Fresh Produce Discussion Blog

Created by The Packer's National Editor Tom Karst

Tuesday, December 26, 2006

All farm bill all the time

Look for much more coverage of the 2007 farm bill in the weeks ahead, beginning with the American Farm Bureau Federation convention in January. With program crop growers determined to hang on to their safety net of subsidies, Agriculture Secretary Mike Johanns is still talking reform. A story that covers existing farm program realities is found here. For the produce industry, look for reintroduction of the Equitable Agriculture Today for a Healthy America Act in the House early on. Industry lobbyists also are talking to possible Senate sponsors.

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Not your father's market news

The USDA has eliminated or will eliminate some of its market news reports in the near future. Satisfyingly for the agency, I'm sure, there is some push back from the industry. It would be disappointing to go through cutbacks and not hear a wimper. Most the reports are composite reports that require manipulation by market news reporters. With budget constraints limiting expensive staff hours spent on market news reports, the USDA is directing users to the slick fruit and vegetable portal. More on this in the Jan. 1 issue of The Packer.

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WIC food package deadline slippage

While produce industry advocates like Lorelei DiSogra of United Fresh Produce Association were hoping for a spring/summer timetable for the interim final USDA rule on revisions to WIC food packages to include fruits and vegetables, the USDA has already pushed that expectation back. In fact, the USDA said in its regulatory agenda published in the Federal Register that their internal deadline is September of next year. (It's a massive document, so you might want to keyword search for RIN: 0584-AD77) DiSogra said that Agriculture Secretary Mike Johanns indicated to her and other nutrition advocates in a pre-Christmas meeting that more than 56,000 comments were received about the rule to add fruit and vegetable vouchers to the WIC food packages. Some nutrition advocates were surprised to hear Johanns tell them that more people have been in his office opposed to the proposed rule than supporting it. While it seems unlikely that an Agriculture Secretary from Nebraska could be the best hope for changing the WIC food packages in 30 years, that may well be the case. Let's hope he steps up to the table and does the right thing for America's needy women and children by next fall.

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The 2.5% solution

Skip the palm reader. Here's your future, and it's partly cloudy. The USDA Economic Research Service predicts that the the production value of U.S. horticulture crops - fruit, tree nuts, vegetables, melons, mushrooms, greenhouse and nursery - is forecast to grow at an average 2.5% pace from 2007 to 2016. At the same time, horticultural imports will grow at a 3.8% clip, the agency said
From a value of $50 billion in 2006, the USDA predicts the value of those U.S. horticultural crops will rise to more than $63 billion by 2016. The price forecast includes a 0.9% gain in yearly production volume and an average 1.7% inflation rate. The USDA isn't counting on big gains in per capita consumption, as the production gains coincide with expected increases in the U.S. population. By 2016, U.S. fruits and nuts will account for $22 billion, vegetables and melons $20 billion and $21 billion for greenhouse and nursery crops. The ERS says that fruit and tree nuts will grow the fastest in value, while citrus fruit and processed and fresh market vegetables will face strong import competition. The USDA reports that fresh market vegetable import value has grown at a whopping 10% annually for the past decade.
The value of U.S. horticultural crops exported will increase from 33% in 2006 to about 38% in 2016, driven largely by fruits and nuts. In 2006, the export value of fruits and nuts was a surprising 46% of total production value, up from 40% in 2005
For me, the real eye openers are the import projections. The USDA said that about 49% of the value of fruits and nuts consumed in the U.S. will be imported during 2007 to 2016. For vegetables, the import share of domestic consumption is forecast to rise from 35% in 2006 to 41% in 2016.
This projection from the USDA shows with sobering clarity that U.S. producers need more support from the federal government to meet the long term food needs of U.S. consumers.

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Eating out is in

The National Restaurant Association has forecast that 2007 will bring record sales of $537 billion, in what the group described as a "solid" 5% increase over 2006. Americans are spending 47.9% of their food budget in restaurants, and 935,000 restaurants employ 12.8 million people. Some hot menu trends in the NRA report include bite-sized desserts, locally grown and organic produce, flatbread and bottled water. Other hot items include pomegranates, figs, grass-fed and and free range meat, fresh herbs and exotic mushrooms. The NRA reports that of those restaurants serving organic items, 52% of fine dining, 42% of casual dining and 27% of family dining operators expect higher sales in 2007. Locally sourced produce is also expected to grow in sales by 51% of fine dining, 38% of casual dining and 31% of family dining restaurant operators. Another interesting tidbit: 36% of adults say they eating on the go less than two years ago, and 48% eat in their cars less frequently.
The NRA report said the Mountain region will lead restaurant sales growth at 6.7% followed by the South Atlantic with 6.2% growth. Nevada will lead all states in sales growth with 8.1% forecasted growth, followed by Arizona at 7.6% ad Florida at 7.1%. Baby boomers are eating better, so the NRA mentioned that quick service restaurants will continue to diversify their menus with "good for you food."
That's one of several positives in the 2007 forecast for fruit and vegetable marketers.

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