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Title: Florida watermelon production and marketing outlook facts
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Circular 540




FLORIDA WATERMELON PRODUCTION


AND MARKETING OUTLOOK FACTS


John J. VanSickle N /.o


/ O r,
S AP o















ZZ:

r' A A .W.


Florida Cooperative Extension Service / Institute of Food and Agricultural Sciences / University of Florida / J. T. Woeste, Dean











FLORIDA WATERMELON PRODUCTION
AND
MARKETING OUTLOOK FACTS: 1981
John J. VanSickle*


An inspired economist was once quoted as saying,
"It costs more not to harvest than it does not to
plant." His reference was not about the cost of plant-
ing or cost of harvesting, but about the accumulated
cost of production up to the point of planting or
harvesting. It costs more not to harvest because not
harvesting incurs the cost of planting and growing
up to harvest without any revenues, whereas not
planting incurs no cost of production at all.
This statement has special application to
watermelon producers. Since 1971, Florida
watermelon producers left more than 10 percent of
their crop unharvested only twice; 1975 and 1980.
The purpose of this circular is to explore the
historical production and pricing patterns for
Florida watermelons and supply an outlook for 1981
and a method for developing future outlook informa-
tion for Florida watermelons.

Industry Production
The state of Florida is a major producer of spring
and early summer watermelons for the domestic
U.S. market. In 1980 Florida produced 72.3 percent
of the U.S. spring production (Table 1) and 34.8 per-
cent of the total U.S. production. The 1980 season
was worth approximately 48.5 million dollars in
crop value; which represented 7.8 percent of the
total fresh vegetable income for Florida. Other
states which compete with Florida for the spring
market include Georgia, Texas, Alabama, Califor-
nia, and Arizona (Table 1). In addition, Mexico com-
petes with south Florida for the early market.

Table 1.-1980 Spring Watermelon Pro-
duction by State'
State Percent of total
Florida 72.3
Georgia 4.8
Texas 11.0
Alabama 2.0
California 7.8
Arizona 2.0
'Source: Crop Reporting Board, Vegetables 1980
Annual Summary. ESS, USDA, December, 1980.


As the market volume leader, Florida is not
assured profits for its watermelon production. In
fact, compared to competing crops in Florida,
watermelon returns are often depressed due to large
volumes of production. Florida watermelon acreage
has shown considerable variation, ranging from
65,000 acres in 1976 to 45,000 acres in 1980. Com-
paring acres planted to average price per hun-
dredweight for Florida watermelons (Figure 1) gives
some interesting results. Starting in 1971, Florida
watermelon acreage increased in 1972, fell each year
through 1975 and then rose sharply from 47 to 65
thousand acres in 1976. Since 1976 the acreage
planted has declined to 45 thousand acres in 1980.
In contrast, the average price for Florida
watermelons decreased in 1972 then increased each
year through 1975. In 1976 the average price
decreased substantially then increased each year
since to a record high average value of $5.92 per
hundredweight in 1980. This pattern is the exact op-
posite of the pattern displayed for planted acres. It
appears that higher acreages planted to water-
melons works to lower the price paid to the grower.
Lower prices cause another effect. That is, it
causes Florida producers to leave watermelons
unharvested. Unharvested acres of watermelons are
due to many factors such as disease, trucking short-
ages, etc., but the price the producer receives is one
of the more important factors. Figure 2 shows the
annual average value and unharvested acres for
Florida watermelons. The same opposite pattern ap-
pears between these two factors for the years from
1971 to 1980 as was evident between annual average
value and planted acreage. The question which re-
mains is: are unharvested acres due to the number
of acres planted (and, therefore, trucking shortages,
diseases, and other production failures have greater
impact) or; are unharvested acres due to the low
value for the product (and, therefore, left
unharvested because of the profitability at that
point in the production process)? The answer to this
question can best be determined by studying the
production of watermelons in Florida.

Intra-Florida Production
During the last 10 years, production shares in the
various production areas of Florida have changed


*Extension Marketing Economist, Food and Resource Economics Dept., IFAS, University of Florida, Gainesville 32611.








6.0067



5.45 PLANTED ACRES 63



4.85


VALUE (1000 ACRES)
($/cwt) 4.25
55


3.65 \



3.05



2.45 7
43


1.85 AVERAGE VALUE 39

1.40
61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80
YEAR
Figure 1. Annual average value and planted acreage for Florida spring watermelons, 1961-1980.



6.00 15



5.45 13



4.35 11


VALUE (1000 ACRES)
($/cwt) 4.25
\9






3.05


UNHARVESTED ACRES
2.45 3


1.85 1
A / average
Value
1.40 V___ 0
61 62 63 64 65 66 67 68 69 70 71 72 J3 74 75 76 77 78 79 80 81
YEAR
Figure 2. Annual average value and acres left unharvested for Florida spring watermelons, 1961-1980.










Figure 3.--Average Percent of Total Harvested Acres in Florida by Area and
Average Percent of Unharvested Acres within Each Area for Years
1970-19791/


West--13.4%
(27.2%)


Central
20.9%
(9.41)


South
13.1%
(6.0%)


-/The upper number is the average percent of total Florida harvested acres
by area. The lower nur-ber in parentheses is the average percent of planted
acres left unharvested within each area.


substantially. Figure 3 shows the producing areas of
Florida which are identified by the Florida Crop and
Livestock Reporting Service. In addition, the
average production share and average percent of
planted acres left unharvested for the years 1970 to
1979 are shown for each region. Table 2 shows the
percent of harvested acres by region for the years
from 1970 to 1979 and Table 3 shows the percent of
acreage planted which has been left unharvested in
each region for the same years.

Table 2.-Total Harvested Acres in Florida and Per-
cent of Total Harvested Acres by Area

Area Florida
Harvested
Year West North Central South Acres

1970 15.1 38.9 26.1 19.8 47,500
1971 18.0 39.7 24.3 18.1 50,100
1972 17.1 46.7 21.4 14.8 56,100
1973 14.9 50.3 21.6 13.1 48,700
1974 16.1 52.8 18.0 13.0 44,500
1975 14.4 53.4 20.2 11.9 43,600
1976 13.5 56.4 21.8 8.4 55,000
1977 7.8 62.1 19.8 10.2 51,000
1978 10.0 62.0 18.6 9.4 50,000
1979 7.0 64.0 17.2 11.9 43,000
Average 13.4 52.6 20.9 13.1 48,950


Close examination of Tables 2 and 3 yields in-
teresting conclusions about the shift in harvested
and unharvested acres in these regions. 1972 was
the first year in the 70's to experience a substantial
increase in acres planted. The production share for
north Florida increased 7 percent in 1972 and con-
tinued with a gradual increase through 1975. The
production share in the south and west areas declin-
ed from 1971 to 1975 while the central area had only
a slight decrease. In 1976, Florida experienced its
second large increase in acres planted for the 70's.
This increase in production has caused an even
greater increase in production share in the north
area of Florida. In 1979, the north area produced 64
percent of the harvested acres of watermelons; an in-
crease of 25.1 percent since 1970. In contrast, all
other areas have decreased their production share 8
to 9 percent.
The percent of planted acres left unharvested has
also changed notably, as is marked by production in-
creases in 1972 and 1976.
Table 3.-Percent of Planted Acres Left Un-
harvested in Florida and Within Each
Area of Florida

Area
State
Year West North Central South Total

1970 5.3 1.1 2.4 14.5 5.0
1971 9.1 4.3 1.6 1.1 4.0
1972 19.3 5.8 4.8 6.7 8.3
1973 27.8 7.2 8.7 4.5 11.0
1974 18.2 6.4 16.7 10.8 11.0
1975 19.2 4.9 4.3 5.5 7.2
1976 26.0 13.9 14.3 8.0 1.5.4
1977 60.0 16.6 12.2 5.5 21.5
1978 47.4 8.8 13.1 2.1 15.3
1979 40.0 11.2 15.9 1.9 14.0
Average 27.2 8.0 9.4 6.0 11.3

All areas experienced an increase in acreage left
unharvested in 1972 and 1976. The west area of
Florida experienced the largest increase in
unharvested acres to where 60 percent of its planted
acres were left unharvested in 1977.
The price individual producers in Florida receive
for their product depends on the time of the season
the product goes to market. The average f.o.b. price
for medium sized watermelons for the years 1966 to
1979 is shown in Figure 4. The season is defined as
beginning with the first week of April of each year.
Included on the graph is the 90 percent lower con-
fidence bound. The lower confidence bound can be
used as an estimate of the price floor. Given condi-
tions similar to the years 1966 to 1979, on an
average, only 10 times out of 100 will the price fall
below this line.








It is interesting to note that the price for the first
six weeks of the season is highly variable (note the
large separation between the average price and
lower confidence bound). After the sixth week the
price steadily declines and the separation of the two
curves becomes smaller. July 4th is traditionally
viewed as the season's end in Florida, which occurs
the 14th or 15th week of the season.
Figure 5 gives some indications for the reason
Florida watermelons have the seasonal pricing pat-
tern shown in Figure 4. Figure 5 shows the market
share for Florida ahd its seasonal competitors in
percent of total U.S. shipments. The extent of
Florida's domination in the market can be seen in
Figure 5. Producers in south Florida compete with
Mexico for the available early market. Florida clear-
ly dominates the market from weeks six to eleven.
This is the time the north and central areas of
Florida are producing. Comparing this with Figure 4
shows that Florida's production share is increasing
at the same time price is decreasing (weeks six to
eleven). The north and west areas compete with
other Southeastern U.S. producers beginning
around week eleven.
Price
per cwt.
($)
6.50

6.00

5.50

5.00

4.50

4.00

3.50
90 percent
lower confidence
3.00 bound

2.50

2.00

1.50


Week eleven is when Florida prices fall to their
low levels and it is these low prices which often
cause farmers to leave potentially productive fields
unharvested. The degree of unharvested acres is
dependent on the market price and its relation to
harvesting and marketing costs. If the cost of
harvest and marketing exceeds the market price,
then fields are left unharvested.


Research Results About
Florida Production and Pricing
A recent study by Wall, Tilley, and VanSickle [2]
of Florida watermelon production analyzed the rela-
tionship between prices, planted acres, harvested
acres, and shipments of watermelons from Florida
and other states competing with Florida. As is in-
dicated by the data in the previous discussion, it
was determined that higher prices in one year will
influence production in the following years.
Specifically, the findings of the study indicate that a
10 percent increase in the current year's price will,
on the average, cause producers to increase produc-


Average price


1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
--------April------------I-----------May---------I----------June----------I-----July---------
Week of Season (Season beginning April 1)


Figure 4. Average weekly shipping point prices and 90% lower confidence limit for medium sized
watermelons (25-28 lbs.).










Figure 5.--Weekly Relative Market Share by Source of Production


Florida


x-- Mexico

o- Texas

--+ California

. Arizona


--- Georgia

'.... Alabama

'+t+ South
Carol ina


2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
------April-----I ------May------ ------June------------Juy--------- ----August--
Week


tion 6 percent the following year (all other factors re-
maining unchanged). In addition, this price increase
will influence planted acres for the two years follow-
ing. Producers will tend to increase production 6
percent the second year and 3.5 percent the third
year following the price increase.
Another finding of the research was that
shipments from other states have more of an in-
fluence on the average Florida price than do Florida
shipments. In general, it was discovered that a 10
percent increase in Florida shipments will decrease
Florida prices 6 percent while a 10 percent increase
in shipments from other states will decrease Florida
prices 12 percent.

Florida Outlook For 1981

The two most recent years have given Florida
watermelon producers exceptional returns for their
product. As acreage declined to 45,000 acres in
1980, price rose to an average of $5.92 per hun-
dredweight. Given the improvement in prices for


Florida watermelons, it is expected that planted
acres of watermelons will increase substantially.
The Florida Crop and Livestock Reporting Service
estimated on March 1, 1981, that Florida producers'
intentions for planted acres of watermelons are
54,000 acres. This represents a 20 percent increase
over 1980. The comparison of plant-
ing intensions by area in 1981 with planted acres by
area in 1980 is given in Table 4.
Increasing the acres of watermelons planted will
increase the amount of shipments under normal con-
ditions. The results described in the previous sec-
tion indicated that increasing shipments will
generally cause the average price received for
watermelons to decline. Given these results and the
estimate for increased acreage, it is expected that
the average price received for Florida watermelons
will decline. Given these results and the estimate for
increased acreage price received for Florida
watermelons will decline.
Another factor which will create downward
pressure on watermelon prices is the recent freeze


Percent
00or


90

80











experienced in Florida. Although this freeze affected
only that acreage planted in south Florida, it will
cause prices to decline by making south Florida pro-
ducers sell their product at a later time in the
season. The freeze made it necessary for many south
Florida producers to replant. Replanting will mean a
later marketing season for these producers. Later
marketing of watermelons will cause south Florida
production to compete more with central Florida
production, causing downward price pressure for
both south and central Florida producers.

Table 4. -Acres Planted by Area for 1980 Com-
pared to Planting Intentions for 1981

Percent change
Area 1980 1981 from 1980

West 4,000 4,500 +12.5%
North 27,500 32,000 +16.4%
Central 7,800 10,700 +37.1%
South 5,700 6,800 +19.3%

Total 45,000 54,000 +20.0%

A final factor which will create downward price
pressure for Florida producers is increased produc-
tion in states competing with Florida. Florida was
not alone in experiencing improved prices in 1979
and 1980. These improved prices will likely cause an
increase in planted acreage in these competing
states and, with normal conditions, will increase
shipments from these competing states and depress
Florida prices even more.
Given these factors, an estimate of the Florida
average price for watermelons would have to be
below the average price in 1980. An estimate for the
average Florida price for 1981 which incorporates
these factors would be $5.00 per hundredweight.
This represents a decrease of approximately 16 per-
cent from 1980. This estimated average price was
calculated from the results of the Wall, Tilley, and
VanSickle study with a correction factor for the
freeze. This estimated average price would depend
on a normal production season for the rest of 1981
with no abnormal marketing problems. This average
price would be the average of all watermelons sold in
Florida. The actual price received by producers will
depend on when they market their product. The
earlier watermelons are sold, the more likely a pro-
ducer is to receive a better price. Late season market
price will probably be below $5.00 per
hundredweight.

Implications to Florida Producers
Those Florida producers who have or are con-
templating planting acreage to watermelons are en-
couraged to determine their anticipated cost of pro-


duction and harvesting. This estimate can then be
used to compute a breakeven price. These break-
even prices can be applied to Figure 4 to indicate
dates for successful harvest. Given the increase in
intended planted acres in 1981, the lower confidence
bound in Figure 4 may be used as an estimate for
expected price. Table 5 shows the expected harvest
date and expected price floor for various planting
dates. The expected price floor is the 90 percent
lower confidence bound for the harvest and
marketing dates listed in Figure 4. The production
season is assumed to be sixteen and one-half weeks
in Table 5. Brooke [1] estimated that production and
harvesting costs for south Florida producers
averaged $4.19 per hundredweight in 1979. This
estimate would indicate a successful harvest would
be likely through the seventh week or May 20
(Figure 4) for south Florida producers. This would
imply a planting date of January 26 or before
(Table 5).
Table 5-Planting Date and Expected Price Floor
at Harvest1

Earliest Expected
Planting Date Harvest Date Price Floor

Dec. 29 Apr. 22 $4.51
Jan. 5 29 5.17
12 May 6 4.75
19 13 4.73
26 20 4.28
Feb. 2 27 3.61
9 June 3 2.83
16 10 2.96
23 17 2.57
Mar. 2 24 2.35
9 July 1 2.23
16 8 2.29
23 15 2.60
The expected price floor is the expected shipping price for
medium sized watermelons (25-28 lbs.).


North Florida producers can generally produce
watermelons for a lower cost of production. The
north Florida producer however, cannot market
watermelons until later in the season when prices
are declining. If a north Florida producer an-
ticipates a cost of production of $2.75 per hun-
dredweight, then Figure 4 would suggest that he
plan to have his product sold before the twelfth
week of the season (June 17). This would imply that
the producer should plant the watermelons on or
before February 23. Producers should, whenever
possible, attempt to plant and harvest as early in
the season as possible. This will generally assure
him of the highest potential for profits.










Conclusions
Historical trends indicate that Florida producers
determine the acreage planted to watermelons based
on the prices received in previous years. Florida pro-
ducers have received exceptionally high prices for
their product the previous two years. These high
prices have led Florida producers to increase their
intended planted acreage in 1981 over the planted
acreage in 1980 by 20 percent.
This increase in planted acreage combined with the
delay- in harvesting south Florida watermelons
because of the recent freeze will put downward
pressure on prices in 1981. An estimate of $5.00 per
hundredweight represents a 16 percent decline in
the average Florida price. Florida producers should
estimate their cost of production and harvesting
and determine the probability of having a profit-
able harvest (Figure 4). Those producers who are
unlikely to receive a price above their estimated pro-
duction costs should reconsider their intentions before
planting.
Finally, Florida producers should be aware of the
returns to watermelons in previous years. Producers
determine watermelon acreage based on the ex-
pected returns. A misconception about the expected
returns may be developed if determined solely from
prices for previous years. Evidence suggests that


producers have historically determined expected
returns based on prices received in the two previous
years. Producers should be aware of this cyclical
pattern and develop their own outlook information
for watermelons with this input considered.
Although producers may be unable to forecast a
specific price for their watermelons, they should be
able to predict a directional change in price (either
up or down from the previous year) based on earlier
years returns. This directional change combined
with Table 5 could help producers plan their own
production intentions more profitably. Careful con-
sideration should be given to the probability of
receiving a price above the cost of production. After
all, "It costs more not to harvest than it does not to
plant."


References
[1] Brooke, D.L. Costs and Returns from Vegetable
Crops in Florida. 1978-79 with Comparisons.
Econ. Info. Rpt. 127, Food and Resource
Economics Department, IFAS, Gainesville,
Fla., March, 1980.
[2] Wall, G. Bryan, Daniel S. Tilley, and John J.
VanSickle. Characteristics of the Water-
melon Industry. IFAS Bul. In Press.


This public document was promulgated at a cost of $87.70, or 9 cents per copy, to inform Floridians about marketing
watermelons. 8-1M-82

COOPERATIVE EXTENSION SERVICE, UNIVERSITY OF FLORIDA, INSTITUTE OF FOOD AND AGRICULTURAL
SCIENCES, K. R. Tefertiller, director, in cooperation with the United States Department of Agriculture, publishes this infor-
mation to further the purpose of the May 8 and June 30, 1914 Acts of Congress; and is authorized to provide research, educa- IFPA
tional Information and other services only to individuals and institutions that function without regard to race, color, sex or
national origin. Single copies of Extension publications (excluding 4 -H and Youth publications) are available free to Florida
residents from County Extension Offices. Information on bulk rates or copies for out-of-state purchasers is available from
C. M. Hinton, Publications Distribution Center, IFAS Building 664, University of Florida, Gainesville, Florida 32611. Before publicizing this
publication, editors should contact this address to determine availability.




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