For your convenience, a roundup of government reports of interest in the last week or so.

Consumer Price Index Summary

TK: Food at home index has fallen nearly 3% in the last 12 months....

Food  The food index rose 0.1 percent in November, the same increase as in October. The index for food away from home increased 0.2 percent while the food at home index was unchanged. Among the food at home groups, the dairy and related products index declined 0.7 percent in November after rising 1.0 percent in October, and the index for other food at home also declined in November following an October increase.

 In contrast, the indexes for fruits and vegetables and for meats, poultry, fish, and eggs both increased in November after declining in October. The index for nonalcoholic beverages fell for the second straight month, declining 0.3 percent in November, and the index for cereals and bakery products rose 0.1 percent in November after being unchanged in October. Over the past year, the food index has declined 0.7 percent. The food at home index has fallen 2.9 percent over the last 12 months, with five of the six grocery store food groups declining, but the index for food away from home has risen 2.1 percent.


Vegetables and Melons Outlook - USDA ERS

TK: Lots of good crop/commodity nuggets and big picture perspective in this 42 page report authored by Gary Lucier and Andy Jerardo...

Despite a cool, wet growing season in many areas (and substantial harvest delays in some places due to rain), the fall potato crop is expected to total 394 million hundredweight (cwt)—up 4 percent from a year earlier, but 2 percent below the 2003-07 average. With harvested area only slightly below a year ago, production was again boosted by a record-high yield of 429 cwt.

This was up 4 percent from the previous record and was the sixth consecutive year that fall potato growers have experienced record per acre yields. With a larger crop and sluggish demand, prices have declined. It appears that higher farm prices for some vegetables have been more than offset by lower prices for others, leaving net consumer prices lower. Retail prices for all freshmarket vegetables will average about 6 percent below a year earlier this fall due in part to sharply lower potato prices.

 According to USDA’s Market News Service, although advertised retail prices during the fourth quarter are expected to average above a year earlier for field-grown tomatoes and lettuce, consumer prices will average below a year earlier for most other vegetables including potatoes, onions, green beans, broccoli, and hothouse tomatoes (on-the-vine).

From an estimated $21 billion in 2009 and 2010, the value of farm sales of vegetables and melons is projected to grow by an average of 2 percent annually over the next decade, reaching $25 billion in 2019. Farm sales of fresh-market vegetables (excluding potatoes) are forecast to grow 1.8 percent annually, reaching $15.4 billion in 2019.

Fresh vegetables
: The outlook for fresh vegetables this winter indicates reduced acreage and supplies. At the same time, demand is expected to continue to be relatively soft as consumers remain conservative with regard to both away from home eating and premium products such as hothouse and organic vegetables. Although the winter price outlook is uncertain (given average weather), it favors higher prices compared with the relatively modest levels experienced a year earlier.

Melons: During the fourth quarter of 2009, the shipping-point price for U.S. cantaloup averaged about 20 cents per pound—27 percent lower than a year earlier. The U.S. market is now transitioning to imported melons, largely from Central America, with the winter outlook tilted toward good supplies and lower prices due to relatively favorable growing weather.

Longrun outlook
: After remaining flat in 2010, the average annual growth rate forvegetable and melon production is forecast at 0.5 percent for 2011-19, with the value of vegetables expected to reach $26 billion by 2019. About two-thirds of the 207 billion pounds of fruits and vegetables expected to be consumed per person in 2019 will consist of vegetables and melons.
 
Imports
: During the first 10 months of 2009 (January to October), the volume of freshmarket vegetable imports (excluding potatoes, mushrooms, melons, and pulses) was up 2 percent from a year earlier. The top five sources of fresh vegetable imports were Mexico (74 percent of total volume), Canada (13 percent), Peru (3 percent), Costa Rica (2 percent), and China (2 percent).

Tomatoes remain the leading fresh import item by volume, followed by cucumbers, onions, bell peppers, squash, and chile peppers. Despite higher shipping-point prices this year, the value of fresh vegetable imports decreased 5 percent through October to $3.3 billion, while fresh melon import value rose 11 percent to $390 million. Over the final quarter of 2009, with stronger prices for several items providing an incentive for importers, fresh-market vegetable import value will likely rise.

Despite the weak economy and the weak dollar, given year-round vegetable demand and the importance of the U.S. market to countries such as Mexico and Canada, calendar-year fresh vegetable and melon import volume is expected to rise again in 2010.


Potato Stocks - USDA NASS

Potato Stocks Up 9 Percent From December 2008
                                                                                
The 13 major potato States held 265 million cwt of potatoes in storage December 1, 2009, up 9 percent from a year ago but slightly below December 1, 2007.  Potatoes in storage accounted for 69 percent of the 2009 fall storage States' production.  Klamath Basin stocks totaled 4.50 million cwt on December 1, 2009, up 13 percent from a year ago.

 Klamath Basin stocks include potatoes stored in California and Klamath County, Oregon.  Potato disappearance, at 120 million cwt, was 5 percent below December 1, 2008 and  down 9 percent from 2007.  Season-to-date shrink and loss, at 14.1 million cwt, was up 11 percent from the same date in 2008 but 1 percent below 2007.  Processors in the 9 major States have used 60.9 million cwt of potatoes this season, down 12 percent from the same period last year and down 17 percent from 2 years ago.

 Dehydrating usage accounted for 11.0 million cwt of the total processing, up 3 percent from last year but 14 percent below the same period in 2007.


Russian Fresh Deciduous Annual 2009 - USDA FAS

TK: Russia imports more than twice the amount of fruit they produce, and that hasn't changed with the economic crisis...


Report Highlights
: Russia is the largest importer of apples and pears in the world, and despite the economic crisis, devaluation of the ruble, and negative income growth, imports in 2009 remained steady. Fruit remains popular with consumers, but they are buying less exotic fruits, pears, and grapes. Demand for most U.S. fresh fruits is growing, and U.S. fruit importers continue diversifying their product lines. Domestic fruit production is limited, and growers already suffering from the economic crisis are facing increased competition from imports.

Executive Summary: Russia is the largest importer of apples and pears in the world, and despite the economic crisis, devaluation of the ruble, and negative income growth, imports in 2009 remained steady. Fruit remains popular with consumers, but they are buying less exotic fruits and pears.

Consumers are spending their food budgets on more affordable and necessary products, and Russians bought 30 percent less exotic fruits, 17 percent fewer pears, and 5 percent less grapes. Russia imported 5.1 million metric tons (MT) of fruit while domestic production was only 2.1 million MT. Fruit imports from Europe and the Southern Hemisphere are declining, while imports from the Commonwealth of Independent States (CIS) and Poland are increasing.

Demand for most U.S. fruit is growing, and importers of fresh fruit from the U.S. continue to diversify their product lines. Domestic fruit production is limited, and growers already suffering from the economic crisis are facing increased competition from imports. The main commercial fruit crop is apples and both the area planted and production fell in 2008. The Russian Government provides subsidies to stimulate production and investment in plantations with perennial crops and help growers modernize and remain in the industry. Investment in new rootstock and equipment is continuing, but at a pace of only 2 to 3 percent per year.

The Russian Far East remains a stable market for U.S. fruits, responsible for 30 percent of the total volume imported to Russia. U.S. fruit sales and their price competitiveness in Russia will depend a lot on the U.S. Dollar/Russian ruble and Euro/Russian ruble exchange rates.

Weekly highlights in Canadian agriculture - USDA FAS

TK: Supply management appears to give farmers a good return but offers the downside of sliding per capita consumption....


Cheese Is The New “White Gold” Recent press reports in Canada have pointed out that some dairy products have become more expensive than some top cuts of meat in Canada. Since 1994, the price of dairy has jumped by sixty percent, twice the rate of inflation. The Canadian Dairy Commission, a Crown agency, manages the prices that farmers receive for their milk and limits production through quotas to match Canadian demand for milk, cheese, butter and other dairy products.

A recent report by the Conference Board of Canada criticized the dairy industry's supply/management system, saying it hurt diary famers' ability to compete globally. In addition, Canadian dairy exports are capped by the World Trade Organization obligations. Those limits capped shipments of dairy products in 2008 at $255 million. The Dairy Farmers of Canada responded to the Conference Board report by saying that milk producers in other countries have been devastated when forced to compete in the free market. Press reports suggest that fewer individuals can afford to buy dairy products, like ice cream, cheese and yogurt.

Moreover, the dairy-supply management system is not only thwarting Canadian opportunities abroad, but it is also dramatically impacting a number of domestic sectors, such as food processors and restaurants. Some food processors have secured exemptions allowing them to purchase cheese at reduced prices. This reduction allows them to export processed food products to the U.S. market where they would otherwise not be able to compete. Representatives of the food processors sector argue that if something doesn’t change, it could be cheaper for them to import milk from the United States.


Also in the report:
First Hog Exit Cash Coming
Canada/European Union Bilateral Negotiations
Ottawa Delays Natural Health Food Crack Down


Hong Kong Retail Food Sector - USDA FAS

TK: This 38-page USDA FAS report says U.S. exports have improved with the weaker dollar and notes expanding opportunity for organic food in the market....

Report Highlights:
Hong Kong grew to be the 4th largest market for U.S. F&B exports in 2009, at a time when other major import markets were shrinking. U.S. exports of high value food products to Hong Kong are expected to grow by 15% and top the US$1.4 billion mark by the end of 2009, the largest growth among all U.S. export markets in the world! The demand for U.S. products continues to grow, given the weakened U.S. dollar making U.S. food products more competitive.

U.S. food products are well-known for their high quality and reliability of food safety. Hong Kong consumers are increasingly more health and safety conscious due to food scares from neighboring countries. With a relatively stable economy, Hong Kong’s per capita GDP is set to remain at US$30,000 in 2009, one of the highest in the world. Top prospects for U.S. F&B export to Hong Kong include red meat, fresh fruit, tree nuts, poultry meat, processed fruit, vegetables, wine, craft beer and cheeses. Wine and beer offer special opportunities as the Hong Kong Government eliminated their excise taxes in 2008.


French government provides 1.7 billion Euros to French farmers

TK: Do French farmers know how to get what they want or what?


Report Highlights: After several weeks of farmers' unrest French President Nicolas Sarkozy recently announced that the French farm sector will benefit, in the coming weeks and months of over € 1.75 billion of financial support. Several French banks will notably provide one billion Euros in low interest bank loans to ease farmers’ cash problems. Farmers will also get tax exemptions. This announced flow of money seems to have calmed down the farmers though several demonstrations have occurred since Nicolas Sarkozy’s speech. It appears that the economic situation is now taking a toll on all the French farms sectors.

EU-27 STONE FRUIT ANNUAL USDA FAS

TK: The report suggests producers are worried about  cutbacks in consumption due to the financial crisis. "Producers fear that economic uncertainty coupled with high unemployment and lower purchasing power will lead consumers to buy fewer fresh fruits and vegetables."

Report Highlights
: EU-27 production of peaches and nectarines in MY 2009/10 is estimated at 4.2 million MT. Favorable weather conditions during blooming and maturation resulted in a slight harvest increase for the EU-27 as compared to the previous MY. Quality is reported as good in most Member States. Total cherry production in MY 2009/10 is expected at 634,000 MT, an increase over the previous MY, due to good crops in Spain and Germany.