Vegetables Market Outlook

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Vegetables Market Outlook Samuel D. Zapata 08-23-18 Small Acreage Horticulture Conference Weslaco, TX

Vegetable Industry Overview Supply and Demand Challenges and Opportunities

Vegetable Industry Overview

Value of Texas Agricultural Production

RGV Top Commodities All Other, 42.0% Cotton Lint, 25.2% Sorghum, 9.5% Grapefruit, 9.2% Fishing, 6.2% Vegetables, 7.9% Rank by Total Value Total Value ($1000's) Percent of RGV Total Cotton Lint $184,088 25.2% Sorghum $69,144 9.5% Grapefruit $67,341 9.2% Vegetables $57,953 7.9% Fishing $45,297 6.2% RGV Total $731,262 2.8% State Total $26,138,870

Vegetable Acres in Production 1,400,000 1,200,000 29% 1,000,000 24% 800,000 600,000 400,000 200,000 9% 8% 7% 5% 5% 4% 3% 3% 3% 0 U.S.: 4,180,894 acres, 72,045 farms Texas: 124,133 acres, 2,296 farms Source: 2012 Census of Agriculture

Vegetable Farm Size US US TEXAS 8% 4% 5% 8% 4% 5% 9% 5% 6% 18% 18% 65% 23% 65% 57% 0.1 TO 4.9 ACRES 5.0 TO 24.9 ACRES 25.0 TO 99.9 ACRES 100 TO 249 ACRES 250 OR MORE ACRES ~58 ac/farm ~54 ac/farm Source: 2012 Census of Agriculture

Vegetable Farm Ownership 8% 7% US 1% 2% 8% 7% US 1% 2% 7% 4% TEXAS 1% 2% 82% 82% 86% Family Family Corporation Other Partnership Non-Family Corporation Source: 2012 Census of Agriculture

Top Vegetables Grown PEPPERS BROCCOLI CAULIFLOWER SQUASH CABBAGE PUMPKINS CARROTS CUCUMBERS PEAS SPINACH US GARLIC CELERY ASPARAGUS ARTICHOKES SPINACH CABBAGE PEPPERS PUMPKINS CARROTS TEXAS SQUASH ONIONS SWEET POTATOES POTATOES CUCUMBERS POTATOES MELONS BEANS ONIONS LETTUCE BEANS TOMATOES SWEET CORN MELONS Source: USDA NASS

Million Dollars Value of Vegetable Sales 18,000 16,000 16,851 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 U.S. 475 Texas Source: 2012 Census of Agriculture

Crop Value Comparison Commodity Acreage (million) Market Value ($ million) AcreValue ($/ac) Corn 90.17 48,465 538 Soybeans 90.14 41,007 455 wheat 46.01 8,142 177 Cotton 12.61 7,227 573 Sorghum 5.63 1,175 209 Vegetables 2.57 13,838 5,386 Tree Nuts 2.02 9,024 4,477 Citrus 0.71 3,439 4,837 Source: USDA NASS

Crop Value Comparison Commodity Acreage (million) Market Value ($ million) AcreValue ($/ac) Corn 90.17 48,465 538 Soybeans 90.14 41,007 455 wheat 46.01 8,142 177 Cotton 12.61 7,227 573 Sorghum 5.63 1,175 209 Vegetables 2.57 13,838 5,386 Tree Nuts 2.02 9,024 4,477 Citrus 0.71 3,439 4,837 Source: USDA NASS

Crop Value Comparison Commodity Acreage (million) Market Value ($ million) AcreValue ($/ac) Corn 90.17 48,465 538 Soybeans 90.14 41,007 455 wheat 46.01 8,142 177 Cotton 12.61 7,227 573 Sorghum 5.63 1,175 209 Vegetables 2.57 13,838 5,386 Tree Nuts 2.02 9,024 4,477 Citrus 0.71 3,439 4,837 Source: USDA NASS

Supply and Demand

Milliom pounds U.S. Consumption and Production of Fresh Vegetables 65,000 60,000 55,000 50,000 45,000 40,000 35,000 30,000 25,000 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Produced Consumed Source: USDA-ERS

Factors Affecting the Demand for Vegetables Per capita income Price differentials Change in consumer preferences Seasonality Fresh vs. processed Innovation and convenience

Real Median Household Income

Price ($/cwt) Historical Vegetable Prices 70 60 50 40 30 20 10 0 Dark Green Red & Orange Starchy Other Source: USDA-ERS

Historical Vegetable Prices Commodity 1970 1980 1990 2000 2010 2017 % Change 2010-2017 ------------------------------------------------------- $/cwt --------------------------------------------------- Dark Green 9.0 18.5 19.3 27.0 38.0 48.7 28% Head lettuce 4.8 8.9 11.5 17.3 21.1 36.4 73% Spinach 11.4 24.8 28.2 31.8 42.7 64.5 51% Red & Orange 8.9 18.1 16.8 20.7 29.2 29.2 0% Tomatoes 11.2 20.7 27.4 30.7 48.2 37.3-23% Carrots 5.1 11.3 11.9 13.1 26.6 30.1 13% Starchy 5.3 10.7 11.5 11.9 19.3 19.8 3% Potatoes 8.0 5.3 12.7 10.6-17% Sweet corn 5.3 10.7 15.0 18.5 25.9 29.1 12% Other 9.4 30.0 31.0 41.5 47.7 55.4 16% Brussels sprouts 13.5 21.5 23.1 34.4 45.0 69.9 55% Artichokes 10.3 34.7 29.5 60.3 50.2 70.0 39% Total 9.2 24.5 24.2 31.9 40.2 46.3 15% Source: USDA-ERS

Fresh Vegetables per capita Availability 250 200 150 100 50 0 Dark Green Red & Orange Starchy Legumes Other Source: USDA-ERS

Fresh Vegetable Availability Commodity 1970 1980 1990 2000 2010 2017 % Change 2010-2015 ------------------------------------------------------- pounds/year --------------------------------------------------- Dark Green 23.8 27.9 35.9 41.3 37.1 35.9-3% Head lettuce 22.4 25.6 27.7 23.5 15.9 13.5-18% Spinach 0.3 0.4 0.8 1.4 1.7 1.7 3% Red & Orange 27.0 28.6 42.0 49.6 53.7 55.8 4% Tomatoes 12.1 12.8 15.5 19.0 20.6 20.5 0% Carrots 6.0 6.2 8.3 9.2 7.8 8.8 12% Starchy 69.6 57.6 53.5 56.2 46.1 42.7-8% Potatoes 61.8 51.1 46.7 47.1 36.8 34.1-8% Sweet corn 7.8 6.5 6.7 9.0 9.2 8.6-7% Other 32.4 36.3 43.9 51.5 51.3 50.7-1% Brussels sprouts 0.3 0.3 0.3 0.3 0.3 0.7 60% Artichokes 0.5 0.6 0.8 1.2 1.5 1.4-4% Total 154.4 151.8 176.4 200.7 190.0 186.7-2% Source: USDA-ERS

Fresh vs. Processed

Innovation and convenience

Social Media

Food as social status? In order to gain and hold esteem of men it is not sufficient merely to posses wealth or power. The wealth or power must be put in evidence, for esteem is only awarded on evidence. Thorstein Veblen (1857-1929) 25

Is it possible? 26

Factors Affecting the Supply of Vegetables Competition Trade Weather Input prices Labor

Source: TDA

Global Production Seasons Adapted from NOAA

Million pounds U.S. Net Trade of Fresh Vegetables 15,100 10,100 5,100 100 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015-4,900-9,900-14,900 Exports Imports Net Trade Source: USDA-ERS

Sources of Imported Vegetables to the U.S. 2017 Total value: $8,000 Guatemala, $125 India, $2 Spain, China, $180 $51 Rest of Peru, $329 World, $427 Million Dollars Canada, $1,414 Mexico, $5,472 Source: USDA-FAS

Mexican Fresh Vegetables Exports to U.S., 2017 Selected Vegetables: $5,474 Million Dollars Tomato GH, $1,045.00 Other Vegetables, $1,617.00 Asparagus, $422.00 Squash, $341.00 Cucumber, $270.00 Onion, $303.00 Bell Pepper, $242.00 Roma Tomato, $431.00 Broccoli, $248.00 Chili Pepper, $271.00 Bell Pepper GH, $284.00 Source: U.S. Trade Internet System, www.fas.usda.gov/ustrade

Canadian Fresh Vegetables Exports to U.S. 2017 Total Value: $1,414 Million Dollars Bell Peppers GH, $230.00 Other Vegetables, $387.00 Tomato GH, $294.00 Russel Potato, $45.00 Cucumber, $63.00 Peppers, $47.00 Onion, $35.00 Red Skin Potato, $47.00 Potato, $67.00 Carrot, $48.00 Mushrooms, $149.00 Source: U.S. Trade Internet System, www.fas.usda.gov/ustrade

Total Availability (%) Share of Imported Fresh Vegetables 100.00 90.00 80.00 70.00 60.00 50.00 40.00 30.00 20.00 10.00 0.00 1980 1990 2000 2010 2017

Drought Conditions

How Thirsty is Your Food?

Fertilizers Use vs. Source: USDA-NASS

Fertilizer Prices 400.0 PPI, base=2003 350.0 300.0 250.0 200.0 150.0 100.0 50.0 0.0 All fertilizers Nitrogen Phosphate Source: USDA-NASS

Challenges and Opportunities

Challenges Labor shortages Food safety Trade

Labor Cost Share

Legal Status of Farmworkers

Temporary Farmworkers (H2-A)

H-2A Wage

Food Safety Cannot control every possible risk Vegetables are very safe Consumers expect zero risk Foodborne outbreaks are very visible

Number of Refusals Fruit and Vegetable Import Refusals 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2002 2004 2006 2008 2010 2012 2014 2016 2018 Source: FDA

Number of Outbreaks Million Pounds Vegetable Related Foodborne Outbreaks 1,500 1,400 46,000 1,300 1,200 1,100 1,000 44,500 43,000 41,500 900 40,000 800 700 38,500 600 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 37,000 Outbreaks Availability Source: USDA-ERS, CDC

Mexico Main Highway Network 2006 Mazatlán Durango Highway: > 140 miles 114 bridges 61 tunnels 2012 Reduce transportation cost: Travel time: >6hrs Saving of $500 -$1,500 per load

Baluarte Bridge

U.S. Population Density, 2010 Nogales, AR Pharr, TX Adapted from Wang et al., 2014

U.S. Imports of Fresh Produce from Mexico

Opportunities Food spending Dietary guidelines

Consumer Expenditures on Food

BRFSS, 1990, 2000, 2010 (*BMI 1990 30, or about 30 lbs. overweight for 5 4 person) 2000 2010 Source: CDC No Data <10% 10% 14% 15% 19% 20% 24% 25% 29% 30%

Dietary Guidelines for America Food Pyramid: 1992 My Plate: 2010 Suggested Actual

Cups Ounces Historical Daily Food Availability 8.0 7.5 7.0 6.5 6.0 5.5 5.0 4.5 4.0 Protein Grains 1.9 1.7 1.5 1.3 1.1 0.9 0.7 0.5 Dairy Fruits Vegetables

Changes needed to meet 2015-2020 Dietary Guidelines for Americans (DGA) Food Group Units Recommended Available 2015 % Change Fruits cup/wk 14 5.8 140.1% Vegetables cup/wk 17.5 12.0 45.2% Dark Green cup/wk 1.5 1.1 40.6% Red & Orange cup/wk 5.5 1.6 235.5% Starchy cup/wk 5 4.4 12.4% Legumes cup/wk 1.5 1.6-4.7% Other cup/wk 4 3.3 20.4% Grains oz/cup 42 47.0-10.6% Protein oz/cup 38.5 52.6-26.8% Dairy cup/wk 21 10.6 99.0% Based on USDA-ERS and DGA

Changes needed to meet 2015-2020 Dietary Guidelines for Americans (DGA) Food Group Total Available Total Needed Difference ----------------------- million pounds ------------------- Fruits 80,401 193,075 +112,674 Vegetables 122,216 212,381 +90,165 Dark Green 8,374 11,772 +3,399 Red & Orange 31,523 105,773 +74,251 Starchy 44,033 49,497 +5,463 Legumes 3,066 2,922-144 Other 35,220 42,416 +7,196 Grains 55,754 49,863-5,891 Protein 145,432 106,467-38,965 Dairy 201,407 400,834 +199,427 Based on USDA-ERS and DGA

Thank you! Samuel D. Zapata samuel.zapata@ag.tamu.edu @SZapataD12