The report by the United States Department of Agriculture (USDA, 26 July 2007) titled Vegetables and Melons Situation and Outlook Yearbook provides details on the market for different vegetables and melons. The paper provides an analysis and literature review of fresh Head Lettuce. OBJECTIVE Objectives of the paper are to: • Understand the supply, price and season average price movement • Understand the ratio between local production and import trends. • Understand where the lettuce market is headed and if the season price is a random variation
• Understand the trend for per capita consumption LITERATURE REVIEW According to Sexton (et all, 2005), price of lettuce depends to a great extent on the factors such as production, stocking limits, life of the preserved products and the ability of the exporter to bear the initial costs and the easily availability of imports. Izumi (2007) has written about the use of electrolyzed water to c=disinfect the vegetables and increase their shelf life. Bolin (2006) has suggested the factors that cause shortages in the lettuce market. DATA AND PROCEDURES
Data from different peer reviewed journals have been used to understand how the market is influenced by various s factors mentioned in the objectives section According to USDA (p. i) the per capita use declined for fresh vegetable such as head lettuce, and the U. S. vegetable and melon trade deficit widened in 2006 as the value of imports increased more than the value of vegetable and melon exports. In 2006, about 16 percent of all the vegetables and melons consumed domestically was imported. As a result of the imports, the price of lettuce has come down. The report also says that Aggregate U.
S. output of vegetables rose less than 1 percent in 2006 to 130 billion pounds—largely unchanged from and the reduction in production of almost offset stronger processing of other costs (USDA, p. iii). Cash receipts for all vegetables rose 6 percent to $18. 9 billion in 2006 (USDA, p. iv) In 2006, per capita disappearance of all vegetables, fell 3 percent to 428 pounds (farm-weight basis) and lettuce remained the third most popular product at 7 percent. Arizona is the largest producer and produces almost 7 percent of the national produce and the total production was 977 million USD (USDA, p.
iii). The shipping price of lettuce was 24% of the retail price and this shows the wide difference between what the growers get and what the retailers get. EMPIRICAL DATA AND DISCUSSION Table 37 (USDA, p. 53) gives the data for the U. S. monthly and season-average f. o. b. shipping-point price for the years 1979-2007 in dollars per cwt. As per the data, it can be seen that the seasons price for the years from 1979 to 2006 has increased from 9. 2 to 16. 6 dollars per cwt. The highest ever rate in these years has been in March 2002 when the price rose to 87. 30 dollars per cwt.
The prices for the year 2007 from January to June vary from 21 to 18. 60 USD per cwt. Another important point to note is that since 2000, the average seasonal price has varied between 15. 5 to 21. 1 $ per cwt. The change in price trend shows that changes in price are independent of the month and the variation can best be described as random. Table 55 (USDA, p. 71) gives details of the supply, utilization and the season average price of fresh head lettuce for the years from 1979 to 2007. On the supply side, information is given for the production, imports and the total production of green lettuce in million pounds.
It is interesting to note that local country production far outweighs the import volume. In 1979, the ratio between production and import was 772:1 while in 2006, the ratio was 53:1 and the figures indicate that more and more quantity is being imported. Also according to the data given in the table for utilization, the per capita consumption that was around 25. 1 pounds in 1979 has fallen to 18. 4 pounds in 2007. The quantity that is being exported has also fallen and while it was 480. 6 million pounds, in 2007 it has reduced to 360 million pounds.
The domestic consumption of lettuce has also fallen in the years from 1979 where it was 5648 million pounds to 5563 million pounds. The table has also given the season average price in current dollars and the constant 2000 dollars rate basis. In 1979, the price of lettuce was 9. 2 and 18. 57 dollars per cwt fpr the current dollars and the constant 2000 dollars basis. The same values for the year 2006 has reduced to 18. 6 and 14. 21 dollars respectively. These figures means that farmers are getting lesser margins and returns from growing lettuce. CONCLUSION
The market for fresh head lettuce is declining and substitutes such as imports are causing further losses to the cultivator who receives just 24% of the retail price. It can be seen that the season price is a random variation and it may vary in any direction during the 12 months. The trend for imports and local production is falling. The per capita consumption is decreasing
Bolin. H. Izumi. Stafford A,E. (2006). Factors affecting the storage stability of shredded lettuce. Journal of Food Science. Volume 42. Issue 5. pp: 1319–1321 Sexton J, Richard.Zhang Mingxia. (November 2005). A Model of Price Determination for Fresh Produce with Application to California Iceberg Lettuce. American Journal of Agricultural Economics. Volume. 78. Issue 4. pp. 924-934 Izumi, H. (2007). Electrolyzed Water as a Disinfectant for Fresh-cut Vegetables. Journal of Food Science. Volume 64. Issue 3. pp: 536–539 USDA. (27 July 2007). Vegetables and Melons Situation and Outlook Yearbook: United States Department of Agriculture Report. Retrieved 1 October 2007 from www. ers. usda. gov/Publications/VGS/2007/07JulYearbook/VGS2007. pdf