Consumption trends for fresh market produce have changed significantly over the last two decades. Concerns have been expressed about a faltering demand structure for fresh produce in the face of an obesity crisis in the U.S., especially with our youth. The ongoing trade dispute between U.S. and Mexican growers in the U.S. fresh tomato market raises additional concerns about our demand structure.
What we do know is that Canada and Mexico are the two largest origins for imported tomatoes and the majority of their tomatoes are now greenhouse grown. In 2011, Mexico shipped 11.5 million hundredweight (1 unit is equivalent to 100 pounds) of greenhouse tomatoes to the U.S. market and Canada shipped another 3 million hundredweight. In the same year, U.S. growers provided 5.4 million hundredweight of greenhouse tomatoes to the domestic market, mostly from Arizona and California. In total, Mexico and Canada greenhouse grown tomatoes accounted for 30% of total U.S. expenditures on fresh market tomatoes. U.S. field growers of large round tomatoes accounted for 27% of total U.S. tomatoes expenditures while U.S. greenhouse grown tomatoes accounted for 9%.
To gain an even deeper understanding of the changing market for fresh market tomatoes, we recently completed a demand study for fresh market tomatoes. Our results suggest that U.S. field grown large, round tomatoes compete with Mexican field grown tomatoes and all sources of greenhouse tomatoes, but that there is a synergistic relationship between imported and domestically grown greenhouse tomatoes.
Since the beginning of the 21st Century, we have witnessed a large increase in the production and marketing of greenhouse tomatoes, taking market share away from field grown tomato producers. What our results suggest is that those greenhouse grown tomatoes are competing with and taking market share from field grown tomatoes but have led to a growth in production of U.S. greenhouse tomatoes. The results suggest while greenhouse tomatoes are competitors with field grown tomatoes, they are complementary to U.S. greenhouse tomatoes. The logic behind this is that consumers are shifting preference to greenhouse grown tomatoes. When a sector is in a boom phase of growth (as has been the U.S. greenhouse tomato market), it appears that competitive producers are complementary in the market. This will in fact continue until the market matures and moves into the bust side of what is often referred to as the boom-bust business cycle in sector analysis. When this market matures, we are likely to see U.S. and imported greenhouse tomatoes shifting from complementary products to direct competitors in the market, and will lead to the bust side of the boom-bust cycle and eventually lead to some difficult times for those producers.
What we have witnessed in the fresh tomato market is not unique to tomatoes. We have seen similar changes in the fresh pepper market and other fresh produce commodities. While the growth in imported greenhouse tomatoes has impacted field grown producers, it may be only the beginning of a more significant change that could take place in the fresh produce market. Between pressures on water use and other environmental stress, we might see even greater change in the fresh produce market over the next decade. Economics would suggest producers optimize the use of resource endowments they control. We need science and shared knowledge to realize our greatest opportunities with those resources.