FRUIT AND TREE NUTS April 3, 1996 Approved by the World Agricultural Outlook Board ----------------------------------------------------------------------------- FRUIT AND TREE NUTS Situation and Outlook is published three times a year by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20005-4788. FTS-276. Please note that this release contains only the text of FRUIT AND TREE NUTS--tables and graphics are not included. Subscriptions to the printed version of this report are available from the ERS-NASS order desk. Call, toll-free, 1-800-999-6779 and ask for stock #FTS, $18/year. ERS-NASS accepts MasterCard and Visa. ----------------------------------------------------------------------------- Contents Summary Fruit Price Outlook Citrus Fruit Outlook Noncitrus Fruit Outlook Tree Nut Outlook Chilean Fruit Imports into the United States Down in 1995 Mexico Trade, 2 Years After NAFTA Situation Coordinator Susan Pollack Voice (202) 219-0505 FAX (202) 501-6782 Principal Contributors Susan Pollack (202) 219-0505 Agnes Perez (202) 501-6779 Doyle Johnson (202) 501-7159 Editor Martha Evans Graphics and Table Design & Layout Joyce Bailey Wynnice P. Napper Anne Pearl Approved by the World Agricultural Outlook Board. Summary released March 28, 1996. The next Fruit and Tree Nuts Situation and Outlook is scheduled for release in August 1996. Summaries and text of reports may be accessed electronically; for details, call (202)219-0515. The Fruit and Tree Nuts Situation and Outlook is published twice a year and supplemented by a yearbook. See back cover for subscription information. The United States Department of Agriculture (USDA) prohibits discrimination in its programs on the basis of race, color, national origin, sex, religion, age, disability, political beliefs and marital or familial status. (Not all prohibited bases apply to all programs). Persons with disabilities who require alternative means for communication of program information (braille, large print, audiotape, etc.) should contact the USDA Office of Communications at (202) 720-2791. To file a complaint, write the Secretary of Agriculture, U.S. Department of Agriculture, Washington, D.C., 20250, or call (202) 720-7327 (voice) or (202) 720-1127 (TDD). USDA is an equal opportunity employer. Summary Grower prices for fruit and nuts were up sharply this winter from a year ago. Grower prices will continue to rise seasonally until harvesting begins for late spring and summer crops. Prices will likely remain above a year ago in the spring as supplies remain tight for apples, pears, and strawberries. Stronger retail prices for fresh apples, grapefruit, lemons, and grapes helped raise the January consumer price index above December and last January. Total U.S. orange production is expected to be up 1 percent from last year, with production estimated at 11.7 million short tons for 1995/96. California-Arizona navel orange production is up 17 percent from last year. The Florida orange crop, which is mostly processed, is down about 2 percent from the bumper crop of a year ago. If realized, Florida's 1995/96 crop would be the third largest on record. Florida's orange production was only minimally affected by three freezes this winter. Orange juice production is expected to decline about 2 percent in 1995/96 from the previous year's record high. Most of the decline is a result of lower juice yields this year, estimated at 1.48 gallons per box for concentrate (FCOJ), down from 1.50 gallons in 1994/95. Near-term futures prices for FCOJ have been above the previous 2 years for much of this season. With continued pressure of higher orange juice prices, retail prices may start to increase in the coming months. Grapefruit production is expected to fall 9 percent from last year's record, with smaller crops in all States. F.o.b. prices for fresh grapefruits have averaged lower from November through March than a year earlier. An abundance of red grapefruit, along with extra large fruit size of the white seedless grapefruits, pressured prices downward this year. The good-sized crop and low prices should help support strong exports in 1995/96. Cool, very wet, and windy weather in the spring of 1995 in the Western States and a very dry summer, particularly in the Eastern States, hampered some noncitrus fruit crop development. Utilized production of noncitrus fruit, including berries, was down 7 percent in 1995 compared with 1994, and down 2 percent from 1993. The winter of 1996 exposed crop growing areas of the United States to various extreme weather conditions. It is still too early, however, to detect the damage to the new 1996 noncitrus crops. Growers are concerned about lower fruit sets and lighter crops in 1996. USDA's preliminary estimate of the 1995 harvest shows total noncitrus crops valued at $6.6 billion, up 6 percent from the previous year. With relatively smaller 1995 crops compared with 1994, season-average grower prices were stronger for a majority of the noncitrus crops namely apples, California apricots, bananas, sweet cherries, dates, nectarines, olives, papayas, peaches, pears, pineapples, and prunes and plums. U.S. apple production in 1995 was 4 percent smaller than in 1994 but still relatively large compared with previous years. Lighter supplies of generally good quality apples, along with strong domestic and export demand, have supported apple grower prices, estimated to be 29 percent higher in 1995 than the prior year. U.S. grape production declined 2 percent in 1995 from a year ago, and was also down 4 percent from 1993. Reduced production may be attributed to smaller crops in California, the largest grape-producing State, and in New York, Pennsylvania, Missouri, North Carolina, and South Carolina. The value of the 1995 grape crop was estimated to be $1.82 billion, down 3 percent from the prior year, and the lowest in 3 years, reflecting the smaller crop and lower processing prices. Increased fresh-market grape supplies during 1995/96 (July-June) may be attributed to the largest table-variety grape crop since 1992. U.S. peach and pear production declined in 1995 from a year ago. While the fresh-market value of both crops rose in 1995, processing value fell. The fresh-market, freestone peach crop value rose as a result of a sharp increase in prices. California's clingstone peach (mostly canned) value declined as a result of a sharp drop in production. Continued strong demand for fresh-market pears helped strengthen their season-average grower price, while large supplies of Bartlett pears weakened prices paid by processors. U.S. avocado production in 1994/95 increased 23 percent from the 1993/94 crop, with California contributing 89 percent of the total output and Florida 11 percent. About 98 percent of the 1994/95 U.S. avocado output was utilized fresh. The U.S. average grower price for avocados was 22 percent lower than the prior year and the sharp price drop brought the total crop value down 4 percent in 1994/95 from a year earlier. California's 1995/96 avocado crop is expected to be up about 3 percent from a year ago. Florida's 1995/96 avocado crop may be slightly smaller than last year. The 1995 U.S. strawberry crop was estimated 9 percent below the record crop of 1994. Estimated average grower price for fresh-market strawberries was fractionally above a year ago in 1995, despite lower prices in California, New York, Oregon, Pennsylvania, and Washington--producers of 79 percent of the fresh-market strawberry output in 1995. Prices for processing strawberries averaged 10 percent lower than a year ago due to larger frozen carryover stocks of strawberries from 1994. Total tree nut production fell sharply in 1995 to the lowest level since 1986. Almond production was off substantially while production of other tree nuts was mostly higher. Grower prices were higher for all tree nut crops which resulted in higher grower cash receipts, except almond receipts which were slightly lower. Imports of fruit and tree nuts from Chile were down in 1995 from the previous year. Strong European demand for fresh fruit contributed to the decline of supplies shipped to the United States. The North American Free Trade Agreement (NAFTA) has been in effect for over 2 years. While NAFTA is opening trade between the United States and Mexico by removing trade barriers and reducing tariffs, Mexico's devaluation of the peso in December 1994 is having more of an impact on trade between the two countries than NAFTA. Fruit Price Outlook Grower Price Index for Fruit and Nuts Strengthens In January, the index of prices received by growers for fruit and nuts was 92 (1990-92=100), a 2-percent drop from the December index, but up 28 percent from the same period a year ago (table 1). Relative to last year, the stronger index reflects higher prices being paid for apples, pears, oranges, and grapefruit. Higher grower prices for almonds, resulting from a sharply reduced 1995/96 crop, have also provided some support to the grower price index while lower strawberry prices (down 11 percent in January) have offset some of the increase. The grower price index is rising seasonally and will likely continue to do so until harvesting begins for late spring and summer fruits. The index rose to 99 in February, up 8 percent from the January index and was 41 percent higher than last year. The index will likely remain above a year ago in the spring as supplies remain tight for apples, pears, and strawberries. Grower prices for apples, pears, strawberries, and oranges averaged higher than last year in February while prices for lemons provided some downward pressure. Stronger prices for all oranges may be attributed to higher prices of processing oranges. While orange production is expected up slightly from last year, orange juice production will likely decline in 1995/96 due to a smaller crop in Florida and lower juice yields. Consumer Price Indexes for Fresh and Processed Fruit Above Last Year Stronger retail prices for apples, grapefruit, lemons, and grapes helped raise the consumer price index (CPI) for fresh fruit to 228 (1982-84=100) for January 1996, 2 percent above the December CPI, and 7 percent above January 1995 (table 2). Reflecting tighter cold storage supplies, the U.S. average retail price for Red Delicious apples moved up to $0.88 per pound in January, up 5 percent from December and up 15 percent from a year ago (table 3). At the same time, average retail prices for grapefruit, lemons, and grapes were 3 percent, 2 percent, and 19 percent respectively, above a year ago. The CPI for fresh fruit moved down to 219 in February as retail prices for navel oranges, grapefruit, lemons, and grapes declined from January. The February index, however, remained above a year ago, with the retail prices for grapefruit and apples averaging higher than last year. Banana retail prices in February were also up slightly from a year earlier. Tight supplies of bananas from Costa Rica will likely continue to keep banana prices stronger than a year ago throughout the spring. Reduced shipments from Costa Rica, supplier of about one-fourth of total U.S. banana imports, may be attributed to the heavy rains and floods that affected its production in mid-February. Imports account for nearly all of the U.S. banana supply. The CPI for processed fruit in January was 141, up 2 percent from December and up 5 percent from the same period last year. The index for processed fruit increased to 142 in February, up 5 percent from a year ago. Continued strong domestic and export demand for processed fruit, especially for apple juice and orange juice, helped strengthen the CPI for processed fruit. The CPI for frozen fruit and juice, as well as for canned and dried fruit, rose from January, and was up 5 percent and 4 percent respectively, from a year ago. Citrus Outlook Orange Production Expected Up Slightly in 1995/96 Total U.S. orange production is expected to rise 1 percent from last year, with production estimated at 11.7 million tons for 1995/96. California-Arizona navel production is up 17 percent from last year to 1.5 million tons. The new crop, if realized, will be 9 percent higher than in 1993/94 (table 4). Warm weather in California this winter prevented the skin on navel oranges from toughening up, increasing fruit splitting and causing shipping problems, sending more to processing than in most years. Over half the navel crop was harvested by the first of March. Valencia production in California and Arizona is forecast at 1.08 million tons, up 8 percent from last year. Harvesting began in February for Valencia oranges in the California desert area. Texas' production of midseason and Valencia oranges continues to increase, but Texas oranges still account for less than 1 percent of total production forecast for 1995/96. The Florida orange crop, which is mostly processed, is down about 2 percent from a year ago. Total production is expected to reach 9.09 million tons. The early-midseason crop was up 2 percent to 5.5 million tons, but Valencia production is expected to decline 7 percent to 3.6 million tons. If realized, Florida's 1995/96 crop would be the third largest on record, surpassed by last year's crop and the record 1979/80 harvest. Three winter freezes in Florida were neither cold enough nor had long enough duration to cause major damage to Florida's orange crop. California's orange crop matured about 2 weeks later than normal this past fall, causing November 1995 f.o.b. prices to reach $22.10 per box, about 19 percent above the previous November's price (fig. 1). Once the navel oranges reached the market, however, the large crop put downward pressure on prices which fell below last year in December. Industry sources expect domestic demand for navels to stay strong through the remainder of the season, preventing prices from declining substantially from last year. Average grower prices followed the same trend as f.o.b. prices, reflecting both the late start in November and the decline in prices once the large crop reached the market (table 5). While navel oranges are the most available oranges in the fresh market from fall through early spring, Valencia oranges dominate the market during the spring and summer months. The March 12 forecast for the 1995/96 Valencia crop in California-Arizona is up 8 percent from last year, with increases in both California's and Arizona's crop. Texas' Valencia crop continues to increase (by 50 percent over 1994/95), but still accounts for only a small portion of total Valencia production. With the expected increase in the fresh-market Valencia crop, prices this summer should be slightly lower than last year. Industry sources indicated that California's domestic orange shipments for this season rose 4 percent over the same period last year in response to high consumer demand. The higher domestic shipments are offsetting lower exports to date. California did not have sufficient cold weather this winter to produce a thick-skinned fruit that can ship well. Also reducing exports was low demand from Japan, a major export market, due to its continued sluggish economy. Orange Juice Production Expected Down Due to Lower Juice Yields Orange juice production is expected to decline about 2 percent in 1995/96 from the previous year's record high (table 6). Oranges for processing (Florida round oranges and temples) are 2 percent lower than last year. Florida's early-midseason orange crop was forecast at 122 million boxes in March. While production would be a record, surpassing last year's crop by 2 percent, it is 3 percent lower than January's estimate. Florida's 1995/96 Valencia production is estimated at 80 million, and Temple production at 2.2 million boxes. There were three freezes in Florida this past winter, the first at Christmas, a second on January 9, and the third on February 5. While it was feared that these freezes would reduce production, their effects on Florida's citrus crop appear to be minimal. None of the freezes had low enough temperatures, sustained for a long enough period of time, to create real damage to the orange crop. The freezes tended to be concentrated in the north and central portions of Florida, while orange production extends from central to southern Florida, with an increasing proportion of orchards in southern Florida. Therefore, while there were pockets of damage, the industry was able to process these oranges before they deteriorated, and the overall industry was able to survive the freezes with minimal losses. By mid-February, almost all of Florida's early-midseason and navel oranges were harvested. About 98 percent of the early-midseason and 39 percent of the navel oranges were processed into juice. Valencia oranges, however, are harvested March through June. The juice yield forecast for the 1995/96 crop is 1.48 gallons per box (of 420 Brix concentrate), the lowest in several years (table 7). Early-midseason oranges are expected to yield 1.45 gallons per box, and the Valencia orange yield has been placed at 1.55 gallons per box. Tighter stocks coming into the new marketing year, along with lower juice yields, have kept demand for juice oranges high, pushing grower prices in 1995/96 over the previous year (fig. 2). December-February's on-tree equivalent grower prices more closely reflect prices in 1993/94 (table 8). Near-term futures prices for frozen concentrated orange juice (FCOJ) have ranged from $1.179 to $1.342 since December, above the levels of the previous 2 years (fig. 3). The higher futures prices reflect the expected production decline, lower inventories, increases in list prices by Brazilian and Florida processors, and prospects that next season's Florida harvest will be later than average. In spite of the higher futures prices, retail prices have remained fairly level, ranging from $1.573 to $1.625 from December to February, as processors compete to maintain their market shares (fig. 4). With continued pressure of higher orange juice prices at the f.o.b. level, however, retail prices may increase in the coming months. According to the U.S. agricultural officer in Sao Paulo, the 1995 orange crop in Brazil's Sao Paulo state (harvested mostly in late 1995, but shown as 1994/95 in table 9) was 355 million boxes, up 14 percent from the previous year. However, processors opted to process only slightly more than in the prior season, leaving a larger quantity of fruit for the domestic fresh-fruit market. Average juice yield was down from the prior season's record. During the past year, Brazilian exporters have concentrated on the booming European market, ceding North America to their Florida competitors. The agricultural officer reported that July 1995-February 1996 FCOJ exports from the Brazilian Port of Santos were down 17 percent from the previous year. Shipments to Western Europe increased slightly, but exports to North America were off 52 percent. Exports to North America are likely to pick up for the remainder of this season because of declining inventories and higher prices in the United States. Mexican FCOJ has made up for some of the decline in Brazilian orange juice imports into the United States. Imports from Mexico accounted for 38 percent of the volume of U.S. orange juice imported in 1995 (January-November), up from only about 12 percent in 1994. Brazil's share of the U.S. import market declined from 83 percent in 1994 to 49 percent in 1995. Mexican orange production is predicted lower this year, and its share of the U.S. orange juice market may fall as Brazil's share rises. Lemon Production Highest in 3 Years U.S. lemon production is forecast at 1.03 million tons in 1995/96, down 2 percent from October's initial 1995/96 forecast, but up 12 percent from last year and 4 percent higher than 1993/94 (table 10). The forecast for California's production remains unchanged at 836,000 tons, 7 percent higher than a year ago. The California crop is reported to be in good to fair condition, but there is some fruit blemishing. The January estimate for Arizona's expected production, however, fell 9 percent from October's forecast to 5 million tons. The new forecast is still 39 percent over last year's total production. Average f.o.b. lemon prices this season are below last year in response to the larger crop (fig. 5). November's price was high because of the crop's late maturity. Between December and March, lemon prices have been lower, ranging from $16.80 to $20.10 per box. This year's larger crop should keep monthly prices below last year, although there will still be monthly fluctuations reflecting the seasonal demand for lemons. Lemons tend to be more popular in the summer when domestic supplies are declining. Lower prices this year should also help the lemon export market. Industry sources say exports are slightly ahead of last year's levels, but moving slower than expected for the size of the crop. Grapefruit Production Below Last Year's Record Grapefruit production is expected to fall 9 percent from last year, with smaller crops in all States (table 12). Florida's grapefruit crop is expected to total 2.2 million tons, 8 percent lower than last year. Since last year's Florida crop was a record, the new crop is still quite large. The average fruit size was reported to be at near-record levels and of good quality. The white seedless crop, forecast at 935,000 tons, is down 14 percent from 1994/95, and the red seedless, at 1.2 million tons, is down 2 percent. Production of seedy grapefruit, which is all processed, fell 22 percent from last year and continues to decline in proportion to seedless varieties. By late February, about 60 percent of Florida's red seedless grapefruit, 43 percent of the white seedless, and 57 percent of the seedy crop had been harvested. California's grapefruit production forecast declined 12 percent from the initial October forecast, and about 20 percent from last year. Poor weather conditions in California reduced the fruit set. The quality of California's grapefruit, however, was reported as good. Texas' production is down only 1 percent and has large fruit size. Some of the crops in both California and Texas were misshapen, increasing grapefruit going to processing. F.o.b. prices for fresh grapefruit have averaged about 5 percent lower from November through March than last year, ranging from $10.90 to $13.20 per box (fig. 6). The lower prices this year have resulted from many factors. Early in the season, it was anticipated that there would be an abundance of red grapefruit, and its lower prices put downward pressure on all grapefruit prices. The excess from the fresh market was sent to processing. However, because there is less demand for red grapefruit juice than white, processing prices have also been lower this year. The price of white grapefruit is also down this season because its record large fruit size has put downward pressure on prices. These grapefruit do not sell as well. Grapefruit exports were 6 percent higher in 1994/95 than the previous year. Exports increased to the European Union, Taiwan, Hong Kong, and Korea, but fell to Japan and Canada. Exports through February 1996 were similar to last year's levels. However, the good-sized crop and low prices should help support strong exports through the remainder of the year. Tangelo Crop Lower in 1995/96, but Tangerines Are Expected Up Tangelo production is expected to decline in 1995/96 for the second year in a row (table 14). Production is estimated to be 23 percent lower than last year, with a total of 110,000 tons produced. By the end of February, over 93 percent of the crop had been harvested, 64 percent of which was processed. Tangerine production is expected to total 327,000 tons, up 19 percent from last year and a record crop. Florida's crop is forecast at 209,000 tons, a 24-percent increase over the previous year. Most of Florida's early tangerine crop was harvested by the end of January, and about 60 percent of the Honey tangerine crop was harvested by the end of February. Tangerine shipments have been slightly ahead of last year, mostly due to the larger crop of early tangerines--Robinson, Fallglo, and Sunburst varieties. Strong demand has kept f.o.b. prices high for the early tangerines, however, the later varieties--Honey and Dancy tangerines--have had lower f.o.b. prices so far this year. Noncitrus Fruit Outlook Reduced Production Increases Noncitrus Grower Prices and Crop Value in 1995 Cool, very wet, and windy weather in the spring of 1995 affected pollination and fruit set in the Western States while a very dry summer, particularly in the Eastern States, hampered some crop development. Utilized production of noncitrus fruit, including berries, was down 7 percent in 1995 compared with 1994, and down 2 percent from 1993 (table 16). USDA's preliminary estimate of the 1995 harvest shows the total value of noncitrus crops to be $6.6 billion, up 6 percent from the previous year. With relatively smaller 1995 crops compared with 1994, season-average grower prices were stronger for a majority of the noncitrus crops, namely apples, California apricots, bananas, sweet cherries, dates, nectarines, olives, papayas, peaches, pears, pineapples, and prunes and plums (table 17). However, even with decreased production, grower prices averaged below a year ago for figs, grapes, and strawberries. Average grower price estimates for avocados, tart cherries, guavas, kiwifruit, and California plums will be published on July 8 and for cranberries on August 20. Winter 1996 Conditions May Reduce Yields The winter of 1996 exposed crop growing areas of the United States to various extreme weather conditions. Arctic conditions were felt in the Midwest, freezing temperatures occurred as far south as Texas and Florida, and blizzards and floods occurred in the East. In the Pacific Northwest, unseasonably warm weather and heavy rains melted snow packs which caused serious flooding. A series of storm systems also moved in from the Pacific, bringing heavy rains to California (except the extreme southeast corner of the State), especially along the central and northern coast. The Pacific Northwest and parts of California also experienced severe freezing in early February. In general, it is still too early to detect the damage of these extreme weather conditions on most of the new 1996 noncitrus crops. However, noncitrus growers are concerned about lower fruit sets and lighter crops in 1996. For example, many fruit trees in California and the Pacific Northwest received less than normal chilling hours as a result of the relatively mild winter. Chilling hours refer to the number of hours that fruit trees are exposed to 45F temperatures or below, and is one of the physiological factors that regulate bloom and fruit set. The heavy rains and short chill hours caused some premature bud drop or blossom loss to some fruit trees, particularly for apricots, peaches, plums, nectarines, and cherries. Low temperatures in February in the Northwest may have cracked barks on apple and pear trees which may cause reduced yields or even kill the trees. In Texas, freezing temperatures in late February caused some losses to early blooming peach trees. In Georgia and South Carolina, the summer peach crop was badly damaged due to an early March freeze. Temperatures that dropped into the teens and windy weather seriously damaged thumb-size fruit and blossoms, mostly of early-season varieties. Smaller U.S. Apple Output in 1995 U.S. apple production in 1995 was 4 percent smaller than in 1994 but still relatively large compared with previous years (table 18). Total bearing acreage was up less than 1 percent from a year ago but yields per acre averaged 4 percent below last year. Of the 36 apple-producing States surveyed by USDA's National Agricultural Statistics Service (NASS), 17 registered smaller crops in 1995, including major producing States such as Washington and California. Washington's 1995 apple crop totaled 2.6 million short tons, down 11 percent from the 1994 crop, while California's crop reached 500,000 short tons, down 5 percent. Apple production in Michigan and New York, both large apple-producing States, were up 20 percent and nearly 1 percent respectively, from a year ago. Lighter supplies of generally good quality apples, along with strong domestic and export demand, have supported apple grower prices thus far (fig. 7). Fresh apple prices are expected to continue higher than a year ago for the remainder of the season as strong demand for juice apples has resulted in more fresh-market supplies being sold to processors. The demand for domestic juice apples is strengthened by the smaller crops in Europe and United States and higher prices for imported juice concentrate. USDA's preliminary estimate of the 1995 season- average grower price for apples is $332 per ton, 29 percent higher than the prior year. The increase in the average grower price is sharp enough to offset the drop in output, raising the value of the 1995 U.S. apple crop to $1.8 billion, 23 percent higher than in 1994. According to the International Apple Institute, total U.S. apple movement in January 1996 was 13 percent less than a year earlier and 5 percent less than the 5-year average. Of the total, about 65 percent was fresh-market shipments. Total fresh-market shipments during the same period were down 15 percent from a year ago and 9 percent below the 5-year average. In Washington, total apple shipments were 12 percent lower than a year ago. In January 1996, f.o.b. prices for Red Delicious apples (Washington Extra Fancy 80's) and Golden Delicious apples averaged about 5 and 16 percent higher respectively, than the year before. The International Apple Institute reported that on February 1, 1996, total U.S. apple stocks were 14 percent below the same period a year ago, and were 2 percent lower than the 5-year average. Stocks intended for the fresh market were down 12 percent from a year ago while those intended for processing were down 20 percent. On a regional basis, apple stocks were down 23 percent in the Southeast, 18 percent in the Northwest, and 41 percent in the Southwest regions, while up 1 percent in the Northeast and 8 percent in the Midwest. Red Delicious apples accounted for 46 percent of the total U.S. apple stocks on February 1, 1996. Red Delicious stocks were down 21 percent from a year ago and down 8 percent from the 5-year average. Golden Delicious stocks were down 10 percent from a year ago but 7 percent above the 5-year average. Stocks of Granny Smith apples, mostly in the West, were 2 percent below a year ago and 4 percent below the 5-year average. Stocks of McIntosh, mostly in the Northeast, were down 3 percent from a year ago and down 5 percent from the 5-year average. Reduced apple output and lower stocks will likely limit domestic consumption and reduce the quantity of apple exports in 1995/96 below last year's record level. Domestic consumption of fresh apples in the marketing year 1995/96 (beginning with August of the first year) will be close to last year's 19.57 pounds per person. U.S. fresh apple imports are expected to increase from last year to keep domestic supplies near last year's level. From August through December, fresh apple imports were already 58,768 short tons, 84 percent above the same period a year ago. In the meantime, U.S. fresh apple exports during the same period dropped 24 percent to 280,650 short tons. Although lower, fresh apple exports are expected to remain strong at about 21 percent of domestic production, nearly the same as the 4-year average share of 22 percent. Taiwan, Canada, Hong Kong, Indonesia, and Mexico are the top five U.S. markets this season. Exports are down to all of these markets, except Canada and Indonesia. Exports to Canada during August-December 1995 were up fractionally from the previous year, and exports to Indonesia were up 39 percent. Reduced Grape Output in 1995 U.S. grape production declined 2 percent to about 5.8 million tons in 1995 compared with a year ago and was also down 4 percent from 1993. Reduced production may be attributed to smaller crops in California, the largest grape-producing State, and in New York, Pennsylvania, Missouri, North Carolina, and South Carolina. USDA's preliminary value estimate of the 1995 grape crop was $1.82 billion, down 3 percent from the prior year, and the lowest in 3 years, reflecting the smaller crop and lower processing prices. Eighty-six percent of utilized grape production in 1995 was processed, and the U.S. season-average grower price for grapes that were crushed, canned, or dried, dropped 4 percent from a year ago (table 20). The amount of grapes that were processed also dropped 3 percent from the year before, the lowest quantity in 3 years, mainly with reduced quantities of canned grapes and raisins. Light supplies of grapes crushed in 1994 nearly depleted stocks of wine and juice in 1995. However, 7 percent more grapes were crushed for wine and juice in 1995, resulting in a 15-percent and 3-percent drop respectively, in grower prices for grapes crushed for juice and wine. Increased fresh-market grape supplies during 1995/96 (July-June) may be attributed to the largest table-variety grape crop since 1992. Fresh-market grape utilization increased 2 percent in 1995 from the prior year and was the highest in 4 years. Strong demand for the fresh commodity helped increase the season-average grower price for fresh-market grapes to $618 per ton, compared with $581 per ton during the 1994 marketing year. Concord grape production for processing was up 8 percent to 477,050 tons in 1995, with Washington remaining as the top producer, followed by New York. Washington's concord grape production reached 252,500 tons, up 46 percent from the year before. New York's output declined 18 percent to 111,000 tons, due partly to drought conditions during the summer. Peach and Pear Crops Are Smaller in 1995 U.S. peach production declined 7 percent in 1995 from a year ago. Clingstone and freestone production in California were down 23 percent and 14 percent, respectively (table 21). Georgia and South Carolina, major peach producing States, also produced smaller peach crops. Production of peaches in other States, however, was mostly up. Fresh utilization of the 1995 peach crop was up 9 percent from 1994. Freezes in early 1996 in Georgia, South Carolina, and Texas will likely lower total peach output this year. Reduced production will provide some upward pressure on grower prices in 1996. The value of California's clingstone peaches (mostly canned) in 1995 came down 7 percent from the prior year, a result of the sharp drop in production. The value of California's freestone crop, however, rose to $97.4 million, up 43 percent from 1994, reflecting the sharp increase in prices. Overall, the value of the 1995 freestone crop rose 48 percent to $322.3 million from 1994. About 81 percent of the 1995 freestone crop was used fresh, and fresh-market prices averaged 38 percent stronger than a year ago. Even with increased imports and lower exports, U.S. per capita consumption of fresh peaches (including fresh nectarines) fell fractionally below 1994's (January-December) 5.49 pounds as supplies remained tight. While fresh peach utilization increased from a year ago, fresh nectarine utilization declined sharply. U.S. fresh peach imports rose 3 percent from a year ago. U.S. fresh peach exports, on the other hand, dropped 21 percent, mainly reflecting decreased shipments to Canada, Latin America, and to some Asian countries such as Hong Kong, Taiwan, China, and Japan. Utilized production of all pears was down about 10 percent in 1995 from a year ago, with smaller outputs in California, Colorado, Connecticut, New York, and Oregon. At the same time, Michigan and Pennsylvania's utilized pear output were each 11 percent larger, Utah's production was about the same, and Washington's was 7 percent larger than in 1994. The total Bartlett output was 493,000 tons in 1995, 16 percent below a year ago. Thirty percent of the Bartlett output was utilized as fresh while 70 percent was processed (canned). Production of other types of pears in 1995 was down less than 1 percent from a year ago to 420,000 tons, with 91 percent utilized as fresh. Overall, the total quantity of fresh-market pears increased fractionally from a year ago while processing pears declined 21 percent. Large stocks of Bartlett pears in cold storage since August 1995 have weakened prices of processing pears. USDA's preliminary estimate of the season-average grower price for processing pears in 1995 is $186 per ton, 9 percent below last year. Continued strong demand for fresh-market pears helped strengthen the season-average grower price for fresh Bartlett pears to $327 per ton in 1995, 74 percent above a year earlier. Average grower prices for fresh-market pears, other than Bartlett pears, were $378 per ton in 1995, 34 percent higher than in 1994 (fig. 8). With slightly larger fresh-market supplies, domestic fresh pear consumption in 1995/96 (July/June) is estimated to increase about 2 percent from 1994/95. Increased U.S. imports of fresh pears will supplement the fractional increase in fresh-market domestic production. During July through December, fresh pear imports already increased 50 percent from the same period a year ago. The quantity of U.S. fresh pear exports, at the same time, was 1 percent below a year ago. Exports in 1995/96 are expected to be down from last year, due mainly to the smaller crop. Plum Production Declines; Cherry Output Rises California's 1995 plum output was only half of the 1994 crop, and prune output (dried basis) was 8 percent smaller. Plum prices nearly doubled. Prune and plum production in 1995 from Idaho, Michigan, Oregon, and Washington, totaled 23,000 tons, down 40 percent from a year ago. Utilized production from these four States dropped 32 percent from the prior year, with 57 percent used as fresh. Fresh prune and plum prices from the four States averaged $437 per ton, 71 percent higher than a year ago, and processed prices averaged 50 percent stronger. The U.S. cherry crop (sweet and tart) was 18 percent larger in 1995 than in 1994, reflecting larger production of tart cherries in Michigan, New York, and Pennsylvania. Total tart cherry production increased 32 percent from 1994, while total sweet cherry output decreased 20 percent from 1994. Other than Michigan, New York, and Pennsylvania, sweet cherry-producing States had smaller crops. Cool, wet spring weather hampered pollination and reduced fruit set in the major States, namely Washington, Oregon, and California. Heavy rains in May and July caused cherries to split, further reducing production. Forty-two percent of the sweet cherry production was utilized as fresh and 58 percent as processed. Fresh sweet cherry utilization in 1995 dropped 35 percent whereas processed utilization dropped 5 percent from 1994. Grower prices for fresh-market sweet cherries averaged $2,250 per ton, 52 percent higher than the average in 1994 while grower prices for processed sweet cherries averaged 3 percent lower. Almost all of the utilized tart cherry output was processed. California Crop Raises U.S. Avocado Output U.S. avocado production in 1994/95 increased 23 percent from the 1993/94 crop, with California contributing 89 percent of the total output and Florida 11 percent (table 22). California's production increased 12 percent, while Florida's output was nearly four times as much as in 1993/94. Florida's 1993/94 crop was the smallest in more than 20 years as a result of the fruit and tree damages caused by Hurricane Andrew on August 24, 1992. While Florida's bearing acreage remained about 2 percent smaller than the prior year, average yields in 1994/95 were 3.51 tons per acre, compared with 0.76 tons in 1993/94. In California, bearing acreage fell by 7 percent but average yields were up 20 percent. About 98 percent of the 1994/95 U.S. avocado output was utilized fresh. Fresh utilization rose 27 percent from 1993/94, while processed utilization dropped by more than half. The U.S. average grower price for avocados was 22 percent lower than the prior year, and the sharp price drop brought the total crop value down 4 percent in 1994/95 from a year earlier. Grower prices in California averaged $1,490 per ton, 18 percent below 1993/94. The value of the crop amounted to $232.4 million, 8 percent lower. During the same period, grower prices in Florida averaged 25 percent lower than in 1993/94 but because of the State's sharp output increase, the value of the crop more than tripled. USDA's NASS will release the first official 1995/96 U.S. avocado crop estimate in July. According to the California Avocado Commission, the State's 1995/96 crop (November through October) is expected to be up about 3 percent from a year ago. California avocado shipments from November 1995 to February 1996 were 28 percent above the same period a year ago. Shipments are usually heaviest during March through August. In December 1995, f.o.b. prices for California Hass avocados averaged 3 percent above a year earlier, but prices are expected to come down as the season progresses and volume increases. In January 1996, f.o.b. prices averaged 19 percent lower than the same time a year ago and were about 11 percent below the December average. Hass variety avocados dominated production in all regions of California except the San Joaquin Valley during 1994/95. Overall, the seven most prevalent avocado varieties by total acreage for the 1995/96 crop year are estimated to be Hass, Bacon, Fuerte, Zutano, Pinkerton, Reed, and Gwen, according to the California Avocado Commission. Florida's 1995/96 avocado crop may be slightly smaller than last year. Florida avocado shipments during 1995/96 (April through March) are estimated to total 18,750 short tons, down 4 percent from last year. Commercial shipments account for a majority of the State's production. Shipments through December amounted to 93 percent of estimated total shipments for 1995/96. Increased supplies of U.S.-grown avocados and lower prices helped boost U.S. avocado exports in 1994/95 (fig. 9). Exports from November 1994 through October 1995 totaled 14,749 tons, 48 percent larger than the previous year. Leading foreign markets for U.S. avocados in 1994/95 were France, Japan, the Netherlands, and Canada. As of early March 1996, season-to-date California avocado exports were 7 percent above the same period last year. According to the California Avocado Commission, these export shipments were made mostly to Hong Kong, Korea, and Japan. There were no exports so far to Europe because it is still Israel's heavy season. U.S. 1995/96 avocado exports are likely to stay unchanged from last year. U.S. avocado imports account for an average of about 11 percent of total domestic supply, with Chile and the Dominican Republic as the largest foreign suppliers. Expectations are that these two countries will have larger 1995/96 crops. On July 3, 1995, USDA published in the Federal Register, a proposed rule that would allow Mexican Hass avocados into 19 northeastern U.S. States. Public hearings were held across the United States in August 1995. The written comment period that ended October 16, 1995, mostly expressed opposition to allowing the Mexican avocados into the United States. No date has been set for a final decision on the rule. U.S. fresh avocado imports from Mexico have been prohibited since 1914 to protect U.S. growing areas from pests that could be brought in with the shipments. Beginning in July 1993, Mexican shipments were allowed into Alaska. Smaller Strawberry Crop in 1995 The 1995 U.S. strawberry crop was estimated at 748,800 short tons, 9 percent below the record-large crop the previous year (table 23). Reduced production may be attributed to smaller crops in California, Florida, Louisiana, New York, Ohio, Oregon, Washington, and Wisconsin. Despite lower prices in California, New York, Oregon, Pennsylvania, and Washington, total U.S. average grower prices for fresh-market strawberries in 1995 were up only fractionally from 1994. These five States produced 79 percent of U.S. fresh-market strawberries in 1995. Prices for processing strawberries averaged 10 percent lower than a year ago due to larger frozen carryover stocks from 1994. Overall, USDA's preliminary estimate of the 1995 season-average grower price for strawberries (both fresh-market and for processing) averaged fractionally below a year ago. Reduced output and a slight drop in prices brought the value of the U.S. 1995 strawberry crop to $753.4 million, 10 percent below the prior year. California's 1995 strawberry output was down 10 percent from a year ago and accounted for 80 percent of the U.S. crop. Florida's 1994/95 crop was down fractionally from the record large crop of a year ago and Oregon's 1995 crop was 15 percent smaller. Production in 10 other States amounted to 5 percent of the 1995 U.S. crop and was 6 percent below the prior year. Based on USDA's Cold Storage report, frozen strawberry stocks as of January 31, 1996, were 108,190 short tons, 1 percent below a year earlier, but 15 percent above the previous 3-year average. Thirty-three percent of California's reduced crop was frozen in 1995, bringing the total U.S. frozen pack to 203,850 tons, down 8 percent from a year earlier. Grower prices for processing strawberries may improve in 1996 if frozen strawberry stocks continue below a year ago. According to the California Strawberry Commission, California's planted acreage is up 7 percent from a year ago and the 1996 crop will be up from last year. Through February, production nearly doubled from the same time last year, mostly reflecting the heavy early season supplies brought by unseasonably warm weather in December. However, heavy rains and low temperatures delayed harvest and kept supplies lighter than expected in late February. In the absence of heavy rains, ample supplies are expected to be underway by mid-March since many of the plants are already in bloom. California shipments usually peak around May. The mild weather in December allowed California to start shipping as early as December and fresh California strawberry f.o.b. prices were about $30 per flat. Prices have come down since then as the Florida winter crop began. In early March, f.o.b. prices averaged $10.25 per flat, compared with $12.25 during the same period a year ago. Tighter supplies are possible for Florida's 1996 winter strawberry crop. Freezes that occurred in late December and early February required frequent irrigation to protect the crop against freeze or frost damage. However, excessive moisture promoted fungal problems in some mature berries. According to the Florida Agricultural Statistics Service, winter strawberry acreage is expected to total 6,000 in 1996, unchanged from 1995. Pickings usually begin in November and shipments usually peak around March. The 1996 winter crop progressed faster than a year ago, with shipments through early March up 33 percent from the same time last year. This, however, is not an indication that the crop will be larger. Fresh Florida strawberry prices during December 1995 averaged $16 for a flat of 12 1-pint baskets compared with $15 in December 1994. In January and February, prices dropped from a year ago and from December and averaged around $11 per flat. U.S. Berry Production Increases In 1995, production of cultivated blueberries, cultivated blackberries, boysenberries, loganberries, and raspberries was 5 percent higher than a year ago, while the value of production declined 1 percent to $201.5 million. Cultivated blueberries accounted for 55 percent of the U.S. berry output (excluding strawberries and cranberries), and 50 percent of the total value in 1995. Cultivated blackberries accounted for 13 percent of the berry crop, and 10 percent of the value. Oregon's loganberry and raspberry production, Washington's red raspberry crop, and California's raspberry output each declined in value in 1995, and brought total berry value down. Cultivated blueberry production was up 15 percent in 1995 from a year ago (table 24). Larger crops were found in Alabama, Georgia, Indiana, Michigan, and New Jersey, while reductions were noted for Arkansas, Florida, New York, North Carolina, Oregon, and Washington. The large increase in production was enough to offset the decline in grower prices, bringing the value of the 1995 crop to $100.6 million, 11 percent above the previous year. Michigan and New Jersey are the two leading States in cultivated blueberry production. Michigan's crop increased 43 percent in 1995 and accounted for about 41 percent of the Nation's output. New Jersey's crop was 11 percent larger and was 22 percent of the U.S. total. A 10-percent increase in Maine's wild blueberry production, coupled with a larger 1995 cultivated crop, raised U.S. total blueberry production 13 percent from 1994. Frozen blueberry stocks are limited. According to USDA's Cold Storage report, as of January 31, 1996, blueberry stocks were 30,034 short tons, 15 percent lower than a year ago and 21 percent below the prior 3-year average (table 25). Nearly all of Maine's blueberries and 53 percent of other States' cultivated production in 1995 were used for processing. U.S. Cranberry Supplies Shortened Despite a larger bearing acreage, lower average yields brought U.S. cranberry production down 12 percent from a year ago in 1995, but total output was still 5 percent larger than the 1993 crop. All cranberry-producing States, except Wisconsin, produced smaller estimated crops in 1995 compared with a year earlier. The summer was very dry for cranberries in Massachusetts and the central growing areas of Wisconsin, while a very wet spring in Washington and hail in Oregon during late March and April resulted in poor pollination. Grower prices for cranberries may average higher in 1995, due partly to reduced production. Cranberry holdings from the 1994/95 crop that ended August 31, 1995, were 1 percent above a year ago. According to the Cranberry Marketing Committee, the increase in stocks was not enough to lower grower prices in 1995. In addition, the smaller 1995 crop was generally of good quality, and processing demand was high. USDA's estimates of cranberry utilization and prices will be published on August 20, 1996. Tree Nut Outlook U.S. Tree Nut Production Falls; Receipts Rise in 1995/96 Total tree nut production fell sharply in 1995 to the lowest level since 1986 (table 26). Almond production was off substantially while production of other tree nuts was mostly higher. Grower prices were higher for all tree nut crops which resulted in higher grower cash receipts, except almond receipts which were slightly lower (fig. 10). Tight Almond Supply; Record Price California almond production in 1995 was 370 million pounds (shelled basis), down 50 percent from the record 1994 crop and the smallest output since 1986. Beginning stocks were relatively large when the 1995/96 season began in July, but the overall tight supply situation caused the season-average grower price to jump to $2.50 per pound, twice the 1994/95 season-average price and 29 percent higher than the previous record of $1.94 set in 1993/94. However, the small crop more than offset the record price, resulting in a total crop value of $888 million, 1 percent below the 1994/95 crop value. Lower supplies and higher prices have dampened domestic and export shipments. The Almond Board of California reported total domestic shipments for July 1995 through January 1996 at 89.5 million pounds, compared with 102.1 million for the same period a year earlier. For the same period this year, export shipments totaled 219.6 million pounds, compared with 292.4 million a year ago. Exports from July 1995 through January 1996 to Western Europe, the major almond export destination, totaled 149.4 million pounds, compared with 182.2 million the previous year. Export shipments to Asia, the second most important destination, were down 9 percent from a year ago, but exports to Japan were up. Despite the lower export volume this year, the total value of U.S. almond exports is likely to rise due to the higher prices. The United States accounts for about 80 to 85 percent of world almond exports. Spain, the second largest producer of almonds, also harvested a smaller crop in 1995/96 as did Morocco and Greece. Only Italy and Turkey produced crops as large or larger than in 1994/95. Ending stocks for the six major almond-producing countries will be small, which will moderate supplies for the 1996/97 season. Given the small U.S. almond production last year and moderate beginning stocks, U.S. almond ending stocks on June 30, 1996, will be among the lowest in recent years. If the 1996 crop is average, grower prices are likely to remain strong. Bloom conditions this spring have been variable with some good days for pollination intermingled with periods of rain. Industry sources report that sets will likely vary greatly by variety, area, and orchard. This portends an average crop. Pistachio Output, Price Climb Bearing acreage of California pistachios in 1995 increased to a record 60,100 acres, and combined with a good yield of 2,460 pounds per acre, resulted in a crop of 148 million pounds (in-shell basis), 15 percent more than the 1994 production. California growers harvested a record crop of 152 million pounds in 1993. Many of the trees planted in the 1980's are reaching full-bearing age and boosting per acre yields. According to the California Pistachio Commission, domestic and export shipments from September 1995 through January 1996 were slightly higher than the previous year. Shipments were lower during the first quarter of this season compared with the prior season, but January and February shipments have been much stronger. About two-thirds of the shipments are for domestic markets and one-third is destined for export markets. Exports to Eastern Europe have increased sharply while most other European markets have also continued strong. However, Hong Kong remains the major market where demand has slackened somewhat as have shipments to other major Asian markets such as Taiwan, Singapore, and Japan. Shipments to Australia, Korea, and China have increased. Large pistachio crops in Turkey, Syria, and Italy boosted world supplies in 1995/96. Iran is the world's largest pistachio-producing country, but supply information is not available. Pistachios from Iran are the main competition for the United States in major export markets. USDA's preliminary estimate of the 1995/96 average grower price is 95.7 cents per pound compared with 92.1 per pound (in-shell) the previous season, but well below $1.07 per pound received by growers in the 1993/94 season. The larger California crop, combined with a higher price, resulted in a crop value of nearly $140 million in 1995/96, up 18 percent from the prior season. The California Pistachio Commission reported 46.5 million pounds of total inventory on January 31, 1996, compared with an inventory of 72.9 million pounds a year earlier. A low carryover into the 1996/97 marketing year would put upward pressure on grower prices. Moderate Size Pecan Crop; Price Unchanged The 1995 pecan crop was 238 million pounds (in-shell basis), 20 percent above the small 1994 crop, but 35 percent below the large crop harvested in 1993. USDA's preliminary estimate of the 1995/96 season-average grower price is $1.04 per pound (in-shell), the same as the 1994 price, but nearly twice the low price received for the 1993 crop. By late January, harvesting was virtually complete in all areas. Demand was mostly very light for declining available supplies. Practically all of the remaining lots are being marketed on a direct basis to the end user. Some growers, waiting for the price to improve, are holding pecans in cold storage. Most accumulators had sold their remaining inventories by the end of January. Delivered quality has been generally good throughout the season with some lots of high quality ranging 56 percent meat yield or better. However, there have been some small lots, depending on the growing area, showing quality defects and low meat yields, especially for the native and seedling pecans. The 1995 crop of improved variety pecans was up 30 percent from the prior season and the price was also up slightly. However, the 1995 crop of native and seedling pecans was up only 13 percent from the small 1994 crop and the price fell 10 cents per pound, reflecting quality problems. The top five producing States of Georgia, Texas, New Mexico, Oklahoma, and Louisiana all had higher output in 1995, but only Oklahoma had a larger crop than 1993. Walnut Production Up; Exports Fall The 1995 California crop of English walnuts was 234,000 tons (in-shell basis) up 1 percent from the 1994 crop, but 10 percent lower than the record 1993 harvest of 260,000 tons. USDA will release the 1995/96 season-average grower price and crop value estimates in July 1996. Moderate beginning stocks and the 1995 crop have caused a slowdown in both in-shell and shelled walnut exports from last year's record highs. Although domestic in-shell shipments are down slightly, shipments of shelled walnuts are up 29 percent for the marketing year period of August 1995 through January 1996. In-shell walnuts take the lead in exports, while shelled walnuts predominate in the domestic market. Exports to most major markets in Europe are lower so far this season with the exception of Spain, United Kingdom, Belgium, and the Netherlands. Walnut production in the top six countries in 1995/96 is estimated at 627,822 short tons (in-shell basis), up 1 percent from the record 620,565 tons produced the prior season. The U.S. crop accounts for about 37 percent of the total. A record crop in China of 241,406 tons was expected to be harvested in the fall of 1995. If realized, this would be the first time that China's walnut production has exceeded the U.S. crop. As plantings expand under China's afforestation program, average annual production increases of 5 to 6 percent are expected for the next 4 to 5 years. However, China maintains no stocks due to expanding domestic demand and lack of storage facilities. Therefore, U.S. competition with China in major markets, such as Canada, United Kingdom, Hong Kong, and Japan, was severe, but short-lived, in the late part of the year. Hazelnuts Rebound to Near-Record Crop The U.S. hazelnut crop totaled 39,000 tons (in-shell basis) in 1995, nearly double the 1994 production, but 5 percent below the record 1993 crop. Bearing acreage increased to a record 27,800 acres and an excellent yield of 1.4 tons per acre was harvested. The 1995/96 season-average grower price also increased to $887 per ton, resulting in record crop receipts of $34.6 million. The Hazelnut Marketing Board report as of January 1, 1996, showed 8,991 tons of in-shell hazelnuts had been sold into export markets, up 40 percent from a year ago, and in-shell domestic sales totaled 3,980 tons, up 11 percent. About one-third of total in-shell exports are destined for Germany. Kernel shipments to export markets totaled 1,045 tons for the marketing year to date (July 1, 1995 to January 31, 1996). Major kernel export markets are Israel, Australia,and Germany. Production in 1995/96 for the major hazelnut-producing countries, (including Turkey, Italy, Spain, and the United States) at about 668,700 short tons, is down 15 percent from the bumper crop harvested in 1994/95, but 45 percent above 1993/94's harvest. These large world supplies continue to depress prices in major markets. However, strong demand for high quality U.S. hazelnuts among food manufacturers should boost U.S. exports. Record Macadamia Nut Crop Hawaii macadamia nut production in the 1995/96 crop year is expected to be a record 54 million pounds, up 3 percent from the previous season, and the third consecutive year-to-year increase. Record harvested acreage is largely responsible for the boost in production, but yield was also excellent, although nut quality was mixed. The preliminary farm price for net wet-in-shell macadamia nuts averaged 73.0 cents per pound, 4.0 cents above last season and 5.0 cents higher than the 1993/94 season. The demand for Hawaiian macadamia nuts continued favorable. The farm value of the 1995/96 crop is estimated at $39.4 million, 9 percent more than the 1994/95 crop due to increased production and higher prices. Chilean Fruit Imports into the United States Down in 1995 Imports of fruit and tree nuts from Chile were down in 1995 from the previous year (table 32). Strong European demand for fresh fruit contributed to the decline in supplies shipped to the United States. Fruit growers in Chile have suffered from poor economic returns from their crops in recent years as a result of a strengthening Chilean peso, increasing production costs, and poor export quality controls. In response to lower returns, growers have been uprooting orchards and not replacing old plantings, thereby reducing supplies available for export. Chilean apple production increased in 1995, mostly due to an increase in the number of bearing trees. Chile produces mostly Red Delicious and Granny Smith apples, and is diversifying into new popular varieties such as Fuji, Gala, Jonathan, and Braeburn. As a result of favorable weather this season, production is expected to increase again in 1996. Apple exports to the United States in 1995 increased nearly 1 percent from the year before. The small increase occurred despite the Chilean apple crop maturing about 2 weeks later than usual, abundant supply and low prices in the United States, and a favorable market for Chilean apples in European and Latin American countries. Grape, stonefruit, and pear production in Chile fell in 1995, mostly due to bad weather and uprooting of plantings in previous years in response to poor returns. The decreased production, along with quality controls and higher export prices, led to smaller shipments of grapes and pears to the United States. Grape shipments, which accounted for about 60 percent of fruit imports over the last several years, fell 6 percent, and pear shipments dropped 41 percent from the previous year. Grape production is expected to continue to fall over the next few years as the rootstock ages and becomes less productive. Pear production should increase as more trees reach bearing age. Chilean kiwifruit production reached a record in 1995 as a result of additional bearing orchards and good weather conditions. Production is forecast to increase again in 1996, although plantings have declined. Kiwifruit exports to the United States rose 35 percent in 1995. Chile's larger supply, which helped keep the unit value of kiwi exports down, along with activities under the government's new export promotion program, helped boost shipments. Chile was declared free of the Mediterranean fruit fly (Medfly) in December 1995, opening its exports to more countries. In the past, only the United States recognized Chile's major export- producing areas as Medfly free. Prior to the new status, Chilean fruit had to go through a costly, and lengthy cold treatment before it could be shipped to many of the world's biggest export markets. Some Asian countries prohibited the admission of certain fruit entirely. Under the new status, Chile hopes to expand its exports to new markets. The increase in demand for Chilean fruit by countries that previously limited these imports, may cause prices of the fruit entering the U.S. market to increase in the near future. Mexico Trade, 2 Years After NAFTA The North American Free Trade Agreement (NAFTA) went into effect January 1, 1994. The agreement opened trade between the United States and Mexico by removing trade barriers and established a schedule to reduce tariff rates between the two countries, eliminating them immediately for least trade-sensitive commodities and in 15 years for the most trade-sensitive commodities. At the end of NAFTA's first year, Mexico began economic readjustment, with a major peso devaluation. The devaluation resulted in lower real incomes in Mexico as well as increasing the cost of imported goods. At the same time, the dollar price of Mexican goods exported declined. The result, in 1995 Mexico imported less from its major trading partners, such as the United States, but exported more. Fruit imports from Mexico fluctuate yearly, responding to U.S. market conditions and Mexican production. The quantity of most fruit imports increased in 1995 as it has through most of the nineties (table 33). Fresh fruit, especially citrus, mangoes, and grapes, account for the majority of fruit products imported. Citrus, mostly limes, accounted for 20 percent of all fresh fruit imported since 1993, up from 12 and 15 percent respectively, in 1990-91. Mangoes' share of fresh fruit imports has been growing in recent years, increasing from about 10 percent in 1990 to 19 percent in 1994. In 1995, while imports of mangoes rose to the United States, the proportion of mangoes to other fresh fruit fell to 15 percent. Grape imports fluctuated between 5 and 7 percent for most of the years during 1990-94, increasing to 11 percent in 1995. Tariff rates vary seasonally for these commodities. Citrus and mangoes are classified as sensitive commodities during their peak harvesting period, and have a 15-year tariff phase-out period during these periods. The United States does not import many deciduous fruits, such as peaches, pears, apples, and plums from Mexico. Mexican production of these commodities is small and declining in favor of more profitable fruit and vegetables. Because of economic hardships, many growers are not replacing trees that have become unproductive. Mexican agricultural reform policies, prior to NAFTA, removed input subsidies for fruit producers, increasing their costs of production. Reforms also limited government lending to essential commodities, and fruit growers must now rely on commercial lenders, with higher interest rates, for loans. Many of Mexico's deciduous fruits are produced in states that have not been declared free of fruit flies, making exporting of commodities grown in these states more difficult. Mexican orange juice exports to the United States declined in the early nineties, but recovered in 1994 and 1995 with the help of lower tariffs under NAFTA. Oranges used for processing into juice are the residual from the fresh market. Unlike the United States, where Florida oranges are grown specifically for processing, Mexican processors must compete with the fresh market for fruit supplies. Under NAFTA, Mexican FCOJ exports to the United States are given annual access for 40 million gallons (single-strength equivalent) at one-half the most favored nation (MFN) applied tariff. Imports over the quota level are taxed at the applied MFN with this rate declining in phases until both the quota and the tariff are phased out at the end of 15 years. The increase in Mexico's orange juice imports into the United States in 1995 reflected not only the preferential tariff rate, but also reduced supplies of FCOJ from Brazil. Almost all U.S. fruit exports to Mexico are fresh noncitrus fruit, of which apples make up the largest share (table 34). The volume of all noncitrus exports to Mexico declined in 1995, mostly because the peso devaluation made the peso cost of these commodities higher than past years. Throughout 1990-94, however, quantities of apples, peaches, pears, grapes, plums, and nuts, increased almost annually. Citrus fruits were the only fresh fruit export that rose in 1995. Grapefruit and limes accounted for most of the growth. Prospects for future trade between the United States and Mexico look good for both countries. Mexico helps supplement U.S. production during low production years and for growing consumer demand for fruit and vegetables. Once Mexico's economy stabilizes, the demand for U.S. fruit and nuts should return to the growth path of the early nineties. END-END-END .