Changes ahead for vegetable industry

This year might prove to be a major turning point in the history of the U.S. fruit and vegetable industry, for several reasons, according to Greg Fonsah, University of Georgia Extension economist.

Many changes are on the horizon for fruit and vegetable producers, and topping the list is the possible direct inclusion of fruits and vegetables in the 2007 farm bill, with the specialty crops now contributing about 29 percent of the total U.S. farm cash receipts for crops, says Fonsah in the 2007 Georgia Ag Forecast.

This industry, he says, is one of the most versatile and dynamic in terms of growth and diversity. “A segment of the industry is strictly for the fresh market while the others cover a broad range of distribution and market chain supply, from canned, frozen and processed to dehydrated. In 2004, the industry ranked third in U.S. crop cash receipts and fifth in U.S. agricultural exports, a position that is expected to further improve in 2007,” he says.

Some of the policy issues that would affect the industry and are expected to be addressed in the next farm bill are more flexibility in program restrictions; government purchases for federal feeding programs such as school lunches; export and competitiveness programs; diet, health and safety programs; and related trade reform programs such as country-of-origin labeling, traceability, ISO-9000 and EurepGAP.

However, says Fonsah, the most important federal policy issue for the fruit and vegetable industry is immigration reform on migrant labor. “It is high priority because it impacts heavily on the agriculture sector at large and the fruit and vegetable industry in particular due to its high dependence on migrant labor. The implication — whether positive or negative — will affect most of the states that rely heavily on agriculture,” he says.

Looking at the state level, Fonsah says Georgia produces more than 34 vegetables and a dozen fruits. Although the 2005 Georgia vegetable farmgate value was $896 million, this amount is expected to show an increase for 2006.

“In most cases, increased Georgia vegetable production does not depress prices enough to reduce total production value. For instance, in 2006, a 48-percent increase in production reduced onion prices by only 15 percent. A planned 2007 onion acreage increase of 24 percent is expected to depress prices by about 7.5 percent in 2005,” he says.

Watermelon production increased from 3,795 thousand hundredweight to 5,250 thousand hundredweight, or 38 percent in 2005, while prices still increased by 12.8 percent in the same time period. Other vegetables, such as tomatoes, increased production by 117 percent in 2005 whereas there was a 22.2 percent decrease in prices.

Despite an impressive fruit, vegetable and nut farmgate value of more than $1 billion, the final decision on immigration reform for migrant labor can positively or negatively affect the profitability and future of Georgia's fruit and vegetable industry, says Fonsah.

“Some of Georgia's most important economic crops such as onions, watermelons, tomatoes, bell peppers, cucumbers, sweet corn and snap beans are hand picked. Hand harvest is an important factor in maintaining the quality required for premium prices in the fresh market.”

“As a result, the survival of these entities depends heavily on the availability and economics of the farm labor supply. Any shortage in the local farm labor market requires workers to fill the gap,” he says.

The Georgia vegetable, fruits and nuts industry is rapidly and steadily growing, says Fonsah. And while production is erratic, it is at overall good levels with strong prices that are trending upward.

“An estimated 2.5 percent overall rise in prices is expected in 2007,” he says. “But despite all of these positive economic indicators, some gray areas need to be addressed if the industry is to maintain its rapid growth. Immigration reform is on top of the list, especially for those crops that depend on farm labor for survival.”

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