U.S. per capita fruit and vegetable consumption peaked in the mid-1990s, but several factors could join to help increase demand in the future, which is good news for producers, says Alba Collart, Mississippi State University Extension economist.
“The per capita consumption of fresh fruits and vegetables had been increasing in the United States,” said Collart at the Southern Outlook Conference held in Atlanta. “In the 1980s, it was 600 pounds per year, and then in the mid-1990s, it hit an all-time high of 710 pounds per year.”
In 2010, per capita consumption was estimated at 650 pounds per year, but that was among a subset of the population, she says. According to the USDA, high-income consumers drink more orange juice and eat more vegetables, per capita, than low-income consumers. Low-income consumers drink more orange drinks with less than 10 percent juice, and one in five low-income households buy no fruits or vegetables, says Collart.
However, several factors are in play in the United States that may work together to increase demand for fruits and vegetables, she says.
A few of these factors include a population increasing in number and diversity, higher educational attainment and the accompanying higher income, and a better knowledge of diet and health issues fueled by the availability of information, especially through social media.
“Also, more consumers are interested in the origin of their food, as shown by recent trends such as urban gardening,” says Collart. “In addition, consumers have become accustomed to the year-round availability of fruits and vegetable, and this is related to imports and international trade.”
An expansion in consumer choice also could play a role in increasing demand, she says, including new specialty varieties, new products, new colors, mini-varieties, and greenhouse-grown produce. This too, has been spurred by international trade.
Public health concerns continue to grow in the U.S., says Collart, and this may in part be driving consumer interest in locally grown specialty crops, organic crops, direct-to-consumer marketing, and farm-to-table and farm-to-school trends.
There are also factors, she says, that have the potential to decrease demand for fresh fruits and vegetables including price increases for domestic production. “Also, as income rises, people tend to eat out more, particular consumers who are pressed for time. And at-home use dominates away-from-home use for fruits and vegetables. When people eat at home they tend to eat more fruits and vegetables than when they eat at restaurants.”
A recent study by USDA-ERS found that while a higher income brings better dietary knowledge and a greater consumption of fruits and vegetables, it also results in an increase in eating out, which reduces that same consumption, says Collart.
Increasing consumption and demand have resulted in a higher demand for imports, she says. As a share of domestic consumption, fresh vegetable imports have risen from 8 percent in the 1980 to 25 percent in 2010. During the same time period, fresh fruit imports as a share of domestic consumption have risen from 27 to 49 percent.
Rising imports result in higher trade deficit
The rising pace of imports boosted the fruit and vegetable trade deficit to $11.2 billion in 2011, excluding tree nuts and processed nut products which had a trade surplus of $5.5 billion.
“One-half of the trade deficit can be attributed to bananas and fresh tomatoes – mainly from Mexico but also Canada and Guatemala – and bell peppers – Mexico, Canada and Spain. Yet the value of bananas remained stable. There were concerns about producers from Mexico dumping their tomatoes on the U.S. market, so a price floor was mandated for tomatoes imported from Mexico.”
Almost half of U.S. fruit and vegetable imports came from Mexico and Canada in 2011, says Collart. The greatest increase in market share from China and Peru, she adds.
Several factors are affecting fruit and vegetable trade, including free trade agreements such as NAFTA and CAFTA.
“We also have ncreased competition from low-cost production, particularly for labor. China does not benefit from preferential import treatment, but has lower costs. Average per-unit production costs in China for tomatoes, peppers and citrus are about one-tenth those in the U.S.”
Other factors affecting international trade include imports of counter-seasonal supplies and improvements in transportation and refrigeration, she says.
“We have barriers to U.S. exports that are not necessarily tariffs, such as technical, product and sanitary requirements. But this is a two-way street because U.S. imports are also subject to requirements such as marketing orders.”
But despite increasing imports, prices for U.S. fruit and vegetables have remained strong, says Collart. Between 1980 and 2005 prices paid for fresh fruit and vegetables remained strong and, in many cases, about doubled for all crops, including processed products.
“In 2013, grower prices rose sharply and retail prices responded to some extent, due mostly to weather effects. In February 2013, the Consumer Price Index for all fresh vegetables rose 6.3 percent over the previous year.”
Looking at the long-term market outlook all the way to 2022, grower prices for vegetables are forecasted to increase by 0.7 percent annually on average from 2013 to 2022. The import value of U.S. vegetables is forecasted to grow by 4.6 percent, whereas export value is projected to grow by 2.9 percent per year through 2022.
The U.S. fruit and vegetable industry, accounting for more than $40 billion in sales annually, continues to face production and industry issues, says Collart.
The first of these is global competition,” she says. “Increasing imports may now be directly competing with domestically produced commodities throughout the year. Another challenge is imports from lower-cost producers and from countries with subsidized fruit and vegetable production such as the European Union. Some producers have complained that recent free trade agreements allow more access to U.S. without creating equal access to foreign markets.”
U.S. producers also are being challenged by rising costs of production as costs of energy and inputs also rise, she says. In addition, weather impacts are being felt, particularly in desert-growing regions such as Texas and California.
“We’re dealing with increased regulation, including workers’ compensation requirements and a new bill in California that introduces groundwater regulations. A report from USDA-ERS found that $1 of every $9 in farm capital investment goes toward regulatory compliance.”
Labor costs is another major challenge for the fruit and vegetable production industry, says Collart.
“In 2005, the Westerns Grower Association warned of a labor shortage crisis, especially for harvesting tree fruits, given higher wages in other ag sectors and higher-paying construction work as a result of ongoing development.”
Food safety remains a high priority for the industry, says Collart, with producers adding food safety to marketing orders, such as with cantaloupes in California. There’s also the Food Safety Modernization Act, passed in January 2011, she says.
“We also must consider that fruit and vegetable producers do not directly benefit from federal farm support programs. However, they may benefit indirectly from government research and farm assistance programs.”