Marketing Fruit Crops in the United States
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Marketing Fruit Crops in the United States. Wen-fei Uva, Ph.D. Senior Extension Associate Department of Applied Economics and Management Modified by Georgia Agriculture Education Curriculum Office June, 2002. Presentation Outline. Situations of Fruit Production in U.S. and New York

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Marketing Fruit Crops in the United States

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Marketing Fruit Crops in the United States

Wen-fei Uva, Ph.D.

Senior Extension Associate

Department of Applied Economics and Management

Modified by Georgia Agriculture Education Curriculum Office

June, 2002


Presentation Outline

  • Situations of Fruit Production in U.S. and New York

  • Consumption Trends

  • Marketing Systems

  • Marketing Risks and Opportunities


Situations of Fruit Production


Fruit and Tree Nuts Production in the United States

  • $11.6 billion Farm Production Value in 2001

    • 122,892 fruit farms (1997 Census of Ag.)

    • 5.3 million production acres (1997 Census of Ag.)

    • 7% of farm receipts (inc. livestock and crop)

    • 14% of total crop sales in the U.S.

    • $11.9 billion in 2000, $12.0 billion in 1999

    • Low receipts for citrus, apples & cranberries


Major Fruits Produced in the U.S.

  • Orange, Grapes, Apples and Strawberries are the four major crops dominate the industry (61%)

Source: Economic Research Service, USDA, 2002, Fruit and Tree Nuts Outlook


Regional Specialization of Production

Source: Economic Research Service, USDA, 2002, Fruit and Tree Nuts Outlook


  • Hawaii is the only state producing bananas

  • CA produces almost all of the canning peaches

  • FL processes 95% of their oranges

  • CA-AZ producers market 75% of U.S. fresh oranges,

  • WA apple production

Challenge: Balancing Marketing Power


Trends in New York Fruit Production

(Millions of Dollars)

Source: New York Agricultural Statistics Services


Relative Value of New York Fruit Crops

Total Fruit Production - $179 million, 2000

Source: New York Agricultural Statistics Services


Characteristics of Fruit Marketing From Producer’s Perspective

  • Perishability - “Sell it or smell it”

  • Product Bulkiness - Processing facilities

  • Sensitive to Price & Quantity Risks - Supply & demand

  • Seasonality - Global sourcing


Consumption Trends


Per Capita Consumption of Fruits and Vegetables

Total per capita use of fruits and vegetables rose 24% from 573 pounds in 1970 to 711 pounds in 1997


Changes in Per Capita Consumption, 1970-99


Away-From-Home Consumption

are Up

  • About 50% of food spending in U.S. on meals away from home (2000)

  • Spending increases during 1990’s (adjusted for inflation)

    • Meals away from home: 25%

    • Food at home: 5%

  • Product exposure - A good target for new products


American Food Consumption Trends

  • Year-round availability

  • “Natural”, “Organic”, “Wholesome & Healthy” - Functional Food

  • Convenient products


American Food Consumption Trends

  • Something New - “Exotic” and “Ethnic”


American Food Consumption Trends

  • Packaged well- image, food safety


American Food Consumption Trends

  • Branding - Private Labels and National Brands


Retailers Responded with Bigger and Better Produce Departments


Fruit Marketing Systems


Fresh Market Channels for Fruit Growers

  • Wholesale

    • Packer/shipper

    • Wholesale distributor

    • Auction

    • Sales agents

    • Brokers

    • Terminal markets

    • Retailer distributors

    • Food service outlet

    • Export/Import

  • Retail

    • Farm stands

    • Pick your own

    • Farmers’ Markets

    • Mail order/E-commerce

    • CSA


Processing Market Channels for Fruit Growers

  • Sell to proprietary processors

  • Market through processing cooperatives

  • Custom processing for the grower

  • Grower’s own processing facilities


Major Marketing Channels for Fruits in the U.S.

Exports

Imports

Shippers & Packers

Retail Outlets

Consumers

Wholesalers & Distributors

Growers

Institutions & Food Service Outlets

Processors

Brokers

Direct Marketing


Dynamics of the U.S. Fruit Marketing System

Exports

Imports

Shippers/ Packers

Retail Outlets

Wholesalers & Distributors

Consumers

Growers

Processors

Institutions & Food Service Outlets

Brokers

Direct Marketing


Total Apple Juice Imports Vs. Price

100

10

90

9

80

8

70

7

60

6

$ PER CWT

MILLION BUSHELS

50

5

40

4

3

30

Million Bushels

20

2

Dollars Per Gal.

10

1

0

0

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

YEAR

Trends Influencing Fruit Marketing

  • Globalization


  • Imports - Fruits: $4 billion (2000)

    • Top four fruit imports

      • 1. Bananas; 2. Fresh grape; 3. Fresh & frozen pineapple; 4. Fresh apples

  • Export

    • Fruit Exports at $3.4 billion in 2000

    • Fresh Fruit -- 62%

    • Destinations

      • 1. Canada , 2. Japan, 3. Taiwan, 4. Mexico,

      • * Export to India and Australia increased -- Trade agreement for allowed U.S. grapes to market


Sales of Top 8 Chains as a % of Total Grocery Sales

  • Growing concentration in the retail sector


  • Continuous concentration of retail buying

    • Fewer produce buyers in 2001

    • Centralized buying

    • Buying more from top 10 suppliers


More Contracting


  • Changing retail marketing practices

    • Growing category management(58.5% in 2001)

    • Establishing and enforcing performance guideline with produce suppliers (70% in 3-5 yrs)

    • Looking to share responsibilities


Sales of Top 10 & Top 20

WA State Apple Shippers

  • Changes in Wholesaling


  • Depressed grower/commodity prices


  • Changes in consumer attitudes

  • Need for alternative marketing strategies

Survival of producers

is often atRISK!


Crisis

RiskOpportunity


How Can Farmers Get their Fair Share??


Changing Opportunities and Challenges in Fruit Marketing

  • Consumer can have direct input and interaction with any point of the supply chain

  • Middleman’s changing roles - Become the Preferred Supplier

    • Food Safety issues

    • Effective and efficient market tools- To satisfy the needs of specific customer sectors

    • Multiple interfaces - transaction efficiency

  • Barriers of Entry


Challenges and Opportunities for the NE Growers

  • Market fragmentation -- Small compared to major fruit producers, but many are too big to depend solely on direct marketing

  • Nearness to market- Blessing or Curse??

  • Food travels an average of 1,300 miles before reaching the consumer’s table in the U.S. - Can we become the preferred supplier for the NE marketers and consumers?

  • Better Marketing is Critical - Collaboratively

  • Be Small Do Not Have to Look Small!!


Differentiation

-- Meeting Customer’s Needs and Wants

Mega Player

Niche Player, or

Former Player?

  • Max Brunk (1983)

  • Marketing is Not Just Selling!

    • To Market is to Create Value;

    • To Offer a Service Which Someone is Willing to Pay.


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