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Friday, May 21, 2010

The U.S. Trade Situation for Fruit and Vegetable Products

Renée Johnson
Specialist in Agricultural Policy

Over the last decade, there has been a growing U.S. trade deficit in fresh and processed fruits and vegetables. Although U.S. fruit and vegetable exports totaled more than $10 billion in 2009, U.S. imports of fruits and vegetables were nearly $16 billion, resulting in a gap between imports and exports of almost $6 billion. This trade deficit has widened over time—despite the fact that U.S. fruit and vegetable exports have continued to rise each year—because growth in imports has greatly outpaced export growth. As a result, the United States has gone from being a net exporter of fresh and processed fruits and vegetables in the early 1970s to being a net importer of fruits and vegetables today. 

A number of factors shaping current competitive market conditions worldwide, and global trade in fruits and vegetables in particular, partially explain the rising fruit and vegetable trade deficit. These include: 

• a relatively open domestic import regime and lower average import tariffs in the United States, with products from most leading suppliers entering the U.S. dutyfree or at preferential duty rates; 

• increased competition from low-cost or government-subsidized production; 

• continued non-tariff trade barriers to U.S. exports in some countries, such as import and inspection requirements, technical product standards, and sanitary and phytosanitary (SPS) requirements; 

• opportunities for counter-seasonal supplies, driven in part by increased domestic and year-round demand for fruits and vegetables; and 

• other market factors, such as exchange rate fluctuations and structural changes in the U.S. food industry, as well as increased U.S. overseas investment and diversification in market sourcing by U.S. companies. 

In the buildup to the 2008 farm bill (Food, Conservation, and Energy Act of 2008, P.L. 110-246), the trade situation contributed to demands by the U.S. produce sector that Congress consider expanding support for domestic fruit and vegetable growers in farm bill legislation. Historically, fruit and vegetable crops have not benefitted from the federal farm support programs traditionally included in the farm bill, compared to the longstanding support provided to the main program commodities (such as grains, oilseeds, cotton, sugar, and milk). The 2008 farm bill provided additional support for specialty crop programs, as well as organic programs. The farm bill also included provisions intended to address existing trade barriers and marketing of U.S. specialty crops, including (1) provisions under USDA's Market Access Program (MAP) reauthorizing MAP funding to encourage domestic exports; and (2) Technical Assistance for Specialty Crops (TASC), reauthorizing the TASC program to address sanitary and phytosanitary (SPS) and technical barriers to U.S. exports, and providing mandatory funding.

Date of Report: May 12, 2010
Number of Pages: 19
Order Number: RL34468
Price: $29.95

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