Bottom Line
The vegetable industry in Texas, and especially in Southwest Texas, has undergone dynamic changes in recent years. Factors are increased production risk and weak markets associated with increased U. S. vegetable production and competition from Mexico.
Summary
Vegetable production, especially production for processing in Southwest Texas, increased due to producers, agribusiness, consultants, and research scientists creating systems to help manage both production and marketing risk. Acres planted peaked in 1998, as the industry experimented with new products. About 48,650 acres of vegetables were planted in 2000, down 17.1 percent from the peak of 58,670 in 1998, but up 43.4 percent from about 33,90 acres planted in the mid-1980s.
Farm gate income from vegetable production has more than tripled from about $26 million in the mid-1980s to the latest estimate of about $80 million in 2000, and now accounts for about 8.2 percent of the over $1 billion in farm gate cash receipts.
The produce industry in Southwest Texas has undergone dynamic changes during the last 10 to 15 years, assuming a larger role in local agricultural income. Acres planted and farm income from vegetable production have both increased significantly. Figure 1 provides an outline of the region covered.
Scarce and expensive production resources, such as irrigation-water quantity and quality problems, creeping urbanization, and heavy competition from Mexico, have influenced a shift of some Lower Rio Grande Valley production to the Winter Garden region. Vegetable production for processing has increased in Southwest Texas, as producers shift to less labor-intensive production alternatives and more mechanization, to better manage production and marketing risk. Most vegetables for the processing market are normally produced under a forward contract, thereby reducing marketing risk.
Vegetable acres for harvest in Texas dropped in the early 1990s as the industry restructured to cope with a recession in the agricultural sector, changes in domestic farm policy, and the effect of international trade treaties negotiated in the early 1990s. The North American Free Trade Agreement (NAFTA) had an impact on these changes, as the production of more labor-intensive vegetables moved to Mexico.
Texas lost market shares, particularly in labor-intensive and price-volatile fresh vegetable production, to California, Florida, and other states. Low major commodity prices forced farmers in many states to grow more vegetables, resulting in low or erratic vegetable prices.
In Southwest Texas, however, it appears that the biggest changes have been associated with a restructuring of the production profile.
A recent USDA report indicates that between 1970 and 1998, the consumption of produce in the U. S. has more than doubled. The vegetable industry in Southwest Texas has been able to capitalize on this increase, and showed signs of recovery by the mid-1990s. This region produced significant quantities of at least five of the top ten most widely consumed vegetables: potatoes, onions, carrots, cabbage, and cucumber, and smaller amounts of many others. In addition, the region produces one-third of the U. S. demand for spinach. The region is ideally suited to satisfy a demand for vegetables during the winter months when U. S. supplies are scarce. Close proximity to rapidly expanding urban centers in Texas also helped.
The transition required the integrated efforts of farmers, researchers, consultants, and the agribusiness industry. Growers increased yield and quality with improved pest control products and better varieties. Harvest, handling, and trucking have all improved. Post-harvest losses have decreased. It should be noted that recent increases in farm gate value are more associated with improved production efficiencies, as mentioned above, compared to markets which have been relatively flat. Alternative crops that were tried, accepted, and/or rejected included sweet corn for processing and fresh specialty crops and herbs. The past few years saw increases in acres planted to potatoes, carrots, green beans, and southern greens. Major participation by local processing firms, such as Del Monte Foods in Crystal City and Agrilink Foods and Hartung Brothers in Uvalde, were instrumental in assisting in the transition and providing stability to the vegetable industry. Increased emphasis on processing vegetable production has helped stabilize the industry.
Acres planted peaked in 1998, as the industry experimented with new products and capitalized on opportunities with traditional crops. Disappointments and losses included prevented onion plantings, due to heavy mid-winter rains in 1999, and a price-crashing, substantial increase in watermelon plantings in 1999 due to attractive crop insurance programs.
Acres planted appear to have stabilized at a much higher annual rate than during the mid-1980s. There were concerns that new government-supported crop insurance products might cause plantings to increase and distort markets, but apparently these programs had negligible effects during the transition. About 48,650 acres of vegetables were planted in 2000, down 17.1 percent from the peak of 58,670 in 1998, but up 43.4 percent from about 33,900 acres planted in the mid-1980s (see Figure 2).
Conversely, farm income from vegetable production has increased substantially from an annual income of about $26 million in the mid-1980s to the latest estimate of about $80 million in 2000 (see Figure 3).
Increased vegetable production can be attributed to the industry developing more profitable alternatives to the use of expensive and increasingly restricted resources. As valued at the farm gate, vegetable production in Southwest Texas accounted for about 3.5 percent of the approximately $0.76 billion in annual cash receipts in the mid-1980s. In 2000, vegetable production accounted for about 8.2 percent of the more than $1 billion in farm gate cash receipts (see Figure 4).
