Vegetable Farming in The US Industry Report PDF

US INDUSTRY (NAICS) REPORT 11120
Vegetable Farming in the US

A new leaf: Healthy eating and increased disposable income are expected to foster
industry growth
John Madigan | August 2020
IBISWorld.com +1-800-330-3772 info@IBISWorld.com

Vegetable Farming in the US 11120 August 2020
Contents
About This Industry...........................................5 Competitive Landscape...................................29
Industry Definition..........................................................5 Market Share Concentration....................................... 29

Major Players................................................................. 5 Key Success Factors................................................... 29
Main Activities................................................................5 Cost Structure Benchmarks........................................ 30
Supply Chain...................................................................6 Basis of Competition................................................... 34
Similar Industries........................................................... 6 Barriers to Entry........................................................... 36
Related International Industries....................................6 Industry Globalization..................................................37
Industry at a Glance.......................................... 7 Major Companies............................................ 38
Executive Summary..................................................... 10 Major Players............................................................... 38

Other Players................................................................38
Industry Performance..................................... 11
Operating Conditions...................................... 40
Key External Drivers.....................................................11
Current Performance................................................... 13 Capital Intensity........................................................... 40
Technology And Systems........................................... 41
Industry Outlook............................................. 16 Revenue Volatility........................................................ 43
Regulation & Policy...................................................... 44
Outlook......................................................................... 16
Industry Assistance..................................................... 45
Performance Outlook Data......................................... 18
Industry Life Cycle....................................................... 18 Key Statistics.................................................. 49
Products and Markets..................................... 20 Industry Data................................................................49

Annual Change.............................................................49
Supply Chain................................................................ 20
Key Ratios.................................................................... 49
Products and Services.................................................20
Industry Financial Ratios............................................. 50
Demand Determinants................................................ 21
Major Markets..............................................................23 Additional Resources...................................... 51
International Trade.......................................................24
Business Locations..................................................... 26 Additional Resources.................................................. 51
Industry Jargon............................................................ 51
Glossary Terms............................................................51
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Covid-19
Coronavirus IBISWorld's analysts constantly monitor the industry impacts of current events in
real-time – here is an update of how this industry is likely to be impacted as a result
Impact Update of the global COVID-19 pandemic:
· Revenue in the Vegetable Farming industry is expected to contract in 2020 as a

result of the COVID-19 (coronavirus) pandemic disrupting supply chains and
causing industry prices to diverge at the farm gate and at retail levels.
· Profitability is expected to decline amid weak demand from food service and
restaurant establishments due to mandatory shutdowns and forced closures.
· The industry could be headed for a downward spiral of real production should
wholesale operations fail to efficiently get produce to market. As waste rises,
supply will shrink, causing prices to rise across the board. However, the industry will
be stuck producing a lower quantity of produce at a higher price point, a setback for
the economy to say the least.
Note: The content in this report is currently being updated to reflect the trends
outlined above.
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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 not include some notable crops such as
corn, soybeans or wheat, which are included in other reports.
Major Players There are no major players in this industry
Main Activities The primary activities of this industry:

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:

Tomatoes
Potatoes
Sweet corn
Lettuce
Onions
Dry beans
Broccoli
All other vegetables
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Supply Chain
SIMILAR INDUSTRIES
Soybean Farming in the US Corn Farming in the US Fruit & Nut Farming in the US Canned Fruit & Vegetable
Processing in the US
RELATED INTERNATIONAL INDUSTRIES
Under Cover Vegetable Outdoor Vegetable Growing Vegetable Growing in the UK Vegetable Farming in
Growing in Australia in Australia Canada
Vegetable Growing in New Vegetable Growing in Ireland

Zealand
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Industry at a Glance
Key Statistics Key External Drivers % = 2015-2020 Annual Growth
$20.1bn 0.3%
Demand from fruit and vegetable
1.4%
Trade-weighted index
Revenue wholesaling
Annual Growth Annual Growth Annual Growth 0.3% 3.7%

Per capita fruit and vegetable consumption Price of vegetables
2015-2020 2020-2025 2015-2025
0.1%
Average annual precipitation
-2.1% 1.0%
Industry Structure
$1.5bn
Profit POSITIVE IMPACT
Annual Growth Annual Growth
Concentration
2015-2020 2015-2025 Low
-13.3%
MIXED IMPACT
7.6% Life Cycle

Mature
Industry Assistance
Medium
Profit Margin
Regulation Technology Change
Annual Growth Annual Growth
Medium Medium
2015-2020 2015-2025
Globalization Competition
-6.4% Medium Medium
NEGATIVE IMPACT
40,803
Businesses Revenue Volatility Capital Intensity
High High
Annual Growth Annual Growth Annual Growth
2015-2020 2020-2025 2015-2025 Barriers to Entry
Low
0.6% 0.5%
127k
Employment

2015-2020 2020-2025 2015-2025
-1.8% 0.6%
$2.1bn
Wages

2015-2020 2020-2025 2015-2025
0.7% 0.6%
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Key Trends
Consumers have become increasingly health-conscious,
which has helped push up per capita fruit and vegetable
consumption
Changes in consumer preferences have led supermarkets to
demand fresh produce year-round
Greenhouse crops are especially profitable because of their
consistently high quality, which makes them ideal for sale on
the fresh market
The numbers of both smaller local and larger commercial
farms have been growing
Increased health-consciousness among consumers is
expected to continue
Over the next five years, international trade conditions are
expected to reverse
Vegetable consumption will remain near current levels as
industry associations promote healthy eating through
marketing campaigns
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Products & Services Segmentation
10.0% 20.1% 4.6% 14.6% 4.4% 5.2%
Tomatoes Potatoes Sweet corn Lettuce Onions Dry beans
Vegetable Farming
Source: IBISWorld
Major Players % = share of industry revenue SWOT
STRENGTHS
Low Product/Service Concentration
WEAKNESSES
Low & Steady Barriers to Entry
High Volatility
High Imports
Low Profit vs. Sector Average
High Customer Class Concentration
Low Revenue per Employee
High Capital Requirements
OPPORTUNITIES
THREATS
Low Revenue Growth (2005-2020)
Low Outlier Growth
Low Performance Drivers
Price of vegetables
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Executive The Vegetable Farming industry consists of vegetable and melon

Summary farmers.
Over the five years to 2020, production of both fresh and processing vegetables has
increased, with retail prices also rising, though the farm value of vegetables has
been volatile. However, poor weather conditions during the 2018-19 hurricane
season helped to drive prices up in 2019, preventing greater declines in industry
revenue. In 2020, prices are expected to rise, though a depression in demand as a
result of the COVID-19 (coronavirus) outbreak is expected to cause the industry to
exhibit a 3.7% decrease in revenue. Overall, volatile price conditions have caused
wide swings in industry revenue on a year-over-year basis, while the coronavirus
outbreak has served to exacerbate volatility in 2020 as supply chains become
stressed. Over the five years to 2020, industry revenue is expected to fall an
annualized 2.1% to reach $20.1 billion.
Rising per capita fruit and vegetable consumption has aided the industry, staving
off greater declines during the period. This has benefited the industry, as fresh
vegetables generally sell for more than double the price of processed vegetables
and yield higher profit for farmers. However, rising domestic availability has
prevented stronger increases in domestic prices, limiting revenue and profit gains
for industry operators during the period. Profit is expected to increase in 2020 along
with prices at the retail level, despite weakening demand due to a stressing of the
supply chain. Since supply cannot get to market fast enough, it is flooding at the
farm gate, driving returns for farmers down while retailers can increase prices,
leaving industry operators little chance to capitalize on current price growth.
Drastic changes are not expected within the industry over the five years to 2025.
Revenue is anticipated to return to growth at an annualized rate of 1.0% over the
five years to 2025, reaching $21.1 billion, largely driven by an expected 2.3%
increase in the price of vegetables in 2021 and a subsiding of current conditions
regarding the coronavirus outbreak. Vegetable consumption is expected to remain
near current levels as industry associations promote healthy eating through
marketing campaigns that tout the benefits of eating vegetables. Imports of
industry products are expected to diminish, reducing per capita availability and
pushing prices upward during the outlook period, while exports are also slated to
rise.
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Industry Performance
Key External Price of vegetables

Drivers 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.
With all other things equal, an increase in the price of vegetables will garner higher
revenue for industry operators, so long as cost increases can be passed on to
consumers to protect profit. The price of vegetables is expected to rise in 2020,
representing a potential opportunity for the industry.
Demand from fruit and vegetable wholesaling

Fruit and vegetable wholesalers play a key role in getting this industry's 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. Demand from fruit and
vegetable wholesaling is expected to increase slightly in 2020.
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Per capita fruit and vegetable consumption

Increased public awareness of nutrition and diet is having a marginal effect on
vegetable consumption. According to the US Department of Agriculture, Americans
need to increase their vegetable consumption 25.0% to meet health
recommendations. Per capita fruit and vegetable consumption is expected to fall in
2020, posing a potential threat to the industry.
Since the industry's performance is increasingly reliant on imports and exports, 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 TWI increases, industry
products become more expensive on the international market and imports become
less expensive on the domestic market. The TWI is expected to rise in 2020.
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, unpredictable weather patterns can have drastic
effects on the industry. Average annual precipitation is anticipated to decrease in
2020.
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Current The Vegetable Farming industry is composed of vegetable and

Performance melon farmers, but does not include harvesters of notable crops
such as corn, soybeans or wheat.
Though this industry may be small compared with others in the Agriculture,
Forestry, Fishing and Hunting sector (IBISWorld report 11), it packs a healthy punch;
vegetables are considered high-value crops, leading vegetable farmers to be among
the most profitable operators in the sector. The premium paid on organic fresh
vegetables has aided this phenomenon. Over the five years to 2020, the industry
has contended with mixed conditions, benefiting from rising demand, production
and consumption, but suffering from volatile returns at the farm gate, which have
depressed industry revenue. Moreover, the outbreak of COVID-19 (coronavirus) has
roiled markets and supply chains. As a result, prices at retailers are rising while
prices at the farm gate are stagnating due to rising production volumes. Overall, this
will demonstrate rising prices at the retail level, but not at the farm gate since
supply is glutting. This has equated to a lowering in levels of demand for industry
operators since total spending on industry products by these downstream retailers
has gone down due to supply chain constraints, disallowing for much, if any, price
appreciation at the farm gate since supply is still high. Overall, industry
performance is expected to weaken in 2020 with revenue falling an estimated 3.7%
in 2020 alone, as profitability, measured as earnings before interest and taxes, also
weakens to reach 7.6%. The industry is expected to record an annualized 2.1%
decline over the five years to 2020 to reach $20.1 billion.
Downward spiral
Extreme variation is common in a farmer's output due to

unpredictable factors such as weather and global supply.
While many crop industries have fluctuated wildly over the past decade, with large
increases and declines in the agricultural price index, movements in the Vegetable
Farming industry have been comparatively muted. This is attributable to the fact
that the industry is a composite of many diverse segments, and drastic changes in
any given crop can potentially be offset by an opposite movement in another. For
example, consumers may 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
increased costs to downstream markets. Therefore, a jump in the price of
vegetables can translate to higher industry revenue, as long as the higher costs do
not weaken demand.
However, as a result of the coronavirus outbreak, volatility has been exacerbated in

2020 alone, with some interesting supply chain dynamics that could spell disaster
for the industry moving forward, should they persist. In particular, labor shortages
of wholesale drivers, which will shuttle industry supply to retail outlets, will likely
cause serious problems for the industry should this link in the supply chain exhibit
further disruption as a result of the coronavirus pandemic. As the wholesale supply
chain gets pinched, the flow of supply to market will slow and industry products will
back up at the farm gate, putting downward pressure on farm prices. However, as
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industry products become more relatively scarce at the retail level due to supply
disruptions, retailers will raise prices to cover growing costs of procuring supply.
Should this trend exacerbate, it is expected that industry produce will rot, becoming
waste for industry farmers, and serving to further drive up prices at the retail level.
The long-term result is an overall lower quantity of production that will settle at a
permanently higher price level, eroding both consumer and producer surplus and
weakening overall demand. Furthermore, once demand growth recovers, prices will
fall as farmers ramp up production in the future, eroding future industry revenue
and profitability to an even greater extent.
Health-conscious consumers drive profit
Over the past five years, consumers have become increasingly

health-conscious, which has helped push up per capita fruit and
vegetable consumption at an annualized rate of 1.2%. 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, with the additional benefit of high-quality produce carrying a price
premium. However, weakness in demand in 2020 alone is expected to suppress
industry profit growth.
Additionally, greenhouse crops are especially profitable because of their

consistently high quality, which makes them ideal for sale on the fresh market. On
the whole, still-strong profitability for most of the period has encouraged new entry
into the industry, primarily by nonemploying enterprises, which have outpaced the
entrance of employing enterprises nearly twofold; over the five years to 2020, the
total number of industry enterprises has increased an annualized 0.6% to reach
40,803 companies. However, industry employment has been steadily weakening,
reflecting a growing capital intensity as evidenced by rising depreciation charges
returning to near peak levels observed in 2015, with the total number of industry
employees falling an annualized 1.8% to reach 126,597 workers during the same
period.
Trade remains stable
Changes in consumer preferences over the past five years have also
led supermarkets and other retail outlets to demand fresh produce
year-round.
Since 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 low-
cost labor. As a result of these factors, coupled with the appreciation of the US
dollar, total imports are expected to grow at an annualized rate of 2.8% over the five
years to 2020, reaching $9.8 billion. Along the same lines, industry exports have
been constrained by the overall growing value of the US dollar; over the five years to
2020, the trade-weighted index (TWI), which measures the strength of the US dollar
against the currencies of major trading partners, has increased an annualized 1.2%.
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This increase has effectively made exports of US industry products more expensive
on international markets, tempering the expansion rate of export volumes. Overall,
industry exports are expected to have fallen at a meager annualized rate of 0.3% to
$3.2 billion over the past five years. While trade is a significant component,
accounting for 15.9% of industry revenue and satisfying 36.8% of domestic demand
in 2020, it is limited compared with other crops because the industry's primary
product is fresh produce. This factor limits the transportation radius, leading
Canada and Mexico combined to consistently account for more than 60.0% of
exports and over 80.0% of imports.
Historical Performance Data

Year Revenue IVA Estab. Enterprises Employment Exports Imports Wages Domestic Price of
Demand vegetables
($m) ($m) (Units) (Units) (People) ($m) ($m) ($m) ($m) (Index)
2011 20,560 4,735 42,527 38,127 132,876 3,280 7,598 1,939 24,878 100.0
2012 19,940 4,949 43,021 38,551 135,642 3,091 7,444 1,639 24,292 91.9
2013 21,935 7,363 43,472 38,902 136,412 3,279 8,387 2,493 27,042 104
2014 20,941 7,578 43,934 39,256 138,694 3,258 8,336 2,008 26,019 103
2015 22,264 6,430 44,375 39,614 138,496 3,236 8,547 2,022 27,575 109
2016 21,152 5,762 44,800 39,974 137,778 3,280 9,568 2,229 27,440 104
2017 21,772 5,738 45,165 40,339 135,361 3,335 9,347 1,798 27,784 114
2018 19,227 4,435 45,783 40,890 133,467 3,268 9,589 1,993 25,548 107
2019 20,814 4,802 46,114 41,186 129,827 3,321 9,976 2,158 27,468 122
2020 20,051 4,689 45,608 40,803 126,597 3,193 9,820 2,099 26,678 124
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Industry Outlook
Outlook The Vegetable Farming industry has plenty of room to grow.
Consumption needs to expand 25.0%
to reach US 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 slight
improvement in eating habits.
Consequently, per capita
consumption of vegetables is
expected to decline marginally over
the five years to 2025, falling an
annualized 0.1%. However, amid
steady demand from wholesalers
and full-service single-location
restaurants, the price of vegetables
is expected to increase an annualized 2.3% over the next five years. Whether these
increases will be reflected at the farm gate is unclear as a result of COVID-19
(coronavirus) roiling supply chain dynamics, but it is expected that industry price
trends will reverse somewhat, exhibiting some level of appreciation at the farm
gate. Over the five years to 2025, steady demand and expected product price
appreciation, coupled with an acceleration of industry exports, are expected to drive
industry revenue to increase at an annualized rate of 1.0% to total $21.1 billion.
International trade
Over the next five years, international trade conditions are expected
to reverse in line with the projected weakening of the US dollar.
This slight depreciation of the dollar is expected to aid domestic industry operators
by facilitating increases in export volumes and decreases in import volumes. As a
result, the value of exports is anticipated to increase an annualized 1.5% to $3.4
billion over the five years to 2025, while the value of imports is expected to fall,
declining an annualized 0.8% to just below $9.5 billion. Overall, it is expected that
rising export volumes, coupled with rising domestic prices due to declining
domestic availability, will be the primary driver of industry growth over the next five
years.
The expansion of greenhouse-grown crops may limit the effect of imported produce
on the domestic industry. By growing more crops under cover, farmers will provide
fresh vegetables even through the lower-yielding winter months, increasing
domestic availability and reducing reliance on imported goods. In this way,
downstream industries will not have to source their out-of-season vegetables from
foreign producers and can instead rely on domestic output. As a result of these
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perceived benefits, IBISWorld expects greenhouse crops to grow as a percentage of

crops produced over the coming years.
Industry exports are significantly smaller than imports, accounting for a projected
16.3% of industry revenue in 2025. Due to the difficulty of transporting industry
products long distance, nearly 70.0% of exports go to either Canada or Mexico. As
the US dollar depreciates in value, US vegetables will be less expensive in foreign
markets, causing exports as a percentage of revenue to increase somewhat.
Additionally, over 80.0% of industry imports also come from Canada and Mexico
due to their geographic proximity to the United States and collective membership in
the United States-Mexico-Canada Agreement (USMCA), the trade agreement built to
replace the North American Free Trade Agreement (NAFTA), if ratified. Typically,
most imported products will be destined for further processing, due to the
competitive price advantage.
Steady weather and health consciousness
Barring calamitous weather such as hurricanes or droughts, the

USDA projects total US vegetable and melon output to rise over the
next five years.
Improvements in yield and dedicated acreage will drive this increase; larger farms
are increasingly using genetically modified seeds and farming machinery to
increase yields per acre. Steady demand, high vegetable prices and increased
productivity are expected to help drive industry revenue growth over the five years
to 2025.
Increased health consciousness among consumers is expected to continue,

increasing the production of fresh and organic vegetables compared with that of
processed vegetables. As fresh, high-quality produce carries a price premium,
industry operators stand to earn higher profit because of the shift toward fresh
vegetables. Additionally, the growing trend of local, organic produce will likely
further raise industry profit, specifically for smaller farming operations. Along these
lines, current trends are anticipated to continue over the five years to 2025, with
profit expected to normalize, holding steady at current levels. Profitability is
expected to rise slightly due to rising prices of industry goods, which are expected
to result from lower domestic availability due to rising export volumes.
Farm size
For the past decade, the numbers of both smaller local and larger
commercial farms have been growing.
According to the 2017 agriculture census (latest data available), between 2002 and
2017, the number of farms with more than 5,000 acres grew 3.0%, while the number
of farms with fewer than 0.9 acres grew 8.4%. This trend is expected to continue
over the five years to 2025, with medium-sized farms increasingly becoming larger
and new, smaller farms entering the industry to cater to the local, organic market.
As a result, the number of industry enterprises is anticipated to grow at an
annualized rate of 0.5% to 41,790 companies over the next five years.
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Larger farms tend to be more capital intensive, involving extensive mechanized

planting, harvesting and sorting systems. As larger farms continue to grow, the
industry's overall level of capital intensity will likely grow. As a result, the number of
industry employees is expected to experience weak growth, increasing at an
annualized rate of 0.6% to 130,172 workers over the five years to 2025.
Performance Outlook Data

Demand vegetables
2020 20,051 4,689 45,608 40,803 126,597 3,193 9,820 2,099 26,678 124
2021 20,254 4,734 45,877 41,033 127,317 3,239 9,758 2,112 26,773 127
2022 20,462 4,779 46,132 41,249 128,004 3,293 9,664 2,126 26,833 130
2023 20,667 4,816 46,366 41,446 128,688 3,342 9,594 2,139 26,918 133
2024 20,870 4,878 46,579 41,624 129,386 3,392 9,523 2,153 27,001 136
2025 21,077 4,948 46,781 41,790 130,172 3,443 9,452 2,168 27,086 139
Industry Life Cycle The life cycle stage of this industry is Mature
LIFE CYCLE REASONS

International trade is limited
Changes are incremental rather than groundbreaking
Vegetables are a staple in the American diet
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The Vegetable Farming industry's steady presence in the US economy points to its
maturity; industry 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, are constant and unlikely to
undergo any revolutionary changes over the five years to 2025. 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 industry's value added (IVA), which measures the industry's contribution to the
economy, is forecast to decline an annualized 2.6% over the 10 years to 2025.
Meanwhile, US GDP is projected to grow an annualized 1.4% during the period. In
general, any large fluctuations in the industry mirror conditions in the overall
economy, further pointing to the Vegetable Farming industry's maturity. Moreover,
an IVA statistic that lags behind the expected growth rate of GDP cements this
industry as mature. Declines in IVA during the current period have been exacerbated
by falling profitability and falling wages as a share of revenue, which are key
components of this statistic.
Lastly, due to the industry's many diverse segments, revenue and growth are
generally quite steady, with any drastic changes in a given segment being offset by
a contrasting 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 industry's
maturity.
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Products and Markets

Supply Chain KEY BUYING INDUSTRIES KEY SELLING INDUSTRIES
1st Tier 1st Tier
Canned Fruit & Vegetable Processing in Crop Services in the US
the US
Tractors & Agricultural Machinery
Fruit & Vegetable Wholesaling in the US Manufacturing in the US
Warehouse Clubs & Supercenters in the Water Supply & Irrigation Systems in the
US US
2nd Tier 2nd Tier

Supermarkets & Grocery Stores in the US Fertilizer Manufacturing in the US
Fruit & Vegetable Markets in the US Commercial Building Construction in the
US
Specialty Food Stores in the US
Coal & Natural Gas Power in the US
Products and
Services
The Vegetable Farming industry produces a wide range of

vegetables and melons.
The majority are grown in open fields, while the rest are grown under cover.
Potatoes (estimated to account for 20.1% of industry revenue in 2020), lettuce
(14.6%), tomatoes (10.0%), onions (4.4%), sweet corn (4.6%), bell peppers (2.8%)
and broccoli (4.0%) are among the largest vegetable segments within this industry.
These crops' share of revenue has largely remained steady over the past decade,
and this is not expected to change significantly over the five years to 2025.
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However, there are yearly variations due to relative price fluctuations and crop-
specific production or supply 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, so 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 an estimated half the
total harvest but less than 10.0% of industry revenue because of the lower prices
farmers receive for them. Processed vegetables' portion of revenue has been fairly
stable over 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 over the
five years to 2020. However, since all greenhouse crops account for only a small
portion of overall industry revenue, this growth has been marginal overall.
The other vegetables category includes all remaining vegetable varieties, such as
asparagus, mushrooms, cabbage, carrots, celery, green peas, sweet peppers and
others. Herbs and spices are also part of this industry's products, mainly grown in
greenhouses. Overall, other vegetable products are expected to account for 37.1%
of industry revenue in 2020.
Demand Vegetables are sold to fresh and processing markets.

Determinants
As a result, any factors that improve demand for either of these downstream
markets will increase returns to farmers. The largest factors that influence
Vegetable Farming industry demand are dietary trends, produce price, consumer
incomes, exchange rates and produce quality.
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 Administration's recommendations for low-fat diets and
increased media attention on nutrition issues have helped raise consumer
awareness about the benefits of vegetable consumption. Demand for vegetables
may increase as the nation continues to reduce the fat content of its collective diet.
Price
Demand for vegetables is sensitive to large price changes.
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Smaller increases in price can have a positive effect on the Vegetable Farming
industry by maintaining the same level of demand while achieving a higher price per
unit. However, large increases 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 deadfalls in production.
Retailers and wholesalers often try to smooth out falls in production by importing
fresh produce or dedicating more acreage for under-cover growth. This demand
determinant could become more significant in 2020 as COVID-19 (coronavirus)
causes bottlenecking in the distribution supply chain, which will drive prices up at
the retail level due to relative scarcity, while industry products pile up at the farm
gate. Overall, as prices rise, some consumers may be persuaded to forego
purchases of some product segments or cause them to substitute.
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 low-cost
vegetables and purchase more-exotic vegetables or organic produce when incomes
rise, keeping consumption at or near the same levels. Moreover, as household
incomes rise, it is likely that consumers will increase the number of meals eaten
outside the home, which will serve to increase sales of higher-margin industry
products at restaurants and eateries over inferior goods. This factor may also
affect demand in 2020 as the coronavirus outbreak has increased unemployment
and decreased per capita disposable income in this year alone. As a result,
purchases of industry products may be driven by income-focused decisions.
Exchange rates
Exchange rate movements directly affect demand for US vegetables

and melons in foreign markets.
Like domestic manufacturers, overseas customers are sensitive to price increases.
Any appreciation in the value of the US dollar will erode the price competitiveness
of US-grown vegetables abroad. This, combined with increased production
overseas (particularly in China) and the removal of trade barriers in some parts of
the world, has served to increase global competition and reduce demand overseas
for US-grown 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 is able to develop flavorful, high-quality tomatoes,
demand may increase. Similarly, the introduction of new types of mushrooms and
research into alternative products (such as mushroom tea) may also boost demand
22 IBISWorld.com
for greenhouse mushrooms. Overall, changes in product attributes arise out of a

need to meet shifting consumer preferences to garner higher revenue gains.
Major Markets
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 farmer's markets. Furthermore, the
export market comprises a significant share of revenue for the Vegetable Farming
industry.
Fresh markets
Markets for fresh produce are expected to account for 50.1% of industry revenue in
2020. Supermarkets and other grocery stores are often the primary outlet for fresh
produce, but within this segment is also food service-related industries. 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. Over the five years to 2020, large retailers such as Walmart
Inc. and Safeway Inc. have sourced their produce directly from farmers to cut
purchasing costs, thereby avoiding wholesaler markups. Additionally, this has put
some downward pressure on prices because large retailers have substantial
bargaining power. Overall, the fresh segment has increased marginally in 2020,
though is well within normal ranges.
Processing markets
Vegetables that are grown for processing, are usually harvested mechanically and
transported in bulk containers to processing plants. Many of these vegetables are
grown under long-term contracts between farmers and processors. As processing
has now been extended to the fresh market through prepackaged salads and ready-
to-eat vegetable packs, contract sales are becoming more common throughout the
industry, and this segment's share of industry revenue has slightly increased.
23 IBISWorld.com
However, the majority of industry revenue comes from fresh vegetable segments,
which compete directly with the processed vegetable segment. In 2020, vegetable
processors are estimated to account for a combined 34.0% of industry revenue,
while canning vegetable account for 27.6% of industry revenue and frozen
vegetables account for 6.4% of industry revenue in 2020.
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 and the United States, Mexico, Canada Agreement. Despite increasing
trade levels, the export market for this industry remains moderate because
transporting fresh vegetables is not cost effective. Overall, the export market is
expected to account for 15.9% of industry revenue in 2020.
International Exports in this industry are Medium and Steady

Trade
Imports in this industry are High and Increasing
The United States is a net importer

of vegetables and melons. To
supplement production and supply
fresh vegetables year-round, the
Vegetable Farming 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 dollar depreciates.
This is because a stronger dollar
makes imports cost comparatively
less to consumers, with the opposite
effect on foreign buyers of US
goods.
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 diminish 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 over the past decade,
24 IBISWorld.com
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 capture 36.8% of
domestic demand, and exports account for 15.9% of industry revenue.
Imports
Over the five years to 2020, import values have grown at an annualized rate of 2.8%
to an estimated $9.8 billion. An appreciating US dollar, high consumer demand for
year-round fresh vegetable availability and an ever-expanding American palate has
created demand for foreign produce. The main sources of imports into this industry
are Mexico, Canada, Peru and Guatemala. The low labor cost in many of these
countries makes lower-cost 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 such as 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 three-quarters of domestic consumption. Lastly, the US
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.
Over the five years to 2025, international trade conditions are expected to reverse,
with the dollar anticipated to depreciate an annualized 1.0%, which will likely cause
import volumes to fall.
Exports
The biggest contributors to industry exports 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 decrease at an annualized rate of
0.3% to $3.2 billion over the five years to 2020; export growth has been constrained
by the appreciating dollar, which has made US-grown produce less affordable on
the international market. Due to the difficulty of transporting industry products long-
distance, nearly 70.0% of exports go to either Canada or Mexico. The remaining top
destinations for US exports include Japan and the Netherlands. Over the five years
to 2025, international trade conditions are expected to reverse, with the dollar
anticipated to depreciate, which is anticipated to increase export volumes at an
annualized rate of 1.5% to reach $3.4 billion. Additionally, though not a major
trading partner for broad vegetables, India sources a high quantity of chickpeas or
garbanzo beans from the United States. However, rising imports into India has
caused domestic prices to dip below the price floor set by the Indian government,
which has caused a 60.0% tariff to be imposed on chickpea imports by the Indian
government. This has served to weaken demand from India for US-exported
chickpeas.
25 IBISWorld.com
Business
Locations Business Concentration in the United States
WA
MT ME
ND
VT
OR MN
NH
ID WI
SD NY MA
WY MI CT RI
IA PA
NV NJ
NE
OH MD
IL IN DC DE
UT
CO WV VA
KS MO
CA KY
NC
AZ TN
OK
NM SC
AR
AL GA
MS
TX LA
FL
AK
Percentage of Acres Planted (%)

HI
0 28 56 84
Vegetable Farming in the US

Source: IBISWorld
Historically, vegetable and melon farms have been established on urban fringes.
However, the rising values of metropolitan land and encroachment by housing
26 IBISWorld.com
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 produce the best quality and
highest profit margins. As a result, large producers are predominately located in
states such as California (43.0% of industry establishments) and Florida (7.5%),
which make up more than two-thirds of the Vegetable Farming industry's revenue
while comprising over half of total production volume.
Farms in the Southern states typically contract to processors. Growers in this

region have access to readily available low-cost labor and growing conditions that
are sufficient but not optimal. These states are also established manufacturing
centers, and being located close to them results in transportation cost savings.
However, even in the processing market, California is the single-largest player due
to sheer size and production capacity.
The remaining states are typically smaller, less-profitable, family-owned farms.

These farms, and thus the regions they reside in, contribute very little to total
industry revenue. Vegetable farms in the Mid-Atlantic (4.9%) and New England
(0.0%) 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 requirements, with an average of just 42.0 acres of land,
compared with 229.0 acres for field-grown vegetables. They are also less
dependent on weather conditions than their field crop counterparts, enabling them
to operate close to large markets, which are mainly concentrated in the Mid-Atlantic
and West (52.7%) regions. Overall, few states outside of California, Florida and
Wisconsin (6.9%) and Minnesota (6.8%) command more than 5.0% of either total
revenue or total production volume.
According to the US Department of Agriculture, the production of greenhouse crops

has been gradually shifting from the eastern states to the Southwest region (8.4%).
The first large greenhouses were opened in the 1990s in Pennsylvania, close to
power plants, since 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. To
take advantage of the winter season, greenhouse operators decided to relocate to
the Southwest (particularly Arizona and New Mexico), where weather conditions
enable companies to maximize production in winter.
27 IBISWorld.com
28 IBISWorld.com
Competitive Landscape
Market Share Concentration in this industry is Low
Concentration
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, nearly 6.0% of farms are
commercial farms that dominate the
Vegetable Farming industry in terms of
acreage and revenue. Even so, the
production value is dispersed such that no
single farm receives a large proportion of
the industry's 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 the Vegetable Farming
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 enabling 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 enable farmers to realize many of the benefits of
economies of scale by pooling resources. Concentration is not expected to be
particularly affected by the COVID-19 (coronavirus) outbreak.
29 IBISWorld.com
Key Success IBISWorld identifies 250 Key Success Factors for a business. The most important for this
Factors industry are:
Economies of scale: Reducing average costs by spreading fixed costs over larger
production volumes enables field and greenhouse vegetable growers to be more
competitive. These lower per-unit costs enable farmers to widen profit without raising
prices.
Production of premium produce: Farmers who produce premium vegetables and melons
can find buyers in the fresh produce market where prices are highest (compared with the
processing market). Premium goods can also generate brand loyalty.
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 farm's viability. Farmers need to be able to change their
production mix to maximize farm returns.
Establishment of export markets: The ability to identify and market vegetable harvests
to customers overseas reduces a farmer's dependence on the local market.
Appropriate physical growing conditions: The presence of fertile soils and other
appropriate growing conditions play a critical role in shaping the success of growing
vegetables and melons. Growing conditions influence harvest levels and crop quality.
Availability of irrigation water: Water access issues can affect the quality of vegetable
harvests and the area of land devoted to vegetable growing.
Cost Structure
Benchmarks
30 IBISWorld.com
Profit
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. However, 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,
due to domestic and international weather
patterns, returns can vary unpredictably from
year to year. For example, if an unprecedented
frost kills a farmer's output, they will have no
choice but to absorb their losses. However, if
weather conditions limit supply in other
vegetable-producing regions or countries, a
farmer can benefit by growing more crops to
meet the shortage. In 2020, IBISWorld estimates
that industry profit (measured as earnings
before interest and taxes) accounts for 7.6% of
revenue, which is more normal than the highs
exhibited in 2015 due to the commodities run-
up, however industry profitability is expected to
take a hit in 2020 as a result of the COVID-19
(coronavirus) outbreak. Overall, as prices at the
farm gate and at retail levels diverge, industry
farmers are expected to take in less revenue per
sale, or perhaps even increase waste should
they be unable to get produce to market, both of
which will cause industry profitability to decline
in 2020 alone.
Wages
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
31 IBISWorld.com
fluctuate with the seasons, 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. Moreover, industry operators will often
hire out seasonal labor when they need extra
workers for harvest, laying them off when
production slows in the winter months, making
industry employment highly seasonal.
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 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
increased over the five years to 2020, totaling an
estimated 10.5% in 2020, up from 9.1% in 2015.
Labor effects at the farm level as a result of the
coronavirus outbreak have been minimal, since
industry employment is often seasonal in
normal economic conditions, and rising capital
intensity has reduced labor needs to a degree,
as evidenced by a declining number of industry
employees. Therefore, in 2020 wages appear to
have increased as a share of industry revenue
as a result of industry wages rising marginally
during the period, while industry revenue
contracted.
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 lower-cost seeds. On average, fertilizer costs
make up an estimated 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
2020, purchase costs account for an estimated
34.1% of revenue, which have risen in recent
years due to rising costs of production.
Furthermore, purchase costs may rise further
32 IBISWorld.com
should supply chains become increasingly

disrupted as a result of coronavirus.
Depreciation
Depreciation charges can vary widely for the

various types of operators within this industry,
though on average, depreciation accounts for
5.3% of revenue in 2020, a slight decrease from
5.8% in 2015. Though depreciation has come
down slightly, industry capital intensity has
declined since 2015, representing a slowing in
adoption of new technologies. However, they
have been rising since a comedown in the
middle of the period, which implies some
heightened degree of capital intensity. New
technology adoption has been inhibited by
declining farm incomes and rising levels of debt.
While field producers can minimize their capital
expenses by outsourcing harvesting, for
example, farmers that specialize in growing
crops under cover depend on large capital
investments to continue operating. Since most
harvests are done by hand (except for potatoes)
depreciation is low, with equipment often being
rented to keep depreciation charges down.
Marketing
Industry marketing costs are low, accounting for

just 1.1% of total revenue. Marketing is most
often directed to small local farmers markets
and communities, since the largest
differentiation between products is price.
Typically, most growers will be contracted to
grow a specific quota at a specific rate, thereby
eliminating the need for heavy marketing.
Rent
Rent is also a substantial part of industry

expenses, accounting for 7.7% of industry
revenue in 2020 and more, on average, for
producers of greenhouse crops, as these require
special housing to grow. Greenhouse expenses,
including buildings, land and infrastructure, are
included under this title. 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.
33 IBISWorld.com
Utilities
Utilities are estimated to account for a

combined 12.7% of revenue in 2020. Fuel, oil,
electricity and water expenditures are included
under the utilities heading. These are among the
most volatile components of a farmer's cost
structure and also largely outside their control.
Utility costs have declined slightly over the past
five years.
Other Costs
Other costs include administrative fees and

insurance costs. Though the federal government
offers crop insurance programs, private crop
insurance has been on the rise in more recent
years as a result of weak price growth and
volatile production conditions. This ensures a
farmer will be profitable despite potential poor
weather conditions or weakened supply.
Basis of Competition in this industry is Medium and Steady

Competition
Production costs and price
Production costs are a key competitive factor among operators in

the Vegetable Farming industry, 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 significantly lower compared with
vegetables sold on the fresh market. In addition, they are usually grown as part of a
34 IBISWorld.com
contract with a processing plant, which will prefer to buy produce at the lowest cost
possible. This factor is likely to become more prominent as a line of competition as
a result of the COVID-19 (coronavirus) outbreak, since cost will be more of a factor
when consumers decide to purchase industry products.
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, organic-certified farmers are able to command a higher
price. Though a basis 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.
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. Consequently, farmers of different produce will have different cost
structures, output volumes and prices. Moreover, the choice to grow one vegetable
over another represents an opportunity cost that also must be managed to remain
competitive.
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 America's reputation as a producer of safe food.
External competition
In a strict diet, competition for each calorie is intense.

Vegetable and melon growers must also compete with an ever-increasing range of
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.
35 IBISWorld.com
Outside the United States, the industry competes with food producers in other
regions such as 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. Moreover, since it is difficult to transport and
maintain fresh produce over long distances, the Vegetable Farming industry is
insulated somewhat from import competition, on a broad basis. The industry still
must contend with trade conditions primarily concerning Mexico and Canada,
fellow members of the North American Free Trade Agreement.
Barriers to Entry Barriers to entry in this industry are Low and Steady
Overall, there are few barriers to entry

into the Vegetable Farming industry, Barriers to entry checklist
most of which can easily be Competition Medium
surmounted. Required inputs are readily
Concentration Low
available and there are often farms for
sale. The most significant barriers are Life Cycle Stage Mature
the capital investment requirements
Technology Change Medium
associated with establishing any farm
and establishing contracts with Regulation & Policy Medium
downstream outlets.
Industry Assistance Medium
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 US Department of Agriculture's 2017 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 industry's 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. Moreover, due to the volatile and
unpredictable nature of this industry, would-be entrants may find it difficult to obtain
the credit or financing from financial intermediaries.
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, which buy the crop according to
predetermined conditions (based either on price or on 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,
whether 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.
36 IBISWorld.com
Industry Globalization in this industry Medium and Increasing

Globalization
Although foreign ownership in the local Vegetable Farming 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 industry's revenue. This makes
US growers sensitive to changes in foreign-exchange markets, world vegetable
supplies (particularly from 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
effect on the level of demand for industry products.
37 IBISWorld.com
Major Companies
Major Players THERE ARE NO MAJOR PLAYERS IN THIS INDUSTRY
Other Players The presence of many small farms, with very few operating as companies,
characterizes the Vegetable Farming industry. 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 serve the interests of a group of
growers in a particular region or state.
BOLTHOUSE FARMS
Market Share: 4.0%

Founded in 1915 and headquartered in Bakersfield, CA, Bolthouse Farms
(Bolthouse) is a vertically integrated farm company that is a leading producer of
carrots. Bolthouse 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. In 2012,
Bolthouse was acquired by Campbell Soup Company (Campbell) for $1.6 billion, but
was sold in 2019 by Campbell to private equity firm Butterfly Equity for $510.0
million. With this sale, Campbell has completed its divestiture of the
underperforming Campbell's Fresh segment, and thus has exited the industry. As a
private entity, there is little financial information surrounding Bolthouse Farms, but
IBISWorld expects the company to earn an estimated $523.2 million in 2020, as
results are slightly boosted by rising vegetable prices in 2020 alone.
MONTEREY MUSHROOMS INC.
Market Share: 3.0%

Headquartered in Watsonville, CA, Monterey Mushrooms Inc. (Monterey
Mushrooms) is reportedly the largest grower, shipper and marketer of fresh
mushrooms in the United States, employing 3,500 individuals, which makes the
company eligible to receive paycheck protection plan loans. Since the company's
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 revenue to reach $632.8 million in 2020.
Monterey Mushrooms' Fresh Division carries out the mushroom growing. This
operating arm includes nine mushroom farming facilities located in California,
Florida, Illinois, Texas, Tennessee and Pennsylvania, along with a further two
facilities in Mexico and Canada. Fresh mushrooms represent the majority of the
company's sales. Its line of mushrooms includes varieties such as portobello,
38 IBISWorld.com
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. The company has been able to
increase revenue in recent years due to upticks in the average selling price of
mushrooms during the period, while results in 2020 have been poropelled by rising
consumer demand for fresh produce.
39 IBISWorld.com
Operating Conditions
40 IBISWorld.com
Capital Intensity The level of capital intensity is High
Relative to the sector, capital expenditure in

the Vegetable Farming industry 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 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 limits salability within the
fresh segment. This translates into fairly large
labor expenses, compared with lower
depreciation.
Nevertheless, the Vegetable Farming

industry's 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 $0.51 to capital
equipment. Over the five years to 2020, the
industry's capital intensity has come down
slightly, reflecting a deceleration in technological change. This has occurred as a
result of diminishing cash returns at the farm gate and an increase in farm debt.
However, it should be noted that though capital intensity is lower than it was in
2015 it has been rising to reach these peak levels on a more consistent basis, which
reflects an increasing capital intensity, but levels still remain below those of 2015.
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, particularly in the precision-agriculture methods
variety of equipment.
Technology And Potential Disruptive Innovation: Factors Driving Threat of Change

Systems Level Factor Disruption Description
A ranked measure for the number of

Rate of patents assigned to an industry. A faster
High Likely rate of new patent additions to the
Innovation industry increases the likelihood of a
disruptive innovation occurring.
A qualitative measure of barriers to entry.

Fewer barriers to entry increases the
High Ease of Entry Likely likelihood that new entrants can disrupt
incumbents by putting new technologies
to use.
41 IBISWorld.com
Level Factor Disruption Description
Annualized growth in the number of

enterprises in the industry, ranked against
High Rate of Entry Likely all other industries. A greater intensity of
companies entering an industry increases
the pool of potential disruptors.
A ranked measure of the largest core

Market market for the industry. Concentrated core
High Likely markets present a low-end market or new
Concentration market entry point for disruptive
technologies to capture market share.
A measure for the mix of patent classes

Innovation assigned to the industry. A greater
Moderate Potential concentration of patents in one area
Concentration increases the likelihood of technological
disruption of incumbent operators.
The industry has a high rate of new patent technologies combined with moderately
concentrated focus of patent types. New technology entering the industry increases
the likelihood of discontinuous innovations. This presents a technology focus
whereby new activity has a moderate potential to enter through less high-end areas.
This technology trend is underscored by structural factors that support new

entrants. An accommodative structure can create a situation where small entrants
can focus on less profitable albeit innovative industry entry points. Or, large
operators in other industries can leverage expertise in other areas to enter the
industry from a new angle.
The major markets for this industry are highly concentrated, which implies that the
market has a focus on key customer segments. This presents an opportunity for
strategic entrance into lower-end markets or unserved markets for innovations to
take on a disruptive trajectory.
This Vegetable Farming industry is experiencing a degree of

technological disruption via the introduction of genetically modified
(GM) seeds.
It is important to note that this technology is not the most recent advancement, but
the effects of efficient GM seeds are influencing the entire agricultural sector.
Currently, GM seeds serve as a form of technological disruption by causing end
stocks and yields per acre to rise too quickly, expanding supply and depressing
prices. Even though farmers are scaling back acres planted, output has continued
to grow. Overall, this has made planting seasons difficult over the five years to 2020,
with rising production equating to continued declines in output prices for the
industry. As a result, though GM seeds are an innovation meant to aid the industry,
they are currently disrupting farmers' performance more than they are helping.
The level of technology change is Medium
The technology associated with growing horticultural crops has

changed significantly over the past two decades or so.
42 IBISWorld.com
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
Vegetable Farming industry. The modern and highly mechanized methods used by
US growers 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 used.
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 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 contend with 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 United States. Although this was found to
be against World Trade Organization regulations in 2006 and opposition has
softened, there is still no widespread consumer acceptance. Greenhouse crops,
however, are not yet grown through the GM method because they are protected
from a majority of pests and weather-related dangers.
Technology is also improving water efficiency in irrigation. Advances in irrigation

include the introduction of micro-irrigation. This includes trickle/drip, microspray
and minisprinkler systems that are designed to target water at the root zone of
vegetable plants rather than traditional watering systems that wet the whole crop.
Intensive crop and vine production has been an important breakthrough in

vegetable and melon farming. The adoption of intensive production is beginning to
provide growers with lower per-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).
Additionally, more recently, there has been a push for more precision agriculture
methods such as auto-steering tractors, GPS guided planters and drone technology.
Currently this technology is not widespread as it its highly expensive, but adoption
rates should increase in the future as the benefits of such capital outlays become
apparent to industry operators.
43 IBISWorld.com
Revenue Volatility The level of volatility is High
Note: Revenue growth and decline reflective of 5-year annualized trend. Y-axis is in
logarithmic scale. Y-axis crosses at long-run GDP. X-axis crosses at high volatility
threshold.
While the various segments of the Vegetable Farming industry can

fluctuate considerably from year to year, the Vegetable Farming
industry as a whole has a high 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 an opposing 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 vegetable and toward
another. Furthermore, crops grown under cover are less prone to changes in
weather, which makes this segment's output less volatile. While these effects do
not perfectly balance each other, they do make total revenue for the industry sticky.
However, it should also be noted that the COVID-19 (coronavirus) outbreak has
increased volatility in 2020 as bottlenecking of the supply chain has exacerbated
price swings.
Regulation & The level of regulation is Medium and is Steady

Policy
There are seven federal marketing orders that apply to the
Vegetable Farming industry 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),
44 IBISWorld.com
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 set out by the Food and Drug Administration.
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 such as the Environmental Protection

Authority also monitor the environmental effect 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 over the previous three years and a written Organic
System Plan describing the practices and substances to be used in future farming
operations. Moreover, strict penalties are imposed on growers who market their
products as organic without USDA certification.
Industry The level of industry assistance is Medium and is Steady

Assistance
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 Vegetable Farming industry still benefits from a variety of government
programs that are designed to promote the growth and consumption of vegetables
in the United States.
2018 farm bill provisions
The 2018 farm bill does not present any drastic changes to industry
regulation or assistance, though some methods of crop insurance
and payment methods have been streamlined.
Perhaps the most drastic change between this iteration of the Farm Bill and its
previous version is that funding for specialty crops has risen 55.0%, which includes
increased funding for fruit and vegetable farmers. It is expected that the new Farm
Bill will increase demand for fruits and vegetables via spending initiatives and an
expected $1.0 billion in purchases of crops for public schools and service
institutions.
45 IBISWorld.com
The policies regarding crop insurance, which are federally supported and cover
more than 120 different crops, will remain largely unchanged, though price
thresholds can now be pegged to a national benchmark or a regional benchmark.
Should prices for a given product fall below 80.0% of the peg, government
assistance and insurance programs will be paid out.
Additionally, the farm bill promotes several programs that aim to funnel money into
the Vegetable Farming industry. These programs include the $400.0 million for crop
research, $375.0 million for block grants, $200.0 million for farmers markets and
local food promotion programs, 167.5 million for organic agriculture and up to 140
million for the Food Insecurity Nutrition Incentive. Overall, the 2018 Farm Bill does
not structurally depart from the 2015 version, though payment systems have been
streamlined and funding has been increased.
Overall, however, it is not expected that this version of the bill will give struggling
farmers the relief they need. The mandates of this bill largely leave issues such as
fair pricing, supply management programs, the rising instance of contract growing
and climate change unaddressed.
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 Agriculture's (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 USDA's Risk Management Agency administers subsidized crop

insurance policies. The insurance is purchased before the growing season and
provides an indemnity payment if the farmer's 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 2015 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 cooperatives to help expand markets overseas
for US agricultural products. The National Potato Promotion Board is a major
beneficiary of this program.
Additionally, international trade agreements such as the United States-Mexico-

Canada Agreement (USMCA) and the Central American Free Trade Agreement have
assisted the industry by removing trade barriers and enabling 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
46 IBISWorld.com
of mushrooms; however, imports from Canada (which account for over 80.0% of
imported mushrooms) are free from tariffs under USMCA.
Taxes and checkoffs
Vegetable farmers experience the same tax benefits offered to all

US farmers, including several tax breaks and acceptable 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
industry's product. However, the 2015 farm bill contains a provision which enables
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 an estimated $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.
Industry organizations
In the private sector, US vegetable and melon growers receive

assistance from the lobbying efforts of industry associations.
Membership organizations include bodies such as 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.
CARES Act
In response to the COVID-19 (coronavirus) outbreak, the federal

government has passed the Coronavirus Aid, Relief, and Economic
Security (CARES) Act, dumping over $4.0 trillion into the economy
via stimulus funding.
47 IBISWorld.com
Primarily, these funds will be issued to the Small Business Administration (SBA),
which is offering qualifying companies Paycheck Protection Plan loans, of which
80.0% of SBA funding must be used for covering employee paychecks. However,
only companies with over 500 individuals are eligible, which indicates that not many
industry farmers will be eligible to receive SBA paycheck protection loans.
48 IBISWorld.com
Key Statistics
Industry Data
Demand vegetables
2011 20,560 4,735 42,527 38,127 132,876 3,280 7,598 1,939 24,878 100.0
2012 19,940 4,949 43,021 38,551 135,642 3,091 7,444 1,639 24,292 91.9
2013 21,935 7,363 43,472 38,902 136,412 3,279 8,387 2,493 27,042 104
2014 20,941 7,578 43,934 39,256 138,694 3,258 8,336 2,008 26,019 103
2015 22,264 6,430 44,375 39,614 138,496 3,236 8,547 2,022 27,575 109
2016 21,152 5,762 44,800 39,974 137,778 3,280 9,568 2,229 27,440 104
2017 21,772 5,738 45,165 40,339 135,361 3,335 9,347 1,798 27,784 114
2018 19,227 4,435 45,783 40,890 133,467 3,268 9,589 1,993 25,548 107
2019 20,814 4,802 46,114 41,186 129,827 3,321 9,976 2,158 27,468 122
2020 20,051 4,689 45,608 40,803 126,597 3,193 9,820 2,099 26,678 124
2021 20,254 4,734 45,877 41,033 127,317 3,239 9,758 2,112 26,773 127
2022 20,462 4,779 46,132 41,249 128,004 3,293 9,664 2,126 26,833 130
2023 20,667 4,816 46,366 41,446 128,688 3,342 9,594 2,139 26,918 133
2024 20,870 4,878 46,579 41,624 129,386 3,392 9,523 2,153 27,001 136
2025 21,077 4,948 46,781 41,790 130,172 3,443 9,452 2,168 27,086 139
Annual Change
Demand vegetables
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
2011 3.51 -20.8 1 1 1 4.07 7.42 -10.4 4.61 -3.39
2012 -3.02 4.51 1 1 2 -5.76 -2.04 -15.5 -2.36 -8.10
2013 10.0 48.8 1 1 1 6.07 12.7 52.1 11.3 12.9
2014 -4.54 2.93 1 1 2 -0.67 -0.61 -19.4 -3.78 -0.49
2015 6.31 -15.2 1 1 -0 -0.66 2.53 0.68 5.98 5.32
2016 -5.00 -10.4 1 1 -1 1.35 11.9 10.2 -0.49 -4.51
2017 2.93 -0.41 1 1 -2 1.67 -2.32 -19.4 1.25 9.43
2018 -11.7 -22.7 1 1 -1 -2.03 2.59 10.9 -8.05 -5.72
2019 8.25 8.27 1 1 -3 1.64 4.03 8.25 7.52 13.5
2020 -3.67 -2.36 -1 -1 -2 -3.86 -1.57 -2.73 -2.88 2.20
2021 1.01 0.96 1 1 1 1.43 -0.63 0.65 0.36 2.32
2022 1.02 0.94 1 1 1 1.67 -0.97 0.63 0.22 2.29
2023 1.00 0.77 1 0 1 1.49 -0.74 0.63 0.32 2.25
2024 0.98 1.27 0 0 1 1.48 -0.74 0.62 0.31 2.25
2025 0.99 1.44 0 0 1 1.49 -0.75 0.68 0.31 2.25
Key Ratios
Year IVA/Revenue Imports/Demand Exports/Revenue Revenue per Wages/Revenue Employees per Average Wage
Employee estab.
(%) (%) (%) ($'000) (%)
2011 23.0 30.5 16.0 155 9.43 3.12 14,591
2012 24.8 30.6 15.5 147 8.22 3.15 12,082
2013 33.6 31.0 14.9 161 11.4 3.14 18,276
2014 36.2 32.0 15.6 151 9.59 3.16 14,479
2015 28.9 31.0 14.5 161 9.08 3.12 14,599
2016 27.2 34.9 15.5 154 10.5 3.08 16,180
2017 26.4 33.6 15.3 161 8.26 3.00 13,280
2018 23.1 37.5 17.0 144 10.4 2.92 14,933
2019 23.1 36.3 16.0 160 10.4 2.82 16,618
2020 23.4 36.8 15.9 158 10.5 2.78 16,578
2021 23.4 36.4 16.0 159 10.4 2.78 16,592
2022 23.4 36.0 16.1 160 10.4 2.77 16,609
2023 23.3 35.6 16.2 161 10.4 2.78 16,625
2024 23.4 35.3 16.3 161 10.3 2.78 16,639
2025 23.5 34.9 16.3 162 10.3 2.78 16,652
49 IBISWorld.com
Industry Financial Ratios

April 2018 - March 2019 by company revenue
Liquidity Ratios April 2015 - April 2016 - April 2017 - April 2018 - Small (< Medium Large (>
March 2016 March 2017 March 2018 March 2019 $10m) ($10m-50m) $50m)
Current Ratio 1.5 1.4 1.5 1.4 1.3 1.9 1.4
Quick Ratio 0.9 0.8 0.8 0.8 0.6 1.2 0.7
Sales / Receivables (Trade Receivables Turnover) 14.2 13.6 13.0 10.3 12.3 8.8 10.1
Days' Receivables 25.7 26.8 28.1 35.4 29.7 41.5 36.1
Cost of Sales / Inventory (Inventory Turnover) 13.6 23.0 16.2 13.0 566.7 38.3 9.5
Days' Inventory 26.8 15.9 22.5 28.1 0.6 9.5 38.4
Cost of Sales / Payables (Payables Turnover) 16.9 22.6 19.4 17.2 95.1 22.8 9.9
Days' Payables 21.6 16.2 18.8 21.2 3.8 16.0 36.9
Sales / Working Capital 15.2 22.3 18.0 15.8 23.1 11.2 16.5
Coverage Ratios
Earnings Before Interest & Taxes (EBIT) / Interest 6.7 3.8 4.1 1.8 1.0 2.5 1.2
Net Profit + Dep., Depletion, Amort. / Current 3.9 2.2 3.0 3.9
Maturities LT Debt
Leverage Ratios
Fixed Assets / Net Worth 1.0 1.2 1.3 1.1 2.4 1.1 0.9
Debt / Net Worth 1.4 1.6 1.5 1.6 5.9 1.5 1.3
Tangible Net Worth 30.5 29.5 28.3 31.4 4.9 41.3 40.6
Operating Ratios
Profit before Taxes / Net Worth, % 16.9 16.5 12.2 7.0 11.6 7.0 3.5
Profit before Taxes / Total Assets, % 7.0 6.5 4.1 1.8 0.1 2.4 0.3
Sales / Net Fixed Assets 4.9 5.3 5.6 5.0 4.8 3.9 6.4
Sales / Total Assets (Asset Turnover) 1.6 1.8 1.8 1.7 1.8 1.6 1.8
Cash Flow & Debt Service Ratios (% of sales)
Cash from Trading 26.1 21.6 18.4 17.6 24.7 15.6 16.1
Cash after Operations 6.5 7.1 3.3 4.2 3.2 4.5 4.2
Net Cash after Operations 6.9 7.1 4.4 4.2 4.3 4.4 4.1
Cash after Debt Amortization 3.5 3.4 1.2 0.2 -1.3 1.6 0.3
Debt Service P&I Coverage 2.4 2.8 1.9 2.2 1.0 2.5 2.0
Interest Coverage (Operating Cash) 6.7 8.0 5.9 6.4 4.8 6.5 6.8
Assets, %
Cash & Equivalents 10.9 9.9 10.3 8.3 12.3 9.6 4.1
Trade Receivables (net) 15.5 15.8 17.2 20.9 17.0 23.2 21.3
Inventory 15.0 14.7 13.6 15.2 18.0 10.1 18.6
All Other Current Assets 5.4 3.5 6.3 5.4 1.9 5.2 8.3
Total Current Assets 46.8 43.8 47.4 49.9 49.2 48.1 52.3
Fixed Assets (net) 41.1 41.0 39.6 38.4 37.6 41.2 36.1
Intangibles (net) 4.5 6.0 6.1 4.9 6.2 4.2 4.8
All Other Non-Current Assets 7.5 9.1 7.0 6.8 7.0 6.6 6.8
Total Assets 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Total Assets ($m) 3,893.8 4,295.5 4,017.8 3,709.6 112.3 816.3 2,781.1
Liabilities, %
Notes Payable-Short Term 9.8 15.8 12.5 12.9 19.2 10.9 10.4
Current Maturities L/T/D 4.8 3.3 4.6 3.3 4.7 2.8 2.7
Trade Payables 11.7 10.6 12.3 12.2 7.2 14.1 13.9
Income Taxes Payable 0.3 0.2 0.0 0.1 0.0 0.1 0.1
All Other Current Liabilities 7.6 7.0 10.1 7.0 11.4 3.9 7.1
Total Current Liabilities 34.2 37.0 39.5 35.5 42.5 31.7 34.2
Long Term Debt 24.4 22.8 23.1 22.3 32.1 18.8 18.6
Deferred Taxes 0.6 0.4 0.4 0.6 0.0 0.9 0.8
All Other Non-Current Liabilities 5.6 4.3 2.5 5.3 14.3 3.0 0.9
Net Worth 35.0 35.5 34.4 36.3 11.1 45.5 45.4
Total Liabilities & Net Worth ($m) 3,893.8 4,295.5 4,017.8 3,709.6 112.3 816.3 2,781.1
Maximum No. of Statements Used 120.0 121.0 119.0 90.0 24.0 34.0 32.0
Source: RMA Annual Statement Studies, rmahq.org. RMA data for all industries is derived directly from more than 260,000 statements of member
financial institution's borrowers and prospects.
50 IBISWorld.com
Additional Resources
Additional USDA Economic Research Service
Resources http://www.ers.usda.gov
National Agricultural Statistics Service

http://www.nass.usda.gov
AgWeb
http://www.agweb.com
Industry Jargon CHECKOFF

An industry-imposed tax on its own products, the proceeds from which are used for
research and promotion. Notable examples include milk ("Got Milk?") and pork ("The other
white meat").
COOPERATIVE
An organization owned and operated for the benefit of those using its services. In
agriculture, cooperatives often span several levels of the supply chain.
GENETICALLY MODIFIED
Refers to a plant or animal that has had its genomes modified through genetic engineering
techniques involving the transfer of genetic material from one organism to another.
Glossary Terms BARRIERS TO ENTRY

High 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.
51 IBISWorld.com
CONSTANT PRICES
The 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 IBISWorld’s reports are made using the US
Bureau of Economic Analysis’ implicit GDP price deflator.
DOMESTIC DEMAND
Spending 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.
EMPLOYMENT
The 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.
ESTABLISHMENT
The 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.
EXPORTS
Total 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 CONCENTRATION
An 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 REVENUE
The 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.
52 IBISWorld.com
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 industry's contribution to GDP,
or profit plus wages and depreciation.
INTERNATIONAL TRADE
The 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 CYCLE
All industries go through periods of growth, maturity and decline. IBISWorld determines an
industry's 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 industry's
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.
PROFIT
IBISWorld uses earnings before interest and tax (EBIT) as an indicator of a company’s
profitability. It is calculated as revenue minus expenses, excluding interest and tax.
REGIONS
West | CA, NV, OR, WA, HI, AK
Great Lakes | OH, IN, IL, WI, MI
Mid-Atlantic | NY, NJ, PA, DE, MD
New England | ME, NH, VT, MA, CT, RI
Plains | MN, IA, MO, KS, NE, SD, ND
Rocky Mountains | CO, UT, WY, ID, MT
Southeast | VA, WV, KY, TN, AR, LA, MS, AL, GA, FL, SC, NC
Southwest | OK, TX, NM, AZ
VOLATILITY
The 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%.
53 IBISWorld.com
WAGES
The gross total wages and salaries of all employees in the industry.
54 IBISWorld.com
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Vegetable Farming in The US Industry Report PDF

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US INDUSTRY (NAICS) REPORT 11120

Vegetable Farming in the US

IBISWorld.com +1-800-330-3772 info@IBISWorld.com

About This Industry...........................................5 Competitive Landscape...................................29

Industry Definition..........................................................5 Market Share Concentration....................................... 29

Industry at a Glance.......................................... 7 Major Companies............................................ 38

Executive Summary..................................................... 10 Major Players............................................................... 38

Products and Markets..................................... 20 Industry Data................................................................49

· Revenue in the Vegetable Farming industry is expected to contract in 2020 as a

About This Industry

Major Players There are no major players in this industry

Main Activities The primary activities of this industry:

Fresh green bean farming

Greenhouse vegetable production

The major products and services in this industry:

All other vegetables

RELATED INTERNATIONAL INDUSTRIES

Vegetable Growing in New Vegetable Growing in Ireland

Annual Growth Annual Growth Annual Growth 0.3% 3.7%

7.6% Life Cycle

Annual Growth Annual Growth Annual Growth

Annual Growth Annual Growth Annual Growth

Products & Services Segmentation

10.0% 20.1% 4.6% 14.6% 4.4% 5.2%

Tomatoes Potatoes Sweet corn Lettuce Onions Dry beans

Major Players % = share of industry revenue SWOT

Executive The Vegetable Farming industry consists of vegetable and melon

Key External Price of vegetables

Demand from fruit and vegetable wholesaling

Per capita fruit and vegetable consumption

Average annual precipitation

Current The Vegetable Farming industry is composed of vegetable and

Extreme variation is common in a farmer's output due to

However, as a result of the coronavirus outbreak, volatility has been exacerbated in

Health-conscious consumers drive profit

Over the past five years, consumers have become increasingly

Additionally, greenhouse crops are especially profitable because of their

Trade remains stable

Historical Performance Data

perceived benefits, IBISWorld expects greenhouse crops to grow as a percentage of

Steady weather and health consciousness

Barring calamitous weather such as hurricanes or droughts, the

Increased health consciousness among consumers is expected to continue,

Larger farms tend to be more capital intensive, involving extensive mechanized

Performance Outlook Data

LIFE CYCLE REASONS

Changes are incremental rather than groundbreaking

Vegetables are a staple in the American diet

Products and Markets

2nd Tier 2nd Tier

The Vegetable Farming industry produces a wide range of

Demand Vegetables are sold to fresh and processing markets.

Rising nutritional awareness and a preference for a produce-rich

Demand for vegetables is sensitive to large price changes.

Disposable incomes influence demand for vegetables.

Exchange rate movements directly affect demand for US vegetables

Although demand for greenhouse tomatoes has been quite strong in

for greenhouse mushrooms. Overall, changes in product attributes arise out of a

The export market is an increasingly important aspect of this industry, evidenced by

International Exports in this industry are Medium and Steady

The United States is a net importer

However, exchange rates have a

The vegetables most commonly imported include tomatoes, cucumbers, squash