Presented by Cornell Horticultural Business Management an

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Vegetable and Ornamental Outlook
2002 Agribusiness Economic Outlook
Conference Wen-fei Uva Senior Extension
Associate Department of Applied Economics and
Management
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VegetableOutlook
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NY Vegetable Production

• NY 2000 vegetable production totaled 378 m.

59.5 increase
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• New York 2000 Vegetable Crop Statistics

• Six crops were added to the NY fresh market
  vegetable program bell peppers, eggplant,
  escarole.endive, pumpkins, spinach, squash.
• Carrots and lettuce were drop from the program
  (carrots will added back to the program in 2001)
• Carrots were dropped from NY processed vegetable
  program.
• NY ranked 5th for principal fresh market
  vegetable production and 7th for principal
  processed vegetable production

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• Cabbage, sweet corn, snap beans, potatoes and
  onions are the top 5 vegetables in NY

1 Processed and fresh market combined 2 New in
2000
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• 2001 Vegetable Production and Market

• Shipping-point prices higher for fresh market
  vegetables in the first two quarters of 2001
• Restraining demand and lower summer-season
  fresh-market vegetable prices
• Seasonal decline in shipping-point prices
• Higher acreage of summer vegetable
• Slower economic growth
• Hot, dry 2001 growing season damaged some
  unirrigated crops in NY

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• 2001 Vegetable Production and Market

• Onions had higher shipping-point prices last
  winter
• Smaller crop in the U.S.
• Good quality and storability
• Stronger domestic and export demand
• Fewer imports from Mexico and Peru
• NY enjoyed higher production and prices in 2000
• National production of storage onion in 2001 is
  estimated down 10
• NY 2001 storage onion production is estimated 14
  less due to lower yields

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• 2001 Vegetable Production and Market

• NY processing vegetable acreage increased in
  2001, but yields were down -- dry conditions this
  summer
• 2002 -- Seneca Food out of canned sweet corn
  acreage for beets and cabbage will increase a
  little.
• Estimated 10 reduction of U.S. fall-season
  potatoes acreage in 2001
• Weak grower prices in 2000
• Area for harvest in NY up 8 in 2001, but
  production down -- low yield
• Lower supply and high quality -- stable to
  higher prices

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• 2001 Vegetable Production and Market

• NY dry bean production continued to decrease in
  NY and U.S. (27 reduction in 2001)
• Large stocks, slow export, and low prices
• During the first 6 months of 2001, dry bean
  export rose 18 from a year ago
• Export increases in navy, Great Northern, and
  pinto
• Sales increased to UK, France, and Mexico, but
  declined to Japan and Canada
• Rising dry bean prices in 2001
• Short crop -- reduced acreage, Midwestern drought
• Expected to continue rising through mid-2002

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Vegetable Outlook

• ERS estimated the average input costs for
  vegetable and melon growers increased 3 - 4
• Despite the increase in input costs, domestic
  production is forecast to increase 3 annually
  during the next decade
• Potatoes will remain the largest vegetable crop
• The largest annual growth will be in pulses
  (dry bean recovery in 2002 and 2003)
• A steady pace of about 2 annually for fresh
  market vegetables

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Vegetable Outlook

• Per capita use of all vegetables was stable
• 464 pounds in 2000
• Higher retail prices -- higher marketing costs
• Fresh market vegetables prices rose 5 in 2000,
  and 9 during the first 6 months of 2001
• Increase for frozen and canned vegetables as well
• CPI for all food is forecast up 3.2 in 2001
• Per capita vegetable and melon consumption is
  projected to decline in 2001
• The food CPI is expected to moderate in 2002

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Vegetable Marketing According to Retail

• Wal-Mart and Home Depot continued to report
  growth in 2001, despite of softening economy
• Food sales is the fastest growing category for
  Wal-Mart
• Brands (national brands and private labels)
• Changing share of produce sales

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• The 2001 Fresh Track Study
• Conducted by the Food Industry Management Program
  -- Supply Chain Management in the Produce
  Industry
• AEM Research Bulletin 2001-05
• http//aem.cornell.edu/research/researchpdf/rb0105
  .pdf
• Grocery retailers continued to expand their
  produce department.

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2001 Fresh Track Study

• Changing Produce Buying-Selling Paradigm

• Continuous concentration of producing buying
• Retailers had fewer produce buyers in 2001
• Buying more from top 10 suppliers
• Reducing spot buying
• More contracting

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2001 Fresh Track Study

• Changing retail marketing practices
• Growing category management (58.5 in 2001)
• Establishing and enforcing performance guideline
  with produce suppliers (70 in 3-5 yrs)
• Partnership alliances initiated by suppliers
• Seller-buyer partnerships
• Pursuing horizontal and vertical alliances

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2001 Fresh Track Study

• Top Priority Issues for Retail Produce Executives

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• Top Priority Issues for Grower/Shipper

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Ornamental Outlook
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NY Ornamental Production

• NY 2000 greenhouse and nursery production totaled
  295 million

6 increase
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• New York 2000 Floriculture Crops

• 175 million, up 8 from 1999
• Totaled 26.8 million square feet greenhouse area
  and 897 acres of open ground
• Total land used was down, but greenhouse space
  increased 16.5 from 1999.
• Ranked 6th in the nation
• Bedding and garden plant still 1 -- but down
  2.9 from 1999 to 94.7 million
• While values increased for all other major
  commodities (potted flowers, cut flowers, and
  potted foliage plants).

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• U.S. 2000 Floriculture Crops

• Reached 4.57 billion, up 11.5 from 1999.
• Values for all crop categories were up
• except for cut flowers (down 1) and cut
  cultivated greens (down 2)
• Impatiens are still the best-selling bedding
  plant
• but Petunias are catching up (new varieties such
  as Wave Petunias).
• Prices are expected to be higher for 2001,
  compared to 2000
• to compensate for higher energy costs

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• The First Multi-State Nursery Production Survey
• http//usda.mannlib.cornell.edu/reports/nassr/othe
  r/nursery/

• 9 Product Categories
• Operations with over 100,000 in sales
• 17 selected states
• With that in mind, New York
• Production value of nursery totaled 52.0 million
• 388 nursery operations with sales over 10,000
• reported 852.6 million sq.ft. or 19,573 acres
  production
• 91 with gross sales over 100,000 12 with gross
  sales over 1 million

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2000 Nursery Production
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2001 Ornamental Outlook

• Consumers are spending more money with
  independent retailers, but they are making more
  purchases with mass marketers
• Mass marketers strategic use of the floral
  departments -- Differentiation vs. Profit Margin
• National chains continued to expand
• Grower suppliers challenged to grow along
• As economy slowing down, national chains will
  demand more of their suppliers to maintain
  profitability

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2001 Ornamental Outlook

• Merger frenzy steadied, more strategic alliance
• More cautious expansion
• Gerald Stevens and U.S.A. Floral Products
• Garden Product Hines Horticulture
• Strategic alliance
• Yoder Brothers and Paul Ecke Ranch
• Consolidating efforts

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2001 Ornamental Outlook

• Dot.complication
• Garden.com, Greendex.com, USGift.com,
  E-Garden.com, E-Greenbiz.com
• 2B or not 2B
• Internet marketing - Consolidation among the
  floral wire services
• Increased competition -- gift delivery with 24
  hours
• Importance of customer acquisition and retention
  -- Established companies strategies alliances

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• Economic Challenges
• Effect of two recent bankruptcies
• Slower economy
• Will lower interest rate help?

• Selling the Sizzle in a Sluggish Economy
• Branding
• individual business, supplier support
• Give me a reason to buy
• SAF support study to prove flowers improve
  emotional health
• Selling a lifestyle
• HGTV, Martha Stewart ...