AN ECONOMIC ASSESSMENT OF BLUEBERRIES
                            EXECUTIVE SUMMARY


     The U.S. farm value of cultivated blueberry production was
about $94 million in 1993.  This does not include the value of
"wild" or lowbush blueberry production, which is a major industry
in Maine.  Cultivated blueberry production is centered in
Michigan and New Jersey, but substantial industries have
developed in recent years in Georgia, North Carolina, Oregon and
Washington.  Fledgling industries are developing in other states
such as Mississippi, Alabama, Arkansas, and Florida.

     Blueberries are perennials that fall into three categories: 
highbush (grown mainly in the Eastern and Northern states);
rabbiteye (native to the South), and lowbush (grown primarily in
Maine).  Blueberries reach peak production 6 to 10 years after
establishment and, although the bushes can live 50 years, a 20-
to 30-year life is typical.

     Regardless of blueberry type, extension and industry
contacts indicated that frost damage in the spring is the major
peril facing growers.  In the northernmost states, cold damage is
a concern.  Bird depredation is a major peril in the Pacific
Northwest and Florida.  Interestingly, perils faced by growers
east of the Mississippi River appear to be largely related to
weather, while Northwestern growers are plagued more by pests and
diseases.

     Because blueberries are shallow-rooted plants, they need 1
to 2 inches of rainfall per week during the growing season. 
Although much of the crop is irrigated, the extent of irrigation
varies widely among states.  In Mississippi and Florida, nearly
all of the crop is currently estimated as under irrigation.  In
contrast, less than one-third of the North Carolina crop is
irrigated.

     Many perils have at least partial means of control.  The
primary method of protection against late frost damage is
sprinkler irrigation.  As a result, progressive growers are
increasingly investing in this technology.  Some states have
recommended spray programs for insects and diseases.  Netting and
noise-making devices are suggested for control of birds.  

     The demand for insurance appears strongest in southern
states in which blueberry acreage has increased considerably in
the late 1980's.  Based on discussions with extension
specialists, demand appears to be strongest in Mississippi,
Arkansas, and Florida.  Demand also appears to exist among
smaller growers in New Jersey.  However, the demand among North
Carolina growers, who were quite interested in insurance in the
late 1980's, appears to have dwindled.

     To protect against adverse selection, a sales closing date
of no later than January 1 seems necessary in the northern
growing areas.  In Florida the closing date should probably be
December 1 because temperatures during December can affect the
earliness of bloom in the spring.  These dates should protect
FCIC from growers signing up later in the winter and early spring
when the likelihood of losses from frost and cold damage become
more apparent.  

     Moral hazard may appear in several ways if blueberry
coverage is offered.  Faced by low prices, some growers may let
their berries become overripe and deteriorate on the bush. 
Others may reduce input use in order to collect an indemnity,
while still maintaining the primary production asset--the
blueberry bush--for potential harvest the next year.  Moral
hazard would be a particular problem if the return from the
policy were expected to be higher than the producer's expected
market return.

     Given the uncontrollable perils faced by growers a blueberry
policy would likely be of benefit to the industry.  Methods of
curbing adverse selection and moral hazard, as discussed in the
report, would help protect FCIC's exposure to loss.