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Vegetable prices increase

Vegetable prices increase

• Higher prices for vegetable crops such as head lettuce, carrots, celery, cucumbers, broccoli and cauliflower easily outweighed lower prices for bulb onions, snap beans, tomatoes and sweet corn. • Although averaging 13 percent below a year earlier, tomato prices remained strong during January through May as cold weather again reduced supplies and delayed harvests.

Over the first five months of 2011, fresh-market vegetable prices at the point of first sale averaged 15 percent above a year earlier, according to the latest USDA Vegetables and Melons Outlook.

Higher prices for vegetable crops such as head lettuce, carrots, celery, cucumbers, broccoli and cauliflower easily outweighed lower prices for bulb onions, snap beans, tomatoes and sweet corn.

Although averaging 13 percent below a year earlier, tomato prices remained strong during January through May as cold weather again reduced supplies and delayed harvests.

This was the third consecutive year of double-digit price increases during this time period for fresh-market vegetables and the fifth in the past seven years. Much of these increases reflect the frequency of weather-related supply disruptions during the winter months (January-March) — a time when supplies are much more regionally concentrated.

Fresh-vegetable prices averaged below a year earlier during April and May and are expected to remain below a year earlier in June as supplies slowly improve. As a result, spring-season (April-June) fresh-vegetable prices are expected to average about a tenth below the highs experienced a year earlier.

Early spring market volume was reduced and delayed by both the February U.S. West Coast/Mexican freeze and the slow start to the spring season caused by below-normal temperatures in many growing areas, including California and the Southeastern states.

With growing-degree days below average in most areas of the state, California remained cool this spring following a cooler-than-normal growing season in 2010. This has resulted in harvest delays of one to two weeks for crops such as tomatoes and melons.

In the Salinas area, temperatures have averaged near normal but heavy rains earlier in the planting season may result in intermittent supply gaps into early July for crops such as head lettuce, broccoli and celery.

Supply gaps

Lettuce prices may be impacted the most by any supply gaps as steady fresh-cut processor demand (moving under contract) potentially leads to more significant reductions in open-market availability. This situation may have been in play during the post-freeze price run-up for iceberg lettuce this past February and early March.

Producer prices for melons averaged 52 percent above the relatively weak levels of a year earlier during the January through May period.

Supplies from both domestic and import sources have improved after a late start caused by yet another cool, wet spring.

Some bunching of harvests from both domestic and import sources resulted in strong supplies of watermelon during mid-May to early June, which caused prices to plummet.

May shipments of watermelons, cantaloupes and honeydews increased seasonally, with volume exceeding year-earlier levels.

The summer season got off to a slow start — some areas as much as one to two weeks behind schedule — in much of the Midwest and parts of the East because of cool, wet spring weather.

There were regional pockets such as New Jersey and parts of Michigan that reportedly came through the spring on schedule and with normal crop growth and yields, thanks in part to increasing use of protective plastic hoop tunnels and row covers.

Assuming average weather from this point forward and a small increase in acreage, the outlook for the 2011 summer season (July-September) appears to favor average supplies and generally lower prices compared with the weather-driven highs of a year ago.

Summer-season shipping-point and retail prices are expected to average below the highs of a year ago despite pressure from higher energy, transportation and packaging material costs.

Tomato prices

Fresh-market tomato prices have been on a rollercoaster as the effects of the February freeze and the cool, wet spring have played havoc with growth and shipping windows.

Shipping-point prices were well above average through early April ($23.95 per 25-pound carton) and began to slip in mid-April before bottoming out with a surge in supply from central Florida in late April and early May ($7.95 per carton).

Once south Florida shipments began to decline seasonally and imports from Mexico also began to tail off, tomato prices began to move higher, reaching $17.95 a carton in mid-May before settling around $15 a carton through early June.

As the season in central Florida began to wind down, seasonal shipments began slowly from west Florida and Baja California followed by movement from southeastern Arkansas and South Carolina in early to mid-June.

According to preliminary data, Florida’s tomato shipments (all types) during January-May of 2011 were 65 percent greater than a year earlier, when a freeze devastated the crop.

However, in 2011, a hard freeze also hit Mexico resulting in a January-May reduction of tomato import shipments from that key supplier of 21 percent from a year earlier. The net result was little change in total tomato shipments during this period compared with a year earlier.

Prices paid by vegetable and melon growers for production inputs have been moving higher for the last four quarters. According to an index calculated by ERS using items pertinent to vegetable production (leaves out farm-origin inputs like feed and livestock), average input prices paid by vegetable and melon growers increased 7 percent during the first quarter (January-March) of 2011 and are expected to rise 11 percent during the second quarter.

In 2010, input prices for products used by vegetable and melon farms rose by about 1 percent.

Prices paid for most farm inputs are rising faster than the overall inflation rate in the U.S. economy of 2 to 3 percent.

Over the first five months of 2011, prices paid by all farmers for inputs sourced from outside the farm sector (e.g., energy, fertilizer, machinery, supplies, etc.) are up 11 percent from a year earlier. However, the value of these non-farm-origin inputs is 31 percent higher than five years ago.

Much of this is a reflection of high energy prices and competitive world demand for farm inputs such as chemicals, seed and fertilizer.

So far in 2011, input prices are higher for most all major items except for herbicides. Since bottoming out in late 2009, fertilizer prices have been trending higher and remain well above a year earlier.

Prices for nitrogen, potash, and phosphate have continued to creep higher this spring with rising energy prices and steady worldwide demand.

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