Vegetable and Melon Outlook- Feb. 20

The Feb. 20 USDA Vegetable and Melon Outlook can be found here. You can find some insightful analysis of the painful status of grower prices for storage onions. Here is the ERS overview on commodity groups:

Fresh vegetables: The value of production for fresh-market vegetables totaled a ecord-high $10.9 billion in 2007, up 2 percent from a year earlier. Head lettuce replaced tomatoes (due to lower tomato prices) as the top fresh vegetable at $1.4 billion—up 31 percent from a year ago. Increases for garlic (up 43 percent), squash (up 2 percent), and snap beans (up 22 percent) outweighed declines for tomatoes (down 21 percent), onions (down 21 percent), and leaf lettuce (down 17 percent). Fresh-market revenue increased 5 percent to $5.9 billion in California, which accounted for 54 percent of the national value of fresh-market vegetables, compared with 52 percent a year earlier. Production of fresh vegetables generated $1.3 billion
in crop value in Florida—up 4 percent from 2006 as aggregate production rose.
Melons: The value of melon production totaled $871 million in 2007—down 1 percent from 2006. Watermelon production squeezed past the 1996 record high while good demand pulled average prices up, leaving crop value up 9 percent to $476 million. Meanwhile, the value of both the honeydew melon (down 7 percent) and cantaloup (down 11 percent) crops declined due mostly to weaker prices.
Potatoes: According to preliminary estimates, the value of U.S. potato production fell 1 percent to $3.2 billion in 2007/08. With the season-average farm price declining 3 percent to 7.12 cents per pound, revenue fell in most states, with the most notable exceptions being Washington, Oregon, and Idaho. With both production and price higher, production value surged 23 percent in Oregon and 9 percent in Washington—two states heavily dependant on processing.
Sweet potatoes: The estimated farm value of the 2007 U.S. sweet potato crop jumped 27 percent to $374 million—well above both a year earlier and the 2003 record-high crop value. Although production was up 14 percent, marketing year prices were expected to rise 12 percent. Although the crop was slightly higher than a year earlier, stronger prices boosted the value of the North Carolina crop 30 percent to $148 million—the highest on record.
Mushrooms: The value of the 2006/07 mushroom crop was estimated to be up 7 percent to $956 million, reflecting a 10 percent increase in average prices to $1.16 per pound. Reflecting higher production costs and reduced volume, prices for both agaricus mushrooms (up 10 percent to $1.12 per pound) and specialty mushrooms (up 5 percent to $3.16 per pound) increased in 2006/07.

On trade:
In 2007, the value of fresh vegetable (excluding melons and potatoes) imports rose 10 percent to $4.0 billion, with the majority of the increase reflecting rising import volume for crops such as fresh dry-bulb onions (up 40 percent), greenhouse tomatoes (up 15 percent), and garlic and chile peppers (each up 11 percent). Mexico and Canada remain the top two foreign suppliers of fresh-market vegetables to the U.S. market. In 2007, Mexico accounted for 70 percent of U.S. fresh-market vegetable import value, while Canada garnered 16 percent of the import market. Rounding out the top five import sources in 2007 were Peru (5 percent), China (2 percent), and Costa Rica (1 percent). On the outgoing side of trade, with higher prices outweighing reduced export volume in 2007, the value of fresh vegetable (excluding melons and potatoes) exports rose 7 percent from a year earlier to $1.6 billion. Canada remained the leading foreign destination for U.S. fresh-market vegetable and melon exports, with 80 percent of total value, followed distantly by Mexico (7 percent), and Japan (4 percent). At $276 million, leaf/romaine lettuce was the leading fresh export vegetable by value in 2007, followed by tomatoes ($160 million), onions ($136 million), head lettuce ($134 million), and broccoli ($131 million).

Wanted : Retail managers

Rick Bella of America's Second Harvest passes on this link of a story published some weeks ago from USA Today about the need for dedicated retail store managers in the U.S. The story isn't specific to supermarkets, but there are obvious truths that transcend the mass merchandisers and food retailers.

Here is a great quote from the story:

"A day in the life of a retail manager would be a nightmare job for a lot of people," says Kathy Mance, vice president of the NRF Foundation, which helps retailers train and recruit employees and managers.


More from the story, about one retail manager:

Working a variety of day and night shifts suits her just fine, Koteski says. On a recent week, her day shifts were 6 a.m. to 3 p.m. and an evening shift was 1 to 11 p.m. She likes to sleep in and do errands on the days when she starts in the afternoon. Even though her shifts are typically 10 hours, during this season it hasn't been unusual for her to work 12 hours, given the restocking necessary to keep up with sales and recalls.

Of the holiday season, which included lines that stretched to the back of the store early on the day after Thanksgiving, Koteski says, "You just need to keep it all in perspective, have an organized plan and be flexible." Part of the plan: "You pick up stuff as you go, so at the end of the night, you don't have 20 carts that need to go back."

More reaction from other ex-managers:

Dillard says she left retailing last year because she didn't feel challenged or appreciated and rarely had time for her family and friends. "The final straw," she says, was when she was diagnosed with the flu and her district manager thought she should still report for work despite doctor's orders that she rest for at least three days.


And here are some choice reader comments

It appears to me that the retail industry fears they will no longer be able to hire and retain people with a selfess work ethic (suckers) any longer . Any semi-intelligent high schooler let alone a college grad knows retail is a dead end road to a miserable existence. This article is a lame propaganda piece. I pity that poor woman. Until Americans either refuse to work under such circumstances or unite to bargain with their employers collectively they will continue to suffer in the work place. One of the earlier comments talked about civil service as unmotivated or ambitionless (I nor any of my immediate family is civil service) and I disagree with this statement. Maybe civil service workers are smarter and like things Americans used to take for granted like a pension, healthcare,vacations, etc. Does this make them lazy or us stupid. Why is it a badge of honor to slave for an ungrateful employer who has disdain for their workers even our country itself and receive substandard pay and benefits for our labors? Maybe most of us are suckers sold a bill of goods about a good work ethic and what it will get you in this country other than taken advantage of. Employers are out for maximum output for minimum input how is it lazy unmotivated or wrong for workers to have this same philosophy?


From another:

I work at Sears part time and my managers HATE their jobs. All day they deal with: having to be a jerk to employees for not selling enough protection agreements and credit cards, problems created poor delivery service (the delivery managers always say its our fault, not theirs), problems created by poor service, (again, service managers blame us for their problems), people buying things online to pick up in store that we don’t have (it may say in stock online, but often is not the case), people angry we don’t have simple things in stock like gas cans ALL SUMMER, on and on and on

And another:

How I do not know what to tell my wife who works as a store manager and is starting to get stressed about all the hours versis the pay , all the theft , unmotavated employees, a over bering district manager ,sales goals that are just out of reach every year to accually make a bounus, the list goes on and on.
all I have ever done was to try and be there for her and give all the understanding and positive input that I could. I do know this much Not everyone out there has a Job better than min wage or just over and we are living a happy life and looking forward to the retirement years (about 12 years away) so all in all guess we will just keep going on and just be happy that we both still have jobs to go to .

TK: I appreciate this last comment. "Suck it up. We all have jobs to do." Managing employees at retail is not easy, and obviously it is a heavy cross to bear for some people. Improving job satisfaction with performance related bonuses, granting more flexible schedules, giving more recognition and providing more communication would be a start.

Doug Powell - KSU Food Safety Network

Here is the famous Doug Powell of KSU on youtube, talking cows, strawberries, and always, food safety.

USDA Ag Outlook Forum - On biofuels

This presentation on biofuels from the USDA Ag Outlook conference provides the "big picture" context that so many of us need to understand the growth and history of ethanol. Here are some risk factors to the ethanol boom, as articulated by Pete Riley, Economic and Policy Analysis Staff USDA/Farm Service Agency.


Biofuel Risk Factors: Oil Prices
Current outlook is uncertain: expectations for weaker economic growth are counterbalanced by geopolitical concerns and speculative price push
• A decline in oil prices will likely mean lower ethanol prices
• As recently as 1998, oil fell to $10 barrel in the wake of the Asian financial crisis.
• Demand Side Wildcards
– Consumer squeeze/recession
– More conservation
– Vehicle technology/mpg improvements
• Supply Side Wildcards
– Lagged response to strong price signals begins to increase supply
– Calming of political hot spots
– Blockbuster new energy discoveries

Biofuel Risk Factors: Government Policy
• Response to changing markets could lead to unknown policy change
• 2005 Energy Bill only lasted 27 months
• What if the policy criteria or objectives change?
– More focus on water use
– Refine carbon rules
– View of energy independence widened to include fertilizer
– Restrictions on land use
• If ethanol import tariff expires on schedule (Jan. 1, 2009), cheaper imports from Brazil could compete in coastal markets
• Pressure mounts from higher food costs
• Subsidy and/or mandate adjustments

Biofuel Risk Factors: Technology
• Unpredictable developments can change the game: for example, the DVD makes the videocassette obsolete or cell phones do an end-around land-line phones
• Competing fuels breakthroughs:
– Improved engine performance for diesel, and more substitution for
gasoline, as in Europe
– Plug-in hybrids drawing from the electric grid
– Improvements in battery technology
– Butanol
– Fuel cells/hydrogen vehicles

USDA Ag Outlook Forum - Notables

Here are some other presentations fr on the USDA Ag Outlook Forum that might be worth a look:

Procedural Impediments to Regulation—The Ossification of the Rulemaking Process: Interesting presentation on the barriers to rulemaking that exist in the federal government and possible shortcuts - such as issuing "guidance" - that may be ways around the problem. By Jeffrey S. Lubbers Washington College of Law American University JSL26@aol.com


The Challenge of Increasing Trade: How to Address Linkages and Barriers Drawing lessons from two specific examples —Avocados and Apples: Presentation by David Orden and Everett Peterson: Fascinating presentation drawing comparisons between opening of U.S. market for Mexican avocados and the potential opening of the U.S. market for Chinese apples. I pulled some highlights on apple in the following excerpts:


On apples:
Apple production in China has increased substantially in recent years and now accounts for nearly half of the total global output. Correspondingly, China has highlighted apples (and also pears) as products for which it has sought market access in many of its negotiations with trade partners about agricultural technical barriers. China’s apple exports have skyrocketed as markets have been opened. In the 2004/05, China exported 850,000 metric tons of fresh apples, a nearly five-time increase in the export volume over five years. A large proportion of the increase in Chinese apple exports has gone to Pacific Rim markets. In North America, the importation of Chinese fresh apples from approved orchards and packers in selected provinces has been authorized by Canada since November 2004 but importation of fresh apples remains banned by the United States.
Opportunity: It is not as obvious that there is an economic opportunity for Chinese apples in the U.S. mark et as in the case of Mexican avocadoes. Chinese apples have obtained only about a 3-percent share of Canadian fresh apple consumption. The Chinese apples imported by Canada are mainly sold in the Asian communities at relatively high prices as a somewhat specialty product. In the European Union, Chinese fresh apples account for only about a 1-percent market share. Imported Chinese apples would similarly be likely to enter the U.S. market as a specialty item. This limits the economic gains but also limits the pest risks which increase a larger volume of trade.

On apple science:
Science: Since there has not been a U.S. risk assessment, the scientific evidence is less cohesive at this point in time. One can examine the risk assessments that Canada and other countries have made and the risk-mitigation measures they have imposed. From this, one can describe a prototype or hypothetical systems approach that might be adopted by the U.S. The decision by Canada provides some evidence that a risk assessment can support Chinese apple imports with feasible risk-mitigation requirements. Canada identifies 10 pests of concern and its risk-mitigation implementation is closely coordinated with Chinese sanitary authorities. But a process of pest identification, data collection, risk assessment and analysis of mitigation measures has only progressed to an early stage for the U.S.

On political will:

Political Will: The current political environment does not seem conducive for decisions that open U.S. markets further to imports from China. At the macroeconomic level, there is a large U.S. bilateral trade deficit and arguments are made that the Chinese currency should be revalued. There is concern about industrial competition in general from this lower-wage country. And the safety of products from China, from pet food to pharmaceuticals, has
made front-page international news. In this context, it would be difficult for the two governments to agree to intense efforts to reduce phytosanitary barriers for a new product.
It can be argued that NAFTA was also controversial when negotiated. But once a high-level political decision was made to reach the NAFTA accord it provided an institutional impetus for various bilateral trade issues to be addressed. There is no similar high-level accord currently under discussion between China and the U.S.

Analysis:
Without considering pest risk, it is assumed that Chinese exports to the U.S. would achieve about a 3-percent share of the total U.S. apple consumption and sell at a price above the U.S. market average, similar to the situation for Canada in 2003-2004. This results in small economic gains. Next the outcomes are evaluated with pest risks and related control costs taken into account. The probabilities of U.S. pest outbreaks due to the importation of Chinese fresh apples are not known. Thus, the risk probability levels are estimated that cause the expected change in U.S. welfare due to granting market access to Chinese fresh apples to fall approximately to zero. Higher levels of risk from trade would result in expected welfare losses.
In the case of the assumed lowest costs from pest infestations, an expected frequency of a trade-related pest outbreak of approximately 0.2 per year, or one every five years, leaves U.S. welfare unchanged. For the cases of assumed “average cost” and “high cost,” the expected frequency of an outbreak that leaves U.S. welfare unchanged drops to once in 16.7 and 50 years, respectively.

From the report's conclusions:
There are several general lessons from this case-study evaluation:
• In some instances, calls to reduce technical trade barriers may not be matched by real economic circumstances that would result in trade.
• In other cases, where exporters rightly perceive a real economic opportunity, they face multiple challenges. These challenges should figure into their business calculations and industry strategy.
• An industry seeking market opening needs to send the “A team” into the fray and even then recognize that its fate depends in part on contextual forces beyond their control.
• Appreciation is gained of the complex environment in which regulators operate. This may be no surprise for those with experience, but the point needs to be widely understood. Such understanding will enhance the functioning of the regulatory process.

USDA Ag Outlook Forum - Terry Long

Terry Long, chief of the Fruit and Vegetable Market News, Agricultural Marketing Service, USDA delivered remarks Feb. 22 to the USDA Agricultural Outlook Forum horticultural luncheon. Here is the link to Long's 35 page pdf presentation on developments in the market news service, "From market reports to market information" Answering the question of "what's next?," Long listed these points:

• Portal Communities
• RSS notification of updated information
• Add Districts to rail movement data
• Improve display on Portal queries
• Make additional graphing options available
• Add improved functionality to the Retail
Report

TK: The USDA's Market News portal has been a very useful tool to extract market information on fresh produce movement and prices, and reports that price charting functions of the system are being integrated by March is another piece of welcome news for users of fruit and vegetable data.

USDA Ag Outlook Forum - Climate change

All of the presentations from the second day of the Feb. 21-22 Agricultural Outlook Forum have been posted, and here is one that caught my eye:

How will global climate change affect agriculture? This 37 page pdf by Jerry Hatfield of the National Soil Tilth Laboratory of Ames, Iowa, speculates about climate change in the next 10 to 30 years.
Here is a quick summary:
- Increasing temperature of 1.2C (2.2F) over the next 30 years
- Increasing CO2 of 60 ppm over the next 30 years
- Increasing variability in precipitation
- There will be increasing variation in temperature and precipitation within and among years

The plant response will be mixed, he said:

Occurrences of higher temperatures will
cause faster phenological development
- Higher temperatures will affect reproductive development because of the sensitivity of pollen survival to temperature
- Yields will be impacted because of shorten reproductive periods

For fruits and nuts:
- Warmer temperatures will cause earlier bud break or flowering in the spring
- Warmer temperatures will cause faster development
- Warmer temperatures could impact chilling requirements for many plants
- Increase potential problems when warm temperatures cause early development and then turns cold


On CO2
- Increasing CO2 will increase plant growth
- Difference between C3 and C4 plants
- Increasing CO2 will increase water use efficiency because of increased growth per unit of water transpired

On precipitation
- Variable precipitation will increase potential soil deficits
- Decreased soil water availability will offset the positive impacts of CO2 and exaggerate the effect of increasing temperatures

On pests
- Weeds will be favored by increased CO2
- Increased temperatures will change phenological development of weeds
- Increased spring, winter, and fall temperatures will allow for winter survival and earlier seasonal onset of insects and pathogens

Implications

Implications
- Temperature increases will alter phenological development of crops, increase potential sensitivity to temperature extremes in fruit crops
- Temperature increases will affect reproduction because of sensitivity of pollen
to extreme temperatures
- Overall impact will be to decrease crop yield and forage quality
- Temperature increases will negatively impact animal production and reproduction
- Increasing CO2 will positively impact plant growth and ultimately yield
- Increasing CO2 will reduce crop water use which will be an advantage under water limitations
- Increasing CO2 will offset some of the negative impacts of increasing temperature

Management Changes
- Producers can adapt to climate changes by altering crop management practices, e.g., planting date, crop selection, nutrient management
- Producers can adapt to climate changes in livestock through changes in management practices that reduce exposure to thermal stress


TK: All in all, more bad than good, and 2.2 degree rise in temperature over the next 30 years is a steep increase.