USDA's latest outlook suggests that grower prices for most fresh vegetables will continue recovering gradually in 2013. However, Miguel Gómez, Cornell University ag economist specializing in horticultural markets, predicts they probably won't reach the pre-2011 levels.

Retail prices are, on the other hand, increasing relative to the consumer price index. That suggests that intermediation margins are on the rise, he adds.

PRETTY

Domestic production of vegetables and pulses are expected to grow an average of 1% per year over the next 10 years – after zero growth in 2011. One trend of concern is that U.S. per-capita vegetable consumption is flat, even declining among younger generations – despite industry and government promotion and advertising campaigns.

Devising strategies to increase per capita consumption of vegetables will be a central challenge to the industry in years to come. Labor supply and immigration policy also will continue to be top industry concerns as grower groups seek ways to increase labor supply.

Tougher import competition
While fresh market vegetable imports declined 7% in the first nine months of 2012, the drop was primarily in bulb onions, carrots, broccoli and celery. In contrast, fresh tomatoes imports, the leading fresh-import item, increased 3%. Other vegetable products experiencing higher imports were cucumbers, chili peppers and bell peppers, originating primarily from Mexico and Canada and grown under controlled atmosphere environments.

In contrast to imports, the export volume of fresh vegetable increased by 3% during the same period, driven primarily by exports of celery, lettuce and broccoli exports. Broccoli exports increased by 24% during the first three quarters of 2012, mostly to markets in Canada, Japan, Taiwan and South Korea.

USDA's Economic Research Service estimates that imports of fresh-market vegetables will continue to strengthen relative to exports. And, this trade deficit is likely to grow over the next five years.

One U.S. export strength is in processed tomatoes – by far the largest domestically produced processed vegetable. It dwarfs imports by nearly $400 million in the last market year.

Increased production of fresh vegetables under protection in Mexico and Canada will continue to compete intensely with domestic field production, says Gómez. Such issues as traceability, food safety, generic promotion efforts, and increased localization of vegetable supply chains will continue affecting vegetable markets in years to come.