AN ECONOMIC ASSESSMENT OF ASPARAGUS Executive Summary U.S. growers harvested 125.3 million pounds of fresh asparagus in 1993, with a total crop value reported at $163 million. Asparagus is grown in most temperate areas of the U.S., although the majority of commercial production is located in California, Washington, and Michigan. Other commercial growing areas include Illinois, Indiana, Maryland, Minnesota, New Jersey, and Oregon. About 57 percent of U.S. asparagus production was destined for fresh-market use in 1993. Virtually all of the asparagus grown in California is sold for the fresh market, and a portion of Michigan and Washington output is sold to the fresh market. Output in the minor production areas is sold almost exclusively for fresh-market use. Fresh-market asparagus prices demonstrate a very pronounced seasonal pattern. They are highest at the beginning of the season (January-March) and at the end of the season (August- September) when shipment volume is smallest. During the high- price periods, southern California (the Imperial Valley) is the principal shipper. Fresh-market prices are generally lowest in mid-season (April-May) when shipment volume is greatest and harvest is peaking in central California, Washington, Michigan, and other states. Income diversification--from off-farm employment and crop diversification--enhances the ability of asparagus growers to manage risk. According to the Census, over half of the 3,033 farms with asparagus sales in 1987 reported the operator working off the farm at least one day, and 30 percent reported the operator working off-farm 200 days or more. Further, asparagus growers appear generally well-diversified with other crops. Asparagus is a perennial crop that has a life expectancy of up to 30 years, although the life of most commercial plantings is less than 20 years. An asparagus bed produces a small crop one year after crowns (the underground part of the plant) are transplanted. However, a bed is only partially productive the first three years after transplanting. Commercial fields receiving average care yield their largest output at 5 to 7 years of age in California. Plantings in Michigan reportedly produce their maximum yields at 5 to 12 years of age. Beyond that time, yields tend to decline. The crop cycle for established asparagus consists of: 1) a 4-8 week harvest in the spring and early summer, 2) a summer fern growth (or re-establishment) period during which the plant re- stocks its energy reserves in the roots and crown, and 3) a rest period brought on by cold weather or drought. In the spring, spear growth occurs when soil temperatures reach 50o F. Daily average temperature affects the rate of growth of the spears. For example, the asparagus shoot requires 5 days to produce a 6-inch spear with daily average temperatures of 53o F. In contrast, at 78o F, a shoot will reach 6 inches in about 1.9 days. Although spears grow faster at higher temperatures, extremely high temperatures also promote early branching of the shoot. Late spring frost is the most common weather-caused peril reported in all major production areas. Asparagus is one of the first plants that emerges in the spring, with harvest beginning as soon as spears reach marketable length. As a result, asparagus is quite vulnerable to frosts. Frost damages or kills any spears that have emerged from the soil, making them worthless, and slows the development of new spears. Other perils include extended cool weather, excess heat, excess moisture, hail, insects, and diseases. These perils can reduce the current year's production during the harvest season. They can also reduce fern growth during the re-establishment period, and thus, diminish yields in subsequent production years. Asparagus is fairly drought-tolerant, with roots that can reach a depth of 15-20 feet in sandy soils. The multi-year effect of natural perils on yields, as described above, has implications for the offering of an asparagus crop insurance policy. In order to avoid adverse selection--growers taking out insurance after an event occurred that reduced future yield prospects--it may be necessary to require that growers insure for a period of years. A minimum step in reducing adverse selection would be to define the crop year as beginning with fern growth in one year, extending through the conclusion of harvest the following year. Other insurance issues addressed in this report include: setting reference prices, estimating "appraised production," and the demand for insurance. One key issue is determination of the actual production history calculation, as expected yield varies with the maturity of the asparagus bed. Our assessment is that asparagus is not as good a candidate for insurance as the previous specialty crops we have examined. The insurance issues noted above make policy development difficult, but not insurmountable. Further, there are questions concerning the potential demand for an asparagus policy. The largest demand is likely to occur in Michigan and other midwestern and eastern areas because weather-related losses appear to be more frequent in these areas than in California and Washington. However, even in these areas, it is questionable as to how often a grower would experience a loss of the 25-percent or more that would be required to collect an indemnity. Ad hoc disaster assistance data can be used to provide a further indication of areas of expected high losses, as well as the demand for insurance. Michigan and Illinois collected a relatively large share of ad hoc disaster payments for asparagus relative to their acreage. However, overall, ad hoc disaster assistance payments to asparagus growers in the nine USDA- reported states amounted to only 0.2 percent of the value of crop, compared to 2.4 to 6.6 percent for major field crops.