawberries, and Thompson seedless grapes boosted the consumer price index for fresh fruit in July 2001 compared with a year ago. Following the trend in grower prices, higher retail prices are expected for apples and pears during the fall. The 2001 U.S. apple crop is forecast to be down 10 percent from a year ago and the smallest crop since 1988. Production is down both in the Western and Eastern regions, offsetting increased production in the Central region. Due to the smaller crop, apple prices in 2001/02 will likely average higher than in 2000/01. Less competition from a smaller pear crop this fall will also help boost apple prices. Reduced supplies and higher prices will limit both domestic and export demand for U.S. apples, especially in the fresh-market sector. Domestic consumption of fresh apples is expected to decline 5 percent from last years estimate of 17.9 pounds per person. U.S. grape production for 2001 is forecast to decline 15 percent from last years record-high crop of 15.3 billion pounds. Although smaller, this years grape crop, if realized, will be 11 percent and 4 percent larger than in 1998 and 1999. Californias production is expected to decline 16 percent and output is expected lower in most other grape-producing States. Reduced production and less competition from smaller crops of stone fruit and citrus point to higher grape prices this summer. A combination of lower production and higher prices will likely decrease domestic consumption of fresh grapes by 4 percent from the 7.5 pounds per person estimated in 2000. Meanwhile, the good quality of this years crop and continued strong international demand has kept U.S. exports of fresh grapes higher thus far this season. U.S. pear production for 2001 is forecast down 5 percent from 2000. The size of the Bartlett crop is 9 percent smaller and the combined production of other U.S. pear varieties is forecast down 1 percent. The overall decline in production this year, combined with the depletion of carry-in stocks, will help boost grower prices during the 2001/02 marketing season. In the fresh-market sector, lower supplies and higher prices will likely lead to more imports, fewer exports, and a decline in domestic consumption from the 3.3 pounds per person estimated for 2000. Harvest of stone fruit crops is expected smaller in 2001 than a year ago, except for sweet and tart cherries. Peaches account for a large proportion of total stone fruit production in the United States. Partly due to reduced supplies, grower and retail prices for fresh peaches have held strong. These higher prices, along with reduced supplies, will likely keep domestic consumption of fresh peaches (including nectarines) in 2001 below last years 5.6 pounds per person. Reduced supplies of apricots and California plums are also expected to lead to higher prices and decreased domestic consumption in 2001. The larger sweet cherry crop, meanwhile, will likely increase domestic cherry consumption about 4 percent from last years estimate of 0.61 pound per person. Commercial strawberry production in five major producing States (CA, FL, OR, MI, and NJ) is forecast down 8 percent from a year ago. Production is expected lower in these States except New Jersey. The smaller crop has kept monthly grower prices for fresh-market strawberries higher than last year. Decreased supplies and higher prices will likely limit this years prospects for U.S. fresh strawberry exports and lead to a decline in domestic fresh strawberry consumption from the 2000 estimate of 4.80 pounds per person. Based on preliminary crop indications reported by the North American Blueberry Council (NABC), the 2001 U.S. cultivated blueberry crop is estimated to be down 5 percent from a year ago. The smaller overall crop reflects reduced production in all major blueberry-producing States except New Jersey and Washington. NABC estimated there were fewer blueberries for both the fresh-market and processing sectors this year. Due to lower supplies, grower prices for fresh-market blueberries are likely to average higher, but large carry-in stocks will likely put downward pressure on processing blueberry prices. U.S. cranberry production is expected to decline 1 percent in 2001 from a year earlier. Production declines are expected in most major producing States, except in Wisconsin. As most of these States had average to good growing conditions, much of the decline in production may be attributed to a federal marketing order that will restrict the amount of cranberries that can be marketed during the 2001/02 season. While the crop is expected smaller, carry-in inventories are still expected to remain large, though down from a year ago, limiting any improvement in grower prices during the 2001/02 season. Demand for fresh tropical fruit in the United States has been on the rise--a trend influenced mainly by the Nations growing immigrant population. Because areas with tropical climate are limited in the United States, imports constitute the bulk of the U.S. tropical fruit market, with bananas accounting for over 85 percent of the total import volume. Imports were down in 2000 for bananas, canned pineapple, and pineapple juice, lowering domestic per capita consumption for these commodities. Meanwhile, greater imports of fresh and frozen pineapple, mangos, and papayas led to increased per capita consumption. The 2000/01 citrus crop is projected to be 6 percent smaller than the previous season, with reduced-sized crops for all citrus fruit except lemons. Despite the smaller crop, sluggish demand brought lower prices to growers for grapefruit, processing oranges, and lemons. Drought conditions in Florida, the major citrus-producing State, reduced its citrus production 6 percent. Growers also were removing grapefruit trees from production due to low prices from poor demand in recent years, further decreasing the total citrus crop size. The size of Californias citrus crop fell 9 percent due to lighter fruit set on orange and grapefruit trees than last season. Arizonas citrus crop fell marginally while only in Texas was the citrus crop larger. The 2000/01 U.S. orange crop is expected to decrease 5 percent from the previous year, but was the fourth largest on record. Production declined in all States, except Texas. The good quality and large size of this seasons fresh oranges from California helped drive up exports 21 percent above last season. As a result of the smaller crop and higher exports, consumption of fresh oranges this season is projected to decline to 1.5 million tons, 14 percent below last season and the second lowest in 10 years. Orange juice production in 2000/01 is forecast to decrease 7 percent from the previous season, but the third highest in history. Juice yields were higher than a season ago--frozen concentrated orange juice (FCOJ) yield was up 2 percent and not- from-concentrate (NFC) orange juice yield was up 5 percent. Despite reduced production and imports, supply estimates only dropped 4 percent due to record-high juice stocks at the beginning of this season. Because of continued large supplies, grower prices for processing oranges were down 19 percent from the previous season. Strong demand for NFC orange juice limited the decline in domestic consumption to less than 1 percent, to 5.83 gallons per capita. The U.S. grapefruit crop is forecast to decline 10 percent in 2000/01 from a year earlier, the lowest quantity since 1991/92. The smaller crop is largely attributed to fewer trees and small fruit in Florida, and light fruit set in California. Floridas crop fell 14 percent from last season and accounted for 79 percent of this years total production, a smaller share than in past seasons. Florida grower prices fell 52 percent this season due to lower prices for processing grapefruit. Consumers faced fractionally higher retail prices for fresh grapefruit this season compared with last season. With the smaller crop and higher retail prices, fresh grapefruit consumption is projected to decline 33 percent from last seasons estimate of 5.19 pounds per person, declining for the third consecutive season. The total tree nut crop is expected to increase in 2001 after declining 15 percent in 2000 from the previous year. Indications for a larger crop are based on the alternate bearing nature of nut trees. This year should be an on year for most of the major crops, almonds, walnuts, hazelnuts, pecans, and macadamia nuts. Only the pistachio trees will be on an off cycle. Accounting for more than half of the total tree nut output, the California Agricultural Statistics Service forecast almond production to be at a record high in 2001, up 21 percent from a year ago. Although grower prices are expected to decline as a result of the expected large crops, grower revenues should be higher this year as increases in production will more than likely offset the declines in prices. Fruit Price Outlook Smaller Crops Point to Higher Prices During the Second Half of 2001 Grower prices for many fruit crops averaged higher than a year ago this summer due to decreased production. Included here are grapes, peaches, strawberries, fresh oranges, and fresh grapefruit. Reduced acreage on some crops and weather-related problems, including hail storms, freezing temperatures, and below-average rainfall, all partly contributed to lower production in 2001. The grower price index for fruit and nuts in July 2001 averaged 12 percent higher than the July 2000 index (table 1). Grapes, oranges, and apples carry the most weight in the calculation of the index. Other fruit (and nuts) used in the calculation of the index include grapefruit, lemons, peaches, pears, strawberries, and almonds. The stronger July index was attributed to higher grower prices for grapes, pears, peaches, strawberries, fresh oranges, and fresh grapefruit. While the larger 2000 fall pear crop resulted in lower fresh pear prices through most of the 2000/01 season, seasonal supply decreases and smaller crops of summer fruit such as peaches, strawberries, and most citrus boosted end-of-season prices. By the end of April, stocks of pears in cold storage were 48 percent lower than the same time last year, and as of May 31, stocks were fully depleted. Pear prices from May through July averaged 92 percent higher than the same period a year ago. Higher fresh orange prices are a result of the smaller fresh-market crop, as well as strong demand both in the domestic and international markets for large-sized, good-quality fruit. Despite the smaller 2001 grapefruit crop, lackluster demand held grapefruit prices (fresh and processed) below a year ago through most of the 2000/01 season. Fresh grapefruit prices, however, gained strength since May and averaged higher than the same period from May through July. Besides the smaller grapefruit crop, seasonal decreases in supplies (particularly in Florida) and less competition as a result of lower production of many summer noncitrus fruit probably pressured fresh grapefruit prices higher during those months. Offsetting some of the upward pressure on prices in July were lower prices for apples as stocks remained above the July 2000 level. With the larger harvest in the fall of 2000, apple prices averaged lower through much of the 2000/01 season. Grower prices are likely to remain above a year ago through most of the second half of the year as the anticipated smaller crops of apples and pears this fall could lead to higher prices. Meanwhile, grower prices for most tree nuts will likely average lower in 2001/02 as larger crops are expected for most of the major crops. Based on the alternate bearing nature of nut trees, 2001 should be an on year for the major crops grown in the United States, except for the pistachio crop. Decreased supplies for most fresh fruit are going to keep retail prices higher than a year ago throughout the second half of 2000. In July, the Consumer Price Index (CPI) for fresh fruit averaged 6 percent higher than the same period a year earlier (table 2). The higher CPI compared with a year ago reflects higher retail prices for grapefruit, lemons, bananas, peaches, strawberries, and Thompson seedless grapes (table 3). Higher prices for bananas reflect not only fewer imports but also less competition from lower supplies of other summer fruit. Although supplies were below a year ago, banana prices averaged lower during the first half of 2001, perhaps due to large supplies of apples and pears from last years harvest that have pushed retail prices for these commodities lower. Seasonal increases in supply during the summer point to a downward movement in retail prices, forcing the August CPI to drop from the July CPI. Following the trend in grower prices, higher retail prices are expected for Red Delicious apples and Anjou pears during the fall. Noncitrus Fruit Outlook U.S. Apple Crop Expected Smaller in 2001, Prices Likely To Be Higher The U.S. Department of Agricultures (USDA) forecast for 2001 U.S. apple production was 9.6 billion pounds, down 10 percent from a year ago (table 4) and the smallest crop since 1988. Production is down both in the Western (down 16 percent) and Eastern (down 3 percent) regions, offsetting increased production in the Central region (up 12 percent). Because of the smaller crop this year, apple prices in 2001/02 will likely increase from price levels of 2000/01. Less competition from a smaller pear crop this fall will also help boost apple prices. Reduced supplies and higher prices will limit both domestic and export demand for U.S. apples, especially in the fresh-market sector. Domestic consumption of fresh apples is expected to decline from last years estimate of 17.9 pounds per person. With the exception of California, all western apple-producing States are expected to harvest smaller crops of apples this fall with the region producing a total of 5.9 billion pounds. Production in Washington is expected to reach 4.9 billion pounds, down 17 percent from 2000. Washington produces over half the Nations apples and is the largest producer for both the fresh and processing markets. Besides being in its off production year (Washington produced a near-record large crop in 2000), other weather-related issues and a drop in bearing acres have also contributed to the anticipated smaller crop this fall. In addition to the stress on the trees resulting from below-average rainfall during the spring, combined heavy winds and hail from a storm in June caused severe damage to orchards in the States Yakima Valley. Unfavorable weather during bloom and hail also reduced production in the States Wenatchee area. In California, the second largest apple-producing State in the region, weather was generally favorable and was conducive for increased production. Meanwhile, decreased production in other Western States could be partly attributed to crop damage caused by hail, early-season frost, and late-season drought. Almost similar weather problems affected apple production in many Eastern States, while generally favorable weather improved crop performance of apple crops in most Central States, except in Ohio. As of July 1, 2001, U.S. apple holdings, as reported by the U.S. Apple Association, totaled 21.3 million bushels, up 9 percent from this time last year and 26 percent higher than the 5-year average. Fresh apple holdings (mostly in controlled atmosphere storage) were up 16 percent, while total processing holdings were 8 percent less. Although fresh-market stocks from the 2000 fall apple crop are still quite large, the diversion of these stocks to the processing sector and the expected smaller crop in Washington, the largest supplier to the domestic fresh apple market, will help ease any fresh-market supply pressure during the 2001/02 season. Fresh-market supplies in 2001 are anticipated to be below last year, likely resulting in higher prices, increased fresh apple imports, and reduced fresh apple exports. During 2000, fresh-market supplies were up 4 percent from the previous year and the season-average price growers received for fresh-market apples declined 16 percent, to 17.9 cents per pound. Retail prices for Red Delicious apples mirrored the pattern in grower prices during 2000/01 and averaged 66.1 cents per pound (August-July), down 30 percent from the previous season. U.S. production of apples for the processing sector in 2001 will also likely be limited. Many Eastern States, where a large proportion of production is for processing, are expected to harvest smaller crops. In addition, although combined production in the Central and Eastern States are expected up 2 percent from a year ago, the much smaller crop in Washington will likely bring overall production of processing apples down from last year. Washington accounts for over one-third of processing apple production. Reduced production and lower stocks of processing apples will help improve grower prices. However, stocks of 2000 fresh-market apples being diverted to the processing sector will likely mitigate some of the upward pressure on prices. During 2000, production of processing apples was down from a year ago but large carryover stocks from the 1999/2000 season, along with increased imports of apple juice and cider, contributed to lower grower prices. The 2000/01 season-average grower price for processing apples averaged $103 per ton, down 20 percent from the previous season. Increased production in the fall of 2000 reduced imports of fresh apples during the 2000/01 season. U.S. imports from August 2000 through June 2001 totaled 301.5 million pounds, down 5 percent from the same period a year ago. About 94 percent of this volume came from the United States three largest suppliers of fresh- market apples. Of these top suppliers, imports were down from Canada (19 percent) and New Zealand (11 percent) but were up from Chile (23 percent). During the same period, exports of fresh apples increased 44 percent to 1.6 billion pounds. Exports were up to all major markets, including Mexico, Taiwan, Canada, Hong Kong, Indonesia, and the United Kingdom. U.S. imports of apple juice and cider from August 2000 through June 2001 totaled 286.1 million gallons, up 2 percent from the same period a year earlier. Although smaller volumes were shipped from large suppliers such as Argentina and Chile, imports were up sharply from China, Italy, Germany, Hungary, and New Zealand. During the same period, U.S. apple juice exports declined. At nearly 7.0 million gallons, exports were down 21 percent, reflecting reduced shipments to Japan and Canada, the two leading markets. U.S. Grape Production Lower in 2001 U.S. grape production for 2001 is forecast to decline 15 percent from a year ago, to 13.0 billion pounds (table 5). While production is expected to be down from last years record-large crop, this years grape crop, if realized, will be 11 percent and 4 percent larger than in 1998 and 1999. Californias production is expected to decline 16 percent from the record 14.1 billion pounds harvested last year. Reduced production is also expected in most other grape-producing States, except in Washington and Oregon where the grape crops are forecast 11 percent and 24 percent larger and in Arkansas where output is expected unchanged. Grape production in California during 2001 is expected to consist of the following: 52 percent wine varieties, 34 percent raisin varieties, and 14 percent table varieties. Production of table varieties is expected to be up 3 percent from a year ago while those of wine and raisin varieties are expected to be down 8 percent and 31 percent, respectively. The California Agricultural Statistics Service estimated the States total grape acreage in 2000 at 955,000 acres, up 2 percent from the previous year. Total bearing acres rose 5 percent to 827,000 acres, but non-bearing acres declined 15 percent to 128,000 acres. Bearing acres rose for all variety types while non-bearing acres declined for table varieties (down 15 percent) and wine varieties (down 15 percent). Non-bearing acreage for raisin varieties was unchanged. Acreage devoted to wine-type grape production accounted for 59 percent of total grape acres, of which bearing acreage increased 8 percent (the largest increase among variety types) to 458,000 acres. Increases in bearing acreage for raisin and table varieties were 0.4 percent and 2 percent, respectively. The Thompson seedless variety continues to be the most predominant grape variety grown in California. Although this variety is used primarily in making raisins, it is also used for fresh-market consumption and in the production of juice concentrates and wine. Flame seedless is the leading table grape variety, but bearing acreage was 4 percent smaller in 2000, while bearing acreage for the Redglobe variety rose 8 percent. Prominent wine grape varieties are Chardonnay and French Colombard for white wine and Cabernet Sauvignon, Zinfandel, and Merlot for red wine. Among these popular varieties, increases in bearing acreage last year, however, were most significant for Cabernet Sauvignon (up 21 percent), Merlot (up 15 percent), and Chardonnay (up 10 percent). Bearing acreage for French Colombard declined 5 percent. Reduced production this year points to higher grape prices. Grower prices for fresh-market grapes from May through July declined seasonally and averaged $875 per ton, up 51 percent from the same period a year ago. Less competition from smaller crops of stone fruit and citrus provided additional upward pressure on fresh grape prices during the summer. Retail prices for fresh Thompson seedless grapes also declined seasonally, but the June- July average was 35 percent higher than the same period in 2000. A combination of reduced production and higher prices will likely lead to a decline in domestic fresh grape consumption during the 2001/02 season. Export prospects will also be limited by these same factors but the good quality of this years crop and continued strong international demand are keeping shipments to foreign markets higher than a year ago thus far for the new season. Domestic consumption of fresh grapes is forecast to decline about 4 percent from the 2000 estimate of 7.5 pounds per person. With the record production last year, U.S. exports of fresh grapes for the 2000/01 season (May-April) were 24 percent above the same period a year earlier, reflecting increased exports to major North American markets and many important Asian Pacific Rim markets. For the new season, shipments to many Asian markets continue strong thus far (May-June) resulting in a 4- percent increase in total export volume from the same period a year ago. Due to the smaller crop this year, U.S. imports of fresh grapes will likely increase during 2001/02 to help meet consumer demand in the United States, especially if no major weather problems arise to curtail this years grape production in Chile, the dominant foreign supplier to the U.S. market. Import volumes are heaviest during the months of January through April, when domestic production is in its off season. During the 2000/01 season (May-April), U.S. imports of fresh grapes declined 4 percent from the previous year to 954.9 million pounds, partly reflecting last years fresh-market production that was the second largest on record (table 6). The largest volume harvested for the fresh market was reported in 1997 at 937,100 short tons. Imports from Chile registered a 5-percent decline and accounted for 76 percent of total import volume during 2000/01. Imports from Canada and the Republic of South Africa also declined, but shipments increased from Mexico and Argentina. Combined, these other suppliers made up most of the remaining import volume. During the same period, U.S. exports of fresh grapes rose 24 percent to 655.7 million pounds, with increased volumes shipped to most major markets, except to Hong Kong. Record-large production for the processing sector during 2000 pressured down prices growers received for processing grapes. In particular, production increased for grapes used for making wine (up 23 percent) and raisins (48 percent). Correspondingly, grower prices for these two processing categories declined 4 percent (to $511 per ton) and 54 percent (to $133 per ton), respectively. Grapes crushed for wine production accounted for 61 percent of processing grape production, while grapes dried to make raisins made up 32 percent. During the same period, production declines reported for grapes for canning and for juice resulted in higher grower prices in both categories. These price increases were not enough to offset the price declines in the more dominant processing categories. The 2000 season-average price for processing grapes was $373 per ton, down 15 percent from the previous year. Continued strong domestic demand contributed to a 10-percent increase in U.S. wine imports during 2000 from a year ago, reaching 121.1 million gallons. Among the top five suppliers last year, imports rose from Italy, France, Australia, and Chile but declined from Spain. Also strong was the export market for U.S. wine. U.S. wine exports reached another record in 2000, increasing 6 percent from a year ago, to 73.9 million gallons. The five leading markets last year were the United Kingdom, Canada, Japan, the Netherlands, and Switzerland, whose combined share was 72 percent of the U.S. wine export market. Export gains were achieved to these leading markets, except to Japan and Switzerland. U.S. wine imports and exports from January-June 2001 were up 6 percent and up 11 percent, indicating a continuing strong market for wine both domestically and internationally. Larger domestic production and carry-in stocks during 2000, combined with sharply lower grower prices, helped promote U.S. raisin exports during the 2000/01 season (August through July). Exports through June increased 41 percent. Imports for the same period fell 33 percent. Ending stocks of domestic raisins remained large in 2000 and along with depressed prices are expected to lower production in 2001/02. While domestic supplies are still likely to remain large in 2001/02 even with lower production, exports are likely to decline due to a large world surplus of cheaper raisins entering into the new season. U.S. Pear Crop Smaller in 2001 Total U.S. pear production for 2001 is forecast down 5 percent from 2000 to 1.8 billion pounds (table 7). The harvest of Bartlett pears is projected to decline for the second consecutive year, reaching 946.0 million pounds. The size of the Bartlett crop is 9 percent smaller than a year ago and 19 percent below 1999. Combined production of other U.S. pear varieties is forecast at 885 million pounds, down 1 percent. Bartlett production is forecast down in California (18 percent) and Oregon (3 percent), but up in Washington (5 percent). These three Pacific Coast States produce nearly all the Bartlett pears in the United States. Frost and hail affected Californias production during the early spring. Oregons production also experienced little frost damage. In Washington, growing conditions were generally favorable, but below average rainfall still remains a concern among growers. The overall decline in production this year, combined with the depletion of carry-in stocks, will help boost grower prices during the 2001/02 marketing season. As of June 30, 2001, the end of the 2000/01 marketing season, stocks of both Bartlett and other variety pears were already exhausted relative to the same period a year ago. Bartlett pears are mostly used for processing while other-than-Bartlett pears are primarily utilized for the fresh market. In the fresh-market sector, lower supplies and higher prices will likely lead to more imports, fewer exports, and a decline in domestic consumption from the 3.3 pounds per person estimated for 2000. Although overall production was down last year, more pears were sent to the fresh market, including the diversion of some processing pears into fresh use. Increased fresh-market supplies have put downward pressure on fresh-market grower prices. The 2000 season-average grower price for fresh pears dipped 19 percent from the previous year, to 15.9 cents per pound, the lowest price over the last 6 years. While lowering returns to growers, increased supplies, lower prices, and the good quality of the fruit have spurred demand for exports. U.S. exports of fresh pears during 2000/01 (July-June) rose 10 percent from the previous season, while imports declined 6 percent. Fresh export shipments rose to most of its primary markets, especially to Mexico, but declined to Canada. Stone Fruit Production Down in 2001 Overall stone fruit production (peaches, nectarines, plums, prunes, apricots, and cherries) in 2001 is expected to be down from a year ago. Harvest of most stone fruit crops are expected smaller, except for sweet and tart cherries. U.S. peach production is forecast at 2.54 billion pounds for 2001, down 2 percent from last year, but up 4 percent from the previous 5-year average (table 8). Prune production in California (dried basis) is forecast 29 percent below a year ago, and combined output of prunes and plums harvested in Idaho, Michigan, Oregon, and Washington is expected 4 percent lower (table 9). U.S. apricot production is forecast at 162 million pounds, down 18 percent from a year ago, while total sweet and tart cherry production are forecast up 14 percent and 24 percent, respectively (tables 10, 11, and 12). USDA will not report this years production of California nectarines and plums until January 2002, but estimates from the California Tree Fruit Agreement, a grower-funded organization that promotes fresh-market stone fruit, indicate that pack-out levels will be down from last year for both crops. California is a dominant producer of many stone fruit. Adverse winter and spring weather in California led to the harvest of smaller crops of most stone fruit in the State this summer. Although having no effect on early-variety self-pollinating peaches and nectarines, heavy early-March rains hampered bee pollination of plum varieties that were already in full bloom. An April hailstorm also caused sporadic damage to stone fruit orchards in the State, and crop losses in areas affected were mostly significant. In the Fresno area, for example, the California freestone peach crop suffered severe damage, contributing to a 1-percent reduction in the States freestone production over last year. Strong winds and cold weather also caused some localized losses to sweet cherry production but the States sweet cherry crop is expected to increase 50 percent from last years significantly reduced crop. This year, California is the United States second largest producer of sweet cherries, next to Washington. Weather conditions in Washington were generally favorable throughout the growing period, but rains late in the growing season resulted in a sweet cherry crop smaller than previously anticipated. Despite crop damages caused by the rains, production in the State is expected to be up 5 percent from a year ago at 200 million pounds, partly reflecting more bearing acres coming into production. Meanwhile, Washingtons tart cherry production is anticipated to remain unchanged. In Michigan, weather conditions were generally favorable during bloom that had contributed to a good fruit set for both the States sweet and tart cherry crops. Post-bloom conditions also remained favorable except for isolated hailstorms. The sweet and tart cherry crops in Michigan are forecast up 53 percent and up 47 percent from a year ago. Michigans sweet cherry production this year has rebounded to more normal levels, following last years freeze-damaged output while its tart cherry output is the largest since 1995. Sweet cherry crops in the Northeast region experienced generally similar weather conditions and production, such as in New York and Pennsylvania, and are expected larger than last year. Frost early in the growing season, however, reduced tart cherry production in both these States. Peaches account for a large proportion of total stone fruit production in the United States. While reported to be of generally good quality, California is expected to harvest 1 percent fewer peaches this year, for a total of 1.83 billion pounds. Both the States clingstone and freestone crops are forecast 1 percent smaller than last year. Among other important peach producers, production in Georgia is expected 17 percent larger, while output in South Carolina is expected down 33 percent due to a mix of weather problems. Partly due to reduced supplies, grower prices for fresh peaches have held strong. Although prices have declined seasonally, grower prices from May through July averaged 27 percent higher than the same period a year ago. At the retail end, prices have also declined seasonally and averaged higher than a year ago during the months of June and July. These higher prices, along with reduced supplies, will likely keep domestic consumption of fresh peaches (including nectarines) in 2001 below last years 5.6 pounds per person. Reduced supplies of apricots and California plums are also expected to lead to higher prices and decreased domestic consumption in 2001. The larger sweet cherry crop, meanwhile, will likely increase domestic cherry consumption about 4 percent from last years estimate of 0.61 pound per person. Except for cherries, export prospects for U.S. stone fruit will be limited by the smaller crops harvested this year. Continued strong demand in international markets, however, are keeping shipment volumes above a year ago thus far but at a much smaller growth rate. Exports of fresh peaches (including nectarines) from May through June this year were up only fractionally from the same period in 2000, compared with a 59-percent increase this time last year. Exports increased to important markets such as Taiwan and Mexico but exports were lower to Canada, the leading market, and to Hong Kong, also a large market. U.S. exports of fresh plums thus far are up 8 percent, while this time last year exports were up 43 percent. U.S. exports of sweet cherries increased 9 percent. Well over half the volume went to Japan, the number one market for U.S. sweet cherries, with shipments up 6 percent despite the countrys weak economy. 2001 Strawberry Supplies Lag Last Year, Prices Average Higher Commercial strawberry production in five major producing States-- California, Florida, Oregon, Michigan, and New Jersey--is forecast at 1.64 billion pounds in 2001, down 8 percent from production levels in comparable States a year ago (table 13). In California, the largest producer, production is forecast to decline 7 percent, to 1.41 billion pounds. Cool and wet conditions have generally delayed crop development in most of these States and caused either rain damage or disease problems. Production is expected lower in all States but New Jersey. Acres harvested are down 4 percent from a year ago, with only Florida showing an increase. Average yields in Florida, however, are down 17 percent, causing output in the State to drop. Average yields are also expected lower in the other States, except in New Jersey and Oregon. Production in Oregon benefited from excellent weather conditions, but output is expected to be 3 percent smaller as some acreage will not be harvested due to poor economic conditions. USDA previously included an in-season (spring) forecast for strawberry production in Washington. However, this forecast was discontinued in 2000. Instead, the production estimate for Washington will be reported in the Vegetable 2001 Summary to be released in January 2002. Decreased supplies are keeping monthly grower prices for fresh- market strawberries higher than last year. The January-July average was 89.3 cents a pound, up 32 percent from the same period in 2000. At the same time, cumulative shipments from California were running 17 percent behind (table 14). Winter shipments from Florida for the period November through May lagged the same period a year ago by 23 percent. Retail prices for fresh strawberries also averaged higher, at $1.77 per 12-ounce pint (February-June), 16 percent higher than the same period a year ago. Decreased supplies and higher prices will likely lead to a decline in U.S. fresh strawberry consumption from the 2000 estimate of 4.80 pounds per person. Despite the smaller domestic crop this year, U.S. fresh strawberry imports during the first 6 months of 2001 totaled 62.3 million pounds, 11 percent lower than the same period a year ago. Shipments from Mexico, the dominant supplier, are down 11 percent, reflecting a 3-percent decline in the countrys fresh- market strawberry production. According to USDAs Foreign Agricultural Service, much of the decline in Mexicos strawberry output may be attributed to a smaller acreage being planted to the crop as a result of recent lower market prices. Mexican growers, particularly in the state of Guanajuato, are utilizing areas formerly planted with strawberries to produce less risky crops such as broccoli, cauliflower, sorghum, wheat, and tomatoes. The smaller U.S. crop and higher prices will likely limit this years prospects for U.S. fresh strawberry exports. Aided in part by the larger 2000 U.S. strawberry crop, exports last year increased 10 percent from the year before and totaled 136.5 million pounds. Among the United States major export markets, exports increased to both Canada and Mexico but declined to Japan. Already, exports during the first 6 months of 2001 are 8 percent behind the same period a year ago, reflecting mostly a decline in shipments to Canada that accounts for over 90 percent of the volume. In addition, exports to Japan were down sharply partly due to the countrys sluggish economy that is resulting in a shift away from the consumption of the more expensive U.S. product to relatively cheaper strawberries from China. Strawberries for the processing sector are running behind a year ago. The National Agricultural Statistics Service reported cold storage stocks of frozen strawberries as of June 30, 2001, to be 363 million pounds, 30 percent below the same period a year ago. In addition, imports, particularly those from Mexico, the largest supplier, are also lagging last year due to lower production. Because processing supplies are reduced, grower prices for processing strawberries are likely to average higher than last year. Despite reduced supplies, U.S. exports of frozen strawberries this year thus far (January-June) were up 16 percent from the same period a year ago, when exports were at the lowest level since 1993. Exports thus far this year remain below average compared with volumes shipped during the same period from1995 through 1999. Blueberry Production Expected Down in 2001 The National Agricultural Statistics Service will report its first official estimate of U.S. cultivated blueberry production for 2001 in January 2002. Based on preliminary crop indications reported by the North American Blueberry Council (NABC) as of July 18, 2001, the 2001 U.S. cultivated blueberry crop is estimated to be down 5 percent from last years 185.3 million pounds (table 15). The smaller overall crop reflects reduced production in all major blueberry-producing States except New Jersey and Washington, where the crops are estimated 3 percent and 14 percent larger than last year. Producing over one-third of the U.S. crop, this years output in Michigan, the largest producer, is estimated to be down 3 percent due in part to some freeze damage and an extended dry spell that has not only caused volume to decline but also reduced sizing of berries. For the same period, combined production in Oregon, North Carolina, and Georgia are estimated down 15 percent. Of the U.S. cultivated blueberry crop, NABC estimated both fresh and processing use in 2001 to be down slightly from a year ago. While fresh-market production in the two largest cultivated blueberry-producing States--Michigan and New Jersey--were estimated unchanged and 8 percent larger than a year ago, respectively, production declines in other areas such as in North Carolina (17 percent), Indiana (33 percent), and Arkansas, including other Southern States (15 percent) were enough to reduce total U.S. fresh use. Limited supplies, along with strong domestic demand, will likely keep fresh-market blueberry grower prices above last years $1.30 per pound and exports of the fresh product lower. Cumulative U.S. exports of fresh blueberries from January through June were down 3 percent from the same period a year ago, with lower shipments to Japan, a significant market currently experiencing economic problems. U.S. imports of fresh blueberries for the same period, primarily from Chile, totaled 6.6 million pounds, up 16 percent. Cultivated production for processing use will be down mainly due to lower outputs in Michigan (down 5 percent), Oregon (4 percent), North Carolina (50 percent), and Georgia (28 percent) for this sector. In addition, the New England Agricultural Statistics Service forecast the wild blueberry crop in Maine this year to be 90 million pounds, 19 percent smaller than last years record-large crop but 21 percent above the 5-year average. Although fruit set for the wild crop was reported to be above average, insufficient rainfall in most parts of the State caused berry size to be below average. Much of the wild blueberry crop is for processing and it also constitutes a large proportion of total processing use in the United States. Although production for processing use this year is expected to be lighter, grower prices for processing blueberries are likely to be under pressure from large carry-in stocks. USDA reported U.S. stocks of frozen blueberries on January 1, 2001, to be 45 percent above the same period a year ago. There will also be added pressure from increased competition likely resulting from more imports of frozen blueberries this year, as a larger harvest is expected in Canada, the major supplier to the United States. The preliminary estimate from NABC has the 2001 Canadian cultivated blueberry crop 2 percent larger than a year ago. U.S. imports of frozen blueberries from January through June, mostly from Canada, were up 21 percent from the same period a year ago. Kiwifruit Imports Continue Higher The United States is a net importer of kiwifruit. U.S. kiwifruit imports averaged 75 million pounds during the 1990s, while exports averaged 17 million pounds. As U.S. consumers turned more health conscious in the 1990s, heightened publicity over the nutritional value of kiwifruit aided in increasing domestic consumption of this fruit. Kiwifruit consumption in the United States increased from 0.14 pound per person in 1985 to a peak of 0.60 pound in 1993, and averaged 0.52 pound during the 1990s. More than half of the supplies available in the U.S. market during the mid-to-late 1980s was from the domestic crop. However, this has changed over the last decade with imports gaining in importance. Over the last 6 years, imports made up over 50 percent of domestic supplies and continued to increase in volume in each of those years. Cumulative imports for the 2000/01 season thus far (October-June) totaled 86.4 million pounds, 12 percent above the same period in 1999/2000 (table 17). The overall increase in imports stem from higher imports from Chile and New Zealand, two major markets, and a very steep increase in imports from Greece. Virtually all U.S. kiwifruit is grown in California. Domestic production reached 68 million pounds in 2000, 26 percent larger than the below-average crop in 1999, but about the same as the average crop during 1996 through 1998 (table 18). While bearing acreage remained unchanged for the fourth consecutive year in 2000, ideal conditions for growing last years fall crop increased averaged yields. Increased supplies of good quality fruit aided the export picture for the marketing year 2000/01. Cumulative exports from October 2000 to June 2001 totaled 11.6 million pounds, up almost 1 percent from the same period a year ago, with increased shipments to important markets such as Mexico and Japan. Exports to Canada, however, the leading market, were down 3 percent. Industry sources have indicated that although perhaps slightly smaller than last year due to frost and hail damage in the spring, another strong crop is expected for the fall of 2001. Besides having one of the largest fruit sets (meaning number of fruit per vine) on record, excellent fruit quality is also expected, aiding in the marketability of the fruit both here and internationally. Cranberry Production To Continue To Decline in 2001 U.S. cranberry production is expected to decline in 2001. USDAs August forecast of the 2001 U.S. cranberry crop totaled 558 million pounds, 1 percent smaller than last year (table 19). Production declines are expected in the major cranberry-producing States, except in Wisconsin. Crops in Massachusetts, New Jersey, Oregon, and Washington are expected to be 16 percent, 8 percent, 1 percent, and 2 percent smaller, respectively, while the crop in Wisconsin is expected to be 11 percent larger. As most of these States had average to good growing conditions, much of the decline in production may be attributed to a Federal marketing order established this year that will restrict the amount of cranberries that can be marketed during the 2001/02 season. The smaller production this year points to higher prices than last year but because carry-in inventories continue to be above average, prices are not expected to improve significantly. The Cranberry Marketing Committee, the group responsible for overseeing the Cranberry Marketing Order, estimates ending inventories for the 2000/01 crop year to decline from a year ago but remain large, at about 3.3 million barrels. In recent years, cranberry production has exceeded market demand, resulting in mounting inventories and significant declines in grower prices. Production increased for four consecutive years since 1995, reaching an all-time high of 6.32 million barrels in 1999. At the same time, grower prices continued to decline from a high of $65.9 in 1996 to as low as $17.8 per barrel in 1999. During 2000, a Federal marketing order regulation was established by USDA that regulated the volume of cranberries that can be marketed during the 2000/01 season. Although weather-related problems also reduced yields in some production areas, the 11- percent decline in production last year was mostly attributed to the use of volume controls. In that same year, grower prices rose 10 percent from the record low in 1999 but remained well below average. To continue the efforts to defeat the oversupply situation in the industry in recent years, USDA established a final rule regulating the volume of cranberries that can be marketed during the 2001/02 season. This rule, effective June 28 of this year, establishes a marketable quantity of 4.6 million barrels which corresponds to the total amount of fruit that handlers may purchase from or handle for growers during the season. In addition, growers are only allowed to sell 65 percent of their sales history to processors for the 2001/02 season beginning September 1. Exempt from this volume regulation are fresh and organically-grown cranberries. Growers and handlers/processors from Massachusetts, Rhode Island, Connecticut, New Jersey, Wisconsin, Michigan, Minnesota, Oregon, Washington, and Long Island in the State of New York are affected by this final rule. Due to the marketing restriction, many growers lowered their input use, which includes fertilizers, pesticides, irrigation, and leasing of bees for pollination. In addition, along with reducing planted acres, some growers prevented cranberries from budding by flooding some of their bogs during late spring. Tropical Fruit Outlook Demand for fresh tropical fruit in the United States has been on the rise--a trend influenced mainly by the Nations growing immigrant population. Because areas with tropical climate are limited in the United States, imports constitute the bulk of the U.S. tropical fruit market, with bananas accounting for over 85 percent of the total import volume. Bananas continue to lead fresh fruit consumption in the United States, averaging over 25 pounds per person each year during the 1990s and higher than the combined average per capita consumption of all fresh-market citrus. Of the various types of tropical fruit produced around the world, significant volumes of fresh pineapples, mangoes, and papayas are also being imported into the United States. Banana Imports Down in 2000 but Prices Continue Lower Imports constitute nearly all the banana supplies available in the U.S. market. Banana imports were fewer in 2000, decreasing 6 percent from 1999 but still more than any volume imported in the prior years (table 20). Imports were lower from major suppliers with the exception of Guatemala and Honduras. Imports from Costa Rica and Ecuador, the two largest suppliers for the U.S. market, were 15 percent and 16 percent lower, respectively. As Honduras banana production region slowly recovers from major damage brought by Hurricane Mitch in November 1998, U.S. imports from that country were up sharply from 1999 but remained below pre- hurricane volumes. Imports from Honduras and Guatemala continue to increase in 2001, with shipments from January to June up 66 percent and up 31 percent from the same period a year ago. Imports from other major suppliers, meanwhile, continue to fall behind a year ago, dragging down overall imports thus far (January-June) for 2001 to 5 percent less than the volume during the same period last year. Retail prices for bananas averaged $0.51 a pound in 2000, the highest on record. Higher prices, along with reduced supplies and sharply lower fresh-market orange prices, have contributed to a decline in U.S. banana consumption last year. Per capita consumption of fresh bananas is estimated to decrease 8 percent between 1999 and 2000 to 29.0 pounds. However, this level of consumption remains above the previous 5-year average. Retail prices in 2001 thus far (January-June) are averaging 2 percent lower than the same period a year ago despite fewer imports. Although these lower prices will help improve domestic demand for bananas, per capita consumption in 2001 will likely decline from last years estimate if imports continue lower through much of the year. Hawaiis banana production set another record-high in 2000, reaching 29.0 million pounds, up 18 percent from a year ago and increasing for the fourth consecutive year. New and maturing banana acreage, particularly of the Cavendish variety, was the major reason for increased production. In addition, weather was generally favorable for the 2000 crop, with no major wind damage. Growers planted 160 new acres in 2000 for a total of 1,710 acres and intend to plant another 210 acres in 2001. Of the total acres in crop during 2000, 91 percent was harvested, 9 percent larger than in 1999. Average yields also rose in 2000. At 18,700 pounds per acre, this was up 8 percent from the year before. Growers received an average of $0.36 per pound for all banana varieties in 2000, up from $0.35 a year earlier. Grower prices for Cavendish bananas, the major variety grown in Hawaii, averaged $0.33 per pound, 1.0 cent more than in 1999. The farm value reached a record $10.4 million due to increased production and higher prices. Production during the first 6 months of 2001 totaled 13.8 million pounds, down 4 percent from the same period a year ago, perhaps partly due to some reported insect and disease problems in some areas. Grower prices for all banana varieties averaged $0.39 cents per pound during this time, 4 percent higher than last year. Pineapple Imports Down in 2000, Lowering Consumption Imports of pineapples (fresh/frozen, canned, and juice) decreased in 2000 from a year ago. As a result, per capita consumption for 2000 is expected to decrease 4 percent to 12.9 pounds, fresh- weight equivalent. Per capita consumption of canned pineapple and pineapple juice were estimated to decrease 7 percent and 6 percent in 2000, while per capita use of fresh pineapples was estimated to increase 7 percent. While low relative to other pineapple uses, fresh/frozen consumption in 2000, at 3.30 pounds per person, is the highest on record. Consumption is projected to be down for canned pineapples in 2001, with imports running about 18 percent behind January through June 2000. Fresh and juice pineapple consumption, however, are expected to increase, with imports 14 percent and 5 percent above a year ago for the same period. Imports of fresh pineapple increased 12 percent in 2000 from a year earlier, totaling 711.3 million pounds (table 21). Imports from Costa Rica totaled 574.7 million pounds, 14 percent higher than the previous year. In 2000, Costa Rica provided 81 percent of the fresh pineapples shipped into the U.S. market, a share that has nearly doubled over the previous 10 years. Honduras, Mexico, Ecuador, and Thailand rounded out the top five sources of fresh pineapples for the United States. Together these five major suppliers accounted for 99 percent of the imports. Hawaiis 2000 pineapple crop, at 354,000 tons, was fractionally larger than the previous year and the largest crop since 1994. Acres harvested declined 1 percent to 20,700 acres. Most of Hawaiis pineapple crop is processed. In 2000, 66 percent went to processing, up slightly from 1999. Growers, however, received 3 percent more per ton for processing pineapples. At the same time, pineapples that went to the fresh market remained unchanged from 1999, but growers received almost 2 percent less per ton for fresh-market pineapples. The value of the 2000 crop totaled $101.5 million, up only fractionally from the previous year. Imports of canned and juice pineapple decreased in 2000 over the previous year. Canned imports totaled 702.2 million pounds, 7 percent lower than 1999 (table 22). Canned imports were lower from most major suppliers for the United States, with the exception of the Philippines, Indonesia, and the Republic of South Africa. Canned imports from Thailand, the second major source, was down 29 percent. As a result of increased world supplies during 2000, the United States imported fewer canned pineapples from Thailand, whose product is subject to high anti- dumping duties. Pineapple juice imports decreased 14 percent to 67.4 million single-strength gallons (table 23). Juice imports increased 4 percent from the Philippines, the number one source, but declined significantly from Thailand, Indonesia, Costa Rica, Mexico, and Brazil--also major suppliers. The Philippines accounted for 52 percent of pineapple juice imports in 2000, up from 42 percent in 1999. The combined share of juice imports from the four other major suppliers mentioned above, declined from 56 percent in 1999 to 47 percent in 2000. Increased juice imports from Kenya last year made it the fifth largest supplier to the United States. Mango Imports Up in 2000 The popularity of mangoes is growing faster than all the major tropical fruit consumed in the United States, and almost all of what is consumed comes from imports. Aiding in meeting continued strong domestic demand, mango imports totaled 518.3 million pounds in 2000, up 7 percent from the previous year (table 24). As a result, U.S. mango consumption increased 8 percent in 2000 from the previous year, to 1.80 pounds per person. Mexico is the primary supplier of mangos to the United States, accounting for over 75 percent of U.S. mango imports over the last 5 years. Other major suppliers include Ecuador, Brazil, Peru, and Haiti, all of which supplied larger shipments to the United States between 1999 and 2000. Imports from Mexico also increased but at a much slower rate. Because imports from Mexico will likely be down in 2001, domestic supplies will be limited and per capita consumption this year will likely decline, reversing eight consecutive years of growth. Cool winter weather in Southern Mexico resulted in a light fruit set, particularly on early production, which industry sources have predicted may be down 50 percent. Late blooms in some southern states could yield a heavy set, but overall production in Mexico is still expected short of last years crop. U.S. mango imports from all sources thus far (January-June) in 2001 are down 23 percent from the same period last year, with imports from Mexico 31 percent fewer. Commercial mango production in the United States has been dwarfed by imports since the mid-1970s. U.S. production is limited to southeastern Florida where production has been on a decline--from a peak of 30.3 million pounds in 1987 to 5.5 million pounds in 1997. Besides the destruction caused by Hurricane Andrew on Floridas mango production in 1992, growing competition for land and water from urban expansion and lowered U.S. tariffs on tropical fruit are some of the underlying factors behind the shrinking mango acreage in the State during the 1990s. Total acreage has remained at 1,700 acres with not many trees planted in the last few years. Because Floridas production is now limited to very few producers, the Florida Agricultural Statistics Service has not reported any production since 1997. Increased Papaya Imports To Boost Consumption Imports continue to gain importance in the U.S. papaya market, with its share of domestic supplies increasing sharply from 3.4 percent in 1980 to 75 percent in 2000. Since 1995, fresh papaya imports have continued to surpass commercial papaya production in the United States. Imports totaled 154.1 million pounds in 2000, up 5 percent from the previous year (table 25). Papaya consumption increased 10 percent that year, reaching 0.70 pound per person. Similar to mangoes, Mexico is also the major supplier of fresh papayas for the United States, accounting for 79 percent of all shipments in 2000. However, shipments from Mexico declined 1 percent from a year ago in 2000 but significant increases in shipments from smaller but important suppliers such as Belize, Brazil, and the Dominican Republic provided much of the growth in imports last year. Imports for 2001 thus far (January-June) are 16 percent higher, raising the likelihood of another year of increased per capita papaya consumption. Hawaiis papaya crop increased in 2000 for the third consecutive year, following declining production from 1993 to 1997. Output totaling 54.5 million pounds was 29 percent above 1999. The number of harvested acres declined 15 percent in 2000 to 1,650 acres, but average yields were up 51 percent. Growers received 21 percent less for the value of fresh-market papayas last year compared with what they were paid in 1999. For the same period, prices for processing papayas remained the same. Over the last 3 years, approximately 9 percent of the crop was for processing. Production from January through July 2001 is 5 percent higher than last year, and grower prices for fresh papayas have averaged 15 percent lower. Citrus Fruit Outlook Low Prices Hit Much of Citrus Industry Despite Smaller Crop in 2000/01 The 2000/01 citrus crop is projected to be 6 percent smaller than the previous season, with reduced-sized crops for all citrus except lemons (table 26). Despite the smaller crop, sluggish demand brought lower prices to growers for grapefruit, processing oranges, and lemons. Both fresh orange and tangerine producers received higher prices than the previous season, but lower than 2 years previous when the crop was damaged by adverse weather conditions. Drought conditions in Florida, the major citrus-producing State, reduced its citrus production 6 percent. Growers also were removing grapefruit trees from production due to low prices from poor demand in recent years, further decreasing the total citrus crop size. The size of Californias citrus crop fell 9 percent due to lighter fruit set on orange and grapefruit trees than last season. Both the tangerine and lemon crops, however, were the largest in several years. Arizonas citrus crop fell marginally, although its major crop, lemons, increased in size. Texas was the only citrus-producing State to have a larger citrus crop, increasing 23 percent above a season ago. Both its orange and grapefruit crops were larger. In fact, its grapefruit crop was the biggest since 1982/83, before all the major freezes reduced the States citrus production. Orange Crop Smaller in 2000/01 The 2000/01 orange crop is expected to total 12.3 million tons, 5 percent lower than last season. If realized, however, this seasons crop will be the fourth largest orange crop on record (table 27). About 83 percent of the crop is projected to go to processing this season. While this would be the same proportion as last season, the quantity going to processing would be 5 percent less due to this seasons smaller crop. The good quality and large-size of this seasons fresh oranges from California helped drive up exports, increasing 2000/01 projections to 689,000 short tons, 21 percent above last season and the highest in three seasons. As a result of the smaller crop and higher exports, consumption of fresh oranges this season is projected to decline to 1.5 million tons, 14 percent below last season and the second lowest in 10 years. Orange production declined in all States except Texas. Floridas crop, which accounts for 73 percent of expected orange production in 2000/01, is anticipated to be 4 percent below last season. The decline in crop size is mostly attributed to difficult growing conditions, including an on-going drought and cold temperatures during part of the growing season. Arizonas orange crop, the smallest among the citrus-producing States, declined 7 percent from the previous season, but was the same size as the 1997/98 crop. Only Texas orange crop was larger than a year ago. Cool weather at the beginning of its season slowed the maturity of Texas oranges, and harvesting was extended by a month to make up for the late start. Californias crop accounted for the greatest drop in orange production in 2000/01. The smaller fruit set reduced the yields per tree and resulted in an expected 11-percent decline in crop size. Larger fruit size this year, however, somewhat offset the decline in average yields. The smaller set not only contributed to the larger size of the fruit, but also played a role in the very good quality of this years fresh orange crop. The smaller navel crop this season is responsible for most of the decline in Californias orange production. Navel production is expected to be 15 percent below a season ago, although it is still considerably larger than the 1998/99 crop that was reduced due to freezing temperatures. The Valencia crop is expected to decline only 4 percent from a season ago. As a result, the navel crop accounts for 60 percent of Californias orange crop this season compared with 63 percent a season ago. This means growers will be more dependent on their Valencia crop for cash receipts in 2000/01. If Valencia movement and prices continue to be as weak as last season, this could adversely affect growers returns. California fresh-market orange prices averaged $9.74 per 75-lb box from November 2000 through July 2001, 32 percent higher than last year. This years grower prices were among the highest in the last decade. Only during the 1990/91 and 1998/99 growing seasons, when freezing temperatures greatly reduced Californias crop, were prices higher than this seasons average price. Higher prices so far this season resulted from the small fresh-market crop, as well as strong demand both in the domestic and international markets for large-sized, good- quality fruit. The moderation in the growth of imported clementines this year also helped demand for U.S. oranges. Clementine imports, which had been growing rapidly in the last several years, reducing demand for U.S. oranges and tangerines, increased less than 1 percent this season. Spain, the major source of clementines for the U.S. market, had a smaller crop this season, reducing the quantity available for export. Retail prices for navel oranges averaged $0.69 a pound, 8 percent higher than last season. About 80 percent of the crop was harvested by April 1, leaving only the late variety navels for much of April and May. Valencia harvesting began in March. Fresh orange exports increased 14 percent from November 2000 to June 2001 over the same period a year ago. As of June, 574,884 short tons of oranges were shipped, the largest amount on record. Among the top five markets (Canada, Japan, South Korea, Hong Kong, and Mainland China), exports increased the most to China. The United States had no report of any oranges shipped to China as recent as 1991/92. So far this season, China accounts for 5 percent of the exports, showing great potential for the future. Canada continues to remain the strongest market for U.S. oranges, importing 30 percent of the total. Strong sales to Canada, along with overall solid export growth this year, have been major factors in higher overall grower receipts. Export sales are increasingly contributing to a larger share of fresh orange grower prices. In 2000/01, exports are expected to account for 32 percent of total fresh orange sales, up from an average of 25 percent the previous three seasons. Orange Juice Production Expected To Decline in 2000/01 Floridas 2000/01 orange crop is forecast to be 4 percent lower than last season. However, if realized, the crop would still be the third largest on record. The smaller crop brings the projected juice production 7 percent lower than last year, with Florida accounting for 94 percent of the total volume. The early-mid season varieties totaled 5.8 million tons, 4 percent lower than last season. Harvesting began in late October with the crop in good condition at the beginning of the season. By November, however, drought conditions hit Florida and remained throughout most of the rest of the season. In December, very cold temperatures hit Florida around Christmas time, with some freezing temperatures. The combined adverse weather resulted in fruit size being the smallest on record. Further damage to the fruit, however, was limited. The cold temperatures actually helped protect the fruit from the freezing temperatures, minimizing crop loss. Picking of the early-mid season oranges was completed by the end of March. Valencia picking got underway in late February, with all harvesting turning over totally to Valencias by mid-March. Harvesting was running ahead of last season at this time, but a smaller proportion of the crop had been picked than two seasons previous. The Valencia crop is also expected to be 4 percent below the previous crop, for a total of 4.3 million tons. The Valencia harvest was almost completed by early July. Orange juice production for 2000/01 is projected at 1.4 billion single-strength equivalent (sse) gallons, the third highest in history (table 28). Juice yields were higher than a season ago. At a projected average of 1.58 gallons (420 Brix per 90-lb box), this years frozen concentrated orange juice (FCOJ) yield is 2 percent above the 1999/2000 level. The yield for not-from- concentrate (NFC) orange juice was reported by the Florida Citrus Processors Association to be 6.50 single-strength gallons per 90- lb box, 5 percent above last season. Smaller-sized fruit means there are more fruit per box and results in more juice per 90-lb box. This season, 58 percent of the oranges are expected to be utilized in making FCOJ, with the remaining 42 percent going to NFC. Despite reduced production and imports this season, supply estimates are expected to drop only 4 percent due to record-high juice stocks at the beginning of this season. At 2.3 billion sse gallons, orange juice supplies are the third largest on record. Strong demand for NFC orange juice limited the projected decline in domestic orange juice consumption to less than 1 percent in 2000/01, to 5.83 gallons per person. Ending juice stocks are projected to be at a 3-year low, at 520 million sse gallons. Despite the smaller crop in 2000/01, grower prices were down 19 percent from the previous season (table 29). Record beginning juice stocks reduced the price processors were willing to pay for the early-mid season oranges, pushing down prices growers received. With slower FCOJ movement than a year ago, processors demand did not pick up sufficiently for Valencia oranges to improve overall season-average prices. Also driving the lower price for oranges was the low price of the near-term futures contracts for FCOJ. Since processors were able to purchase FCOJ at such low levels, they were able to pay growers lower prices for their oranges. Near-term futures prices averaged 9-percent lower this October through July than last season. Prices ranged from $0.70-to 0.81 per pound solid throughout the season, considerably below the previous two seasons. The large stock situation and the movement away from FCOJ in favor of NFC contributed to the low prices. Unlike growers and futures prices, retail prices for a 16-fl. oz can of FCOJ was up during the October through June period of 2000/01. Prices ranged from a low of $1.81 in March to a high of $1.93 in June. NFC orange juice retail prices ranged from $3.61 a gallon in November to $5.17 in July. Prices averaged 26 percent below the previous season, according to ACNeilsen Scantrack data. Data from the Florida Citrus Processors Association show that as of the end of July, Florida processors packed 15 percent more NFC this season than last. Most of the increase in the pack came from reprocessed single-strength juice; pack from fruit declined 3 percent from the previous season. Orange juice exports declined 18 percent from October 2000 through June 2001 from the same time last season. Exports fell 29 percent for FCOJ and 7 percent for NFC. Canada, the most important NFC market and fifth most important FCOJ market, increased its imports of both types of juice during this time. NFC exports to Canada increased 3 percent and FCOJ exports increased 41 percent. As recently as 1994/95, Canada was the leading market for U.S. FCOJ exports. However, Canadas purchases of frozen concentrate declined as not-from-concentrate became more popular. Canada has an advantage for NFC shipments over most other major markets because of the proximity of Canada to the United States and its major Northeastern and Midwestern markets. NFC is more costly to ship than FCOJ, and the nearness of the Canadian market lowers the cost of shipping NFC relative to other major export destinations. Mexico became the third biggest export market for NFC during the 1998/99 season. In 2000/01, it was the second largest market, even though shipments fell 37 percent from the previous season. Shipments also declined to the European Union and Japan, the top FCOJ markets. The continued weak Euro and the slow recovery of the Japanese economy continue to hamper these countries imports. USDA forecasts Brazils FCOJ production for 2001 to decline 8 percent from a year ago to 1.5 billion sse gallons, the lowest in 5 years (table 30). Exports, projected at 1.7 billion sse gallons, would be the lowest in 3 years. The 4-percent decline in exports is buffered by the large juice inventory coming into the 2001 season. To meet export demand, ending stocks are projected to decline 49 percent. These stocks, the lowest since 1994, could create problems for next years juice supply if weather conditions do not improve and production decreases. The lower supplies in both Brazil and the United States, the two largest orange juice producers, could put upward pressure on world orange juice prices. Brazil shipped about 70 percent of its FCOJ and other frozen orange juice exports to the European Union (EU) from July 2000 through April 2001. While the quantity shipped fell 3 percent from last season, the share going to the EU increased as a result of the reduced supply. Shipments to the United States were off by 30 percent. Lower supplies, large beginning stocks in the United States, and the good quality of domestic fruit reduced U.S. processors demand for Brazilian juice for blending purposes. The unit value of Brazilian juice to its top four markets ran about 28 percent behind last years value. Again weak demand and the weak Euro affected prices Brazilian processors received for their product. Grapefruit Production Lowest in 9 Years The U.S. grapefruit crop is forecast to total 2.5 million tons, the lowest quantity since 1991/92 (table 31). The 10-percent decline is largely attributed to fewer trees and small fruit in Florida and light fruit set in California. Floridas crop fell 14 percent from last season and accounted for 79 percent of this years total grapefruit crop, a smaller share than in past seasons. The long period of dry weather, along with colder than normal temperatures during the winter, slowed fruit maturity. As a result, fruit use fell behind a year ago, and there was a large amount left by July, with only a few packinghouses and processors left open. As a result, the Florida Agricultural Statistics Service is expecting that there will be economic abandonment of grapefruit this year. Florida grower prices fell 52 percent this season to an average of $3.99 per 85-lb box (table 32). While prices were high last season due to processors demand to build grapefruit juice stocks, this seasons price is also 26 percent lower than the 1998/99 season but was 27 percent higher than the 1997/98 season. Prices were driven down by the price of processing grapefruit. Grapefruit marketed for processing use accounted for 64 percent of this seasons crop. While this is lower than last year, it is higher than the two previous seasons. Growers received an average of 3 cents per 85-lb box this season for processing grapefruit, down from $1.88 per box last season. Prices appeared to improve as the season went along, but peaked in February at $1.01 and then declined to the 33 to 57 cents-per-box range. The late maturity of this years crop led to fruit processing occurring later into the season than usual. Prices for fresh grapefruit also were considerably lower than the previous two seasons. Small fruit and late maturity affecting the fruit sweetness early in the season reduced consumer demand. As a result of the smaller crop this season, fresh grapefruit consumption is projected to decline 33 percent during September 2000 through July 2001, declining for the third consecutive season. Consumers faced fractionally higher retail prices for fresh grapefruit this season compared with last, however, they paid slightly less than two seasons ago. Prices followed their usual cycle. They started off high early in the fall when only a small quantity of Florida grapefruit is available. Prices then declined by November when the harvest is in full swing, and increased again in May through the summer when the Florida grapefruit season is replaced by the much smaller California and Arizona grapefruit crop. Possibly due to the size of much of this seasons crop, retail prices began at a much lower price than the two previous seasons. Prices were more similar to the recent past by December. The United States grapefruit industry is becoming increasingly dependent on its export markets to sell their fruit as domestic demand stagnates. This season, an estimated 18 percent of the total grapefruit crop will be exported. Fresh grapefruit exports increased 2 percent from September 2000 to June 2001 over the same period last season. The level of exports, however, has not returned to the quantity exported in the mid-nineties. Exports to Japan, the largest market for U.S. grapefruit, remained unchanged from a year ago and higher than levels during the height of the Asian economic crisis between 1996 and 1998. This season there was also strong growth in Europe, with exports increasing to France, the second largest market, Germany, United Kingdom, and Belgium. Exports, however, fell slightly to the Netherlands, an important destination because of its role in transshipping fruit throughout Europe. Exports to Canada, the third largest market, continued to decline, as they have the previous six seasons. An estimated 1.6 million tons of grapefruit went to processing this season, 3 percent lower than last season, but higher than the previous 5 years. Grapefruit juice yields for frozen concentrated grapefruit juice (FCGJ) averaged 1.28 gallons per 85-lb box, up 8 percent from a season ago. Similar to the situation with this years oranges, smaller fruit result in more fruit filling a box and increasing the juice yield per box. Juice yields for chilled juice increased 4 percent, with the seasonal average of 5.17 gallons per box as of early July. Juice movement was up this year for FCGJ but down for chilled juice. Retail movement was sluggish for both, but bulk movement increased for chilled and FCGJ. Export sales were strong this season as of July 7, with the volume of concentrated juice shipped to export markets rising 25 percent above a season ago, and chilled increasing 3 percent, according to industry data. While juice pack was down, the greatest decline from last season was in the not-from-concentrate category. Red grapefruit accounted for 54 percent of the concentrated juice stock on hand at the end of July, white grapefruit made up the remaining 46 percent. Overall ending juice stocks were up 3 percent at this time. Ending stocks for chilled juice, however, are running 26 percent behind last season as of the end of July. Tree Nuts Outlook Tree Nut Crop Likely To Be Higher in 2001 The total tree nut crop is expected to increase in 2001 after declining 15 percent in 2000 from the previous year. Indications for a larger crop are based on the alternate-bearing nature of nut trees. This year should be an on year for most of the major crops, almonds, walnuts, hazelnuts, pecans, and macadamia nuts. Only the pistachio trees will be on an off cycle. The California Agricultural Statistics Service (CASS) has made preliminary estimates for the 2001 almond crop, the largest of the tree nut crops produced in the United States. According to CASS, the 2001 almond crop is expected to be a record 850 million pounds (shelled basis), up 21 percent from a year ago. Since the almond crop accounted for 61 percent of the entire domestic nut crop in 2000, the anticipated record crop will likely drive the overall nut crop above last year. Based on the Walnut Objective Measurement Survey by the California Agricultural Statistics Service (released August 31, 2001), California walnut production in 2001 is forecast at 280,000 tons, in-shell basis, up 13 percent from last seasons production. Based on the California Pistachio Objective Measurement Survey, also released on August 31, 2001, California pistachio production in 2001 is forecast at 200 million pounds, down 18 percent from a year ago. Production of hazelnuts in Oregon, which accounts for nearly all of U.S. hazelnut production, is forecast at 48,000 tons this year, up 113 percent from a year ago, based on the Oregon Objective Measurement Survey. Although grower prices are expected to decline as a result of the expected large crops, grower revenues should be higher this year as increases in production will more than likely offset the declines in prices. The recent release of information about the health benefits of nuts may also advance grower prices if the result is to stimulate demand beyond recent levels. A positive response by consumers to the health benefits of a commodity has occurred in other produce industries, increasing demand at least temporarily. The 2000 tree nut crop totaled 1.1 million tons (in-shell equivalent), 15 percent lower than last year. Production declined for all major nut crops except pistachio nuts. Pecan production fell 48 percent, walnut and almond production 16 percent, and macadamia nuts 12 percent. Pistachio nut production, however, almost doubled from last year. The value of the 2000 crop fell less than 1 percentage point from the previous year, totaling $1.5 million. The record-high value of the pistachio crop coupled with only slightly lower almond prices kept revenues high despite the smaller crop size. Record Pistachio Crop in 2000 Pistachio nut production increased to 243 million pounds (in- shell basis) in 2000, up from 123 million pounds the previous year, setting a record. A 5-percent increase in bearing acres along with 2000 being the on cycle in the pistachio trees alternate-bearing cycle contributed to the large crop. Pistachio prices averaged $0.98 a pound in 2000, 26 percent less than the year before. Although prices were lower, the record-sized crop boosted grower revenues to a record $238.1 million, 46 percent above 1999 and 23 percent above 1998. According to the industry, about half the pistachio crop is exported. Industry data show exports from September 2000 through June 2001 increased 38 percent over the previous year. The leading destination for U.S. pistachios is the European Union (EU), accounting for 50 percent of all shipments. Germany, alone, accounted for 20 percent of U.S. exports. The other major EU countries receiving U.S. pistachios included France, Italy, Belgium, and Luxembourg. The majority of the nuts shipped are open in-shell. Hong Kong accounted for 21 percent of all exports to date this year. Hong Kong imports both closed and open in-shell nuts. Other important markets include Canada and Japan. Due to the greater quantity available and lower grower prices, exports increased to all these markets. Smaller Almond Crop Pushed Up Prices The almond crop, totaling 703 million pounds (shelled basis) in 2000, decreased about 16 percent from the previous years record high. Beginning stocks were the highest in 5 years, pushing up total supply to just 5 percent below the previous marketing year. As a result, domestic shipments rose almost 1 percent from a year ago and exports were 5 percent higher. To meet these needs, ending stocks for the 2000 crop are estimated to be 65 percent below a year ago, the lowest level in a long time. Almond grower prices increased 17 percent in 2000, to $1.01 per pound, due to the smaller crop and strong demand. The higher price resulted in the value of the crop declining by only 1 percent from 1999, to $682 million. Exports of shelled almonds to the EU were down 1 percent this year, with shipments falling to Germany and Spain, the two largest markets. Exports to Japan, the third largest market, however, rose 14 percent. Shipments also were larger to the United Arab Emirate, Saudi Arabia, South Korea, Mexico, and India. Shipments of in-shell almonds increased 33 percent over a year ago. India remained the primary destination for in-shell almonds. However, despite a 17-percent increase in shipments, Indias share of U.S. almond exports fell to 67 percent, down from 76 percent last year. Indias decline in its share of the market is attributed to the rapid growth of Chinas market, with exports destined to China increasing 108 percent over a year ago. Walnut Crop Down, Prices Highest in 3 Years The 2000 walnut crop was 16 percent lower than the year before, but 5 percent larger than the 1998 crop. The 2000 crop was an off year in the walnut production cycle, similar to 1998. Bearing acres increased 1 percent in 2000, to 193,000 acres, but were the same amount as 1998. Good growing conditions in 2000 improved yields over 1998, with 5-percent higher yields, at 1.24 tons (in-shell basis) per acre. Due to the size of the 2000 crop, shipments for the 2000/01 marketing year decreased from the previous year for both in-shell and shelled walnuts. In-shell shipments declined almost a third, while shelled shipments declined 5 percent. Exports declined to all the major export markets, except the top Asian markets. Shipments were up in 2000/01 to both Japan and Australia for shelled walnuts. Walnut prices rose 37 percent in 2000 because of the small crop. The season-average grower price of $1,210 per ton was higher than the previous 2 years, but was 15 percent lower than 1997. With the increase in price greater than the decline in production, the 2000 crop value for utilized production totaled $238 million, a 15-percent increase over 1999. Crop Size and Value Decline for Hazelnuts, Macadamias, and Pecans Similar to all the other nut crops, excluding pistachios, the quantity of hazelnuts, macadamia nuts, and pecans was lower in 2000 than 1999 due to the alternate-bearing nature of the trees. Crop size declined 40 percent for hazelnuts, 11 percent for macadamia nuts, and 48 percent for pecans. Bearing acreage for macadamia nuts in Hawaii declined by 6 percent. Acreage planted to macadamia trees has been on a downturn since they peaked in 1995. Low prices since 1998 have caused growers to abandon acreage or replant to coffee and other crops. Crop size in 2000 was further hampered by adverse weather conditions throughout Hawaii. Due to poor growing conditions, yields fell to 2,820 pounds per acre (in-shell basis), the lowest since 1995. Even with the smaller crop, prices fell in 2000 to $0.59 a pound, 12 percent below 1999 and the lowest since 1978. As a result, crop value was also down this year. Total crop value for macadamia nuts declined 22 percent, to $30 million. Hazelnut bearing acres fell in both Oregon and Washington for the second consecutive year. There are, however, still more acres producing hazelnuts than there were prior to 1996. As a result of the decline in bearing acreage and with 2000 an off year in the alternate-bearing cycle, hazelnut production fell to 24,000 tons, down from 40,000 tons in 1999, but up 55 percent from 1998. Grower prices for hazelnuts remained virtually unchanged between 1999 and 2000. In 1999, growers received $890 per ton of hazelnuts and in 2000, they received $891. With the 40-percent smaller crop and the stable price, total revenues from hazelnuts fell 40 percent in 2000, to $21 million. U.S. hazelnut exports were up for the 2000/01 marketing year. Even though the U.S. crop was smaller this year than a year ago, smaller crops from the worlds leading hazelnut producers, Turkey, Italy, and Spain, increased demand for the U.S. nut. Exports rose 45 percent above last year and 54 percent above 2 years ago. Exports more than doubled to the two major markets, Hong Kong and Germany. They were also up to Canada, the next largest market, but fell by half to China. The pecan crop was sharply reduced in 2000. While both improved varieties and native and seedling varieties declined from a year ago, the decrease was strongest for the native and seedling variety, with production off 74 percent. Even with the sharp decline, 2000 production of this variety was 43 percent bigger than in 1998. While prices were strong in 2000, they did not increase enough to bring the total crop value above a year ago. Crop value in 2000 declined 28 percent, to $239 million. Pecan exports rose 6 percent for the 2000/01 marketing year. Exports rose to Canada and the United Kingdom, the two biggest destinations for U.S. pecan exports. Exports to Mexico, the third largest U.S. market, declined. Demographic Profile of Apple Consumption In the United States Agnes Perez, Biing-Hwan Lin, and Jane Allshouse -----1/ ----- 1/ Perez is an agricultural economist with the Market and Trade Economics Division, the others are economists with the Food and Rural Economics Division, all within USDAs Economic Research Service. ----- Abstract: U.S. per capita consumption of apples has risen over the past three decades, with consumption of processed apple products exceeding consumption of fresh apples in the last 20 years. While fresh apple consumption remained fairly stable, the largest increases in processed per capita use during the 1990s were for juice, frozen, and dried products. Using data from the U.S. Department of Agricultures (USDA) 1994-96, and 1998 Continuing Survey of Food Intakes by Individuals, this article examines the distribution of fresh and processed apple consumption in the United States. The analysis suggests that fresh apple use was most popular in the Western region of the United States, while processed apple use was strongly favored in the Northeast. Most apples are still consumed at home. Males generally consume more apples than females. Fresh apple consumption was greatest among Hispanic consumers and people of other races, while processed apple products were more popular among black, non-Hispanics. Apple juice, the largest component in the processed apple market, was most popular among children 2 to 5 years of age, especially among boys. As they got older, the importance of apple juice in their diets diminished and the popularity of the product shifted more strongly towards girls. Keywords: Apple, consumption, per capita use, distribution, fresh, baby food, juice, dried, applesauce, cereal, baked products, frozen meals. Introduction Apple production in the United States has come a long way since the early American settlers brought with them seeds and some grafted trees of European varieties and introduced apples to the eastern coast of North America. Through careful selection and breeding of both wild and cultivated varieties, todays apples are quite different from those that were first introduced. Produced commercially in nearly all of the United States, apple production averaged 20 percent higher during the 1990s compared with the previous decade. USDAs apple production data date back to 1889, when approximately 6.0 billion pounds were produced. Production was generally on a declining trend beginning in the 1910s, with average production bottoming out during the 1940s and 1950s at over 4.0 billion pounds. By the end of the 20th century, production had grown to over 10.0 billion pounds. Data on production for farm household use was first reported in 1909. During the 1910s, about one-fourth of production reported as having value was consumed on farm households. This share has declined over the years to about less than 1 percent during the early-to-mid 1960s when it was last reported. According to per capita disappearance data compiled by the USDAs Economic Research Service (ERS), apple demand in the United States has risen since the 1970s, reversing the downward trend experienced during the first half of the 20th century (fig. A-1). During the 1990s, domestic per capita disappearance of apples for all uses averaged much higher than the previous six decades, approaching peak disappearance levels achieved during the first 10 years of the 20th century. A combination of factors has likely contributed to increased per capita apple use in the United States, including production expansion, rising incomes, a growing and more diverse population, new varieties and products that better meet changing consumer lifestyles and preferences, and more recently, increased awareness of the importance of fruit in a healthy diet. However, due to lack of consumer research in this area, little is known about the demographics of fresh and processed apple consumption. Who consumes apples? What proportion of fresh and processed apples are purchased for at-home versus away-from-home meals? Has the increasing Hispanic population influenced fresh apple demand? This article utilizes USDAs most recent individual food consumption survey to describe the distribution of fresh and processed apple consumption in the United States. Apple consumption was analyzed based on the following socioeconomic and demographic characteristics: food source, region of the country, urbanization, racial or ethnic make-up, income class, age, and gender. The information derived from this article attempts to fill some of the information gaps in the area of consumer research for apples. Data and Methodology USDA has conducted periodic surveys of household and individual food consumption in the United States since the 1930s (see box). The most recent surveys, the 1994-96 and 1998 Continuing Survey of Food Intakes by Individuals, (CSFII) 2/----- conducted by ----- 2/ U.S. Department of Agriculture, Agricultural Research Service, 1998. 1994-96 Continuing Survey of Food Intake by Individuals and 1994-96 Diet and Health Knowledge Survey. CD-ROM. Available from National Technical Information Service, Springfield, VA. ----- USDA's Agricultural Research Service (ARS), provided the basis for this article. Each year of the 1994-96 data set comprises a nationally representative sample of non-institutionalized persons residing in 50 States and Washington, D.C. The 1998 CSFII was a supplemental survey to the 1994-96 CSFII. The supplemental survey was strictly focused on children (see the box for more details). In the CSFII, two nonconsecutive days of dietary data for individuals of all ages were collected 3 to 10 days apart through in-person interviews using 24-hour recalls. The 1994-96 CSFII data set includes information on the food and nutrient intakes of 15,303 individuals, while the 1998 CSFII data set includes 5,559 children who were up to 9 years of age. The respondents provided a list of foods consumed as well as information on where, when, and how much each food was eaten. Standardized probes were used to collect details on food descriptions and amount of food eaten. The location where the food was purchased was coded into several categories. For each respondent, an array of economic, social, and demographic characteristics were also collected. This rich database enables researchers to estimate the market/consumption distribution of a food by numerous delineations. Domestic Apple Demand Rising Apples are the third most valuable fruit crop in the United States, next to grapes and oranges, with 2000 farm cash receipts of $1.5 billion, 11 percent of all fruit and nut farm cash receipts. Considered by Americans as a traditional fruit crop, nearly 100 varieties are now commercially produced in the United States, with 15 of the most popular varieties accounting for over 90 percent of production. Next to oranges, apples (frequently alternating with grapes) are the Nations second most popular consumed fruit (fresh and processed uses combined). According to ERS disappearance estimates, per capita fruit consumption in the United States was 284.3 pounds, fresh-weight equivalent, in 1999, of which 48.1 pounds were apples. Consumption is estimated to decline to about 46 pounds of apples per person in 2000 as a result of reduced production in the fall of last year. U.S. apple consumption (fresh and processed combined) generally trended upward over the past three decades. While U.S. fresh fruit and vegetable consumption experienced significant growth since the 1970s, per capita fresh-market apple use has remained relatively flat. The fresh-market apple sector lagged behind other fresh produce product sectors in meeting the growing demand for fresh-cut products, especially during the past decade. Another factor that may have contributed to the leveling of fresh-market apple consumption in the United States is increased competition from imports of other fruits. Increased fruit imports such as grapes, peaches, nectarines, and plums from Chile (mostly during November through March) beginning in the mid-1980s has expanded out-of-season fruit supplies domestically. While perhaps contributing to boost consumption of many U.S. summer fruits (by extending the season), the increase in choices of fruit for consumers during the winter months, besides the traditional apples, pears, and oranges, may have shifted some consumption away from these commodities. Also, supermarkets across the United States now offer more variety of items in their produce department in response to consumers demands for added convenience, healthy diets, and gourmet and ethnic items (Kaufman, et. al.). The number of stock- keeping units (SKUs) sold in the produce department increased from 173 in 1987 to 225 in 1997 (Litwak, 1988 and 1998). For example, the growing demand for non-traditional fruit products such as tropical fruit, reflecting in part the growing immigrant population in the United States and increased interest among Americans to try new products, has led to increased imports of these products and the greater presence of these products in supermarket produce departments. Growth in average per capita consumption for fresh mangoes, pineapples, and papayas during the 1990s relative to the 1980s was substantial and has surpassed those for most domestically-produced fruit. Processed apple demand has trended higher, exceeding fresh apple demand in the last 20 years. During the most recent 3 years (1998-2000), average fresh use increased 6 percent over the 1978- 80 period (to 19.1 pounds per person annually), while average processing use has risen 50 percent, to 28.6 pounds. ERS estimates suggest the largest processed use of apples is for juice (74 percent), followed by canned (17 percent), dried (4 percent), frozen (3 percent), and other (2 percent). Per capita consumption for all these processed products averaged higher during the 1990s compared with the previous decade, with the largest increases in juice, frozen, and dried products (fig. A- 2). At Home Consumption Still Dominates Despite the growing trend in dining out among U.S. households over the last two decades, Americans still consume the vast majority of apple and apple products at home (fig. A-3). Approximately 94 percent of fresh apples were consumed at home, including fresh apples that were packed or prepared at home, but eaten elsewhere. In this study, the at home and away from home delineation is based on where a food was obtained or prepared, not where it was consumed. Food consumed at home is generally purchased at a retail store such as a supermarket, grocery store, or convenience store. Food consumed away from home is generally purchased from foodservice establishments, but can also be obtained in such places as cafeterias, community feeding programs, or child/adult care centers. Among the various food products that contain apples as an important ingredient, dried apples, which also includes apples in cereal products, were most frequently consumed (97 percent) at home while baked apple products such as dessert items were the least frequently consumed at home (77 percent). On average, about 89 percent of all processed apple products were consumed at home. Western Region Led in Per Capita Fresh Apple Consumption, Northeastern Region Topped Processed Apple Product Use The CSFII data present distinct regional patterns in the consumption of apple products. Among the four-Census defined regions, the Southern region had the largest representation of consumers (35 percent of the population), followed by the Midwest (24 percent), West (22 percent), and Northeast (20 percent) regions (table A-1). Consumption of fresh apples was favored more in the West and less in the South, perhaps partly due to the geographic concentration of production. The West is a major production region for apples, particularly for the fresh market, whereas the South is the smallest producing region. Higher transportation costs may be required to bring apples into the Southern region where local production for the fresh market is relatively low, and the resulting higher retail prices may be discouraging consumption. With a 22-percent share of the U.S. population, the Western States accounted for 29 percent of fresh apple consumption (table A-1). By dividing the consumption share by the population share, we can compare relative consumption as shown in table A-2. For example, figures in table A-2 show that relative to the national average, per capita fresh apple consumption in the Western States is 33 percent higher, while in the South per capita consumption is 22 percent lower. Table A-2 also indicates that Westerners consume 71 percent more fresh apples than Southerners. Per capita consumption of processed apple products was strongest in the Northeast region and weakest in the South (table A-1 and fig. A-4). Important apple-producing States in the Northeast, such as New York and Pennsylvania, produce a high percentage of processing apples. Per capita processed apple consumption in the Northeast was 28 percent higher than the national average, while in the South, per capita consumption was 18 percent below (table A-2). While consumers from the Western States indicated a much stronger preference for fresh apples than processed, consumers in the Midwest demonstrated an equal preference for fresh and processed apple products. Per capita processed apple consumption in both regions, however, were about equal to the national average. Among the processed apple products, Northeasterners showed preference towards apple juice, dessert or baked apple products, dried apples, and apple sauce (table A-1). In particular, consumers in the Northeast had the highest per capita consumption of apple juice and dessert or baked apple products (table A-2). Consumers in the Western States also indicated preference for apple juice but the relative per capita consumption of apple juice in the Northeast was 25 percent higher (table A-2). Similarly, consumers in the Midwest also indicated a preference for dessert or baked apple products, but the relative per capita consumption of these products in the Northeast was 24 percent higher. The Western States tied with the Midwest as having the highest relative per capita consumption of dried apples (14 percent above the national average). The Midwest also had the highest relative per capita consumption of applesauce (31 percent above the national average) and other processed apple products such as jams and jellies. Meanwhile, per capita consumption of all these processed products, except other, lagged behind the national average in the Southern States. Suburban Residents Consume More Fresh Apples, Metropolitan Residents More Processed Apples About 47 percent of the U.S. population reside in suburban areas, 32 percent in metropolitan cities, and 21 percent in rural areas (table A-1). Daily per capita use of fresh apples was slightly higher in suburban areas, reflecting in part the higher concentration of supermarkets in these areas and the larger percentage of the middle-income and high-income population residing in these areas. Metropolitan area consumers had a slightly stronger preference for processed apple products, particularly for products such as apple juice and dried apples. Consumption of processed apples such as in applesauce and baked products, meanwhile, were consumed in larger proportions by suburban consumers (table A-2). Although ahead in total processed apple per capita use, consumption of applesauce and baked apple products in metropolitan areas were below the national average. Meanwhile, per capita use of fresh and most processed apples fell below the national average in rural areas, where a large proportion of low-income populations reside and where there are smaller and fewer food stores. Non-Hispanic, White Consumers Dominate the Market for Apples, But Preference for Fresh Apples Lean Towards Hispanics and People of Other Races Apple consumption patterns for the top three racial groups (white, black, Hispanic) and all others (two-thirds of which are Asian) are presented in tables A-1 and A-2. Non-Hispanic, white consumers represented 72 percent of the diverse racial and ethnic makeup of the U.S. population in the 1990 Census. On a per capita basis (market share divided by population), whites indicated preference for all apple products except apple juice (table A-2). While fresh-market apples were found to be important in their diets (fig. A-5), whites indicated stronger preference for dried apples, applesauce, baked apple products, and other processed forms. While accounting for a smaller proportion of the U.S. population, fresh apple consumption was 27 percent higher among Hispanics than non-Hispanic, whites (table A-2). Consumption of fresh apples, however, was highest among people of other races (Asians, Pacific Islanders, American Indian, etc.). Non-Hispanic, black consumers indicated no preference for fresh apples in favor of apple juice, baked apple products, and other (table A-1). This ethnic group made up 13 percent of the U.S. population but consumed only about 7 percent of the fresh apples. However, they consumed 15 percent, 13 percent, and 14 percent of the apple juice, baked apple products, and other processed products, respectively. These findings were reinforced in table A-2. Fresh apple consumption by non-Hispanic, blacks was 46 percent below the national average. These consumers, however, had the highest consumption of processed apple products, in general. They rank second in apple juice and baked apple product consumption and had the highest relative consumption of other processed products. Leading in apple juice consumption, consumers from other backgrounds were found to consume 3 percent more apple juice than non-Hispanic, blacks. Per Capita Apple Use Rises With Income Survey results indicated that per capita consumption of fresh apples increases with income. Households were grouped into three income brackets utilizing the Federal poverty guidelines developed by the Department of Health and Human Services for the implementation of Federal food programs. Households with income falling below 130 percent of the poverty level (eligible for receiving food stamps) were regarded as low-income; those with income between 130 and 350 percent of the poverty level were middle-income; and those with income greater than 350 percent of the poverty level were high-income. About 19 percent of the households in this study were in the low-income bracket, 42 percent were middle income, and 39 percent were high-income (table A-1). Partly reflecting the high value associated with fresh produce, fresh apple consumption was favored by high-income households who represented 39 percent of the population and consumed 45 percent of all fresh apples (table A-1). Fruit intended for the fresh market are typically more costly to produce as they require more careful management to help meet consumer preferences on size, shape, taste, and other physical qualities. The average daily per capita use of fresh apples of high-income households was 16 percent higher than the national average (table A-2). Households in the low-income bracket indicated the least preference for fresh apples as their average daily per capita use were about 20 percent below average, much lower than the already below-average consumption by middle-income households. This pattern in consumption is consistent with findings of a recent ERS study whereby low-income regions exhibited above-average grocery store expenditures on calorie-dense food items and below-average expenditures on many of the vegetable items--the opposite pattern exhibited by high-income markets (Jekanowski and Binkley). For processed apples, per capita use increased with income for dried apples, applesauce, and dessert or baked apple products. High-income households consumed most of these three products, while daily per capita use of low-income households were far below the average, as they may regard these products as luxury or discretionary items in the preparation of a basic nutritious meal (table A-2). Dried apples are an expensive snack item which low- income households may replace with cheaper, more affordable alternatives. Applesauce is usually used as a complement for meat menus that require more expensive cuts of meat such as pork chops and roasts, and baked apple products are often eaten as a dessert or snack for which low-income households may decide to do away with in order to economize. Products that were favored more by households in the low-income bracket were apple juice and items such as jams and jellies which are often offered at lower prices in grocery stores under a private label brand. Also helping to boost consumption of these products among the low-income households is perhaps their participation in Federal food programs such as the National School Lunch Program and other food assistance programs such as the Food Stamp program and the Supplemental Women, Infant, and Children (WIC) program where these apple products are included. Low-income consumers represented 19 percent of the population and consumed 21 percent of apple juice products and 20 percent of other products (jams and jellies) (table A-1). Based on table A- 2, per capita daily use of these products by low-income households was found to be 8 percent and 5 percent above the national average. Apples Are Preferred More By Males, Consumption Patterns Vary Distinctly by Age Male consumers have a stronger preference for fresh and processed apple products than female consumers do. This may be attributed in part to the fact that food intake of males generally tend to be higher. Survey results indicated that although males represented a slightly smaller segment of the population, they, relative to females, accounted for a larger share of the fresh apples and processed apple products consumed, with the exception of dried apples and applesauce (table A-1). The daily per capita use of apples (all) among males was 6 percent higher than the national average while those for females was 5 percent lower (table A-2). Relative to females, apple consumption by males was also found to be 11 percent higher for the fresh-market product and 12 percent higher for all processed products. Between fresh and processed, male consumers in general had a slightly higher preference for processed apple products. Female consumers, meanwhile, were more indifferent in their preference, with the consumption of both fresh and processed apple products lagging the national average. There are distinct fresh apple consumption patterns by age (figs. A-6 and A-7). Children who were 2 years in age through 11 years have the highest consumption of fresh apples. In addition to its nutritional content, this may partly reflect the popularity of this fruit as part of a packed meal, especially among school children. Fresh apple consumption was well below average for children below 2 years old, reflecting the bulk of their apple consumption in the form of baby food, including apple juice. Aside from the infant years, children begin to consume fewer fresh apples once they reach the teen years (defined here as ages 12-19), especially among boys. This consumption pattern continues until adulthood, with consumers between the ages 20 and 59, especially women, having the lowest preference for fresh apples. Perhaps partly due to stronger health concerns, consumption picks up again as consumers reach the age of 60 years and older, with men eating more fresh apples than females. Publicity surrounding recent research findings helped increase public awareness of the many health benefits obtained from apple consumption. Aside from being a delicious source of dietary fiber, apples contain numerous vitamins, minerals, and nutrients that help sustain good health by lowering cholesterol, reducing hypertension, promoting bone and lung health, managing diabetes, and reducing the risk of heart attacks, strokes, and certain types of cancer. Some of these research findings are summarized in the U.S. Apple Associations website www.usapple.org. Distinct patterns also exist in processed apple consumption by different age groups. Processed consumption was higher among younger children (both genders) and teenage girls. Children 2 to 5 years in age had the highest consumption. Children in this age bracket, including those younger than 2 years, had at least more than twice as many servings of processed apple products as fresh. However, as children grew older, their choices of food also expanded and since they take over more of the food decision- making responsibility, they opt for other foods when it becomes their choice. This may partly explain why, like the pattern in fresh apple consumption, the importance of processed apples in the diets of young children faded as they approached teenage years and adulthood. Among adults, those 20 to 59 years of age, had the least preference for processed apple products. Apple juice--the most dominant of all processed apple products-- was the most popular apple product among young children and teenagers (table A-2). Per capita consumption was highest among children between 2 and 5 years of age, with consumption by boys exceeding that of girls by as much as 16 percent. Girls started to have more preference for apple juice than boys after 5 years of age. The early introduction of apple juice into the diets of young children, particularly among infants and toddlers, may have earned its early acceptability to consumers in this age group. Childrens preference for apple juice, however, diminished as they grew older, with per capita use falling well below average as they reached adulthood. From among the adults, those 20 to 59 years old were found to have the least preference for apple juice. Applesauce was the second most popular apple product among younger children (less than 2 to 11 years of age). Boys had a slightly stronger preference for applesauce than girls. Teenagers, and more so adults who were in the 20 to 59 year age bracket, did not indicate any strong preference for the product, and their daily per capita use were well below average. Among the processed apple categories, teenage boys favored dried apples (which includes cereal products) the most while teenage girls placed a stronger preference for apple juice. Although differing slightly in order of preference, both male and female adults 20 to 59 years old showed strong preference for dessert or baked apple products. Females in this age bracket, however, had a much stronger preference for dried apples. Meanwhile, the two most popular processed products among adult consumers 60 years and older were dessert or baked apple products and applesauce. Conclusion: Apples are traditionally among the major mix of fruit grown in the United States. Serving both the fresh and processed markets, apples remain a popular fruit item for many American consumers. The Economic Research Services U.S. disappearance estimates for apple and apple products indicate a general rising trend overall. Still, little is known about the market distribution of fresh and processed apples in the United States. Utilizing data from USDAs CSFII survey, this article arrives at some understanding of the market distribution of fresh and processed apple consumption. The following highlights the findings of this article: o While away-from-home eating has become a clear trend in the United States in the last several years, at-home use still dominates both the fresh and processed apple markets. This means most apples and apple products are purchased at retail stores and eaten as home foods. Baked apple products, although also mostly consumed at home, had the largest share of away-from-home consumption. o Fresh apple consumption was favored more in the Western States and less in the Southern States. Meanwhile, consumption of processed apple products in general was strongest in the Northeastern States and weakest in the Southern States. o Fresh apple consumption was slightly higher in suburban areas, while processed apple consumption was greatest in metropolitan areas. In rural areas, the daily per capita apple use was generally below average. o People of other races were the strongest consumers of fresh- market apples followed by Hispanics. Non-Hispanic white consumers also favored fresh-market apples, but their preference towards processed apples was stronger. African-Americans, on the other hand, indicated the strongest preference for processed apples, particularly apple juice, but their consumption of fresh-market apples was the lowest. o Per capita consumption of fresh apples increases as income rise. Fresh-market apples were favored the most by high-income households and were favored the least by low-income households. From among the processed apple products, dried apples, applesauce, and dessert or baked apple products were popular among wealthier households. The low-income households, on the other hand, favored apple juice and other miscellaneous processed products such as jams and jellies. o Male consumers have a stronger preference for apples in general than females. The daily per capita apple use by males was slightly above average while consumption by females was slightly below average. Moreover, there are distinct patterns in consumption by age. Children 2 to 5 years of age have the highest consumption of fresh and processed apples, while adults 20 to 59 years of age have the lowest preference for these products. The two most dominant processed products--apple juice and applesauce- -were popular among young children, but these products appeal to consumers diminished with age. Box USDA Food Consumption Data USDA collects and compiles two major data sets on food consumption in the United States, the Supply and Utilization or food disappearance data, compiled by USDAs ERS, and the Continuing Survey of Food Intakes by Individuals, compiled by USDAs Agricultural Research Service. Both data sets are key components of ongoing Federal efforts to monitor the nutritional health and dietary status of U.S. consumers. They were mandated by Congress under the National Nutrition Monitoring and Related Research Act of 1990. When used together, they provide a comprehensive picture of the Nations eating habits. Food Supply and Utilization Data, also known as food disappearance data, measures the flow of raw and semi-processed food commodities through the U.S. marketing system. They are neither a direct measure of actual consumption, nor of the quantity of food actually ingested. The total amount available for domestic consumption is estimated as the residual after exports, industrial uses, seed and feed use, and year-end inventories are subtracted from the sum of production, beginning inventories, and imports. The use of conversion factors allows for some subsequent processing, trimming, spoilage, and shrinkage in the distribution system. However, the estimates also include residual uses for which data are not available (such as miscellaneous non-food uses, and changes in retail and consumer stocks). With data back to 1909 for most commodities, the food disappearance data are useful as indicators of trends over time. The data are most commonly used to measure the average level of food consumption in the country, to show year-to-year changes in consumption of major foods, to calculate the approximate nutrient content of the food supply, to establish long-term consumption trends, and to permit statistical analyses of effects of prices and income on food consumption. Because they include spoilage and waste accumulated through the marketing system and in the home, the data typically overstate actual consumption. A 1997 ERS study suggested that such losses may exceed 25 percent of the edible food supply. Food disappearance data reflect the amount of major food commodities entering the market, regardless of their final use. Final product forms and consumption locations are not usually known, and little or no data exist on supplies of further- processed products. In short, relatively good information exists for many food ingredients, but not for foods as actually eaten. For example, the food disappearance data provide a good estimate of the annual per capita consumption of apples but provide no information on products consumed--fresh, juice, frozen, canned, dried; where the apples/products were marketed--supermarket, hospital, school, restaurant, or food manufacturer; how they were consumed--in frozen meals, baked products, or on salads; how they were prepared--cooked from scratch or reheated from a canned or frozen product; or the socioeconomic characteristics of the consumer that ultimately ate the food. Data used in this paper are taken from USDAs Continuing Survey of Food Intakes by Individuals (CSFII), 1994-96 and 1998. The 1998 CSFII is a supplemental children survey to the 1994-96 CSFII, which is a nationally representative sample. The 1998 CSFII adds intake data from 5,559 children from birth through age 9 years to the intake data collected in 1994-96. The CSFII measures foods actually eaten by individuals. The survey records food intake over a specific period of time (two non-consecutive days in 1994-96 using 24-hour dietary recalls). The survey collects demographic information, such as household size, income, race, age, and sex, and information on where a food was purchased, how it was prepared, and where it was eaten, in addition to food-intake data. The CSFII provides information for use in policy formation, regulation, program planning and evaluation, education, and research. For example, data from recent surveys have been used to evaluate the impact of food fortification on nutrient intakes, to estimate exposure to pesticide residues and other contaminants from foods, and to target nutrition assistance and education programs to those who need them most. The data are particularly valuable for measuring the effect of socioeconomic and demographic characteristics on food consumption. In this study, we make use of the Food Commodity Intake Database (FCID) from the Environmental Protection Agency. FCID contains human food consumption data expressed in terms of agricultural food commodities on 5,831 different foods and beverages people of different ages reported eating in 1994-96 and 1998. FCID provides the edible amount of agricultural food commodities contained in each food reported eaten in CSFII. The 1994-96 CSFII data include a sample weight for each respondent, indicating the number of people the sample represents. The share of an apple product by location can be estimated by calculating the weighted-sum of the product consumed in each location. Similarly, the socioeconomic and demographic characteristics of the respondents can be used to estimate the consumption share of apples by these characteristics. References: Jekanowski, M. and J. Binkley. Food Spending Varies Across The United States,Food Review. January-April 2000. Vol. # 23, Issue.1. Kaufman, Phil R., Charles R. Handy, Edward W. Mclaughlin, Kristen Park, and Geoffrey M. Green (2000). Understanding The Dynamics of Produce Markets: Consumption and Consolidation Grow. U. S. Dept. of Agr., Econ. Res. Serv., AIB-758. Litwak, David (1988 amd 1998). Annual Consumer Expenditure Study. Supermarket Business. New York, NY. September. Putnam, J. and J. Allshouse. Food Consumption, Prices, and Expenditures, 1970-97,Statistical Bulletin No. 965, April 1999. U.S. Apple Association, http://usapple.org/. USDA, ERS. Food Consumption, Prices, Expenditures. AER No. 138. USDA, ERS. Fruit and Tree Nuts Situation and Outlook Yearbook. FTS-290. October 2000. Competitive Behavior in Orange Juice Markets By James Binkley, Patrick Canning, Ryan Dooley, and James Eales -----1/ ----- 1/ Binkley is a professor, Eales an associate professor, and Dooley a former research associate in the Department of Agricultural Economics, Purdue University. Canning is an economist, FRED/ERS. This research was supported by ERS cooperative agreement No. 43-3AEM-9-80111. The authors benefited from comments by Mark Brown, Agnes Perez, and Susan Pollack. Remaining inaccuracies are solely the responsibility of the authors. ----- Abstract: This article examines how the movement towards a larger more consolidated orange juice marketing system affects market prices. Observing the retail price for specific orange juice products, including leading national brands and private label brands, in 54 U.S. markets over a 1-year period can help us discern the pricing behavior of brand marketers, wholesalers, and retailers in these markets. The data provided little compelling evidence that markets further advanced in the consolidation process engaged in non-competitive pricing behavior. However, increased brand competition, particularly between private label and leading national brands, does appear to lower average market prices. Keywords: Consumer demographics, national brands, orange juice, price behavior, private labels, wholesale and retail concentration. Introduction Orange growers and orange juice consumers comprise the beginning and end points of the orange juice supply chain. In the United States, no single orange grower produces enough product to influence the price they receive in the market, nor does any group of consumers purchase enough product to influence the price they pay. However, the processing, packaging, and distributing stages of the orange juice supply chain have become increasingly concentrated, with several big companies controlling large shares of the orange juice market at different stages along the supply chain. When firms become very large, they may be able to exercise their influence on market prices. When this happens, they gain at the expense of growers and consumers. Firms are motivated to grow in part so they can realize potential cost savings that often come with increasing size and/or scope of production. When firms achieve cost savings through expansion, they are often able to offer their products at lower prices than their smaller competitors. This may lead to obtaining higher market shares and eventual concentration of industries participating in particular market segments. With these two forces in play within the highly concentrated orange juice marketing system, an examination of market data is presented below to discern if non-competitive or lower cost pricing behaviors are more evident in the observed prices. To understand the effects of industry concentration, one can observe a market over time, or observe many different markets at some point in time. This paper presents analysis of the latter type, focusing on specific orange juice commodity market prices across 54 U.S. grocery marketing areas (table B-1) over a 52-week period, November 4, 1989, to November 2, 1990. There are a number of advantages to taking this approach. First, while the decade of the 1990s witnessed dramatic movements toward consolidation in the orange juice marketing system, regional markets in 1990 exhibited wide variability in their stages of consolidation. Many grocery marketing areas had four-firm concentration ratios-----2/ ----- 2/ The four-firm concentration ratio measures the share of total sales within a well defined market going to the four largest companies operating in that market, for example grocery sales in the wholesale or retail segment of the Baltimore, MD grocery marketing area. ----- (CR-4) near or above 90 percent in both the wholesale and retail stages of the grocery marketing system. Many other marketing areas had CR-4 ratios around or below 50 percent at wholesale and/or retailing stages. Another advantage to looking at the markets over this period is that it encompasses the time before, during, and after a severe negative supply shock in the Florida orange crop, brought on by the December 1989 orange freeze. To observe price behavior, prices must change and in this period, retail prices went from their 1989 low point to the highest levels obtained in the decade of the 1990s, and eventually back down again. How individual brand prices change in these conditions can say a lot about the competitive behavior in the industry. A third advantage to the 1989/90 time period is that it affords the use of a unique data resource that has since been discontinued. Data for this analysis come from Selling-Areas Markets, Inc. (SAMI), a grocery marketing research firm that ceased operations in December 1990, at which time much of their data resources were donated to Purdue University. Information contained in this data includes complete shipping logs from grocery-shipping warehouses serving supermarkets in 54 distinct grocery marketing areas (GMA) whose total sales represented around 85 percent of U.S. supermarket sales. Log entries included shipments and average unit prices, in continuous 4-week intervals, of specific grocery items sold in each market area. This study uses summaries of this data for average prices over four approximately 3-month quarters ending November 2, 1990. The prices are for two frozen concentrate national brand products, two refrigerated national brand products, 3/----- ----- 3/ The four national brand products examined were each sold in all 54 marketing areas, while the two private label categories examined represent average prices of all private label FCOJ and from concentrate refrigerated orange juice respectively, sold within each GMA. ----- and an average price for all private label products, one frozen concentrate average and one refrigerated average. Also used for this analysis is the market share that each brand (including the combined private label brands) controls within each market. The remainder of the paper is organized as follows. The next section presents price analysis for the six orange juice commodities taken from the SAMI data. The analysis will take into account such factors as wholesale and retail concentration, private label market shares, and average household income of consumers in each GMA. Then a consideration of this price analysis is made in the context of current trends in food marketing systems. A separate box insert is also included for readers interested in a background of the orange juice marketing system. Some of the material from in this box insert can be found, in greater depth, in the website www.ultimatecitrus.com. This background focuses on the Florida orange juice industry, which typically accounts for over 90 percent of orange juice production marketed in the United States. Price Analysis By 1997, the average Florida orange grove was 40 percent larger than in 1987 (1997 Census of Agriculture). Florida orange juice processing firms totaled 27 in the 1989-90 season, while only 18 firms processed orange juice in Florida in the 2000-01 season (Spreen and Fernandes). About half of all processed orange juice produced in Florida is branded by the two leading national orange juice marketing processors (Hardy). About half of all groceries purchased in supermarkets nationwide were purchased from the 20 largest grocery chains--this represents an increase of about one- third in the 20-firm supermarket share since the early 1990s. Between the marketing processors or packagers and retailers, grocery wholesalers have also become far more consolidated since 1990. Working backwards from retailing to branding, a closer look is taken at local market pricing behavior, both in markets more advanced in this trend towards consolidation and markets far less so. Retail orange juice prices tend to vary by form (e.g., FCOJ, NFC and RECON), by brand and private label, by season (reflecting uneven supply conditions over time), by shipping distance from primary producing regions (e.g., shipping distance from Florida), by product attributes (e.g., calcium and pulp), and by socioeconomic attributes of the consumer (e.g., average household income in the market area). To minimize the confusion that these factors create in our ability to explain observed retail prices in this analysis, a number of steps are taken. First, specific national brand products are examined, both over time and across markets. For example, a line of FCOJ of a specific brand name, size, and type of container, will be examined. For the private label products, the specificity may vary by region. Secondly, price observations are separated into four approximately equal time periods spanning 1 year. Accounts of the other considerations mentioned here will be discussed in the concluding section of this article. Analysis begins with a look at retail consolidation. Retailers. In 1990, grocery sales by the four largest grocery chains operating in a single SAMI grocery marketing area accounted for, on average, just under 70 percent of that areas grocery sales.4/----- In ----- 4/ The four largest chains within a grocery marketing area are generally a different group of four in each of the 54 market areas. ----- some regions, the four largest grocery chains served over 85 percent of the retail market in their area, while other marketing areas saw less than half their market being served by the four largest chains (Metro Market Studies). With such wide variation in retail concentration of local marketing areas, it is useful to group data from the 10 markets with the highest concentration of larger grocery chains, group data from the 10 markets with the lowest concentration, and compare prices among the two groups. This is what was done, as reported in figure B-1. Average price data for six orange juice products are presented for both the group of low retail concentration markets (depicted by the light-colored bars) and the group of high retail concentration markets (depicted by the dark-colored bars). Prices are reported as averages for four 3-month periods beginning November 4, 1989.- ----5/ ----- 5/ Quarters Q1 to Q3 represent 12-week intervals beginning Nov. 4, 1989, while Q4 is a 16-week interval ending Nov. 2, 1990. ----- The six products include three FCOJ products and three refrigerated products, and the figure groups the frozen and refrigerated products in two separate graphs. Brand 1 and Brand 2 under the frozen segment are specific basic leading national brand frozen concentrate products--that is, they are the exact same product in every marketing area. Also in the frozen segment, private label is not a specific product, but is the average price across all private label or store brand FCOJ products sold within a specific GMA. For the refrigerated segment, one brand is a specific refrigerated product from concentrate, the other is a specific not-from-concentrate product, and private label is again an average of prices, but this time for all private label refrigerated from concentrate products within a specific GMA. In order that one might compare relative prices between groups of markets, for example low verses high, figure B-1 and subsequent figures show prices in all quarters for both the low and high groupings after they are divided by the first quarter price of the commodity in the low grouping of markets. For each of the six commodities, we denote the Q1 price of the low grouping as the base price, so that the first of eight price bars presented for each commodity (prices in four quarters for two market groupings) always has a value of 1, since the first quarter low market price is divided by itself. All other price bars in each group of eight reflect the price in a particular quarter (Q1 to Q4) for a particular market group (low or high) relative to the base price. For example, in figure B-1, the Q1 price of Brand 1 in the high group (depicted by the dark shaded bar) has a value of 0.95, while the Q3 price in the low group has a value of about 1.2. These indicate that the Q1 price in the high group for Brand 1 is 5-percent lower than the base price, and that the Q3 price in the low group is about 20-percent higher than the base price. In some instances in this section, it may be noted that the largest percentage increases from a Q1 price were observed in the high market groupings, but the figure this statement pertains to shows the highest bar is for a price in the low grouping. This is best explained by an example. If a low group price in Q3 is 10-percent higher than the low group price in Q1, a bar in the figure would rise to 1.1, since Q1 low is the base price. For this same product in the high group, suppose that the third-quarter price is 10.5 percent higher than its Q1 price in this high group, but that the Q1 price in the high group is 5-percent lower than the base price. In this case, the bar in the figure depicting the Q3 price in the high group would rise to 1.05 since 1.05 divided by 0.95 (the Q1 price in the high group relative to the base price) equals (approximately) 1.105. The first graph in figure B-1 depicts the four quarterly average prices in the frozen segment. This graph tells us that for all three products, average first-quarter prices are lower (by as much as 10 percent for private label products) in the group of markets with a high degree of retail chain concentration. While prices in the subsequent three quarters generally go up and then down (reflecting the effects of the December 1989 freeze), those markets with low retail concentration maintain a higher price for each of the three commodities. The other graph in figure B-1 depicts the same information for the three commodities in the refrigerated segment. The story is very much the same, with the one exception being the first- quarter price of Brand 1, which is about the same in both the low and high market groupings. Otherwise, the pattern is strongly skewed to a result that indicates each of the six orange juice products were consistently lower priced in markets at advanced stages of retail market concentration. Each of these results are consistent with an interpretation that retail concentration produces cost savings for the retail orange juice markets that can be passed on to consumers in these markets. Wholesalers. Grocery wholesalers purchase orange juice from marketing processors and other packagers, and distribute this juice to multiple retailer outlets (see box). In the case of integrated wholesalers that are chained owned and operated, these outlets are the chain-owned stores. In the SAMI data, all of the products sold by retailers within a grocery marketing area were distributed to these retailers by wholesalers, or from warehouses of integrated retailers, with operations inside the grocery marketing area, as this is largely how these marketing areas were defined (Connor). On average in 1990, 69 percent of the grocery wholesale business within a grocery marketing area was served by the four largest grocery wholesalers operating in that area. In some regions, the four largest grocery wholesalers serving that region supplied over 95 percent of the grocery market in their area, while other marketing areas saw as little as 42 percent of their grocery products passing through the four largest wholesalers servicing their marketing area. For the same reasons as were discussed concerning retailer concentration, it is useful to observe orange juice market prices in areas of high and low wholesaler concentration ratios. Figure B-2 presents this information, using the same approach as was presented in figure B-1. The only difference being that the 10 marketing areas comprising the low group reflect the 10 grocery marketing areas with the lowest concentration of wholesalers servicing these markets, and similarly, the high grouping reflects the 10 highest such markets. Focusing first on the three commodities within the frozen segment, the findings nearly replicate those for the frozen segment in figure B-1. This indicates that orange juice markets where wholesale concentration is far advanced have very similar frozen concentrate orange juice pricing behavior as markets where retail concentration is far advanced. This is not the case for the refrigerated segment, where it appears equally as likely that orange juice prices are higher in either the high or low market groupings. For example, Brand 1 is priced higher in all four quarters in the highmarket group, while Brand 2shows the opposite result. For private label brands, the price is higher in the high markets in the first two quarters, and lower in the last two quarters. A closer look at the price data for the refrigerated segment shows that for all three brands, the highest percentage price increases occurred in the low market groups. Taken collectively, the results in figure B-2 suggest, but not as strongly as for retailing, that markets with more advanced concentration of the grocery wholesaling functions tend to have lower market prices than do markets where such concentration is less advanced. There was a considerable shift in consumer preferences towards the consumption of refrigerated juices (particularly NFC) taking place in this period (Brown, et. al.), so it is not surprising that price behaviors are hard to discern in this segment. Brands. Within the Florida market, there were 27 citrus processors operating in the 1989-90 growing season. For the retail market, what was not produced by or sold to the national brand marketers was packaged and sold under numerous regional brand names and private labels. While private label orange juice brands are not nationally marketed under a single brand name, one or several private label brands are available in every GMA. For example, a single bulk processor may produce an orange juice product that is marketed by several grocery chains under different brand logos. Another way a processors product is marketed is under a regional brand logo. These products have a limited distribution area, possibly spanning several adjacent GMAs. Of the three types of marketing outlets, only the leading national brands engage in extensive national promotional activities, which can involve tens of millions of dollars for a single advertising campaign (Hardy). In 1990, the highest market share for a leading national brand in a single GMA was 38 percent (based on warehouse shipments to supermarkets within each GMA), while the highest combined market share for private labels was 47 percent. 6/----- ----- 6/ By way of an example, the Brand 1 refrigerated market share reflects the gallons of all variants of this brand of refrigerated orange juice shipped to a GMA, divided by total gallons of all orange juice shipped to this GMA, including FCOJ shipments. FCOJ shipments are converted to their fresh equivalent volume. ----- Variations on these shares were large across the different markets. Among the most notable trends related to brand competition over the 1990s has been the continued growth in market share of private label orange juice brands. For example, in the frozen juice category for the 52-week period ending January 2000, 32 percent of sales in supermarkets were for private label brands, and this share is up from 30 percent in the previous year (PLMAs 2000 Private Label Yearbook). Also, specific private label brands from the largest grocery retailers are likely to be taking market shares away from other private label brands. In the GMAs covered in this study for 1990, private label market shares were as high as 32 percent in the refrigerated segment and 47 percent for FCOJ. Averages were much lower--20 percent in the frozen segment and 11 percent in the refrigerated segment. This variation affords the opportunity to compare orange juice prices in high and low private label market share GMAs. Figure B-3 depicts the markets with the 10 highest private label market shares and the markets with the 10 lowest shares. In both the frozen and refrigerated segments, the first quarter price is always lower in markets with high private label market shares, particularly in the refrigerated section. But after the effects of the negative orange supply shock drives prices of orange juice up, the price of most commodities goes up faster in those markets where private label shares are high. While this may suggest a mixed result, it is consistent with a scenario whereby the existence of a large private label market share brings the price of the leading national brands down. When the negative orange supply shock hits, processors must pass the full cost on to their customers in the markets with high private label shares since their price/cost margins in these markets are already low. Another result that stands out in the figure for the refrigerated segment is the large gap between markets with high and low private label shares for average first-quarter prices of both national brands. In subsequent quarters, the price of refrigerated orange juice does not change much in markets with low private label market shares, while the price increases noticeably in the markets with high private label shares. These findings are compelling evidence that national brand orange juice processors are very responsive to private label competition in regional markets. Consumer demographics. Another way companies exercise market power is through segmentation of the consumer market, by charging different prices to different segments of consumers. With the data used here, it is not easy to discern at which level of the supply chain this pricing behavior originates, but prices are available in markets that have clearly distinguishable consumer characteristics. One approach is to determine if average household income within a specific market affects the market price of orange juice. In the frozen segment, prices start higher and remain so throughout the year in markets where household incomes are high (fig. B-4). In the refrigerated segment a distinct pattern does not appear to show up. A closer look at the data reveals that for five out of the six commodities, the highest percentage increases in price occurred in markets with high household incomes. While a number of possible explanations can be offered, it will simply be noted here that the results from this experiment suggest there may be some tendency towards higher consumer orange juice prices in areas with high household incomes. Summary There are far fewer sellers and buyers along the orange juice supply chain today than there were only 10 years ago. This article presented comparisons of pricing behavior at the beginning of this timeframe (1990) between markets more advanced in the marketing consolidation process and markets far less so. Findings indicate that retail orange juice prices were generally lower in markets where a few grocery chains controlled large shares of the area grocery market. Lower prices were also found in markets where large grocery wholesalers and/or integrated retailers dominate market sales. Also observed from this data was an apparent relationship between private label presence in a market and lower prices for leading national orange juice brands. Related to this, it was found that price increases were more pronounced in areas with strong private label competition, and this appeared to reflect smaller cost-to-price margins in these markets. These smaller margins mean there is less of a buffer for retailers or brand producers to hold prices steady when grower prices increased with the freeze-induced commodity shortage. While prices appeared to be higher in markets where average household incomes were high, these findings were not as pronounced. Taken together, the data shows how consolidation along the orange juice supply chain, such as has occurred over much of the past decade, could have contributed to lower market prices. Also apparent in this data are some indication that diminished competition, particularly diminished private label competition, leads to higher market prices. The findings presented here are largely anecdotal evidence of market pricing behavior. For example, it is very likely that markets with a high concentration of large grocery chains also have similar concentrations of wholesalers and a strong private label presence. Another possibility is that GMAs where wholesale or retail concentration is less advanced may happen to be primarily in areas that are a long shipping distance away from the Florida market. In similar analysis to that presented here (omitted from this report), it was found that retail prices, particularly in the refrigerated segment, were substantially higher in markets further away from the Florida market. This is most likely explained by transportation costs and this could be what is showing up in the market groupings for low retail, wholesale, or private label concentration, in which case those findings may be misleading. Similar concerns can be raised about our analysis of household incomes. To overcome this uncertainty, the evidence of market pricing behavior discussed in this report was examined by use of regression analysis. Although the details of this analysis are not presented, the results did indicate that many significant statistical relationships of the type suggested here were found to exist. These findings show, for example, that after controlling for the other factors discussed in this paper (and others not discussed), there is still a strong statistical probability that high private label market shares in the refrigerated orange juice segment make it likely that national brand refrigerated orange juice prices were lower in these areas than elsewhere. Retail concentration was found to have the same effect, although not quite to the same extent as was the private label effect. A less compelling result for the effects of household income on market prices was found using regression analysis. While higher market area household incomes appeared to lead to higher retail orange juice prices, the statistical probability that income and prices are related in this way was found to be rather low. Since the period of this analysis, there has been more widespread consolidation of grocery retail and wholesale operations, and the private label/store-brand products have also flourished. Consumer preferences have substantially shifted from frozen to refrigerated juice varieties, and with this shift, brand market shares have also changed. So, while it appears that the cost- reducing forces have outweighed the anti-competitive forces as consolidation has advanced in the orange juice supply chain, continuing consolidation in the orange juice marketing system has not diminished the potential that anti-competitive forces may push up retail orange juice prices in the future. Definitions Not From Concentrate (NFC) - Juice that is flash-heated to pasteurize it immediately after the fruit is squeezed. From Concentrate (RECON) - Juice manufactured as a frozen concentrate, then reconstituted by adding back the amount of water originally removed. Frozen Concentrate (FCOJ) -- Freshly squeezed juice that has been concentrated and frozen. Consumers reconstitute the juice by adding back the amount of water originally removed. Source: Florida Department of Citrus. References Brown, M., T. Spreen, and R. Goodrich. 2000. Trends in the NFC Orange Juice Segment, Citrus Industry. January. Connor, J.M. 1997. Concentration and Mergers in U.S. Wholesale Grocery Markets, Staff Paper 97-09, Dept. of Agricultural Economics, Purdue University. June. Hardy, N. 1997. How the Brands Market Juice, Citrus Industry. July. Private Label Manufacturers Association. 2000. PLMAs 2000 Private Label Yearbook: A Statistical Guide to Todays Store Brands. Metro Market Studies. 1991. 1991 Grocery Distribution Analysis and Guide. website: www.metromarketstudies.com/. Spreen, T.H., and W. Fernandes, Jr. 2000. Consolidation in the Florida Citrus Processing Industry, Citrus Industry. October. U.S. Department of Agriculture, Economic Research Service. 2000a. Fruit and Tree Nuts, Situation and Outlook Report. FTS-289. September. U.S. Department of Agriculture, Economic Research Service. 2000b. Fruit and Tree Nuts, Situation and Outlook Yearbook. FTS-290. October. U.S. Department of Agriculture, National Agricultural Statistics Service. 1999. 1997 Census of Agriculture. AC97-A-9. March. Box Orange Juice Industry Overview Florida typically accounts for more than 90 percent of orange juice production (USDA, 2000a). However, in the 1989/90 freeze year, Florida produced only 85 percent of the domestic orange juice supply, with Arizona, Texas, and California providing the balance. In addition to domestic production, imports are also an important source of supply. Brazil and Mexico are the major exporters to the United States (USDA, 2000b). In the years from 1989-91, Brazil accounted for approximately 85 percent of U.S. frozen imports, (which are either sold domestically as frozen or reconstituted and sold as chilled), while Mexico was the source of nearly all premium chilled orange juice. Frozen concentrate accounts for approximately 98 percent of total orange juice imports with not-from-concentrate making up the remaining 2 percent. Processing and Packaging. In Florida, around 95 percent of orange production is purchased by orange processors (USDA, 2000b). The juice is either pasteurized immediately in the case of NFC or is processed into FCOJ. There are two types of orange processors-- bulk processors and marketing processors. Bulk processors produce the majority of orange juice in the world. Marketing processors sell packaged juice under their own brand name and they often also purchase additional juice from bulk processors. Juice packers purchase bulk product and package it and in most cases, distribute the packaged product. Some juice packers pack and market their own brands, while most pack for private labels. Another participant that may handle orange juice are blending houses, which are typically located in port cities. Blending houses blend concentrates from different sources and with different quality attributes in order to match customer specifications. In this case the buyer pays a higher price for a product that consistently meets its standards. Most orange juice is transported in the form of bulk FCOJ to packing plants throughout the United States, since shipping volumes are 5-6 times smaller with concentrate than with reconstituted juice. Before packaging in the familiar round package, filtered water is added to the concentrate to bring the brix, a measure of concentration of solids, down to three times the concentration level of fresh juices. In order to bring the FCOJ to the concentration level of fresh orange juice, three parts water must be added by the consumer. For reconstituted juices, filtered water is added to return the brix to the average of fresh squeezed juice. It is then packaged in cardboard cartons, glass, or plastic jugs and sold at retail stores. While only a small portion of concentrate is reconstituted and packaged at the processor, the majority of NFC is packaged at fruit processing sites and transported in final form. Limited amounts of bulk not-from-concentrate is also transported by road and rail tanker to others parts of the country for packaging. Storage. Bulk frozen concentrate can be stored for several years provided the temperature is kept at acceptable levels. NFC can be stored two ways, frozen or chilled. Each of these storage methods allows NFC to be stored for at least a year, a necessity as juice harvested from different times of the season are blended to obtain consistent quality the whole year through. NFC in retail packaging has a shelf life of approximately 63 days. Nearly all storage is in the South Atlantic region and is distributed throughout the country to meet demand. FCOJ stocks are highly seasonal as stocks are at their lowest in November, at which time production begins anew, and peaks in May, when the last of the Valencia crop has been harvested. Distribution. Nearly all orange juice distribution for retail sales follows one of three paths: 1) delivery through wholesalers, 2) delivery through retailers, and 3) delivery directly to the retail store. In the case of delivery through wholesalers, the advantage for the packer is the fact that they make only one transaction, as opposed to dealing with a number of individual stores. Also, the producer is more likely to gain wider distribution of their product. Retailers have also taken over the wholesale function. In this situation, producers reduce transactions, yet distribution across various retailers may require processors to work with a larger number of wholesale distributors. These first two paths are common for frozen, while the third, direct shipment to the retailer, is more common with chilled products. Consumer Preferences. The last decade has seen a large swing in consumer demand from frozen orange juice toward refrigerated, and especially not-from-concentrate juices. The 1990 season is the first year in which chilled orange juice outsold frozen concentrate, and the gap has consistently widened since that time. Refrigerated orange juice is made from concentrate, except for those designated premium which are made from fresh oranges and never concentrated. The refrigerated type is more important in terms of sales than are frozen and shelf stable. END_OF_FILE