Price trends good tool for vegetable growers

It would pay — literally — for fresh vegetable farmers to look at price trends when deciding which crops to plant.

“Economic theory stipulates that the forces of demand and supply determine the price of a commodity,” says Greg Fonsah, University of Georgia Extension economist. “The theory of perfect competition further states that a farmer maximizes profits by producing the output at which marginal revenue equals marginal cost.”

Profits, says Fonsah, are what attract farmers to invest in the production of a certain vegetable, such as snap beans, cucumbers, watermelons or peppers, to name a few.

“But if the production of a given vegetable increases the overall supply, then the price will fall,” he says. “Farmers can maximize their profits when there is a high demand for their crop and limited supplies.”

It’s imperative, says Fonsah, that fresh vegetable farmers pay particular attention to price trends. Price trends, he adds, are excellent tools for planning purposes and decision making.

To this end, Fonsah has looked at the price trends for the following fresh vegetable crops for the past five years.

Snap beans — There was a slight price decline from 1999 to 2000 and a continuous increase thereafter, with a peak in 2003. This price trend is expected to increase in 2004, especially if any drastic unforeseen contingency such as adverse weather, pest or disease problems affect production and or supply. The maximum price

for snap beans in 2003 was $23.75 and was recorded on June 30 while the minimum price was $6 per bushel on May 19. Average f.o.b. price per bushel for two springs plus one fall crop season was $19.62 in 2003 compared with $16.79 in 2002.

Cabbage — Cabbage prices dropped from $5.01 per crate in 1999 to $4.86 in 2000. Thereafter, 17.4 percent and 35 percent price increases were recorded from 2002 and 2003 compared to 2001.

Cantaloupe — Cantaloupe prices have been increasing rapidly since 1999 when it was 55 cents each to 2003 at 116.13 cents each. The five-year average price of 46.06 cents was slightly below the 1999 price. There was no change in price in 2000 and 2001 when prices stagnated at 80 cents each. Price per pound has increased in the past five years from 11 cents in 1999 to 23.23 cents in 2003. This price incentive is expected to trigger increases in production and eventually reduce prices if not controlled.

Carrots — Carrot prices have been on the rise. The maximum price for 2003 was $15 per 48 1-pound film-bags in sacks recorded on June 9 while the minimum price was $9 recorded on March 3. The five-year average price was $7.77 per 48 1-pound film-bags. However, carrot prices have been in a slightly downward trend until 2003, when there was a drastic jump from $5.93 in 2002 to $10.30 per 48 1-pound film-bags for medium-large in 2003.

Sweet corn — Sweet corn prices follow a zig-zag upward trend. The year 2000 price was the lowest in five years at $5.30 per four four-and-a-half dozen (including icing). The best price thus far was in 2003 at $9.07. The five-year average was $7.07 with the maximum and minimum averages at $9.07 and $5.30, respectively. Spring prices — June 2-July 14 — were relatively lower than fall (Sept. 22-Oct. 27). For instance, the average five-year maximum for Georgia yellow sweet corn for spring was $6.38 compared to $7.82 for fall and the minimum price was $5.14 for spring compared to $6.38 for fall.

Cucumber — Except for year 2000, cucumber prices have been on a consistent rise. The peak price of $15.93 per 1 1/9 bushel was recorded in 2003. Contrary to sweet corn, cucumber spring harvest commands relatively better prices. For example, spring 2003 price was $19.58 per 1 1/9 bushel compared to $11 for fall. The five-year average blended prices were $10.85, $11.28 for spring and $9.63 for fall season. At the same time, the five-year average maximum prices were $15.93, $19.58 for spring and $15 for fall while the five-year average minimum prices were $11.45, $10.42 for spring and $8.77 for fall, respectively.

Eggplant — Eggplant prices started improving in 2000 and peaked in 2001 at $10.98 per 1 1/9 bushel. However, there was a 23.4 percent price decrease in 2002 and a subsequent 19.1 percent price increase in 2003. The five-year average price was $8.51 and five-year maximum and minimum were $10.98 and $5.95, respectively.

Okra — The okra price was at its peak in 2003 at $15.99 per 1/2 bushel, Atlanta wholesale. No price data was reported in the year 2000. Thus, it is difficult to determine its upward or downward trend. The four-year average price was $12.03. The maximum price was $15.99 while the minimum price was $10.46. However, the blended price was $9.63.

Pepper — The year 2001 was the least favorable for pepper prices as they dropped to $7.50 per 1 1/9 bushel. The best and peak year in the past five years was in 2003. Growers received $12.90 per 1 1/9 bushel. The five-year average price was $10.22.

Squash (yellow) — Yellow squash prices for the past five years have been consistent until 2001 when a 24.7 percent increase was realized from 2001 to 2002 and a 26.8 percent additional increase from 2002 to 2003. The five-year average yellow squash price was $11.33 and the blended price was $9.07. Yellow squash prices for spring 2002 and 2003 were $12.75 and $15.46. This was higher than fall 2002 and 2003 prices, at $9.28 and $10.75 per 3/4 bushel, respectively.

Sweet potatoes — Sweet potato prices increased consistently from 1999 to 2002. However, there was 80.1 percent increase in price in 2003. The five-year average price was $12.20 while the blended price was $8.53.

Tomatoes — Tomato prices had been fluctuating until 2001 when it maintained a steady rise. There was a 55.9 percent increase in price from 2001 to 2002 and a 25 percent increase from 2002 to 2003. The average spring (June 2-July 7, 2003) harvest f.o.b. price was $12.65 for a 25-pound carton of 6x6s. The average fall (Oct. 20-Nov. 17) harvest f.o.b. price was slightly higher at $12.94. However, the average five-year price was much lower at $9.98.

Vidalia Onions — Vidalia Onions obtained a surprisingly higher price in 2003, at $24.04 for No. 1, 40-pound carton jumbo, up 32.2 percent from the previous year at $18.18. After the 24.9 percent drop in prices in 2000, prices for the subsequent years have consistently been on the rise. Thus far, the five-year average price was $17.36 and blended price was $15.92.

Watermelon — Watermelon is the only vegetable that experienced a drastic fall in price in 2003. In 2002, the f.o.b. price per cwt. for an average of 20 to 24 pounds was $7.75 compared to $3.17 in 2003. The five-year average was $5.92. Excess production could partially be blamed for the 44.5 percent price decrease in 2003.

Zucchini (squash) — Zucchini prices were in a downward trend for three years but skyrocketed in 2003 to $11.06 from $7.50 (per f.o.b. 1/2-5/9 bushel small sizes) the previous year. Historically, fall (Sept. 16-Nov. 4) prices always have been higher than spring (May 19-June 30) until 2003, when the trend was reversed. The five-year average price was $8.25 while the spring and fall average prices were $6.78 and $7.88, respectively. The average five-year blended price was $6.40, whereas the spring and fall blended prices were $5.76 and $6.70, respectively.

All vegetables in Fonsah’s study showed an increasing price trend, especially in 2003. The only exception was watermelons, which showed a drastic reduction in 2003, when excess production may have been a factor.

“Fresh market prices are an important tool for planning and decision making,” says Fonsah. “They are excellent guides for farmers to determine when and how much to produce. Since no individual farmer can influence prices, and no one can predict weather or the outbreak of any particular pest or disease during a planting season, the decision to increase or decrease planting acres is a mere gamble.”

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