Vegetable Farming in The US Industry Report

Vegetable Farming in the USDecember 2015 1
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A new leaf: Steady demand and high prices will

foster industry revenue growth
IBISWorld Industry Report 11120
Vegetable Farming in the US

December 2015
Ryan McCormack
2 About this Industry
17 International Trade
35 Key Statistics
Industry Definition
19 Business Locations
35 Industry Data
Main Activities
Similar Industries
21 Competitive Landscape
Additional Resources
21 Market Share Concentration
35 Annual Change
21 Key Success Factors
4 Industry at a Glance
35 Key Ratios
36 Jargon & Glossary
22 Cost Structure Benchmarks

24 Basis of Competition
5 Industry Performance
25 Barriers to Entry
Executive Summary
26 Industry Globalization
Key External Drivers
Current Performance
Industry Outlook
11 Industry Life Cycle
27 Major Companies
29 Operating Conditions
29 Capital Intensity
13 Products & Markets
30 Technology & Systems
13 Supply Chains
31 Revenue Volatility
13 Products & Services
32 Regulation & Policy
14 Demand Determinants
32 Industry Assistance
15 Major Markets
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About this Industry

Industry Definition
Operators in this industry grow a wide

variety of vegetables and melons in open
fields and in greenhouses. This report does
Main Activities
The primary activities of this industry are
not include some notable crops such as

corn, soybeans or wheat, which are included
under the scope of other reports.
Dry pea and bean farming

Carrot farming
Squash farming
Fresh green bean farming
Tomato farming
Melon farming
Mushroom farming
Potato farming
Greenhouse vegetable production
The major products and services in this industry are
Lettuce
Mushrooms
Onions
Peppers
Potatoes
Sweet corn
Tomatoes
All other vegetables
Similar Industries
11111 Soybean Farming in the US

Operators in this industry grow soybeans and sell soybean seed to US farmers for growing crops.
11115 Corn Farming in the US
Operators in this industry grow corn and sell corn seed to US farmers for growing crops.
11135 Fruit & Nut Farming in the US
Operators in this industry grow non-citrus fruits (excluding melons), such as grapes and apples, or tree nuts,
including pecans and almonds.
31142 Canned Fruit & Vegetable Processing in the US
Operators in this industry can, pickle, or artificially dry vegetables.
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About this Industry
Additional Resources
For additional information on this industry

www.agweb.com
AgWeb
www.agcensus.usda.gov
USDA Census of Agriculture
www.ers.usda.gov
USDA Economic Research Service
IBISWorld
writes over 700 US

industry reports, which are updated
up to four times a year. To see all
reports, go towww.ibisworld.com
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Vegetable Farming in the US December 2015
Industry at a Glance
Vegetable Farming in 2015
Key Statistics
Snapshot
Revenue
Annual Growth 10-15
Annual Growth 15-20
Profit
Exports
Businesses
$25.8bn
1.9%
$1.3bn
$2.9bn
Price of vegetables
Revenue vs. employment growth
There are no major

players in this
industry
12
110
105
% change
Index
Market Share
4
0
-4
Year 07
1.8%
63,575
100
95
90
09
Revenue
11
13
15
17
19
21
85
Year 06
08
10
12
14
16
18
20
Employment
SOURCE: WWW.IBISWORLD.COM
p. 27
Products and services segmentation (2015)
3.6%
Peppers
4.7%
Price of vegetables
4.4%
Mushrooms
Sweet corn
Trade-weighted index
6.0%
Per capita fruit and

vegetable consumption
Onions
Demand from fruit and

vegetable wholesaling
47.3%
10.1%
Tomatoes
Average annual
precipitation
10.3%
Lettuce
13.6%
p. 5
Potatoes
Industry Structure
Life Cycle Stage
SOURCE:
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SOURCE:
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Regulation Level
Medium
Revenue Volatility
Medium
Mature
Technology Change
Medium
Capital Intensity
Medium
Barriers to Entry
Industry Assistance
Medium
Industry Globalization
Medium
Concentration Level
Low
Competition Level
Medium
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 35
Low
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Industry Performance
Executive Summary | Key External Drivers | Current Performance

Industry Outlook | Life Cycle Stage
Executive
Summary
The Vegetable Farming industry is

composed of vegetable and melon farmers,
but it does not include notable crops such as
corn, soybeans or wheat. Vegetables are a
staple in the US diet and, despite per capita
fruit and vegetable consumption declining
marginally during the five years to 2015,
Americans have continued to demand
vegetables in high quantities. Relatively
steady demand, coupled with high retail
prices for vegetables during the past five
years, has fertilized industry growth.
Additionally, a push toward healthy eating
has increased the market for fresh
vegetables, as opposed to processed

vegetables, benefiting the industry; fresh
vegetables yield higher profit margins for
farmers as they generally sell for more than
double the price of processed vegetables. As
a result, over the past five years, industry
revenue is expected to grow an annualized
1.9% to $25.8 billion, including an increase
of 1.8% in 2015.
For the past decade, both the number of
small local farms and the number of larger
commercial farms has been growing.
According to data from the 2012 agriculture
census (latest data available), the number of
vegetable farms with more than 5,000 acres

grew about 45.0% in the 10 years to 2012,
while the number of farms with less than 0.9
acres grew about 75.0% over the same
period. Large farms are more profitable than
medium ones as they tend to invest more
heavily in automated planting, harvesting
and sorting systems, thereby increasing
productivity and decreasing cost per unit.
Conversely, small local farms are able to
capitalize on the growing organic
movement, relying on local markets, such as
restaurants or farmers markets, to pay
premiums for fresh produce. Both of these
trends are expected to continue in the five
years to 2020, with large farms getting
larger and small farms popping up around
the country.
Drastic changes are not expected within
the industry over the next five years.
Revenue is projected to increase at an
annualized rate of 1.7% in the five years to
2020, to $28.1 billion. Vegetable
consumption will likely remain steady or
perhaps slightly increase as industry
associations promote healthy eating
through marketing campaigns that tout
the benefits of eating vegetables. Lastly,
imports of industry products will continue
to pressure domestic farmers. However,
international trade levels will remain
constrained because the industrys
primary product (fresh produce) cannot
be easily transported.
Price of vegetables
An increase in the price of vegetables
positively affects returns at the farm
gate; as the price of vegetables
increases, farmers collect higher
revenue because changes in price do
not drastically affect demand. Price
fluctuations reflect supply levels,
downstream processing activity, global
demand activity and several other
factors. The price of vegetables is
expected to decrease during 2015.
Because the industrys performance is
increasingly reliant on imports and
exports of vegetables, the value of the US
dollar plays a significant role in
determining industry revenue and
profitability. The trade-weighted index
(TWI) represents the value of the US
dollar relative to foreign currencies.
When the TWI decreases, industry
products become more affordable to
foreign buyers. Conversely, when the
Relatively
steady demand coupled with high

retail prices has fertilized industry growth
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TWI increases, industry products become

more expensive on the international market
and imports become less expensive. The
TWI is expected to increase in 2015, posing
a potential industry threat.
Per capita fruit and vegetable consumption
Increased public awareness of nutrition and
diet is having a positive effect on vegetable
consumption. According to the US
Department of Agriculture, Americans need
to increase their vegetable consumption
about 25.0% in order to meet health
recommendations. Despite increased health
consciousness, per capita fruit and vegetable
consumption is expected to remain stagnant
during 2015, presenting a potential
opportunity for the industry given recent
decreases in consumption.
Demand from fruit and
vegetable wholesaling
Fruit and vegetable wholesalers play a
key role in getting this industrys
product to retail outlets. An increase in

orders from wholesalers usually
reflects stronger than usual end-user
demand. Any increase in demand will
place upward pressure on prices and
encourage farmers to increase
production. The Fruit and Vegetable
Wholesaling industry is expected to
decrease during 2015.
Average annual precipitation
Vegetables require a steady amount of
soil moisture to grow and produce, but
they cannot tolerate standing water
from excessive rainfall. Periods of
intense rain or harsh drought can
destroy crops, drastically affecting
industry production and revenue
levels. Average annual rainfall in the
United States typically does not move
far from its annual mean. Still,
however, unpredictable weather
patterns can have drastic effects on
the industry.
Price of vegetables
110
110
105
100
100
90
Index
Index

continued
95
90
85
Year 06
80
70
08
10
12
14
16
18
20
60
Year 06
08
10
12
14
16
18
20
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Crop volatility
The Vegetable Farming industry is

composed of vegetable and melon farmers,
but does not include notable crops such as
corn, soybeans or wheat. Although this
industry may be small compared with others
in the agriculture sector, it packs a healthy
punch; industry farms account for just 2.0%
of all harvested cropland but almost 13.0%
of all crop revenue in the United States.
Vegetables are considered high-value
crops, leading vegetable farmers to be
among the most profitable operators in
the agriculture sector.
As disposable income shrunk in the years
following the economic downturn,
consumers tightened their budgets and
demand for vegetables fell. Additionally,
early in the five-year period, a weak US
dollar encouraged imports of fresh
vegetables, further constraining industry
growth. As a result, industry revenue began
the five-year period at a low base. However,
in the years following 2010, the economic
cloud disappeared and the sun came out
over the industry, returning demand for
vegetables to healthy levels. Additionally,
the price of vegetables remained high for

much of the five-year period because of
rising demand for biofuel production. When
the price of vegetables is high and demand
for produce is steady or growing, the
industry experiences robust growth.
Consequently, in the five years to 2015,
industry revenue is expected to grow an
annualized 1.9%, to $25.8 billion, including
1.8% growth this year.
Extreme variation is common in a

farmers output because it is closely linked
to unpredictable factors such as weather
and global supply. While many crop
industries have been on a roller coaster
ride during the past decade, with a steep
rise beginning in 2005 followed by an
equally sharp drop in 2008, movements in
the industry have been muted by
comparison. This pattern is attributable to
the fact that the industry is a composite of
many diverse segments and drastic
changes in any given segment can be offset
by the opposite movement in another. For
example, consumers will simply respond

to a shortage in celery supplies by
substituting carrots, rather than pay the
higher prices.
The price of vegetables is closely tied to
industry revenue. Because farmers are
often able to pass on increasing costs to
downstream markets, a jump in the price
of vegetables can translate to higher
industry revenue. For example, in 2013,
the price of vegetables increased 13.8%
due to freezing conditions in early 2013,
which limited supply. In 2015, the price of
vegetables is anticipated to fall 2.0%.
Revenue vs. exports

10
5
% change
Current
Performance
0
-5
-10
Year 07
Revenue
09
11
13
15
17
19
21
Exports
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Health-conscious
consumers
Although doctors and public health

administrators have stressed the importance
of fruits and vegetables since 1991, American
consumption is well below recommended
levels. In fact, per capita consumption of
vegetables has trended down in the five
years to 2015. Consumption fell slightly in
the five-year period due to the high cost of
vegetables; even though fruits and
vegetables are food staples, high prices
caused them to comprise a smaller portion
of consumers diets. Still, vegetable
consumption is fairly stable and demand for
industry products does not fluctuate at high
levels from year to year. While the price of
vegetables was quite volatile during the
five-year period, per capita vegetable
consumption changed only marginally,
decreasing at an annualized 0.3%.
Over the past five years, consumers have
increasingly become health conscious,
which has helped temper the slight fall in

vegetable consumption. Additionally,
increased health consciousness prompted
consumption to shift from processed
vegetables to fresh products. As a result,
farmers have increased their production of
higher-quality vegetables for the fresh
market. Because high-quality produce
carries a price premium, industry profit
margins have grown in the past five years to
an estimated 5.4% of industry revenue in
2015. Greenhouse crops are especially
profitable because of their consistently high
quality, which makes them ideal for sale on
the fresh market.
Smoothing out
supplies
Changes in consumer preferences during

the past five years have also led
supermarkets and other retail outlets to
demand fresh produce year-round. Because
the greenhouse crops segment cannot
adequately meet this demand, international
trade in the fresh market has grown. An
additional factor behind the rise in imports
is the increasing tendency of vegetable
processors to purchase produce overseas,
where prices are lower due to the
widespread availability of cheap labor. As a
result of these factors, coupled with the
appreciation of the US dollar, total imports
are expected to grow at an average annual
rate of 3.2% in the five years to 2015, to $7.7
billion. Along the same lines, industry

exports have been constrained by the
growing value of the US dollar, which has
made US produce more expensive on the
international market. As a result, exports are
expected to remain stagnant, decreasing
marginally at an average annual rate of 0.3%
during the five-year period, to $2.9
billion. While trade is a significant
component of this industry, it is limited
compared with that of other crops
because the primary product is fresh
produce. This factor limits the
transportation radius, leading Canada
and Mexico to account for more than
70.0% of both imports and exports.
Industry size and

yields
The existence of many small players largely

characterizes the industry; about 96.0% of
industry farms are individual owned and
operated, while the remaining 4.0% are
corporation farms. These corporation farms
are generally much larger than independent
farms and consequently account for about

30.0% of industry produce and revenue.
According to information from the United
States Department of Agriculture (USDA),
larger crop farms perform better on average
than smaller farms. This is because larger
The
price of vegetables
is closely tied to industry
revenue
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Industry size and

yields continued
farms have lower costs per unit of

production than smaller farms. Large farms
also invest more heavily in automated
planting, harvesting and sorting systems,
thereby decreasing their wage costs,
increasing productivity and rising margins.
Consequently, while the number of industry
employees has increased at an annualized
1.3% during the five-year period, to 312,294
workers, employees per farm have been
decreasing steadily for the past decade.
The vegetable farming landscape has
been shifting for the past decade, from
midsize commercial farms to larger
operations. However, the number of smaller
farms has also been increasing. In fact, the

number of farms with less than 0.9 acres
has increased from 13,426 farms in 2007 to
17,176 farms in 2012, growth of just under
30.0% (latest data available). The USDAs
Farm Size and the Organization of US Crop
Farming report explains the increasing
number of small crop farms as reflecting
farming opportunities as well as popular
lifestyle choices by people who prefer to
combine a rural lifestyle with modest
crop or livestock production. In all, the
number of establishments is expected to
grow 1.1% in the five-year period, to
74,915 farms.
Industry
Outlook
The American appetite for vegetables has

plenty of room to grow; consumption needs
to expand 25.0% to reach United States
Department of Agriculture (USDA)recommended levels. This, along with
increasing health awareness, could lead to a
surge in demand for vegetable farmers.
However, officials have been promoting
messages of this nature for some time with
no improvement in eating habits.
Consequently, per capita consumption of
vegetables has been stagnant and will likely

remain that way over the next five years.
Amid steady demand and continued
pressure from oil prices, the price of
vegetables is expected to grow, albeit
moderately, over the next five years. Over
the five years to 2020, steady demand and
high product prices are expected to drive
industry revenue to increase at an
annualized rate of 1.7% to total $28.1 billion,
including 1.8% growth in 2016 alone.
International trade
Despite healthy conditions, increasing

imports of fresh produce will slightly
constrain demand for industry products
during the next five years. As the US dollar
is expected to continue appreciating, the
total value of imports is anticipated to grow
an annualized 4.8% through 2020, to $9.7
billion. To supplement production and
supply fresh vegetables year-round, the
industry imports fresh and processed
vegetables, especially during the colder
months when domestic production is at a
lull. Imports of fresh produce come
primarily from Canada and Mexico, given
the difficulty in transporting fresh produce.
The expansion of greenhouse-grown
crops may slightly limit the effect of
Increasing
imports of
fresh produce will slightly
constrain demand for
industry products
imported produce on the domestic industry.
By growing more crops under cover, farmers
will provide fresh vegetables even through
the lower-yielding winter months. In this
way, downstream industries will not have to
source their out-of-season vegetables from
foreign producers, but rather they will be
able to rely on domestic output. As a result
of these perceived benefits, IBISWorld
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International trade
continued
expects greenhouse crops to grow as a

percentage of crops produced in the years
to come.
Industry exports are significantly smaller
than imports, typically accounting for about
12.0% of industry revenue. Again, because of
the difficulty in transporting industry
products long distance, nearly 70.0% of
exports go to either Canada or Mexico. As

the US dollar appreciates in value, US
vegetables will be more expensive on the
foreign markets and exports as a percentage
of revenue are expected to decline. In all,
exports are anticipated to increase in the
five-year period, by an average annual rate
of 1.4% to $3.1 billion.
Steady veggie
Barring calamitous weather patterns, the

USDA projects total US vegetable and
melon output to rise an average 0.7%
annually over the next five years.
Improvements in yield and dedicated
acreage will drive this increase; larger
farms are increasingly utilizing
genetically modified seeds and farming
machinery to increase yield per acre.
Steady demand, high vegetable prices
and increased productivity, are expected
to drive industry revenue to grow 1.8%
in 2016.
Increased health consciousness

among consumers is expected continue
through 2020, increasing the production
of fresh vegetables compared with
processed vegetables. As fresh, highquality produce carries a price premium,
industry operators stand to earn higher
profit margins because of the shift
toward fresh vegetables. Additionally,
the growing trend of locally grown
organic produce will further raise
industry margins, specifically for smaller
farming operations.
Farm size
For the past decade, both the number of

smaller local farms and the number of larger
commercial farms have been growing.
According to data from the 2012 agriculture
census (latest data available), in the 10 years
from 2002 to 2012, the number of farms
with more than 5,000 acres grew more than
45.0%, while the number of farms with less
than 0.9 acres grew over 75.0% during the
period. This trend is expected to continue in
the five years to 2020, with medium-size
farms increasingly becoming larger and
new, smaller farms entering the industry to
cater the local, organic market. As a result,
the number of establishments is anticipated
to grow at an average annual rate of 2.0% to
82,764 plants.
As
larger farms grow, the

industrys level of capital
intensity will likely grow
Larger farms tend to be more capital
intensive, involving extensive
mechanized planting, harvesting and
sorting systems. As larger farms
continue to grow, the industrys overall
level of capital intensity will likely grow.
As a result, the number of industry
employees is expected to experience
sluggish growth, increasing at an
annualized 1.6% to 338,447 workers
over the next five years.
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Life Cycle Stage
International trade is limited

Changes are incremental rather
than ground-breaking
% Growth in share of economy
Vegetables are a staple in the American diet
20
Maturity
Quality Growth
Company
consolidation;
level of economic
importance stable
High growth in economic

importance; weaker companies
close down; developed
technology and markets
15
Key Features of a Mature Industry

Revenue grows at same pace as economy
Company numbers stabilize; M&A stage
Established technology & processes
Total market acceptance of product & brand
Rationalization of low margin products & brands
10
Quantity Growth
Many new companies;

minor growth in economic
importance; substantial
technology change
Vegetable Farming
Fruit & Vegetable Wholesaling

Crop Services
Supermarkets & Grocery Stores
Soybean Farming
-5
Decline
Shrinking economic
importance
Corn Farming
-10
-10
-5
10
15
20
% Growth in number of establishments

SOURCE: WWW.IBISWORLD.COM.AU
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Industry Life Cycle

This
industry
is M
ature
The Vegetable Farming industrys steady

presence in the US economy points to its
maturity; its products are an American
staple and it is very unlikely that they will
disappear any time soon. There is little
room for innovation for industry
products; while genetically modified
seeds and new growing techniques do
affect industry operations, the end
product, vegetables, have been around
since the dawn of man and are not
expected to undergo any revolutionary
changes in the next five years. These are
all qualities of a mature industry.
Additionally, the difficulty in transporting
fresh vegetables limits the threat of
import penetration, further maintaining
the need for domestic vegetable farmers.
The industrys value added, which
measures the industrys contribution to
the economy, is forecast to grow at an

average rate of 0.1% per year during the
10 years to 2020. Meanwhile, GDP is
projected to grow at an annualized
2.2% over the period. In general, any
large fluctuations in the industry
mirror conditions in the overall
economy, further pointing to the
industrys maturity.
Lastly, due to the industrys many
diverse segments, revenue and growth is
generally quite steady, with any drastic
changes in any given segment being
offset by the opposite movement in
another. For example, consumers will
simply respond to a shortage in celery
supplies by substituting carrots, rather
than pay the higher prices. The steady
demand for vegetable products further
indicates the industrys maturity.
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Products & Markets
Supply Chain | Products & Services | Demand Determinants

Major Markets | International Trade | Business Locations
Supply Chain
KEY BUYING INDUSTRIES

31142
Canned Fruit & Vegetable Processing in the US

Vegetable processors purchase industry output as ingredients for vegetable-based food
products.
42448
Fruit & Vegetable Wholesaling in the US

Wholesalers purchase fresh vegetables for distribution to grocery retailers.
44511
Supermarkets & Grocery Stores in the US

Sometimes supermarkets will bypass wholesalers and purchase vegetables directly from
producers.
72211a
Chain Restaurants in the US

Sometimes restaurants will bypass wholesalers and purchase vegetables directly from
producers.
72211b
Single Location Full-Service Restaurants in the US

Sometimes restaurants will bypass wholesalers and purchase vegetables directly from
producers.
KEY SELLING INDUSTRIES
Products & Services
11511
Crop Services in the US

Scientific agricultural testing, crop marketing and a range of other tasks are outsourced to
service providers. Fertilizer and pesticide application is also frequently contracted to outside
companies.
22131
Water Supply & Irrigation Systems in the US

Water supply and irrigation systems are used by vegetable farmers.
32532
Pesticide Manufacturing in the US

Pesticides are used to reduce insect damage to vegetable crops.
33311
Tractors & Agricultural Machinery Manufacturing in the US

Agricultural equipment is used for harvesting vegetable and melon crops.
42382
Farm, Lawn & Garden Equipment Wholesaling in the US

Harvesting machinery and other equipment used for producing food crops are purchased from
wholesalers.
This industry includes a wide range of

vegetables and melons. The majority of
them are grown in open fields, while the rest
are grown under cover. Potatoes (estimated
to account for 13.6% of industry revenue),
lettuce (10.3%), tomatoes (10.1%), onions
(6.0%), sweet corn (4.7%) and mushrooms
(4.4%) are among the largest vegetable
segments within this industry. These crops
hold about the same market share today as
they have during the past decade, and this is
not expected to change significantly in the
next five years. However, there are yearly
variations due to relative price fluctuations
and crop-specific production or demand
shocks such as regional droughts.
Vegetables can also be segmented into

fresh market and processing varieties. The
majority of vegetable varieties grown for
processing are better adapted to mechanical
harvesting. They tend to lack the
characteristics desirable for fresh market
sale and, thus, excess supply in the
processing market cannot be used to meet
shortages in the fresh market and vice versa.
For example, processing tomatoes are
generally smaller and softer, with different
internal attributes that make them optimal
for sauces and juices. Processed vegetables
make up about half of the total harvest but
less than one-third of industry revenue
because of the lower prices farmers receive
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Products & Markets
Products & Services

continued
Products and services segmentation (2015)
3.6%
Peppers
4.4%
Mushrooms
6.0%
Onions
4.7%
Sweet corn
10.1%
47.3%
Tomatoes
10.3%
Lettuce
Total $25.8bn
Demand
Determinants
13.6%
Potatoes
for them. Their portion of revenue has been

fairly stable during the past decade but is
subject to annual fluctuations.
Crops grown under cover are mainly used
for distribution on the fresh market, as they
tend to be of higher quality and are available
year-round. Tomatoes and mushrooms are
the main vegetables grown in greenhouses.
Wider acceptance of greenhouse tomatoes
has led to a slight increase in their share of
revenue in the past five years. However,
because all greenhouse crops account for

only a small portion of overall industry
revenue, this growth has been marginal in
the grand scheme of things.
The other vegetables category
includes all remaining vegetable
varieties, such as asparagus, broccoli,
cabbage, carrots, celery, green peas,
peppers and others. Herbs and spices
are also part of this industrys products,
mainly grown in greenhouses.
Vegetables are sold to fresh and processing

markets. As a result, any factors that
improve demand for either of these
downstream markets will lift returns to
farmers. The largest factors that influence
demand are dietary trends, produce price,
consumer incomes, exchange rates and
produce quality.
benefits of vegetable consumption. Demand

for vegetables may increase as the nation
continues to reduce the fat content of its
collective diet.
Dietary trends
Rising nutritional awareness and a
preference for a produce-rich diet across the
nation has a positive effect on demand for
fresh vegetables and melons. The Food and
Drug Administrations recommendations
for low-fat diets and increased media
attention on nutrition issues have helped
raise consumer awareness about the
Price
The demand for vegetables is sensitive to
large price changes. Smaller increases in
price can have a positive effect on the
industry by maintaining the same level of
demand while achieving a higher price per
unit. However, large increase in the price of
industry produce will often constrain
demand and encourage consumption of
alternative foods. Prices can increase
sharply when adverse weather conditions
cause substantial falls in production.
Retailers and wholesalers often try to
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Products & Markets
Demand
Determinants
continued
smooth out falls in production by importing

fresh produce or dedicating more acreage
for under-cover growth.
Household incomes
Disposable incomes influence demand for
vegetables. For example, demand for
vegetable juice is positively related to
income, so income growth is likely to
positively affect downstream demand from
vegetable processors. In the fresh vegetable
market, changes in income can sometimes
cause cross-substitution between vegetables.
Rather than increase total consumption,
households often decide to reduce
consumption of cheap vegetables and
purchase more exotic vegetables or organic
produce following an increase in income.
Exchange rates
Exchange rate movements directly affect
demand for US vegetables and melons in
foreign markets. Like domestic
manufacturers, overseas customers are
Major Markets
sensitive to price increases. Any

appreciation in the value of the US dollar
will erode the price competitiveness of
American-grown vegetables abroad. This
combines with increased production
overseas (particularly in China) and the
removal of trade barriers in some parts of
the world to increase global competition and
reduce demand overseas for Americangrown vegetables.
Product attributes
Although demand for greenhouse
tomatoes has been quite strong in the
retail market, food service outlets (e.g.
restaurants) still prefer mature green
tomatoes. If the greenhouse industry will
be able to develop flavorful, high-quality
tomatoes, it may see an increase in
demand. Similarly, the introduction of
new types of mushrooms and research
into alternative products (such as
mushroom tea) may also boost demand
for greenhouse mushrooms.
Major market segmentation (2015)
10.0%
Food service
industries
10.3%
25.0%
Supermarkets and retail outlets
Other
11.2%
Exports
21.0%
22.5%
Vegetable processors
Vegetable Wholesalers
Total $25.8bn
The US market for vegetables and melons
can be divided into several segments,
including: supermarkets and retail outlets;
vegetable processors; food service
industries; fresh produce wholesalers; and
the US government (through the

Department of Agricultures Agricultural
Marketing Service). Furthermore, the export
market accounts for an estimated 15.1% of
industry sales.
WWW.IBISWORLD.COM
Products & Markets
Major Markets
continued
Supermarket and retail outlets:

Supermarkets and other retail outlets often
put an emphasis on quality by moving
produce quickly from the farm to the
consumer. Most vegetables are sent to a
packing shed, where they are washed,
graded and packaged. They are then
transported either directly to the
distribution centers of large retailers or food
service chains, or to wholesale markets.
Smaller retail and food service outlets will
usually purchase their vegetables from these
markets. Changes in the preferences of large
supermarket chains have a substantial
influence on farmers. In the past five years
large retailers such as Walmart and Safeway
have sourced their produce directly from
farmers to cut purchasing costs, thereby
bypassing wholesalers. This trend, known as
wholesale bypass, has caused the
supermarket and retail outlets segment to
grow slightly during the past five years.
Additionally, this has put increasing
downward pressure on prices because large
retailers have substantial bargaining power.
IBISWorld estimates that super markets
and retail outlets will account for 25.0% of
industry revenue in 2015.
industries. Some larger farm collectives have

sales branches and offices that act as
wholesalers and directly supply downstream
markets. Over the past five years, the
segment has declined drastically. Bypassing
wholesalers has been an important costsavings tool for many downstream retailers,
who now purchase their vegetables directly
from the farmers to avoid the added cost of
the wholesale function. As a result,
wholesalers are expected to account for
21.0% of industry revenue in 2015.
Vegetable Processing:
Vegetables that are grown for processing are
usually harvested mechanically and
transported in bulk containers to processing
plants. A large share of these vegetables is
grown under long-term contracts between
farmers and processors. As processing has
now been extended to the fresh market
through prepackaged salads and ready-toeat vegetable packs, contract sales are
becoming more common throughout the
industry and this segments share of industry
revenue has slightly increased. In 2015,
vegetable processors are estimated to
account for 22.5% of industry revenue.
Food service industries:

The food service segment includes
restaurants, hotels, motels, industrial
catering, airlines and accommodation
venues. While many food service operators
go through wholesalers to obtain produce, a
growing number of operators are sourcing
directly from farmers. The food service
segment has grown slightly in the past five
years because of wholesale bypass, to
account for 10.0% of industry revenue.
Wholesalers:
A substantial portion of revenue comes from
vegetable wholesalers who then supply
industry produce to a range of downstream
Exports:
The export market is an increasingly
important aspect of this industry, evidenced
by exports rising as a percentage of industry
revenue during the five-year period. US
vegetables and melons are mainly sold to
Canada and Mexico; due to the geographic
proximity and the benefits received from the
North American Free Trade Agreement,
trade between the United States, Canada
and Mexico is especially easy. Despite
increasing trade levels, the export market
for this industry remains moderate
because transporting fresh vegetables is
not cost effective.
Other markets:
The Federal Government, through the
Agricultural Marketing Service, is also a
buyer of vegetables. Government purchases
are used in the kitchens of military bases
and schools and are also provided to
individuals through various food assistance
programs. Another small market segment
WWW.IBISWORLD.COM
Products & Markets
that has been expanding recently is

direct sales from farmers to
consumers, via farmers markets and
pick-your-own operations. These
currently are estimated to account for
International Trade
The United States is a net importer of

vegetables and melons. To supplement
production and supply fresh vegetables
year-round, the industry imports fresh
and processed vegetables, especially
during the colder months when domestic
production is at a lull. The trade balance
is sensitive to changes in exchange rates
with imports gaining strength along with
the dollar and exports making up ground
when the American currency depreciates.
This is because a stronger dollar makes
imports cheaper for consumers, with
the opposite effect on foreign buyers of
US goods.
Level & Trend

xports in the
E
industry are
Mediumand S
teady
Imports
in the
industry are
Mediumand
Increasing
Exports To...
less than 1.0% of revenue but have

been gaining popularity and media
attention through their emphasis on
supporting local farmers and
promoting communities.
Industry trade balance

6
3
0
$ billion
Major Markets
continued
-3
-6
-9
-12
Year 07
Exports
09
11
Imports
7.3%
Netherlands
Imports From...
4.3%
Japan
Mexico
16.7%
15
17
19
21
Balance
4.1%
Guatemala
3.4%
13
4.8%
Peru
10.8%
All Others
13.6%
All Others
Canada
68.3%
Canada
66.7%
Mexico
Year: 2015
Total $2.9bn
SIZE OF CHARTS DOES NOT REPRESENT ACTUAL DATA
Total $7.7bn
SOURCE: USITC
WWW.IBISWORLD.COM
Products & Markets
International Trade
continued
However, exchange rates have a

somewhat muted effect on this industry
relative to international trade for other
industries. International trade of vegetables
is subdued because a greater portion of
vegetables are consumed fresh, and the time
it takes to transport can erode quality and
lower returns. For this reason, close to
80.0% of US trade in this industry takes
place with the two closest countries: Canada
and Mexico. While trade has become more
important during the past decade, it is
unlikely that it will rise to levels of other
crop agriculture industries due to the limited
number of opportunities and players.
Imports currently make up about 25.0% of
domestic demand, and exports account for
about 11% of vegetable revenue.
Imports
During the five years to 2015, import values
have grown at an average annual rate of
3.2% to an estimated $7.7 billion. An
appreciating US dollar, high consumer
demand for year-round fresh vegetable
availability and an ever-expanding
American palette has created demand for
foreign produce. The main sources of
imports into this industry are Mexico,
Canada, China and Peru. The low labor cost
in many of these countries makes cheaper
fruit available domestically, which also spurs
demand from downstream industries.
Mexico is the largest exporter of vegetables
to the United States, while Canada is largest
exporter of dry peas, beans and mushrooms.
The vegetables most commonly imported
include tomatoes, cucumbers, squash and
peppers, in both fresh and frozen varieties.
Processed imports are uncommon due to

the highly mechanized and competitive
nature of the domestic industry. However,
imports will continue to increase as
processors move factories to countries like
India and China to take advantage of lower
operating costs. This has already occurred in
some segments such as canned asparagus,
where imports have grown to over threequarters of domestic consumption. Lastly,
the United States Department of Agriculture
estimates that between 15.0% and 20.0% of
canned vegetable imports are for varieties
that are not produced within the United
States, such as bamboo shoots and
water chestnuts. These do not impinge
directly on domestic production but do
act as substitutes, lowering demand for
other varieties.
Exports
The biggest contributors to the export
account are lettuce, potatoes, onions,
cauliflower and broccoli. Exports display
seasonal patterns that are the opposite of
imports, peaking in the spring when
supplies are at their highest and slowing
down into the summer. Industry exports are
expected to decline at an average
annual rate of 0.3% to $2.9 billion
during the five years to 2015; export
growth has been somewhat
constrained by the appreciating dollar,
which has made US-grown produce
less affordable on the international
market. Because of the difficulty in
transporting industry products long
distance, nearly 70.0% of exports go to
either Canada or Mexico.
WWW.IBISWORLD.COM
Products & Markets

Business Locations 2015
West
New
England
AK
0.0
Great
Lakes
WA
ND
MT
5.6
Rocky
Mountains
ID
OR
2.0
West NV
0.2
2.2
SD
0.1
WY
4.4
MN
2.9
0.5
Plains
CO
0.1
0.3
0.2
1.1
KY
37.6
OK
0.2
AZ
NM
4.5
0.8
Southwest
TX
2.3
HI
0.3
Additional States (as marked on map)

1 VT
2 NH
3 MA
4 RI
5 CT
6 NJ
7 DE
8 MD
0.1
0.1
0.1
1.0
0.3
0.3
NC
1.8
SC
Southeast
MS
AL
0.2
0.5
GA
2.8
0.4
LA
0.3
FL
9.3
Revenue (%)
0.0
0.4
0.2
0.0
TN
AR
WV VA
0.6
0.4
CA
West
OH
0.1
MO
KS
1.5
0.5
0.9
3.2
IN
IL
0.8
UT
PA
2.6
0.1
0.8
1 2
3
NY
2.9
5 4
MI
2.4
IA
NE
0.1
WI
ME
MidAtlantic
9 DC
0.0
Less than 3%
3% to less than 10%
10% to less than 20%
20% or more
WWW.IBISWORLD.COM
Products & Markets
Distribution of revenue vs. population

50
40
30
20
10
Southwest
Southeast
Plains
New England
Rocky Mountains
Revenue
Mid-Atlantic
Great Lakes
0
West
Historically, vegetable and melon farms

have been established on urban fringes.
However, the rising values of metropolitan
land and encroachment by housing
developers have been a threat to traditional
vegetable and melon growing areas.
Advances in transportation and storage have
aided farmers as they have progressively
relocated. Today, farms are located some
distance from major markets.
Most varieties of vegetable and melon can
be grown in a wide range of climatic
conditions. However, commercial
production, especially for the fresh markets,
tends to be concentrated in temperate
climates that allow for the best quality and
highest profit margins. As a result, large
producers are predominately located in
states such as California and Florida, which
make up more than one-half of this
industrys revenue while comprising about a
quarter of the farms.
Farms in the Southern states typically
contract to processors. Growers in this
region have access to readily available cheap
labor and growing conditions that are
sufficient but not optimal. These states also
have been established as manufacturing
centers and being located close to them
results in transportation cost savings. But
even in the processing market, California is
the single largest player due to sheer size
and production capacity.
The remaining states are typically have
smaller, less profitable family owned farms.
These farms, and thus the regions they
reside in, contribute very little to total
industry revenue despite having the
majority of farm numbers. Vegetable farms
in the Mid-Atlantic and New England
regions in particular are ill-suited for
commercial growing, due to less-than-ideal
growing conditions.
Production of mushrooms and
greenhouse tomatoes is fairly evenly
distributed across the United States, unlike
field vegetable production. Farms in this
industry have fairly limited land
Business Locations
Population
requirements, with an average of just 42

acres of land, compared with 229 acres for
field-grown vegetables. They are also less
dependent on weather conditions than
their field crop counterparts, which allows
them to operate close to large markets,
mainly concentrated in the Mid-Atlantic
and the West.
According to the United States
Department of Agriculture, the
production of greenhouse crops has
been gradually shifting from the eastern
states to the Southwest region. The first
large greenhouses were opened in the
1990s in Pennsylvania, close to power
plants, because power plants were
exempt from certain Federal
regulations if they supplied heat to
greenhouses. These early greenhouses
produced tomatoes mainly in the
summer months, when competition
from field tomatoes was fierce. In order
to take advantage of the winter season,
greenhouse operators decided to
relocate to the Southwest (particularly
Arizona and New Mexico), where
weather conditions allow companies to
maximize production in winter.
WWW.IBISWORLD.COM
21
Competitive Landscape
Market Share Concentration | Key Success Factors | Cost Structure Benchmarks

Basis of Competition | Barriers to Entry | Industry Globalization
Market Share
Concentration
Level
Concentration
in
this industry is L ow
Key Success Factors

IBISWorld
identifies
250 Key Success
Factors for a
business. The most
important for this
industry are:
The majority of farms, including those

growing vegetables and melons, are small,
family-run enterprises. Farmers generally
own and operate their farms supplementing
family labor with hired hands only during
key periods, such as harvesting season. On
the other end of the spectrum, between
3.0-7.0% of farms are commercial farms,
that dominate the industry in terms of
acreage and revenue; these farms account
for about 30.0% of industry revenue. Even
so, the production value is dispersed such
that no single farm receives a large
proportion of the industrys total revenue.
The distribution of employment is linked
closely to production values, with the few
commercial mega-farms employing the vast
majority of laborers.
This low concentration of market share
results in a transfer of price-setting power to
the large buyers. Farmers are price takers in
many ways, with their options for improving
margins limited to controlling costs or
improving quality so that it can be sold to
the fresh markets. In an effort to regain
some of this diminished power, farmers
commonly pool their resources to form
cooperatives. These organizations act on

behalf of their members to improve demand
and returns, often through marketing and
promotional activities. Additionally, these
cooperatives may vertically integrate into
storing, packing and transportation
operations, resulting in additional returns
and cost savings for farmers.
The number of farms operating in the
various segments of this industry changes
each year as farmers relocate and pursue the
best returns. However, the total number of
farms growing vegetables and melons is
relatively stable. Meanwhile, average
harvested acreage per farm has been
trending up at a slow rate. Newer
technologies are allowing farmers to leave
less of their lands fallow or in a state of
recovery each year, improving their
productivity and bottom line. Notably,
consolidation has not been an emerging
factor in this industry to the same extent as
it has in many other crop industries. This is
likely the result of the presence of
cooperatives, which allow farmers to realize
many of the benefits of economies of scale
by pooling resources.
Economies of scale
Reducing average costs by spreading fixed
costs over larger production volumes allows
field and greenhouse vegetable growers to
be more competitive. These lower per-unit
costs allow farmers to widen profit margins
without raising prices.
critical role in shaping the success of

growing vegetables and melons. Growing
conditions influence harvest levels and
crop quality.
Production of premium produce

Farmers who produce premium
vegetables and melons can find buyers in
the fresh produce market where prices are
highest (compared to the processing
market). Premium goods can also
generate brand loyalty.
Appropriate physical growing conditions
The presence of fertile soils and other
appropriate growing conditions play a
Availability of irrigation water

Water access issues can affect the quality of
vegetable harvests and the area of land
devoted to vegetable growing.
Ability to alter goods and services
produced in favor of market conditions
The ability to alter the balance
between different food crops in
response to changes in market
conditions is important for a farms
viability. Farmers need to be able to
change their production mix to
maximize farm returns.
WWW.IBISWORLD.COM
22
Key Success Factors

continued
Establishment of export markets

The ability to identify and market vegetable
harvests to customers overseas reduce a
farmers dependence on the local market.
Cost Structure
Benchmarks
Profit
Costs and returns for individual industry
operators vary by farm size, region and
target segment. Family farms with just a few
acres are the least profitable and often
operate at losses that can top 25.0% of
revenue. However, larger operations are
able to pursue economies of scale to control
costs and can negotiate better prices with
wholesalers, resulting in wider profit
margins. According to United States
Department of Agriculture (USDA) survey
data, even a modest increase in the size of
operations allows farms to turn a thin profit.
The Vegetable Farming industry seems
profitable because larger players earn the
majority of revenue, but many farmers
operate with dangerously slim margins.
These factors partially drive regional
differences in profitability. Vegetable
growers in the West are the most profitable,
while growers in the Mid-Atlantic and New
England regions are less so. Commercial
growers typically locate themselves in
California because it has optimal vegetable
growing conditions, while the Northeast is
composed of many small family farmers.
Farmers located in the nations heartland
and the Southeast typically fall in the middle
of these two extremes, earning higher profit
margins than smaller, northeastern farms.
Farmers target markets also influence
their profitability. Growers of fresh produce
(including most greenhouse growers) can
command higher prices but are heavily
dependent on labor and incur higher costs.
On the other hand, growers of produce for
processing receive lower prices but are free
from meeting stringent standards and can
easily achieve savings through the use of
machine harvesting, sowing and packing.
The net effect is dependent on the ability of
individual operators to play to their

strengths while minimizing their
weaknesses. Additionally, with weather
patterns domestically and abroad, returns
can vary unpredictably from year-to-year.
For example, if an unprecedented frost kills
a farmers output, he will have no choice but
to absorb his losses. On the other hand, if
weather conditions limit supply in other
vegetable-producing regions or countries, a
farmer can benefit by growing more crops to
meet the leftover demand. In 2015,
IBISWorld estimates that industry profit
(measured as earnings before interest and
taxes) accounts for 5.1% of revenue.
Labor
Farm labor is important for most
agricultural operations, but especially for
vegetable farms. Key activities that can be
performed mechanically for most field crops
must be carried out manually for vegetable
farms. Thinning, cultivating, irrigating,
harvesting and sorting must be carried out
by skilled hand labor to avoid damaging the
fragile plants and assuring that the produce
meets quality and appearance standards.
Likewise, crops grown under cover also
incur high labor costs. Harvesting these
crops is entirely carried out by crews of
workers. Wages fluctuate during the year,
rising when crops are ready for gathering.
However, due to the controlled
environment, production tends to be less
seasonal than field production. Thus,
fluctuations in labor requirements are
less dramatic.
According to the USDA, some
mechanization is beginning to appear in
fresh market crops such as green beans,
sweet corn and some leafy crops, but labor
remains the dominant means of production
WWW.IBISWORLD.COM
23
for most crops. Timely availability of labor is

essential to the Vegetable Farming industry,
as the majority of crops must be harvested
within a specific window during the growing
cycle to ensure a high-quality product.
Wages as a share of revenue have slightly
declined during the past five years, totaling
an estimated 16.3% in 2015, down from
17.3% in 2010.
Purchases
Fertilizer, chemical and seed costs account
for the single largest cost category for
vegetable farmers. The relative portion of
these inputs varies by the type of produce,
with some varieties requiring minimal
fertilizer application or cheaper seeds. On
average, fertilizer costs make up about
two-thirds of this expense category, with
seeds accounting for much of the rest.
Examples of minor purchases include boxes
or crates for transportation and shears for
picking and maintaining trees. In 2015,
purchase costs account for an estimated

40.0% of revenue, increasing during the
five-year period due to volatile natural gas
prices. Natural gas is the main raw input
into fertilizer manufacturing, so when the
price of this commodity fluctuates, the price
of fertilizer rises as well.
Rent and utilities
Utilities and rent are estimated to account
for a combined 8.1% of revenue in 2015.
Fuel, oil, electricity and water expenditures
are included under the utilities heading.
These are among the most volatile
components of a farmers cost structure and
also largely outside their scope of control.
The surge in oil prices caused this category
to balloon. Rent is also a substantial part of
industry expenses and is higher for
producers of greenhouse crops, as these
require special housing to grow. Greenhouse
expenses, including buildings, land and
infrastructure, are included under this title.
Sector vs. Industry Costs

Average Costs of
all Industries in
sector (2015)
100
6.4
10.1
Industry Costs
(2015)
5.1
16.3
80
Percentage of revenue
Cost Structure
Benchmarks
continued
60
61.4
0.6 2.8
8.1
40
20
40.0
n Profit
n Wages
n Purchases
n Depreciation
n Marketing
n Rent & Utilities
n Other
0.9
3.4
4.1
13.7
27.1
0
WWW.IBISWORLD.COM
24
Cost Structure
Benchmarks
continued
Farmers who grow their vegetables in an

open field incur lower rent costs, but this
category still accounts for a substantial
portion of revenue for the average operator.
Depreciation and other costs
Depreciation charges can vary widely for the
various types of operators within this
industry, ranging from 2.0% and 4.0% of
revenue. While field producers can
minimize their capital expenses by
outsourcing harvesting, for example,
Basis of Competition
Level & Trend
ompetition
C
in
this industry is
Mediumand the
trend is S
teady
Production costs
Production costs are a key competitive
factor among growers, although global
trends, which are outside of farmers
control, often dictate prices. Farmers that
can produce their vegetables at lower costs
will have a competitive advantage. This is
particularly the case for vegetables that are
grown for processing. Prices for these
vegetables are about 80.0% lower compared
to vegetables sold on the fresh market. In
addition, they are usually grown as part of
a contract with a processing plant, which
will prefer to buy produce at the lowest
cost possible.
Quality
Various factors of quality (such as color,
size and skin quality) differentiate
vegetables. Premium-graded vegetables
and melons are usually sold into the fresh
produce market and therefore demand a
higher price than vegetables picked for
processing. The introduction of
organically grown produce is creating a
new sub-segment in the market.
Generally speaking, organically certified
farmers are able to demand a higher
price. Although a base for competition,
the quality of harvested vegetables and
melons is difficult to control because
exogenous factors such as weather, pests
and crop moisture levels largely
determine quality.
farmers that specialize in growing crops

under cover depend on large capital
investments to continue operating. On
average, depreciation accounts for an
estimated 3.0% of industry revenue.
Other expenses for vegetable farmers
include insurance costs, repairs and
maintenance, supplies, registration
fees, marketing and advertising and
other general business expenses and
account for an estimated 27.1% of
industry revenue.
Variety
The industry currently grows more than
thirty varieties of vegetables and at least
three varieties of melons on a large
commercial scale. Each variety attracts a
unique price depending on specific demand
levels and availability. For example,
asparagus, peppers, watermelons and grape
tomatoes grown for the fresh market all
typically have higher price per pound rates
than other industry produce, such as
carrots, celery, mushrooms, onions,
potatoes and broccoli. In 2011, on average,
asparagus farmers received as much as
$2.48 per pound, compared with 87.5¢
per pound for iceberg lettuce. Consequently,
farmers of different produce will have
different cost structures, output volumes
and prices.
Branding
Over time, the importance of branding is
growing as farmers and packers seek to
differentiate themselves from their
competitors. Branding is becoming
especially important for American growers
who produce varieties that compete with
imports because it is one of the best ways for
local growers to take advantage of Americas
reputation as a producer of safe food.
External competition
Vegetable and melon growers must also
compete against an ever-increasing range of
WWW.IBISWORLD.COM
25
Basis of Competition
continued
processed foods in the snack and meal

segment. In particular, rice and pasta have
continued to gain a hold on the meal market
to the detriment of vegetables. Given the
high level of competition and the presence
of discerning customers at the retail level,
growers must endeavor to deliver high
quality produce to the marketplace.
Outside the US, the industry
competes against food producers in
Barriers to Entry
Overall, there are few barriers to entry into

this industry, most of which can easily be
surmounted. Required inputs are readily
available and there are often a number of
farms for sale. The most significant
barriers are the capital investment
requirements associated with establishing
any farm and establishing contracts with
downstream processors.
Setting up a farm from the ground up
requires considerable investment. New
participants need to purchase or lease land,
grain silos and essential machinery such as
harvesters and tractors. According to the
United States Department of Agricultures
2012 Agricultural Census (latest data
available), the average US farm occupies
land and buildings worth $1,075,491 and
employs plant and machinery valued at
$115,706. Both of these figures have grown
considerably since 2007, signaling the
industrys increasing values of land and
technology. The high initial cost of
purchasing land and equipment presents a
barrier to entry for some would-be farmers.
The difficulty in obtaining contracts with
downstream markets may also deter new
operators. Farmers who grow vegetables for
processing usually operate under long-term
agreements with food manufacturers, who
buy the crop according to predetermined
conditions (based either on price or on
Level & Trend

arriers to Entry
B
in this industry are

Lowand S
teady
other regions like the European Union,

South America and Asia. The key
factors affecting world demand for
vegetables and melons are the same as
the variables driving domestic demand.
However, foreign exchange effects,
foreign supplies and variances in per
capita consumption of vegetables, and
melons in other parts of the world also
affect the global market.
Barriers to Entry checklist

Competition
Concentration
Life Cycle Stage
Capital Intensity
Technology Change
Regulation & Policy
Industry Assistance
Medium
Low
Mature
Medium
Medium
Medium
Medium
volume). New entrants into the industry

may find it difficult to establish such a
contract, unless they can offer benefits to
their clients. Competition within the food
manufacturing industry is fierce, and
companies buy their vegetables wherever
they can get the best price, within the United
States or overseas.
Smaller farms that produce organic
produce to be sold in local markets will
have a much easier time entering the
industry. As is the case in most
industries, local markets are more
receptive to new products and are often
willing to pay a premium for locally
grown goods. Local farms can often sell
their products directly to downstream
retailers, including restaurants, or
directly to consumers via farmers
markets or food co-ops.
WWW.IBISWORLD.COM
26
in
this industry is
Mediumand the
trend is I ncreasing
International trade is a
major determinant of
an industrys level of
globalization.
Exports offer growth
opportunities for firms.
However there are legal,
economic and political risks
associated with dealing in
foreign countries.
Import competition can
bring a greater risk for
companies as foreign
producers satisfy domestic
demand that local firms
would otherwise supply.
Trade Globalization
200
Going Global: Vegetable Farming 2005-2015

Global
Export
150
100
50
0 Local
0
vegetable supplies (particularly Mexico

and Canada) and international prices.
Most of these factors are felt through
changes in the returns to growers.
Generally, US vegetable growers do not
engage directly in trade; most commonly,
produce is exported through wholesalers.
Nonetheless, these trade levels have a
significant impact on the level of demand
for industry products.
Vegetable
Farming
40
80
200 Export
Exports/Revenue
Level & Trend

lobalization
G
Although foreign ownership in the local

industry is extremely limited, farmers are
exposed to globalization through
international trade. Albeit a smaller
proportion than other crop agriculture
industries, exports and imports make up a
significant proportion of the Vegetable
Farming industrys revenue. This makes
US growers sensitive to changes in
foreign-exchange markets, world
Exports/Revenue
Industry
Globalization
Import
120
Imports/Domestic Demand
160
Global
150
100
50
2005
0 Local
0
2015
40
Import
80
120
160
Imports/Domestic Demand
WWW.IBISWORLD.COM
Major Companies
There are no Major Players in this industry | Other Companies
Other Companies
The presence of many small farms, with very

few operating as companies, characterizes
the US Vegetable Farming industry.
According to data from a report by the
United States Department of Agriculture,
about 96.0% of farms involved in vegetable
production are individually or family owned,
with corporations owning just 4.0% of
farms. However, the individual farms are
responsible for about 70.0% of industry
revenue while the 4.0% percent of
corporation owned farms account for the
remaining 30.0% of revenue. Additionally,
smaller growers sometimes pool resources
with other producers to form processing or
wholesaling businesses to take advantage of
collective bargaining structures. Often, these
structures are formed as cooperatives that
service the interests of a group of growers in
a particular region or state.
Bolthouse Farms
Estimated market share: 1.6%

Founded in 1915 and headquartered in
Bakersfield, CA, Bolthouse Farms is a
vertically integrated farm company that is a
leading producer of carrots. Bolthouse
Farms adds value to its farmed carrots by
producing a variety of carrot-based
products, including baby carrot snacks,
juices, smoothies and other refrigerated
beverages. The company farms the majority
of its carrots in California, with smaller,
contracted farms located in Georgia,
Washington and Ontario, Canada. In 2012,
Bolthouse was acquired by Campbell Soup
Company for $1.6 billion and currently
operates as Campbells subsidiary.
Bolthouses industry specific revenue is
expected to be $400.0 million in 2015.
Monterey Mushrooms Inc.
Estimated market share: 1.5%

Headquartered in Watsonville, CA,
Monterey Mushrooms Inc. is reportedly the
largest grower, shipper and marketer of
fresh mushrooms in the United States. Since
the companys founding in 1971, Monterey
Mushrooms has grown into a fully
integrated mushroom producer with fresh

mushroom farms, processing facilities and
spawn manufacturing plants. Its operations
currently span the United States, Canada
and Mexico. As the company is private, it
does not disclose its financial information;
however IBISWorld expects company
revenue to reach $375.0 million in 2015.
Montereys Fresh Division carries out the
mushroom growing. This operating arm
includes nine mushroom farming facilities
located in California, Florida, Illinois, Texas,
Tennessee and Pennsylvania, and a further
two facilities situated in Mexico and Canada.
Fresh mushrooms represent the majority
of the companys sales. Its line of
mushrooms includes varieties like
portobello, shiitake, oyster and baby bella.
The company also produces and markets
value-added mushroom products
including fresh marinated mushrooms
and a range of microwaveable
mushroom and sauce products.
Sun World International
Estimated market share: less than 1.0%

Sun World International farms more
than 10,000 acres of its own land and has
over 950 domestic and international
licensed partner growers, making it
another example of a large operation
within the Vegetable Farming industry.
The company was established in 1976,
has filed for bankruptcy twice (in 1994
and 2003) and consequently has changed
hands several times since its inception. It
is currently privately owned.
Sun World is a vertically integrated
operation. Its growing operations
specialize in peppers and seedless
watermelons; in addition the company
also grows grapes, plums, apricots and
citrus fruits. It also packs, distributes
and markets its produce in addition to
providing marketing and packing
services to third-party growers. Its
processing operations currently
include two plants in California. These
facilities perform harvesting, packing,
WWW.IBISWORLD.COM
Major Companies
Other Companies
continued
cooling and shipping services for Sun

World and its commercial clients. The
company also operates the worlds
largest fruit breeding program, which

is not included in this industry. Its
annual sales are about $150.0 million.
WWW.IBISWORLD.COM
Operating Conditions
Capital Intensity | Technology & Systems | Revenue Volatility

Regulation & Policy | Industry Assistance
Capital Intensity
Level
The level
of capital
intensity is M
edium
Farming, in general, is a capital-intensive

process. Expensive machinery is needed for
planting, harvesting, irrigation and
packaging. Greenhouses are also heavily
used in roughly 10.0% of industry farms.
Relative to the sector, capital expenditure in
vegetable production is close to the average.
However, this is heavily skewed by potato
farms, which make use of extensive
harvesting machines, and thus have much
higher capital costs than other farms in the
industry. In general, vegetables in this
industry that are grown for the fresh market
must be harvested by specialist pickers and
not machines as they require delicate
plucking and processing; although
mechanical harvesting does take place for
processing markets, visible vegetable
damage problems limit its presence within
Capital intensity
Capital units per labor unit

0.5
0.4
0.3
0.2
0.1
0.0
Economy
Agriculture,
Forestry, Fishing
and Hunting
Vegetable
Farming
Dotted line shows a high level of capital intensity

the fresh segment. This translates into

fairly large labor expenses, compared with
lower depreciation.
Tools of the Trade: Growth Strategies for Success

Investment Economy
Recreation, Personal Services,

Health and Education. Firms
benefit from personal wealth so
stable macroeconomic conditions
are imperative. Brand awareness
and niche labor skills are key to
product differentiation.
Information, Communications,
Mining, Finance and Real
Estate. To increase revenue
firms need superior debt
management, a stable
macroeconomic environment
and a sound investment plan.
Traditional Service Economy

Wholesale and Retail. Reliant
on labor rather than capital to
sell goods. Functions cannot
be outsourced therefore firms
must use new technology
or improve staff training to
increase revenue growth.
Fruit & Nut Farming
Vegetable Farming
Capital Intensive
Labor Intensive
New Age Economy
Water Supply & Irrigation Systems

Fruit & Vegetable Wholesaling
Old Economy
Supermarkets
Agriculture and Manufacturing.
& Grocery Stores Crop Services
Traded goods can be produced
using cheap labor abroad.
To expand firms must merge
or acquire others to exploit
economies of scale, or specialize
in niche, high-value products.
Change in Share of the Economy
WWW.IBISWORLD.COM
Capital Intensity
continued
Nevertheless, the Vegetable Farming

industrys capital-to-labor ratio indicates
that it possesses a high level of capital
intensity overall. For every dollar spent on
labor, the average farm dedicates $0.36 to
capital equipment. Over the past five years,
the industrys capital intensity has grown
slightly as the industry has shifted toward
more intensive production systems using
mechanized planting, harvesting and
processing systems; in 2010, for every dollar
Technology & Systems The technology associated with growing

Level
The level
of
Technology Change
is M
edium
horticultural crops has changed

significantly during the past two decades or
so. These changes include the introduction
of more vigorous and high-yielding
rootstock, mechanical harvesting, the
adoption of row covers, more effective
pesticide sprays and the introduction of
high-density planting. Together, these new
forms of technology have had a strong,
positive effect on field yields in the
industry. The modern and highly
mechanized methods US growers use are
also providing the industry with a strong
competitive edge in the international
marketplace.
In the greenhouse segment of this
industry, technology is much more heavily
utilized. Mushroom seeds must be
produced in a sterile environment such as a
laboratory. Sterile cereal grains are used to
produce mushroom spawn, which can
then be sown like seed. Spawn is sown onto
compost, which is placed on trays stored
in cool rooms. Extensive computerized
systems are used to monitor each point
in production. Similarly, growers of
greenhouse tomatoes also use advanced
techniques. Most commonly used are
glass greenhouses with active climate
control systems and hydroponics. Glass
is preferred over plastic because it
maximizes the effect of winter sun and
makes it easier to control temperatures.
Hydroponics involves the cultivation of
spent on labor, about $0.31 was spent on

capital. Increasing refinements in
mechanical harvests and anticipated
improvements in sorting and grading
technology are expected to continue shifting
the industry away from labor costs.
However, the effect will be delayed because
many of these improvements are not
expected to hit the market for a few years
and will take some time to achieve
pervasive adoption.
plants in nutrient solution rather than

in soil.
One of the major problems experienced
by the industry is the rapid build-up of
resistance by pests and diseases to the
available chemical treatments, and the
increasing restrictions on the use of those
chemical treatments. A possible solution to
this has been provided through genetically
modified (GM) seeds. Not only has this led
to better resistance to diseases for many
plants, it has meant a more even crop,
which has boosted yields. However, US
farmers still face strong resistance to GM
seeds in consumer markets, and this will
take considerable time to change.
Opposition is strongest in the European
Union where legislators placed a
moratorium on GM field crops from the
US. Although this was found to be against
World Trade Organization regulations in
2006 and opposition has softened, there is
still a long way to go to reach widespread
consumer acceptance. Greenhouse crops,
however, are not yet grown through the
GM method.
Technology is also improving water
efficiency in irrigation. Advances in
irrigation include the introduction of
micro-irrigation. This includes trickle/drip,
micro-spray and mini-sprinkler systems
that are designed to target water at the root
zone of vegetable plants rather than
traditional watering systems that wet the
whole crop.
WWW.IBISWORLD.COM
Intensive crop and vine production has

Technology & Systems
been
an important break-through in
continued
vegetable and melon farming. The adoption

of intensive production is beginning to
provide growers with lower unit production
costs arising from managing smaller areas.

The adoption of intensive growing
programs has been made possible through
modifications in machinery (e.g. narrower
tractors, movers).
Revenue Volatility
While the various segments of this industry

can fluctuate considerably from year to year,
the Vegetable Farming industry as a whole
has a moderate level of revenue volatility.
Revenue to farmers responds to local
changes in weather, but is also influenced by
more distant factors, such as exchange rates
and global stocks. However, most drastic
changes in any given segment tend to be
offset by the opposite movement in another.
For example, the economic downturn hurt
demand for fresh vegetables but this
translated to improved returns from the
processing market. Similarly, a health scare

may drive consumers away from a particular
produce and into the arms of another.
Furthermore, crops grown under cover
are less prone to changes in weather,
which makes this segments output less
volatile. While these effects do not
perfectly balance each other, they do
make total revenue for the industry
sticky. As such, the industrys sharped
annual change in the five year period was
a growth of 8.1% in 2013, indicating
medium revenue volatility.
of
Volatility is M
edium
A higher level of revenue

volatility implies greater
industry risk. Volatility can
negatively affect long-term
strategic decisions, such as
the time frame for capital
investment.
When a firm makes poor
investment decisions it
may face underutilized
capacity if demand
suddenly falls, or capacity
constraints if it rises
quickly.
Volatility vs Growth
1000
Revenue volatility* (%)
Level
The level
Hazardous
Rollercoaster
100
10
Vegetable Farming
1
0.1
Stagnant
30
10
Blue Chip
10
30
50
70
Five year annualized revenue growth (%)

* Axis is in logarithmic scale
WWW.IBISWORLD.COM
Regulation & Policy

Level & Trend
he level of
T
Regulation is
Mediumand the
trend is S
teady
Industry Assistance
Level & Trend
he level of Industry
T
Assistance is
Mediumand the
trend is S
teady
There are seven federal marketing orders

that apply to vegetable growers in the
United States. Marketing orders are
designed and administered by handlers and
growers representatives to establish ground
rules within vegetable markets. The
implementation is overseen by the United
States Department of Agriculture (USDA),
including enforcing product quality
standards, regulating the flow of product to
the market, standardizing packages
and containers, creating reserve pools
for storable commodities, and
authorizing production and marketing
research and advertising.
In addition, farmers are required to
comply with the general regulation applying
to the farm sector as a whole. All growers
must comply with stringent food safety and
disease prevention standards. Vegetable
growers must comply with regulations at the
county, state and federal level. At the county
level, farms must comply with zoning
bylaws and use land that has been approved

for vegetable growing. Most states operate
agricultural departments that act as
regulatory agencies. These authorities
monitor pollution levels associated with
farming. This typically involves the
regulation of the discharge of materials such
as waste into the environment, chemical
usage and odor control.
At the national level, regulatory agencies
like the Environmental Protection Authority
also monitor the environmental impact of
this industry. Also at the national level, the
USDA controls the licensing of organic
agricultural production. Farmers wishing to
promote their produce as organic must
obtain certification from the USDA. The
process requires a detailed description of the
farming operation, history of substances
applied to land during the previous three
years and a written Organic System Plan
describing the practices and substances to
be used in future farming operations.
Unlike other growers in the American

agriculture sector, including soy, corn and
sugar farmers, fruit and vegetable farmers
are generally ineligible for direct
payments or subsidies from the federal
government. However, the industry still
benefits from a variety of government
programs that are designed to promote
the growth and consumption of
vegetables in the United States.
and cover more than 120 different crops,

will remain largely unchanged. Additionally,
the farm bill promotes several programs
that aim to funnel money into the Vegetable
Farming industry. These programs include:
the Specialty Crop Block Grant, which
provides $72.5 million to state departments
of agriculture annually to spend on specialty
crops as they deem fit; the Local Regional
Food Systems, which has a budget of $30.0
million to spend on direct-to-consumer
projects and projects supporting local and
regional food operators; and the Organic
Cost Share program, which has an annual
budget of $11.5 million to promote resources
for organic farmers.
2014 Farm Bill Provisions

The 2014 farm bill does not present any
drastic changes to industry regulation or
assistance. The bill provides about $3.0
billion in funding for fruit and vegetable
farmers to address priorities including
battling pests and disease from entering the
United States and increasing research, food
safety, consumption of fresh fruits and
vegetables and access to international
markets access. The policies regarding crop
insurance, which are federally supported
Existing policies
The industry benefits from several
nonpayment programs, which includes
assistance through the Agricultural
Marketing Service and the Specialty Crops
program. The United States Department of
WWW.IBISWORLD.COM
Industry Assistance
continued
Agricultures (USDA) Agricultural

Marketing Service (AMS) buys excess
vegetables from handlers and processors if
government agencies can use the products.
All food the AMS purchases must be
produced in the United States. The AMS has
also been purchasing nonsurplus vegetables
that are provided to schoolchildren through
the National School Lunch and the
Vegetable Pilot programs, and other groups
included in Federal food assistance
programs such as the Food Stamp Program.
The AMS also supervises research and
promotion activities for the avocado, potato
and watermelon segments.
Additionally, the USDAs Risk
Management Agency administers
subsidized crop insurance policies. The
insurance is purchased before the growing
season and provides an indemnity payment
if the farmers yield is lower than expected.
According to Census data, less than half of
vegetable crops are covered by these
policies. Crop insurance policies remained
largely unchanged by the 2014 farm bill.
In the international market, US vegetable
farms benefit from export programs, such as
the Market Access Program. This program
provides matching grants to commodity
marketing boards and co-operatives to help
expand markets overseas for US agricultural
products. The National Potato Promotion
Board is a major beneficiary of this program.
The 2014 farm bill maintained funding
available through the Market Access
Program at $200.0 million annually.
Additionally, international trade
agreements such as the North American
Free Trade Agreement (NAFTA) and the
Central American Free Trade Agreement
have assisted the industry by removing trade
barriers and allowing for easier export
conditions. Similar bilateral agreements
with Australia and Thailand are expected to
generate further export opportunities. Other
measures of direct assistance include tariffs
imposed on competing imports. These
tariffs are particularly high in the case of
mushrooms; however, imports from Canada
(which account for over 80.0%of

imported mushrooms) are free from
tariffs under NAFTA.
Taxes and checkoffs
Vegetable farmers enjoy the same tax
benefits offered to all US farmers, including
several tax breaks and allowable deductions
for farm-related expenditure. For example,
farmers can receive a credit or refund for
excise tax paid on fuel used on a farm for
farming purposes. In some instances,
farmers are also entitled to a tax deduction
for expenses incurred in the conservation of
land used for farming. This includes the cost
of activities such as the treatment or
movement of earth, the eradication of brush
and the planting of windbreaks. However,
the total tax deduction for conservation
expenses is limited to 25.0% of the gross
farm income for a given year.
Currently, the vegetable industry as a
whole is not subjected to any checkoffs or
taxes on all quantities produced, a practice
that is common for many agricultural
commodities in the United States. These
taxes are paid at the first point of sale,
generally from farmers to wholesalers. The
proceeds are used to fund marketing and
research activities, targeted at increasing
popularity and demand for the industrys
product. However, the 2014 farm bill
contains a provision which allows the
USDA Secretary to propose the
establishment of an organic checkoff
program that would spread across all
organic commodities, including
vegetable farmers. The Organic Trade
Association has estimated that the
proposed checkoff, of 0.046% of
product value, would raise about $30.0
million. However, the checkoff is still
being fiercely debated and it is still
unclear if it will be approved. Potato,
avocado and watermelon growers in
particular have little to gain from this
as the Agricultural Marketing System is
already providing these services for
their products using federal funds.
WWW.IBISWORLD.COM
Industry Assistance
continued
Industry organizations
In the private sector, US vegetable and
melon growers receive assistance from
the lobbying efforts of industry
associations. Membership organizations
include bodies like the United Fresh Fruit
and Vegetable Association and the
Mushroom Council. These nonprofit
corporations represent the interests of

growers, shippers and processors
operating in the vegetable and melon
supply chain. As well as supporting the
industry through market development
and lobbying efforts, most associations
also provide information and education
services for members.
WWW.IBISWORLD.COM
35
Key Statistics
Industry Data
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Sector Rank
Economy Rank
Industry
Value Added
($m)
7,108.1
7,083.4
7,496.2
6,860.1
6,977.7
5,695.7
6,241.5
6,496.2
6,486.8
6,222.1
6,517.3
6,311.4
6,599.3
6,730.2
6,925.0
5/29
288/1373
Establishments
65,925
69,172
69,737
70,307
70,882
71,461
72,045
73,629
73,906
74,915
76,459
77,589
79,382
81,082
82,764
9/29
127/1373
Enterprises Employment
56,435
296,610
57,456
298,428
57,532
294,114
59,082
293,434
59,816
293,454
60,452
297,145
61,048
300,207
62,368
309,652
62,642
307,030
63,575
312,294
64,852
317,590
65,859
321,911
67,312
326,977
68,730
333,462
70,094
338,447
11/29
5/29
130/1373
146/1373
Exports
($m)
2,483.8
2,569.5
2,708.7
2,712.0
2,932.7
3,052.6
2,867.1
3,049.1
3,014.7
2,890.9
2,945.6
2,975.8
3,038.2
3,067.0
3,096.2
8/23
89/435
Imports
($m)
5,148.4
5,420.3
5,536.0
5,456.3
6,581.8
7,071.4
6,932.6
7,836.4
7,761.9
7,706.9
8,131.5
8,511.9
8,992.4
9,338.2
9,748.7
4/23
67/435
Wages
($m)
4,049.7
4,175.8
4,390.1
4,227.8
4,063.4
4,023.1
4,041.8
4,324.5
4,234.8
4,200.1
4,301.3
4,364.8
4,463.1
4,561.8
4,653.2
5/29
385/1373
Price of
Domestic vegetables
Demand
(Index)
25,148.1
87.0
26,266.4
101.0
27,690.3
96.0
26,928.2
103.0
27,124.6
93.0
27,494.4
100.0
27,885.3
92.0
30,528.0
104.0
30,039.3
103.0
30,574.4
101.0
31,410.5
102.2
32,110.3
103.4
32,994.6
104.6
33,894.4
105.8
34,741.9
107.1
6/23
N/A
88/435
N/A
Revenue
(%)
4.1
6.2
-2.7
-2.9
0.0
1.5
8.1
-1.7
1.8
1.8
1.3
1.8
2.2
1.7
8/29
881/1373
Industry
Value Added
(%)
-0.3
5.8
-8.5
1.7
-18.4
9.6
4.1
-0.1
-4.1
4.7
-3.2
4.6
2.0
2.9
17/29
1027/1373
Establishments
(%)
4.9
0.8
0.8
0.8
0.8
0.8
2.2
0.4
1.4
2.1
1.5
2.3
2.1
2.1
4/29
670/1373
Enterprises
(%)
1.8
0.1
2.7
1.2
1.1
1.0
2.2
0.4
1.5
2.0
1.6
2.2
2.1
2.0
3/29
617/1373
Exports
(%)
3.5
5.4
0.1
8.1
4.1
-6.1
6.3
-1.1
-4.1
1.9
1.0
2.1
0.9
1.0
14/23
251/435
Imports
(%)
5.3
2.1
-1.4
20.6
7.4
-2.0
13.0
-1.0
-0.7
5.5
4.7
5.6
3.8
4.4
14/23
249/435
Wages
(%)
3.1
5.1
-3.7
-3.9
-1.0
0.5
7.0
-2.1
-0.8
2.4
1.5
2.3
2.2
2.0
21/29
1211/1373
Domestic
Demand
(%)
4.4
5.4
-2.8
0.7
1.4
1.4
9.5
-1.6
1.8
2.7
2.2
2.8
2.7
2.5
7/23
240/435
IVA/Revenue
(%)
31.61
30.25
30.15
28.37
29.72
24.26
26.20
25.24
25.65
24.16
24.85
23.75
24.41
24.36
24.65
11/29
509/1373
Imports/
Demand
(%)
20.47
20.64
19.99
20.26
24.27
25.72
24.86
25.67
25.84
25.21
25.89
26.51
27.25
27.55
28.06
7/23
169/435
Revenue
($m)
22,483.5
23,415.6
24,863.0
24,183.9
23,475.5
23,475.6
23,819.8
25,740.7
25,292.1
25,758.4
26,224.6
26,574.2
27,040.4
27,623.2
28,089.4
8/29
374/1373
Annual Change
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Sector Rank
Economy Rank
Key Ratios
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Sector Rank
Economy Rank
Exports/
Revenue
(%)
11.05
10.97
10.89
11.21
12.49
13.00
12.04
11.85
11.92
11.22
11.23
11.20
11.24
11.10
11.02
12/23
222/435
Figures are in inflation-adjusted 2015 dollars. Rank refers to 2015 data.
Employment
(%)
0.6
-1.4
-0.2
0.0
1.3
1.0
3.1
-0.8
1.7
1.7
1.4
1.6
2.0
1.5
8/29
992/1373
Revenue per
Employee
($000)
75.80
78.46
84.54
82.42
80.00
79.00
79.34
83.13
82.38
82.48
82.57
82.55
82.70
82.84
82.99
18/29
1187/1373
Wages/Revenue
(%)
18.01
17.83
17.66
17.48
17.31
17.14
16.97
16.80
16.74
16.31
16.40
16.42
16.51
16.51
16.57
12/29
781/1373
Employees
per Est.
4.50
4.31
4.22
4.17
4.14
4.16
4.17
4.21
4.15
4.17
4.15
4.15
4.12
4.11
4.09
7/29
1035/1373
Average Wage
($)
13,653.28
13,992.65
14,926.53
14,408.01
13,846.80
13,539.18
13,463.38
13,965.68
13,792.79
13,449.19
13,543.56
13,559.03
13,649.58
13,680.12
13,748.68
18/29
1309/1373
Price of
vegetables
(%)
16.1
-5.0
7.3
-9.7
7.5
-8.0
13.0
-1.0
-1.9
1.2
1.2
1.2
1.1
1.2
N/A
N/A
Share of the
Economy
(%)
0.05
0.05
0.05
0.05
0.05
0.04
0.04
0.04
0.04
0.04
0.04
0.04
0.04
0.04
0.04
5/29
288/1373
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Jargon & Glossary
Industry Jargon
CHECKOFFAn industry-imposed tax on its own

products, where proceeds are used for research and
promotion. Notable examples include milk (Got Milk?)
and pork (The other white meat).
GENETICALLY MODIFIEDA plant or animal that has

had its genomes modified through genetic engineering
techniques involving the transfer of genetic material
from one organism to another.
CO-OPERATIVEAn organization owned and operated

for the benefit of those using its services. In agriculture,
co-operatives often span several levels of the supply
chain.
IBISWorld Glossary
BARRIERS TO ENTRYHigh barriers to entry mean that

new companies struggle to enter an industry, while low
barriers mean it is easy for new companies to enter an
industry.
CAPITAL INTENSITY Compares the amount of money
spent on capital (plant, machinery and equipment) with
that spent on labor. IBISWorld uses the ratio of
depreciation to wages as a proxy for capital intensity.
High capital intensity is more than $0.333 of capital to
$1 of labor; medium is $0.125 to $0.333 of capital to $1
of labor; low is less than $0.125 of capital for every $1 of
labor.
CONSTANT PRICESThe dollar figures in the Key
Statistics table, including forecasts, are adjusted for
inflation using the current year (i.e. year published) as
the base year. This removes the impact of changes in
the purchasing power of the dollar, leaving only the
real growth or decline in industry metrics. The inflation
adjustments in IBISWorlds reports are made using the
US Bureau of Economic Analysis implicit GDP price
deflator.
DOMESTIC DEMANDSpending on industry goods and
services within the United States, regardless of their
country of origin. It is derived by adding imports to
industry revenue, and then subtracting exports.
EMPLOYMENTThe number of permanent, part-time,
temporary and seasonal employees, working proprietors,
partners, managers and executives within the industry.
ENTERPRISE A division that is separately managed
and keeps management accounts. Each enterprise
consists of one or more establishments that are under
common ownership or control.
ESTABLISHMENTThe smallest type of accounting unit
within an enterprise, an establishment is a single
physical location where business is conducted or where
services or industrial operations are performed. Multiple
establishments under common control make up an
enterprise.
EXPORTSTotal value of industry goods and services sold
by US companies to customers abroad.
IMPORTS Total value of industry goods and services
brought in from foreign countries to be sold in the
United States.
INDUSTRY CONCENTRATIONAn indicator of the

dominance of the top four players in an industry.
Concentration is considered high if the top players
account for more than 70% of industry revenue.
Medium is 40% to 70% of industry revenue. Low is less
than 40%.
INDUSTRY REVENUEThe total sales of industry goods
and services (exclusive of excise and sales tax); subsidies
on production; all other operating income from outside
the firm (such as commission income, repair and service
income, and rent, leasing and hiring income); and
capital work done by rental or lease. Receipts from
interest royalties, dividends and the sale of fixed
tangible assets are excluded.
INDUSTRY VALUE ADDED (IVA)The market value of
goods and services produced by the industry minus the
cost of goods and services used in production. IVA is
also described as the industrys contribution to GDP, or
profit plus wages and depreciation.
INTERNATIONAL TRADEThe level of international
trade is determined by ratios of exports to revenue and
imports to domestic demand. For exports/revenue: low is
less than 5%, medium is 5% to 20%, and high is more
than 20%. Imports/domestic demand: low is less than
5%, medium is 5% to 35%, and high is more than
35%.
LIFE CYCLEAll industries go through periods of growth,
maturity and decline. IBISWorld determines an
industrys life cycle by considering its growth rate
(measured by IVA) compared with GDP; the growth rate
of the number of establishments; the amount of change
the industrys products are undergoing; the rate of
technological change; and the level of customer
acceptance of industry products and services.
NONEMPLOYING ESTABLISHMENT Businesses with
no paid employment or payroll, also known as
nonemployers. These are mostly set up by self-employed
individuals.
PROFITIBISWorld uses earnings before interest and tax
(EBIT) as an indicator of a companys profitability. It is
calculated as revenue minus expenses, excluding
interest and tax.
WWW.IBISWORLD.COM
Jargon & Glossary
IBISWorld Glossary
continued
VOLATILITYThe level of volatility is determined by

averaging the absolute change in revenue in each of the
past five years. Volatility levels: very high is more than
20%; high volatility is 10% to 20%; moderate
volatility is 3% to 10%; and low volatility is less than
3%.
WAGESThe gross total wages and salaries of all

employees in the industry. The cost of benefits is also
included in this figure.
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Vegetable Farming in the USDecember 2015 1

A new leaf: Steady demand and high prices will

IBISWorld Industry Report 11120

Vegetable Farming in the US

2 About this Industry

21 Market Share Concentration

21 Key Success Factors

36 Jargon & Glossary

22 Cost Structure Benchmarks

Key External Drivers

11 Industry Life Cycle

13 Products & Markets

30 Technology & Systems

13 Products & Services

32 Regulation & Policy

www.ibisworld.com | 1-800-330-3772 | info @ibisworld.com

Vegetable Farming in the USDecember 2015 2

About this Industry

Operators in this industry grow a wide

The primary activities of this industry are

not include some notable crops such as

Dry pea and bean farming

11111 Soybean Farming in the US

Vegetable Farming in the USDecember 2015 3

About this Industry

For additional information on this industry

writes over 700 US

Vegetable Farming in the US December 2015

Annual Growth 10-15

Annual Growth 15-20

Revenue vs. employment growth

There are no major

Products and services segmentation (2015)

Key External Drivers

Per capita fruit and

Demand from fruit and

All other vegetables

Life Cycle Stage

Vegetable Farming in the USDecember 2015 5

Executive Summary | Key External Drivers | Current Performance

The Vegetable Farming industry is

vegetables, as opposed to processed

vegetable farms with more than 5,000 acres

steady demand coupled with high

Key External Drivers

Vegetable Farming in the USDecember 2015 6

TWI increases, industry products become

product to retail outlets. An increase in

Key External Drivers

Vegetable Farming in the USDecember 2015 7

The Vegetable Farming industry is

the price of vegetables remained high for

Extreme variation is common in a

example, consumers will simply respond

Revenue vs. exports

Vegetable Farming in the USDecember 2015 8

Although doctors and public health

which has helped temper the slight fall in

Changes in consumer preferences during

billion. Along the same lines, industry

Industry size and

The existence of many small players largely

farms and consequently account for about