Fruit, vegetable supply swings have prices jumbled

by Ron Sterk
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KANSAS CITY — Domestic production of fruits and vegetables vary widely from a year ago, resulting in large price swings and trade prospects, while unusual weather has caused short-term supply disruptions in some key growing areas.

Although the 2007 apple crop is down from a year ago, production of most other fruits is up and prices are mixed. In its latest Agricultural Prices report, the U.S. Department of Agriculture said the preliminary index of prices received by farmers for fruits and nuts in October was 171% of the 1990-92 base, up 5% from September but down 1% from October 2006. The average price of apples was about even with last year, grape and lemon prices were higher, and grapefruit, orange, pear and strawberry prices were lower.

Vegetables, meanwhile, truly were a mixed bag. Production of 11 key fresh vegetables was forecast up 5% from 2006, but individually, area ranged from down 16% to up 47%. Outturn of the five largest processing vegetables was up 12%, mostly because of tomatoes. Prices, meanwhile, were mostly higher. The U.S.D.A.’s commercial vegetable index in October was 192% of the 1990-92 base, up 28% from September and up 56% from a year ago. For fresh produce, prices of five vegetables were up and of six were down from October 2006.

Consumer prices for fresh fruit averaged above year-ago levels all year, although the gap narrowed to 2% by August, according to the U.S. Bureau of Labor Statistics. Fresh vegetable prices averaged 3% above a year ago for the first nine months of 2007. Retail prices for processed fruits and vegetables also were up 3% from last year for the same period, the B.L.S. said.

Meanwhile, participants all along the marketing chain, from grower to consumer, are dealing with higher transportation costs due to soaring energy prices. Average U.S. retail on-highway diesel prices hit an all-time high of $3.303 a gallon last week, up 24% from a year ago, the Energy Information Administration of the U.S. Department of Energy said. West coast prices averaged $3.508, up 26%. Gasoline prices also crept back over $3 a gallon last week for the first time since mid-July.

But processors, especially those with high energy demands that dry or dehydrate produce, could get a break with gains in natural gas prices minimal compared to those of petroleum-based products. The E.I.A. projected the Henry Hub natural gas price to average $7.30 per thousand cubic feet in 2007 and $8.01 in 2008, compared with $6.42 in 2006 and $7.33 in 2005. The price was $7.26 on Oct. 31. The E.I.A. said working natural gas storage was at a record high 3.51 trillion cubit feet on Oct. 26, breaking a 17-year-old record and 8.4% above the five-year average for the date.

Apple supplies down, prices up

Production of all types of apples in 2007 was estimated at 9,255 million lbs, down 7% from 2006 and down 5% from 2005, according to the U.S.D.A.

"Light ending-season supplies of 2006-07 (August-July) apples combined with a forecast smaller domestic crop in 2007 point to a continued strong market for U.S. apples during the 2007-08 marketing season," the U.S.D.A. said in its latest Fruit and Tree Nuts Outlook. The smaller crop was mostly the result of "a range of weather problems," the U.S.D.A. said. Of the five largest apple producing states, only New York, the second largest, was expected to have a slightly larger crop than a year ago. Large declines were seen in several minor producing states across the eastern Midwest and Southeast due to an early April freeze this year.

Prices for processing type apples, those squeezed for juice or peeled for further processing, have been well above year-ago levels, even as the new crop became available earlier than last year. Where feasible some processing apples have been diverted to fresh apple usage. Prices for juice type apples generally have shown the largest increases. Late October prices in Washington, which grows about 60% of all U.S. apples, were two to three times above year-ago values. Prices in Michigan, the third-largest producer, were up as much as 45% and Northeast prices as much as 55% above year-ago levels.

Juice supplies and prices have been less affected by the smaller domestic crop since 80% of the juice consumed in the U.S. is imported, mostly from China. Apple juice imports surged 29% in 2006-07 from a year earlier, the U.S.D.A. said, and per capita consumption was record large at 2.23 gallons.

Most other fruit supplies increase

The U.S.D.A. estimated 2007 apricot production at 173 million lbs, up a whopping 95% from a record low 2006 crop, which was decimated by a freeze, and up 6% from 2005.

The 2007 peach crop was forecast at 2,054 million lbs, up 2% from 2006, due to increased output in California and despite much smaller crops in most Southeastern states due to the April freeze.

U.S. pear production was forecast at 1,756 million lbs in 2007, up 4% from 2006. Favorable weather in California, Oregon and Washington, which account for 97% of U.S. production, resulted in a larger crop, the U.S.D.A. said. Imports also jumped this year. Prices for both fresh and processing pears were forecast to decline from 2006-07 due to increased supply.

Grape production was forecast at 13,981 million lbs, up 9% from 2006 but 11% below the record large 2005 crop, the U.S.D.A. said. Outturn in California, which produces 88% of U.S. grapes, was up 7%, with wine types up 1%, table types up 7% and raisin types up 18% from a year ago. Table and wine type grape prices were forecast to ease from 2007, while raisin type prices were expected to hold steady due to negotiated prices for raisins.

In its first citrus crop forecasts for the 2007-08 season, the U.S.D.A. projected Florida orange production at 168 million 90-lb boxes (7,560,000 tons), up 30% from last year’s crop, which was the smallest in 17 years. Most of Florida’s crop is used for juice. California orange production was forecast at 58 million 75-lb boxes (2,176,000 tons), up 29% from the freeze-reduced 2006-07 crop. Most of California’s oranges are consumed fresh. Orange prices were forecast to decline from last year’s weather-inflated levels but remain above recent averages, the U.S.D.A. said.

U.S. 2007-08 lemon production, most of which also comes from California, was forecast at 18 million 76-lb boxes (684,000 tons), down 3% from a year ago and down 30% from 2005-06, also due to the freeze.

Vegetable prices, supplies mixed

Total harvested area of the 11 major fall-season fresh vegetables tracked by the U.S.D.A. was forecast at 154,300 acres, up 5% from 2006 but down 4% from 2005. Harvested area of broccoli was forecast down 7%, cucumbers down 13%, head lettuce down 6% and fresh tomatoes down 16% from 2006. But large gains were forecast for several items, including snap beans and bell peppers up 47%, carrots up 33% and sweet corn up 34%. Minor changes were forecast for cabbage, cauliflower and celery. California accounts for about 66% of total U.S. fall fresh vegetable production.

The U.S.D.A. forecast total production of the four major processing vegetables (snap beans, sweet corn, green peas, tomatoes) at 16.7 million tons, up 13% from 2006. Production of snap beans was forecast up 10% from 2006, sweet corn down 7% and peas up 1%.

"Wholesale prices of both canned and frozen vegetables are generally higher than a year earlier," the U.S.D.A. said.

After excellent growing weather all summer, late season rainfall in California, which grows 95% of U.S. processing tomatoes, resulted in a slightly smaller crop than expected. Still, processing tomato production was up 19% from last year’s heat-reduced crop.

"Yields were reportedly so good in certain regions that available volume overwhelmed the processing capacity, causing some fields to be left unharvested," the U.S.D.A. said of California’s crop, which was estimated at 12.1 million tons. Total U.S. processing tomato production was forecast at 12.7 million tons, just 100,000 tons short of the 1999 record, the U.S.D.A. said.

Prices for 300-gallon bins of 31% brix tomato past have ranged from 38@42c a lb and are expected to average near 39c in 2007, down from 43c in 2006. Strong demand has prevented further price weakening, trade sources said. 

Wildfires damage California avocado trees, reduce crop size

IRVINE, CALIF. — California wildfires that burned an estimated 500,000 acres in late October hit the state’s primary avocado growing area. Preliminary estimates from the California Avocado Commission put losses at 10% for the 2007-08 crop.

"Prior to this disaster, growers reported their total crop to be 365 million lbs for the 2008 season," the Commission said. "Considering the days of wind and wildfires now behind us, the crop is likely to come in around 325 million lbs by season end in November."

Losses in San Diego county, the home of 41% of California’s avocado acreage and more than 50% of production, were estimated at 2,500 acres, or 10%, with losses in smaller producing counties of Orange estimated at 22% and Riverside at 4%.

"Avocado growers will have to wait weeks before they know if their trees suffered long-term damage in the wildfires," the California Farm Bureau Federation said. "The trees may lose their fruit and leaves, meaning they will not produce for the next two seasons."

Crop experts also noted that avocado trees are known to be resilient.

California avocado areas also were damaged by freezing temperatures in January. California produces about 95% of domestically-grown avocadoes.

This article can also be found in the digital edition of Food Business News, November 13, 2007, starting on Page 1. Click here to search that archive.

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