| MMM 347 | April 22, 1997 |
Trade has become critically important for the U.S. horticulture industry. With demand at a mature level in many domestic markets, the industry is looking to export markets to improve growth. Consumers, on the other hand, are seeking increased variety in their diets. The industry is turning to imports to find commodities or varieties, which are in demand, but not available domestically and to fill seasonal supply gaps.
The U.S. is a net importer of horticultural products by about $2 billion annually. For vegetables, we are a net exporter and are expected to retain this market position. For fruits and tree nets, the U.S. traditionally has been a net importer, largely due to the importation of bananas. This position may change by the end of the century with fresh and processed fruit trade favoring exports. For the green industry, the United States will remain net importers into the next century. In summary, current trends indicate the value of total U.S. horticultural imports and exports will be closely balanced within the next ten years.
EXPORTS
U.S. exports of horticultural products increased steadily over the last 12 years and are expected to advance another 5 percent in 1997. This will put 1997 exports at an average $10 billion or more than 19 percent of total agricultural exports. Twelve years ago horticultural exports were $3 billion annually.
The 1997 forecast is based upon ample availability of U.S. products and various assumptions on market conditions, such as:
Three markets--Canada, the European Union and Japan-- accounted for two-thirds of the export sales in FY 1996. These markets have continued to grow over the years. But, markets in East Asia and Latin America appear to show larger growth potential into the next century.
This year's export growth is considered to be slow compared to the 10 percent annual growth rate in the early 1990's. Slow economic growth and a weak yen in Japan, lower Canadian winter sales due to the Florida freeze, lower than expected Mexican growth and the continued threat of non-tariff trade barriers are given as reasons for this slower export growth rate.
Despite these problems, the long-run prospects for expanding horticultural product exports are favorable. Lower tariffs, greater access to foreign markets because of the GATT, and an emerging middle-class in fast-growing developing countries, all points to increased sales of U.S. products in world markets.
IMPORTS
U.S. imports of horticultural products are expected to increase 7 percent to $12.5 billion this year. Last year imports jumped to 13 percent, in large part because of increased volumes and prices for tomatoes and wine imports. Imports of greenhouse-nursery products (60 percent cut flowers and greens) totaled $1 billion last year while exports totaled $218 million. This year, vegetable imports will remain strong, and wine imports will continue to grow.
In calendar year 1996 the value of fresh vegetables and melon imports rose 17 percent. Most of the increase was concentrated in tender fresh vegetables and melons during the January-May time period. Imports of fresh fruit increased 5 percent in 1996. Most fresh fruit imports are bananas and non citrus fruit such as grapes, peaches and pears coming from Chile during the winter and early spring months. Imports of apples rose by 18 percent in 1996.
Imports of Brazilian orange juice increased in response to lower U.S. production and lower availability of FCOJ from Mexico. Imported orange juice is used by U.S. processors to blend with the domestic orange juice to achieve the desired color and sugar-to-acid ratio, especially early in the processing season. Also, processors who export FCOJ may receive an import duty "drawback" (refund).
In 1996, two major firms who process orange juice in Brazil bought existing plants in Florida, increasing the presence of foreign juice companies in Florida. These companies invested in Florida in order to protect their shares of the U.S. orange juice market in the face of expanding Florida orange production.
