Specialty Crops: Dr. Daniel Tregeagle Provides Analysis on Caneberry Marketing Risk

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[Farmlaw Editor’s Note: The article below is not a legal article per se, it nonetheless provides information useful to specialty crop – particularly caneberry – producers in the decisions related to marketing risk management. Below is an excerpt from the article –Specialty Crops in 2020: COVID-19 and Other Challenges – published in the Winter 2021 NC State Economist and written by Dr. Daniel Tregeagle, Assistant Professor and specialist in specialty crop economics.]

Article excerpt begins…
The specialty crop sector has been consistently growing over the last decade. However, the COVID-19 pandemic has presented unique challenges to the industry that threaten its continued growth, while at the same time prompting a positive trend in consumer preferences for direct farm specialty crop purchases.

This article provides a snapshot of the specialty crop industry pre-pandemic specialty crop purchases and then summarizes several of the key issues challenges and changes that COVID-19 has brought. The information about the pandemic’s effects was gathered from the recent agricultural economics literature, as well as a survey of U.S. and Canadian raspberry and blackberry growers I conducted in Summer 2020.

The survey, conducted in collaboration with the North American Raspberry and Blackberry Association (NARBA), focused on caneberry production, which includes raspberries, blackberries and similar berries such as marionberries. We received 155 useable responses from across the US and several from Canada. The southeast region provided 19% of responses, the second most responses after the Midwest region. The main objective of the survey was to collect grower prices by marketing method, but we also asked growers how COVID-19 has affected them.

Specialty Crop Overview
Across the U.S., specialty crop production was valued at $48.2 billion in 2017, which is 12.4% of the agricultural total. To produce these crops, 184,000 farms used 10.4 million acres of land (United States Department of Agriculture (USDA) 2019). The term “specialty crops” is a USDA term used to describe fruits and vegetables, tree nuts, dried fruits, and horticulture and nursery crops (including floriculture).

As a rule of thumb, you can think of them as crops for which you could not buy futures at the Chicago Board of Trade. In North Carolina, 7,470 farms grow specialty crops on 280,963 acres, producing crops valued at $2 billion. Although specialty crops includes horticulture and nursery crops, the focus of this article will be on food crops.

The top U.S. fruit and nut crops are almond, grape, citrus, apple and strawberry. The top vegetable crops are potato, lettuce, tomato, onion and broccoli. Nationally, California leads the production of fruits and vegetables. Though North Carolina is not a top-10 producer of fruit, it ranks seventh in the country for vegetable production, and is the third biggest vegetable producer in the South, behind Florida and Georgia. Fortunately, North Carolina’s top crops – sweet potatoes, blueberries, cucumbers, melon, pepper and squash – do not compete with the the nation’s top crops. North Carolina leads the country in sweet potato production, producing around 60% of the nation’s crop.

Production Trends
Over the last decade, the value of production for most crops has been declining or stagnant. Specialty crops have been an exception, with the value of vegetable and melon production growing at 0.9% per year, and fruit and nut production growing more rapidly at 1.7%.

The USDA predicts the specialty crop sector will grow rapidly over the next decade, with an annual growth rate of 2.6%, substantially faster than the expected US GDP annual growth of 1.8%. The COVID-19 pandemic has had, and will continue to have, major impacts on the agricultural sector. The USDA developed these projections before the onset of the pandemic. While the long-term impacts of the pandemic on the specialty crop sector are still unknown, these projections indicate that the foundation of the U.S. specialty crop industry was strong before the crisis started.

Consumer Trends
Consumer spending on fresh fruits and vegetables is increasing faster than the value of production. Spending on fresh fruits and vegetables is increasing at 3.5% and 4.5% per year, respectively. Spending on processed produce is growing more slowly, at 1.5% for fruits and 3.5% for vegetables.

Despite the growth in production and expenditures, fruit and vegetable availability (a proxy for consumption, measured by the sum of domestic production and imports, minus exports) is growing below the rate of expenditure for fruits and is shrinking for vegetables. Fresh fruit availability is growing at 0.5% per year and frozen fruit availability is growing at 0.7% per year, although from a base around 10 times lower than fresh fruit. Fresh vegetable availability has been shrinking by 0.3% per year and frozen availability shrunk faster at 0.8% per year. The availability of processed fruits, canned and juiced, shrank rapidly, with canned fruit availability shrinking at 1.9% per year and juice availability shrinking at 2.6% per year. The reduction in fruit juice availability was most remarkable, shrinking from 120 lbs/capita in 2000 to 80 lbs/capita in 2019. Canned vegetable availability shrank at 0.9% per year.

[end of excerpt]

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The NC State Economist is a publication of the Department of Agricultural and Resource Economics that serves consumers, producers, students, and others engaged in agricultural, natural resources, and life science related activities through teaching, research, and Extension programs that address and solve economic, policy, legal and business problems.