Analyses of U.S. demand for fresh tropical fruit and vegetable imports
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Since the 1970s, the demand for fresh fruits and vegetables have been on the rise, due to increased purchasing power of U.S. consumers as personal incomes increased, changing U.S. consumer perceptions and habits towards consuming more fresh fruits and vegetables for better health, and a fast growing population of immigrants who are accustomed to fresh-produce diets. Limitations in climate and farm labor supply also hampered U.S. producers’ ability to respond to the increased demand. As a result, the U.S. increasingly depends on imports from NAFTA, banana-exporting countries, and the Southern-Hemisphere to satisfy the demand for fresh produce. The growing demand for fresh fruit and vegetable imports in the U.S., combined with the lack of exhaustive studies on U.S. demand for fresh produce imports, forms the basis for this study. This study analyzes the demand for tropical fresh fruit and vegetable imports into the U.S. and explores the demand relationships between the fresh fruits and vegetables from various sources using a source-differentiated Almost Ideal Demand System approach. The analysis shows that seasonality affects the demand for tropical fresh fruit and vegetable imports. Further, all the commodities in the analysis have a positive and significant trend except for bananas. NAFTA has no apparent impact on tropical fresh fruits, because they originate from tropical regions, but it does impact fresh vegetable imports. Our results confirm that most tropical fresh fruits are luxury commodities, while bananas are a staple food. Bananas face strong competition from other tropical fresh fruits. With the exception of asparagus, all the fresh vegetable imports significantly compete with domestically grown fresh vegetables, which support prior studies particularly on fierce competition between Florida tomatoes and imports from Mexico and Canadian greenhouse. Fresh imported grapes also compete with U.S. domestically produced fresh grapes instead of complementing each other. Results also indicated that U.S. consumers have a preference for tropical fresh fruits from various sources due to quality differences. For example, Guatemalan bananas, Costa Rican pineapples, and the ROW papayas and mangoes/guavas are preferred over the same commodities from competing countries. A major policy implication of this study is that the U.S. may need to re-examine the impact of fresh vegetable imports on the domestic fresh produce industry as they are not contra-seasonal and pose a threat to domestic producers. The evidence from this study shows that fresh vegetable imports are significant substitutes with locally produced fresh vegetables and the same for fresh grapes. International fresh fruit and vegetable trade players and countries of origin could use the results from the study to determine their export promotion strategies in the U.S. fresh produce market based on their commodity’s expenditure, own-price and cross-price elasticities.