Agriculture Reference
In-Depth Information
Supply and Demand Macro-Trends
At the beginning of the twentieth century, most vegetable products were sourced
locally. Advances in infrastructure, transportation and the cold supply chain have
converted the horticulture industry into a global activity. In spite of the perishable
nature and weather conditions necessary to grow fruit and vegetables, technological
advances have translated into increased efficiency of production, transportation and
storage and a reduction in the cost of producing vegetables. Seasonality of produc-
tion has allowed opportunities for certain regions to specialize in fruit and veg-
etable production for specific market windows where prices are usually higher due
to a limited supply. Market window analysis helps match the demand for a product
when the supply of that region is limited or restricted due to climatic differences that
translate into significant increases in the cost of production.
There are certain factors in the vegetable industry that have the potential to make
big structural changes and create considerable opportunities for growers all over
the world. These factors are referred to here as produce macro-trends, due to the
global nature and potential implications in changing the structure and paradigm of
the produce industry.
a.
Demand for organic products
. The demand for organic foods has remained
strong and continues to grow. According to Baginski (
2011
), total organic sales
in the USA were estimated at $ US 23.4 billion in 2010. The produce industry
was the top selling category and accounted for 37 % of total sales in 2008.
b.
Increased consumer interest in the origin of the products with an emphasis on
local.
There is increasing consumer interest about the origin of fruit and veg-
etable production. Even though there is no generally accepted definition of local,
and the term has different connotations to different people, locally grown prod-
ucts are becoming more important to consumers (McGarry et al.
2005
). The
number of farmers' markets in the USA has grown substantially from 340 in
1970 to 7,175 in 2011 (Anon
2012a
). Total local food sales by farmers in the
USA were estimated to be at $ US 4.8 billion, including $ US 887 million in
direct-to-consumer sales, $ US 2.7 billion in intermediate marketing channels
only, and $ US 1.2 billion through markets with both direct and intermediate
channels (Anon
2008
). The rapid increase in the number of farmers' markets is
attributed not only to changes in consumer tastes and preferences and changes in
the economics of agriculture, but also to the passage of the Farmer-to-Consumer
Direct Marketing Act of 1976 by the USA Congress (Brown
2001
).
c.
Food safety.
A proliferation in the number of food-borne illness outbreaks around
the world has brought more attention to food safety in the produce industry. In
the USA, the spinach outbreak of 2006 changed the consumer's view of food
safety for the vegetable industry (Palma et al.
2010
). As a result there have been
many changes to both industry and government driven standards to ensure a
safe food supply (Knutson and Josling
2009
). The 111th Congress enacted the
Food and Drug Administration (FDA) Food Safety Modernization Act (FSMA),
which was signed into law by President Obama on January 4, 2011. This is the
