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Vegetable price increase not good reason to boost 2005 acreage

A succession of hurricanes and tropical storms this past year in the Southeast caused abrupt and significant increases in the fall prices of some fruits and vegetables. Growers, however, should not take this as a sign to boost acreage.

“The increases in the fall prices of some fruits and vegetables were due simply to the shortages caused by the hurricanes and tropical storms that affected Georgia and other parts of the Southeast,” says Greg Fonsah, University of Georgia Extension economist.

“Due to the astronomical jump in prices of vegetables during the fall, growers might be tempted to increase planted vegetable acreage to benefit from the temporary price increases,” he adds. “But if that happens, excess production will dampen next season's prices for vegetables.”

During the 2004 fall vegetable season, which runs from August to October, Georgia was hit by four hurricanes — Charley, Frances, Jeanne and Ivan. These storms damaged a substantial amount of the estimated 45,000 acres of vegetable crops planted in Georgia for the fall season, says Fonsah.

The total damage from the storms, he adds, was estimated at $145 million. “The Georgia pecan and peach industry also suffered significant damage,” says the economist. “There were uprooted pecan trees, broken limbs and the loss of nuts. In addition, peach trees were uprooted and suffered broken limbs, although the fruits were already harvested.”

Losses caused by the hurricane damage has created a drastic shortage in the quantity of some vegetables and fruits harvested and sold during the fall production season, says Fonsah. Basic economic theory, he says, stipulates that whenever there is a scarcity of any given commodity, prices will increase.

To present a clearer picture of vegetable prices, Fonsah analyzed the price trends for selected fall fruits and vegetables that were affected by the storms of 2004.

  • Pepper. Jumbo green pepper prices for spring 2003 ranged from $12.18 per 1 1/9-bushel cartons to $19.43, while they ranged from $10.21 to $12 in the fall of the same year. On the other hand, large green pepper prices started from $9.18 up to $15.43 for the spring 2003 crop and from $8.87 to $8.97 for the fall crop. This trend would suggest that pepper prices usually are better for the spring crop than for the fall crop.

    However, the price situation drastically changed during the 2004 cropping period. Jumbo green pepper prices for the spring 2004 crop were relatively lower than the previous year's levels. They started from $8.88 and dropped to $7.29 per 1 1/9-bushel carton while the prices for large green peppers started from $7.06 and rose slightly to $7.93. Incidentally, the prices increased more than four-fold for the fall crop. The jumbo green price per 1 1/9-bushel carton sold for $32.95 to $40.46, while the large green peppers sold for $28.88 to $36.65.

  • Squash. A similar price trend but different pattern was observed for squash. The spring crop started in April through June while the fall crop was the same as with green pepper — September to November. Two varieties, small yellow crookneck and small yellow straight-neck squash, were used in this analysis.

    For the spring 2003 crop, the prices for small yellow crook-neck squash ranged from $9.68 to $11.08. The fall 2003 prices for the same product ranged from $6.24 to $7.10 per 1/2 or 5/9-bushel carton. In other words, better prices for small yellow crook-neck squash were obtained during the spring harvest season than for the fall season.

    Analysis for the 2004 crop, however, shows a different trend. Prices for small yellow crook-neck and small yellow straight-neck squash vary from $5.85 to $9.75 and $5.48 to $6.76 for the spring crops, respectively. However, a drastic and unusual jump occurred in the fall prices. The small yellow crookneck squash prices started as high as $28.40 in September and dropped to $10.07 in November. On the other hand, the small yellow straight-neck squash prices also started as high as $26.43 and downtrended to $5.95 in November. The starting prices were more than four times the levels seen in 2003.

  • Sweet corn. In 2004, spring yellow and white sweet corn prices were relatively lower than in 2003. Spring 2004 yellow sweet corn sold for $5.55 per four dozen in May and dropped slightly to $4.42 in July. In spring 2003, it sold for $6.10 in May and decreased to $5.52 in July 2003. Spring 2003 white corn prices were even higher than yellow corn, as they started at $6.68 in May and ended at $6.49 per four dozen in July.

However, fall 2003 prices were relatively lower than the same period in 2004. There were no prices reported for either yellow or white sweet corn in September 2004. Fall prices for white corn jumped to $23.46 in October and dropped slightly to $12.12 per four dozen in November. The fall price for yellow corn also jumped, to $12.08 in October before falling to $10.17 per four dozen in November.

Since pecans are an alternate bearing crop, there's a chance that next year's production will be affected seriously by the carryover effect of the 2004 hurricane season, says Fonsah.

“Cost of production for most growers will increase as they would have to replace uprooted trees and increase chemical treatment rates and frequencies for those trees with broken limbs,” he says.

The peach industry, says Fonsah, will feel the pinch of uprooted trees and broken limbs in the subsequent years. “The cost of production will increase, and the quality of next year's crop might be affected.

“Furthermore, although 2005 is expected to be a good production year for peaches, the spillover effect of the hurricanes definitely will have a negative impact on overall production, quality and yield. Assuming these hypotheses are accurate, prices still will remain high but not as high as current prices.”


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