AN ECONOMIC ASSESSMENT OF PINEAPPLE Executive Summary Pineapple (Ananas comosus) is a perennial herb, grown for its sweet and juicy fruit, which can be consumed fresh or in processed form. The pineapple is classified under the botanical family Bromeliaceae, which also includes a number of ornamental bromeliads. They are native to tropical and subtropical South America and are adapted to areas with low rainfall and well-drained soils. Pineapple fruits are high in sugar and provide a good source of vitamins A, B, and C. Virtually the entire U.S. pineapple crop is grown in Hawaii. In this respect, the pineapple industry in Hawaii represents the U.S. industry. Hawaii's Agricultural Statistics Service reports that 15 farms used a total of 22,300 acres to produce 365,000 tons of pineapples in 1994. Over the last several years, fewer and fewer farms comprise Hawaii's pineapple industry. Several pineapple companies closed down due to rising production costs, competition from Hawaii-based corporations with operations in low-cost foreign producing countries, and an oversupply of canned pineapple products. Three companies--Dole Company, PPI Del Monte Fresh Produce, Inc. (formerly the California Packing Corporation), and the Maui Land and Pineapple Company-- produce the majority of pineapples in Hawaii. There are also several small growers who sell strictly to Hawaii's fresh fruit market. Dole and Del Monte are international companies with production and processing operations in foreign countries, while the Maui Land and Pineapple Company is a local company. Only the Maui Land and Pineapple Company has canning and processing facilities in Hawaii. All of Del Monte's production, from approximately 5,000 acres under cultivation, is destined for the fresh market. Major pineapple production areas are found on the islands of Lanai, Maui, and Oahu. Dole Company has plantations in Lanai and Oahu, the Maui Land and Pineapple Company has plantations in Maui, and Del Monte has plantations in Oahu. The few smallholder pineapple farms are located on the islands of Maui and Hawaii. U.S. pineapple production, represented entirely by Hawaii's output, realized a year-to-year decline in 15 of the past 22 years, largely reflecting a drop in acreage. Output has been cut by more than half, from 810,000 tons in 1973 to 365,000 tons in 1994. Improved production technology has led to growth in pineapple yields, partly offsetting the impacts of lower acreage. According to the Hawaii Department of Agriculture, yields per gross acre increased by 58 percent between 1960 and 1990, from 11.8 tons to 18.6 tons. The value of U.S. fresh-weight pineapple production doubled from $39.6 million in 1973 to $79.8 million in 1993. In 1994, the value of production declined slightly to $78.9 million, due mainly to a decrease in output volume. Declining domestic production is augmented by imports from other pineapple-producing countries, such as Thailand, Philippines, Costa Rica, Mexico, and Honduras. Mexico was the largest supplier of fresh pineapples to the U.S. market during the early 1980's, but since the 1983 Caribbean Basin Initiative established duty-free status, imports from Central America have increased. While canned pineapple represents more than half of Hawaii's pineapple output, there is a growing trend towards fresh market use. Consumption of fresh-market pineapples has trended upward since 1970. Based on a fresh-weight equivalent, fresh pineapple consumption was estimated at 2.05 pounds per person in 1993/94, up from 0.70 pounds per person in 1970/71. Consumption of processed pineapples, on the other hand, increased from 11.13 pounds per person in 1970/71 to only 11.84 pounds in 1993/94, and has realized considerable year-to-year fluctuation. Pineapples can be planted all year round in Hawaii, although most plantings occur in the fall. They are generally grown as a monoculture crop because of the high capital investment in processing machinery, field equipment, and land. They are produced through vegetative means using various plant parts of a parent plant. Propagating materials come in the form of slips, suckers, crown, or hapas. Drip irrigation is a standard practice in Hawaii. It helps alleviate the effects of root damage caused by nematodes and reduces moisture stress since water is delivered directly to the root zone. During periods of low rainfall, 47,000 to 94,000 liters of water per hectare per week are required for maximum growth. Pineapple growers are often confronted with plant and fruit losses caused primarily by diseases, insects, and other pests. Weather perils are not much of a problem to production, but in some cases, excessive rains, excessive heat, and prolonged drought could result in losses. Frost and hail occur rarely. Pineapples are fairly tolerant of high winds. Errors in crop management and nutritional imbalances could also cause some losses. Our assessment is that the demand for a crop insurance policy for pineapples will probably not be as strong as for certain other crops. The three major corporations responsible for virtually all of U.S. pineapple production are very competitive with each other and protective of their activities. Even with large capital investments at stake, large corporations would likely prefer to manage their own risks and self-insure. Also comprising the industry are small, independent growers whose outlets are limited to Hawaii's fresh fruit market. Small growers, particularly those who have no irrigation systems, may be interested in a pineapple insurance policy. These growers, however, represent a small share of U.S. output. Finally, only pineapple growers in Guam and American Samoa participated in the ad hoc disaster assistance program during the 1988 to 1993 period.