FRUIT AND TREE NUTS April 3, 1996
Approved by the World Agricultural Outlook Board
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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.

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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.

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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 orangeyield 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.

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