S_Temp1088: Specialty Crops and Food Systems: Exploring Markets, Supply Chains and Policy Dimensions
(Multistate Research Project)
Status: Draft
S_Temp1088: Specialty Crops and Food Systems: Exploring Markets, Supply Chains and Policy Dimensions
Duration: 10/01/2025 to 09/30/2030
Administrative Advisor(s):
NIFA Reps:
Non-Technical Summary
Statement of Issues and Justification
The need as indicated by stakeholders
Since S-1088 participants represent multiple U.S. regions (23 different U.S. states in 2024) it is important to identify the needs of U.S. stakeholders as a whole. Innovation and specialty crop food supply chains is identified as a need by a wide group of stakeholders from government, academia, and industry. A 2023 USDA report focused on advanced research for food and agriculture notes that “where the challenges that faced agriculture mid-20th Century were single-focus challenges to increase production, today’s challenges require high impact, transdisciplinary and convergent research” including a focus on technology and advancements for specialty crops (USDA, 2023a). The NSF Technology, Innovation and Partnerships (TIP) Directorate inaugural roadmap notes that global competitiveness hinges on the ability to harness the power of technology to bridge sustainability and productivity. The USDA Science & Research Strategy identifies Accelerating Innovative Technologies and Practices; Driving Climate-Smart Solutions; Bolstering Nutrition Security and Health; Cultivating Resilient Ecosystems; and Translating Research Into Action as priorities (USDA, 2023b).
In academia, needs identified by the Association of Public Land Grant Universities, and the Experiment Station Committee on Organization and Policy—Science and Technology Committee, in their 2019 “Science Roadmap for Food and Agriculture” document (https://bit.ly/2K2JNYh) include the need for: U.S. food and agricultural producers to be competitive in a global marketplace; food and agricultural systems to be economically, environmentally, and socially sustainable; U.S. agriculture to adapt to and contribute to the mitigation of the effects of climate variability; resilient supply chains that can adapt to unforeseeable shocks; safe, healthy, and affordable foods; global food security and hunger; and good stewards of the environment and natural resources.
Similar needs are identified by industry groups. The International Fresh Produce Association (IFPA) Future Trends Report identifies priority trends in markets (labor, on-farm technology, biosecurity, trade, sustainability), consumers – (technology & sustainability, AI, price), and technology advancements and digital adoption (climate, labor, supply chain, food loss and waste, water) as well as government requirements. The Specialty Crop Farm Bill Alliance identified scientific breakthroughs, technological innovation and data-enabled decision-making as needs to drive long-term sustainability and profitability of the specialty crop industry (SCFBA, 2023).
In addition to these stakeholder needs, project members draw on their working relationships with state and regional industry associations and programs to frame current research and extension activities, and future collaborative work.
Importance of the Work
Strong, resilient produce industries are important contributors to societal priorities for food, nutrition and health, and resilient agriculture communities. We focus our activities on the economics of innovation throughout demand, supply, and policy aspects of specialty crop supply chains. Moving forward, innovation throughout all aspects of specialty crop food supply chains will be critical for sustainability (Klerkx and Begemann, 2020; Western Growers, 2022).
Food
For the past decade, overall consumer spending on food has been steadily increasing with only a slight decrease during the 2009 recession and 2020 COVID-19 [CITE]. In 2023 the total U.S. food expenditure was $2.6 trillion compared to $2.3 trillion in 2022 (USDA, 2024). The COVID-19 pandemic is an example of rapid adjustments in buying patterns as consumers changed where and how they purchased food. For example, sales to food service outlets, including restaurants, schools, and hotels rapidly declined as consumers turned to buying fresh produce almost entirely through the retail channel (Richards and Rickard, 2020). COVID-19 also impacted retail purchase patterns among produce categories (fresh, frozen canned, dried) and purchase methods (online, in store, delivery). This shift continues to impact food retailers, especially smaller retailers that participate less in online food sales. Farmers were forced to adapt production and marketing practices to satisfy the evolving consumer needs. A large percentage of retailers identify the produce department as one of the top three most successful in generating sales and driving traffic (Progressive Grocer, 2019). The popularity of fresh produce offers considerable potential for enhanced marketing revenues if producers can recognize and harness opportunities emerging from changes in food purchases. For example, there is some evidence that the COVID-19 pandemic has potentially solidified consumer interest in direct-to-consumer market outlets (e.g., CSA) (Hobbs, 2020) but long-term supply chain impacts are still to be determined.
Although the U.S, agricultural market is currently dominated (in terms of volume) by foods produced with conventional practices, alternative production practices have emerged and the number of differentiated specialty crops continues to grow. New crops, evolving production practices, and food characteristics (both visible and unobservable) provide multiple options. Consumers continue to demand new foods, new characteristics, and foods produced in unique ways (e.g. organic, local, pesticide-free, free of genetically modified organisms (GMOs), environmentally sustainable, labor-friendly) (Bir et al., 2019; Chen et al., 2018; Govindasamy et al., 2018; McFadden and Huffman, 2017; Rana and Paul, 2017).
This evolution and a need to differentiate themselves led to a proliferation of offerings among specialty crops. A growing number of farmers pursue new ways of producing and marketing their produce. For example, certified organic acreage continues to rise, increasing by 79 percent to 3.6 million acres in 2021. USDA estimates that organic retail sales increased about 8 percent annually with an estimated $52 billion in 2021, whereas fresh fruits and vegetables which dominate the organic sales, contributed $19.2 billion (Carlson and Raszap Skorbiansky, 2023). The produce industry is already taking advantage of the increased popularity of fresh produce among consumers by finding ways to better address consumer needs. For example, a collaboration between Washington State University researchers, tree fruit growers, and industry representatives resulted in a new apple variety (Cosmic Crisp) designed to make “consumers happy” (Hollenbeck, 2019).
Nutrition and Health
It is increasingly recognized that fresh fruit and vegetable consumption has an important role in the efforts to protect individuals against serious and costly chronic diseases such as obesity, heart disease, type 2 diabetes (Center for Disease Control and Prevention (CDC), 2018; CDC, 2020).
Availability, access, and affordability of fruits and vegetables continues to be a public health concern in the United States. Even though U.S. individuals are currently eating more fresh fruits and vegetables per capita than in 1970, the average U.S. diet is still not aligned with the 2015-2020 Dietary Guidelines for Americans for fruit and vegetable consumption (Stewart and Hyman, 2019; USDA, ERS, 2020; CDC, 2018). Therefore, government efforts to increase fruit and vegetable consumption continue (USDA, ERS, 2020; Food and Nutrition Service, USDA, 2019; Minor and Perez, 2018; Cook, 2011). An example of a market model trying to promote access to local and healthy foods among low-income families is the Fresh Stop Markets (FSMs). FSMs are “pop up” farm fresh markets at public spaces in food-insecure neighborhoods to provide local fresh produce on a sliding scale based on income. Evaluating farmers' willingness to sell produce through FSMs is an important component for assessing the replicability of the model in other regions of the country.
Resilient Communities
Specialty crops include a myriad of diverse commodities, markets, and supply chains– many of which are individually small in terms of national acreage or farm numbers. Yet, in aggregate, specialty crops production contributed nearly $75 billion to total U.S. agriculture value of $355 billion in 2020 (USDA ERS, 2022) and the sector provides substantial local and regional economic contributions, including support for small and mid-size farms (Raszap Skorbiansky et al, 2021). When compared with grains, specialty crop markets tend to be “thin” with relatively few buyers and/or sellers and a high degree of price variability and thus, are typically fast-moving and high-risk. Economic evaluation of innovations to support these industries is needed to maintain sustainability. Domestic fresh fruit and vegetable production has been decreasing significantly (Sothern Ag Today, 2024) even as demand increased. Over the same period fresh fruit imports increased from 36.6 to 54.8 percent and the value of imported vegetables increased from 9.5 to 29.3 percent during the same time period (Young and Ribera, 2024). Although the overall U.S. agricultural trade balance has been positive for the past three decades, its first negative balance of $1.3 billion was recorded in 2019 (USDA, 2024).
An often cited priority concern on the supply side of the U.S. fresh produce industry is labor availability and affordability [CITE]. The COVID-19 pandemic showed that disruptions to the availability of agricultural labor can have serious implications on the supply (and price) of food products. Because fruits and vegetables are heavily dependent on agricultural labor, any event that causes a large share of workers to become unavailable will have significant effects on the supply of produce. Therefore, it is important to understand how labor availability disruptions could affect the supply of fresh produce, and how producers and distributors adjust to these disruptions in the short and long-term. Producers consider production practices and technology innovations that target consumer preferences and needs and align with their profitability and risk preferences.
Technical Feasibility
Members of this committee have a long history of building industry and government partnerships in their states and nationally to address research and extension priorities. Past projects and publications illustrate their ability to secure competitive grant funding, obtain necessary primary or secondary data, and develop case studies or other analyses that are appropriate. Each type of research approach (e.g., survey, experimental auctions, analysis of retail scanner or other secondary data, simulations) has its challenges and limitations. A significant value of working together is that the team members can give and receive feedback on data collection, compare the characteristics of specialty crop supply chains across states, leverage our collective resources to respond to emerging and pressing research needs, and collaboratively problem solve for the benefit of supply chain stakeholders in our respective states.
The only barriers we see are decreased funding and institutional support for some research and extension activities due to financial and staffing shortages at key government partner agencies (e.g., USDA NIFA and USDA ERS). That said, as researchers, we are problem solvers and adaptable as needs emerge. For example, during the COVID-19 pandemic S-1088 members in multiple states mobilized to support specialty crop supply chains and other agricultural producers through collaborative research initiatives and partnerships with industry organizations, non-profit organizations, and state and federal agencies.
Advantages of a Multistate
Inter-state collaboration offers significant benefits and a multistate effort that facilitates coordination is desperately needed. Programs focused on economic considerations of fruit and vegetable production and marketing have historically received less attention relative to commodity crops or meat animal production. Many agricultural and/or applied economics programs have one, very few, or no faculty members focused on these products. Given the limited human resources, states face research and extension capacity constraints when trying to respond to the wide breadth of specialty crop issues and sectors that need to be addressed.
Although they may differ in their details, economic and supply chain challenges of fruit and vegetable production and marketing are often similar within regions. Conducting research and developing materials through collaborative efforts or obtaining information and resources from another nearby state, and adapting it to local circumstances, offers a more efficient approach to this work. Furthermore, as fruit and vegetable production and processing are seasonal, many industry stakeholders have a presence in several states, resulting in S-1088 members overlapping in the industry stakeholders they support. Finally, consumer demand assessments frequently include consumers over a broader geographic area than a single state as sales are widespread (nationally and internationally).
Our long term goal continues to be thought of as the leading group of academics that offers economic information and data-driven results about the impact of technology, consumer preferences, and other supply chain considerations on specialty crop markets in the United States. As a multi-state research project, we have a long history of answering the most pressing economic, marketing, and policy questions facing specialty crop markets and our members have contributed to new knowledge in this arena at the state-level, nationally, and internationally. Pooling expertise and leveraging the impact of our deliverables through high profile venues will allow us to maximize impact on a broad-based societal issue such as economics of innovation in the specialty crop food supply chains. Two selected examples to illustrate benefits from the successful collaboration that occurred in the current S-1088 project follow:
The aftermath of the COVID-19 pandemic will be significant. COVID-19 had profound impacts on food systems, both for short-term adjustments and long-term structural change. Many S-1088 members collaborated to analyze impacts of COVID-19 on U.S. specialty crop markets and provide research-based information on supply chain adjustments. Several members contributed to articles published in a special issue of Applied Economics and Policy Perspectives that highlighted strategies and best practices that allowed local and regional food businesses to stay viable during the pandemic. S-1088 members coordinated research and extension on high profile needs for specialty crop supply chains including impacts on (1) on-line marketing of food; (2) agritourism and direct marketing events in the Mid-Atlantic region and (3) Local and Regional Food System Resiliency and Recovery (funded by USDA AMS).
A local food vitality index was developed to help inform specialty crop supply chain actors about local food marketing channel development. Multiple S-0188 members participated in the Local Food System Response to COVID project to rapidly gather data from consumers and industry and share strategies for resilience across sectors. Research is ongoing to study potential trade-offs of continued food assistance policies. Recently, Colorado State University was selected to coordinating the $30 million USDA Regional Food Business Center for the Northwest and Rocky Mountain states of CO, ID, OR, WA, WY, and MT.
Product labels convey information to consumers, particularly focused on production practices that are not directly observable. Many of these attributes relate to environmental and social concerns, including such aspects as “fair trade” for fair treatment of workers, “locally” grown or sourced, wildlife and biodiversity preservation, and sustainability of agricultural production and transportation. A better understanding of food labeling strategies offers significant benefits to firms involved in food manufacturing and processing, as well as researchers that examine factors affecting linkages between nutrition and health outcomes. Understanding consumer preferences for sustainable production practices is vital for understanding the future market of products grown using these practices. Multiple S1088 members conducted research on labelling strategies. For example, the impact of color-coded Nutrition Facts Panels (NFP) on consumer behavior to reveal new insights into label effectiveness in guiding healthier food choices of snacks and fresh produce. Another project focused on increasing grower knowledge of potential benefits from labeling products produced with best management practices as well as increased consumer knowledge of BMPs and the environmental impact of agricultural production. Members from multiple states assessed aspects of state labelling programs (e.g. Grow LA, KY Proud). Members from Washington, Mississippi, and Texas collaborated to assess the impacts of labeling on purchase intention for blueberries and cranberries. Members from California and Utah evaluated consumer reactions to labels for local independent food co-op promotions and consumer preferences for specialty/artisan bakery goods.
Data, core to economic research, is notably sparse for specialty crops (CITE) and current S-1088 members often collaborate on data collection. For example, the Gardner Food and Agricultural Policy Survey conducted by members from the University of Illinois and Purdue University, monitors public perceptions of issues relevant to the politics of the food system, including topics relating to produce. Over time, more than 10,000 U.S. consumers have been surveyed as a part of this effort. Results have led to the publication of 31 outreach reports, and has had more than 30 media appearances, including Wall Street Journal, NPR’s Harvest Public Media, AP News, and Politico. S-1088 members also collected data from households regarding their food shopping behaviors and household food waste. to determine the relationship between household time use, food waste quantities, and the value of their food waste. Separately, online and telephone survey data was collected to determine how households that are food insecure or live in limited access food environments value attributes of online grocery shopping (OGS) services. We investigated if households' self-reported use of or barriers to using online grocery influenced their valuation or attributes such as delivery speed and window, refund policy, and hypothetical programs such as a certified picker and protective produce packaging that are designed to encourage the purchasing of fruits and vegetables online.
Likely Impacts
The research generated by S-1088 members will have benefits reaching all aspects of fruit and vegetable production, processing, marketing, and consumption. Outcomes of the proposed project objectives are expected to provide benefits for businesses, government agencies, and technical assistance providers who seek to improve the performance of the industry with better information and assessment of areas where market performance could be more efficient or effective. Specialty crop supply chains that connect consumers and producers take many different forms and present a variety of unique research needs. Our work will provide research-based information on the benefits and cost of participating in alternative marketing channels. Our research results can also enhance the effectiveness of supply chains by providing evidence about the methods, policies, organizational structures that yield the best outcomes for producers, consumers and marketing channel intermediaries. In partnership with industry, government and non-profit organizations, we will facilitate and evaluate new marketing channels for specialty crops. The research generated by S-1088 will be a valuable input to improve the ability of the USDA, food companies, and university researchers and extension programs that support producers and food manufacturers to develop products that target consumer preferences and needs.
Project team members will develop and update studies related to marketing issues that affect both producers and consumers, including studies which assess producer acceptance and willingness to use production/processing practices, novel technologies, technology innovations that address consumer needs; short- and long-term costs and benefits of adopting these practices and technologies at the farm and industry levels; benefits and costs to producers of government and industry-led programs; the impact of these programs on farmers' production and technology adoption decisions, global supply, trade, and consumer preferences; consumer demand for various products attributes; and supply chain innovations.
A majority of consumers share concerns about fresh and processed fruit and vegetable product availability and quality, caloric and nutritional sufficiency, and product safety. Layered upon this, consumer tastes, preferences, and values can shape consumer purchase and consumption decisions. This has resulted in the proliferation of food production, process, and handling standards, certifications, and labels with claims concerning socially and environmentally responsible production characteristics, geographic origin, organic status, and other attributes. The use of these voluntary programs enables firms to transform commodities into high value differentiated food products.
Related, Current and Previous Work
Objectives