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CARD: Center for Agricultural and Rural Development

Winter 2004, Vol. 10 No. 1

pdf for printing The Expanding U.S. Market for Fresh Produce

Roxanne Clemens

Figure 1
The U.S. Center for Nutrition Policy and Promotion urges consumers to eat between five and nine servings of fresh fruits and vegetables per day. Not all consumers are reaching that goal, but per capita consumption of fresh produce is steadily increasing (see Figure 1). Between 1980 and 2001, per capita consumption of fresh fruits increased by 19 percent and consumption of vegetables (including potatoes) increased by 29 percent. At the same time, new technologies to extend shelf life and new trade agreements have increasingly allowed imports of fresh produce to fill gaps where domestic supplies are too small and domestic products are out of season.

Figure 2
As a result, between 1980 and 2001, fresh fruit imports increased by 155 percent and fresh vegetable imports increased by 265 percent (see Figure 2). In 2001, imports accounted for 38.9 percent of U.S. fresh fruit consumption, up from 24.2 percent in 1980. Fresh vegetable imports accounted for 11.6 percent of U.S. consumption in 2001, up from 5.5 percent in 1980.
Imports from North and South of the Border

Table 1
As shown in Table 1, the majority of imported produce is comprised of a few products originating from a few countries within the Americas (see Table 1). Costa Rica's tropical climate makes it the largest supplier of fresh fruits. Mexico is the largest supplier of fresh vegetables (including potatoes), in part because of relatively low transportation costs. And although import volumes from Canada are lower than are those from other top suppliers, Canada supplies a surprisingly large volume of vegetables to the U.S. market, in part because of increased greenhouse production.
As expected, produce imports are highly dependent on U.S. production and seasonal fluctuations. For example, bananas account for more than 22 percent of total fresh fruit consumption and for 60 percent of total fresh fruit imports. Because banana production is virtually nonexistent in the United States, imports are not strongly affected by seasonal changes. This contrasts with melon imports, which are the second largest fresh fruit import by volume but highly seasonal. Imports are large in March and April and negligible for July through September.
The USDA forecasts that the trend toward increased consumption of fresh fruits and vegetables will continue. Per capita expenditures on fruits and vegetables are expected to have the highest increases among all types of foods through 2020. These increases will be driven by higher incomes, the large number of aging baby boomers, a gradually increasing population, increasing consumption of ethnic foods, and higher levels of education among consumers. Of these factors, higher real income is the most important because consumers can purchase more expensive food products and can pay premiums for desired attributes.
Additional Spending for Quality, Variety
Food choices are moving toward safe, nutritious products, a greater variety of foods, and convenience. Consumer willingness to pay more for safe, high-quality, value-added products will create niche markets that commodity-style imports cannot supply. For vegetables (excluding potatoes), away-from-home consumption is expected to grow more quickly than is at-home consumption, but the proportion of each market held by commodity suppliers is expected to remain almost unchanged. For fruits, consumption at home will increase more than will that away from home. In both cases, a segment of U.S. consumers will pay more for additional variety and quality that commodity production cannot provide.
In determining where to spend their food dollars, consumers are demanding more natural foods. Organic production is growing, and the USDA reports that fresh produce is the top-selling organic category. Also, a desire to "buy local" and a preference for foods produced in an environmentally sound manner are important considerations for some consumers.
Greater Selection Fills the Shelf Space
Consumers are also demanding greater variety. In 1994, small and large supermarkets stocked less than 350 produce items. This year, large supermarkets are expected to stock 558 items, and small supermarkets are expected to stock about 540 items. These data include floral and other nonfresh items, but the majority of the increase is attributable to fresh produce. Supermarkets are delivering greater variety by offering more items, more kinds of a single item, and more further-processed items (for example, pre-cut fruits and vegetables). Packaging can increase the desirability and value of produce by adding convenience (for example, resealable bags), more desirable packaging materials, or a broader selection of sizes.
The sheer size of the U.S. market for fresh fruits and vegetables dictates that commodity-type products will continue to dominate the market and that the percentage of the market supplied by imports will continue to increase. In a growing portion of the market, however, consumers will be willing to spend more money on higher-quality produce. As a result, growing niche markets for noncommodity products are expected to provide greater opportunities for both foreign and domestic producers to increase the farm value of fresh produce. ?