Marketing and Pricing in the U.S. Fruit and Vegetable Industry

Pandemic-era supply chain disruptions and higher input and operating costs have contributed to increased market volatility and higher consumer and producer prices for fruits and vegetables since 2020. While conditions have moderated and overall price inflation has slowed, prices for most fruits and vegetables have remained elevated compared with pre-2020 levels; for some products, prices have continued to trend upward since 2022. The U.S. Department of Agriculture (USDA) continues to report increases in the advertised prices by major retail supermarket outlets for some fruits and vegetables in 2024. Producer prices for U.S. fruits and vegetables have also remained higher. Sustained higher prices reflect, in part, continued production and distribution challenges within some fruit and vegetable markets. The U.S. fruit and vegetable industry is a dynamic and highly complex and diverse market covering hundreds of different types of fruits and vegetables, including fresh, frozen, and dried products, each with its own unique set of supply-and-demand conditions. Retail and consumer markets also have multiple marketing and distribution channels. Complexity within the U.S. fruit and vegetable market complicates efforts to draw general conclusions about the industry’s current and ongoing market and pricing challenges. The existence of limited publicly available and timely retail and producer price data across individual sectors further complicates such analysis. The industry includes a broad mix of participants spanning input suppliers, growers, processors, food services, grocers and other retail outlets, direct-to-consumer markets, and importer-exporters. Fruit and vegetable growers contributed $62.4 billion to farm-level production in 2022, according to USDA. Available data suggest that contributions by other participants throughout the value chain resulted in total consumer sales of fruit and vegetable products between $160 billion and $190 billion annually. Within the overall U.S. market for food consumed at home, fruit and vegetable products represent about one-fifth of the total food market value annually. Sustained higher grocery prices are a concern among U.S. policymakers. In March 2024, the Federal Trade Commission (FTC) released the findings of its investigation of continued high prices throughout the U.S. retail food industry. FTC concluded that “large market participants accelerated and distorted the negative effects associated with supply chain disruptions” and that “grocery retailer profits rose and remain elevated.” In August 2024, FTC and the Department of Justice announced plans to launch a new investigation. These investigations broadly stem from President Biden’s Executive Order 14036, Promoting Competition in the American Economy, which focuses on “lowering food prices for consumers and increasing earnings for farmers and ranchers” in the U.S. food and agriculture industry. In the 118th Congress, bills have been introduced and changes proposed in annual appropriations that would address food prices and supply chain resiliency broadly across the U.S. food sectors. Congress continues to consider a range of broader agricultural supply chain resiliency measures, both in introduced legislation (e.g., H.R. 763, H.R. 4873/S. 4099, H.R. 8833, H.R. 9226) and in annual appropriations actions (e.g., H.Rept. 118-583, S.Rept. 118-193). One bill, H.R. 8898, would require the U.S. Government Accountability Office (GAO) to conduct a study of the Consumer Price Index for all food consumed at home over the past two decades. Other introduced legislation would address shrinkflation or “product downsizing, occurs when a company decreases the amount or size of a consumer product and charges the same price, or a higher price, for such smaller product” (H.R. 7825/S. 3819), and other bills would generally address price gouging, or excessive price increases for any good or service (H.R. 7390/S. 3803). Other introduced legislation would address fruit and vegetable markets specifically, with a focus on impacts from imports (e.g., H.R. 9240/S. 498, H.R. 6712). In addition, some Members are calling on certain federal agencies to address rising food prices under their existing authorities related to anticompetitive behavior in the U.S. market. Some industry and advocacy groups have called for congressional hearings in response to FTC’s investigation. Further legislative and administrative actions might not address the U.S. fruit and vegetable sectors only but would broadly apply to the sector as part of the overall U.S. food system. Other potential actions could be considered specific to the U.S. fruit and vegetable sectors. Existing statutory and regulatory requirements govern the buying and selling of U.S. fruits and vegetables under the Perishable Agricultural Commodities Act of 1930 (7 U.S.C. §§499a-499t; 7 U.S.C. §499(b)(4)) and could provide a means to address specific needs of U.S. fruit and vegetable growers. Existing market data collection programs, such as USDA’s Specialty Crops Market News and other data collection efforts at USDA, could be expanded to improve price transparency for fruits and vegetables in the U.S. marketplace.