MARKETING AND ECONOMICS
HORTSCIENCE 46(3):439–444. 2011. of all sizes for both the national and export markets. Seven percent of Mexican canta- loupe production was exported to the United Analysis of Strategic Industry Planning States in 2007 with Mexico supplying only 2% of U.S. cantaloupe imports. Mexico pre- and Organizational Opportunities for viously accounted for 40% to 50% of U.S. cantaloupe imports; however, Mexico’s share Mexican Cantaloupe Producers dropped sharply between 1999 and 2000 in the face of growing competition from Central J. Alberto Garcı´a-Salazar1 American exporters benefiting from market Economı´a Colegio de Postgraduados Km 36.5 Carr, Me´xico-Texcoco 56230 access provisions of the U.S. Caribbean Basin Montecillo, Estado de Me´xico, Me´xico Initiative (CBI) (Fig. 1). Mexico’s share decline continued, and then in May 2002, contamina- Rhonda K. Skaggs2,4 and Terry L. Crawford3 tion of Mexican cantaloupes by Salmonella Department of Agricultural Economics and Agricultural Business, New Mexico Poona resulted in increased U.S. phytosanitary restrictions and further reductions in Mexican State University, MSC 3169, Box 30003 88003, Las Cruces, NM 88003 exports to the United States (Herna´ndez- Additional index words. Cucumis melo, profit, marketing order, strategy, storage, production Martı´nez et al., 2006). Total Mexican exports planning, programming model of cantaloupes were 136,637 t in 1980, in- creased to 275,915 t in 1991, and as a result Abstract. Cantaloupe [Cucumis melo (L.)] producers in Mexico’s Lagunera region of the events described, decreased to 136,513 t harvest and sell their melons in the Mexican domestic market in June, July, and August. in 2007 (G. Lucier, Agricultural Economist, These producers and the larger Mexican cantaloupe industry have been economically U.S. Dept. of Agr., Economic Res. Serv., per- battered in recent years by increasing competition in the global cantaloupe market, sonal communication, 2010). Salmonella contamination, low per-capita consumption relative to U.S. consumers, and Mexican cantaloupe production increased historic supply gluts, which result in low prices and profits. A programming model of the from 319,952 t in 1980 to 543,336 t in 2008; region’s cantaloupe industry was used to evaluate the impacts of strategic production yields increased over the same period from planning, storage, or flow-to-market supply management. A 20% reduction in regional 11.8 t ha–1 to 25.3 t ha–1 (SIAP-SAGARPA, cantaloupe supply would increase growers’ profits and release land for use in other 2009c). Per-capita cantaloupe consumption in cropping activities. Cantaloupe storage and strategic production planning would in- Mexico was 6.0 pounds in 1980 and 8.6 pounds crease producers’ profits but would require costly infrastructure investments. Organi- in 2007, an increase of 44%. In contrast, annual zation of the regions’ cantaloupe producers to achieve orderly and strategically planned per-capita cantaloupe consumption in the United production and marketing would not require costly infrastructure investments and States increased almost 69% between 1980 and would increase growers’ profits. U.S. marketing orders for fruit, vegetable, and specialty 2008 (from 5.7 pounds to 9.9 pounds) (Lucier crops are models under which Lagunera region cantaloupe industry planning and and Dettmann, 2008). coordination could be effected. U.S. marketing orders have allowed producers to manage Relative to other melon crops, cantaloupes supply, promote their product to influence per-capita consumption, and deal with face unique food safety challenges in both ex- product quality and reliability threats. port and domestic markets. Cantaloupes are and will remain particularly vulnerable to potential bacterial contamination and phyto- The U.S. population has been exhorted by Mexico’s proximity to the U.S. market, its sanitary restrictions or embargos. Rough web- health experts for many years to consume more range of climate and growing conditions, and bing on the cantaloupe rind makes them more fresh fruits and vegetables, and they appear to reduced trade barriers as a result of the North vulnerable to microbial contamination than have taken the advice to heart. Average per- American Free Trade Agreement have led to other smooth-skinned melons (such as water- capita consumption of selected fresh fruits, Mexico’s dominant position in the U.S. market melons or honeydew melons) (Gereffi and vegetables, and melons in the United States for traditionally off-season produce. Mexican Lee, 2009). was 193.5 pounds in 1976 and 281.8 pounds in exporters of many fruit and vegetable products In response to the bacterial contamination 2008 (Lucier and Dettmann, 2008; Perez and have benefited from their position in the U.S. problems described, the Mexican government Pollack, 2009). market, although Mexican dominance is not developed mandatory guidelines dedicated to U.S. consumers have developed a year- without problems or threats. Other nations and reducing food safety risks (Cervantes-Godoy round appetite for fresh produce, much of which regions are aggressively challenging Mexico’s et al., 2007). The industry is now segmented by is imported from other countries. The import position in the U.S. market and U.S. phytosa- export and domestic market quality standards. shares of fresh fruit and vegetable consumption nitary restrictions have been and will continue Mexican cantaloupe exporters’ costs have in the United States were 30.7% and 9.3% in to be a source of uncertainty for Mexican risen as a result of the enhanced regulations, 1983–1985, increasing to 44.4% and 16.3% in producers. their competitiveness with CBI producers has 2003–2005 (Huang and Huang, 2007). Al- Although there is a high degree of comple- been reduced, and relatively few firms now though these products are sourced from all over mentarity between U.S. demand for and Mex- export (Aguilar-Huerta, 2009). Cantaloupe the world, Mexico is a major player in the U.S. ican supplies of fresh fruits and vegetables, not production previously exported is now sold produce market, accounting for 59.8% of fresh all Mexican regions are export-oriented. Fur- domestically, increasing competition between, vegetable and melon imports and 21.6% of thermore, domestic market producers and re- destabilizing the market, and lowering prices fresh and frozen fruit imports (Lucier and gions can be and have been very negatively for all Mexican growers (SAGARPA, 2010). Dettmann, 2008; Perez and Pollack, 2009). impacted by events in U.S.–Mexico produce The cantaloupe is the most important veg- trade. The growing Mexican population, in- etable cultivated in northern Mexico’s Lagu- creasing incomes, and health concerns present nera region, where an average 119,000 t of the domestic market opportunities for Mexican crop are produced on an average 4,665 ha Received for publication 15 July 2010. Accepted fruit and vegetable producers in non-export (SIAP-SAGARPA, 2009c). Lagunera region for publication 29 Nov. 2010. 1Research Professor. regions who strategically organize, produce, cantaloupe production occurs in the munici- 2Professor. promote, and sell their products. palities of Matamoros, San Pedro, Viesca, 3Department Head. Cantaloupe melons [Cucumis melo (L.)] Tlahualilo, Mapimi, Gomez Palacio, and Lerdo 4To whom reprint requests should be addressed; are produced in at least 13 different Mexican and is the principle supplier of cantaloupes to e-mail [email protected]. states, in every climatic zone, and by growers the Mexican national market in the summer
HORTSCIENCE VOL. 46(3) MARCH 2011 439 Fig. 1. months. The majority of Lagunera cantaloupes Table 1. Regression results for relationship between cantaloupe production in the Lagunera region and are sold in the Mexico City, Puebla, and wholesale prices in principal Mexican markets. Guadalajara metropolitan areas (SAGARPA- Distrito San Luis RLCD, 2009). Indicator Torreon Monterrey Guadalajara Federal Puebla Toluca Potosi Lagunera cantaloupe producers regularly Intercept 5917 6161 6776 6763 6516 6789 5789 experience low prices in the high production tc value 72.63 61.66 49.80 40.30 46.72 37.03 51.83 months of June, July, and August. For exam- Coefficient –0.106 –0.105 –0.069 –0.070 –0.071 –0.052 –0.074 tc value –16.44 –13.21 –6.38 –5.29 –6.35 –3.59 –8.30 ple, in 2006, 2007, and 2008, summer whole- R2 0.90 0.85 0.57 0.48 0.57 0.30 0.70 sale average prices for cantaloupes in Torreon Prob>F 0.0001 0.0001 0.0001 0.0001 0.0001 0.0011 0.0001 were 47.9%, 39.7%, and 22.3% lower than annual average prices, respectively. These low summer prices for cantaloupes are a function of seasonal excess supply with the inverse re- Confederation of Horticultural Producers in can be found at http://www.cdfa.ca.gov/mkt/ lationship between prices and production illus- 1989. Since the UNPH was disbanded, fruit mkt/ordslaws.html. trated in Figure 1. and vegetable producer organizations through- Marketing orders and agreements are Simple regression analysis of regional av- out Mexico have disappeared along with many authorized by the Agricultural Marketing erage wholesale cantaloupe price as a function of the flow-to-market management tools af- Agreement Act of 1937 (as amended) and of Lagunera region cantaloupe production pro- forded by the UNPH. state-level enabling legislation and are legal vides greater insight into the Mexican canta- Storage programs for vegetables have been instruments under which commodity pro- loupe market. This equation was estimated implemented in several regions of the world, ducer groups can cartelize and work together using central moving averages of five monthly including in Colombia, for the purpose of to solve marketing problems. Federal and observations for both price and production for managing excess potato supplies. However, state marketing orders have been used in the the period July 2005 to Feb. 2008. The regres- experience in Latin America has shown that United States to help growers in designated sion analysis shows that if cantaloupe produc- storagepolicies generally have notbeen success- regions stabilize markets and increase grower- tion in the Lagunera region increases by 1000 t, ful in countries with limited capital resources. level prices for several crops. Some marketing then the Torreon wholesale price decreases by For example, high management costs were the orders specify grade, size, quality, maturity, 106 pesos/t; similarly, if cantaloupe production primary cause of failed storage plans designed and container requirements; some regulate increases by 1000 t, wholesale prices in Mexico to stabilize potato production and prices in some amounts that handlers may sell in specific City, Monterrey, and Guadalajara decrease by regions of Colombia (Rodrı´guez-Borray, 2000). markets through volume controls; and others 70, 105 and 69 pesos/t, respectively (Table 1). In the past, Mexico’s Lagunera region has authorize research and advertising activities. The strong relationship between cantaloupe pro- attempted supply management through pro- Marketing orders are binding on all crop duction and prices in the Lagunera region and grammed planting of some crops. In the mu- handlers in the geographic area covered by the region’s long-term dependence on the do- nicipality of Tlahualilo, irrigation scheduling an order, whereas marketing agreements are mestic market raise the question of whether was used to stagger planting dates and was binding only on handlers who sign onto the supply or flow-to-market management would supported by rural development authorities agreement. Marketing orders were tradition- be able to increase and stabilize cantaloupe [e.g., Centros de Apoyo al Desarrollo Rural ally used by perishable crop producers to producers’ prices and profits. (Espinoza-Arellano, 2003)]. enhance revenues through the establishment In past years, the now-defunct National In the United States, supply management of grower-level countervailing market power. Union of Horticultural Producers (UNPH) dealt for some fruit, vegetable, and specialty crops Over time, many marketing orders have with problems of excess supply and falling is done under the auspices of federal or state evolved into primarily promotional and infor- prices for exported horticultural products in marketing orders and agreements. Currently, mation organizations. Currently, marketing Mexico. The UNPH attempted to regulate the the U.S. Department of Agriculture reports order enabling legislation is being used by timing of cantaloupe plantings and harvests to federal marketing orders in effect for the leafy green vegetable producers as a means control quantities shipped to foreign markets. following fruits, vegetables, and specialty crops: to implement and enforce production and Using forecasts for each external market, almonds, apricots, avocados, cherries, citrus, handling regulations in an industry that has UNPH delegates and cantaloupe producers cranberries, dates, grapes, hazelnuts, kiwifruit, been very negatively impacted by microbial determined the amount of land to be planted by nectarines, olives, onions, peaches, pears, pista- contamination and loss of consumer confidence. state, thus avoiding episodes of excess supply chios, plums/prunes, potatoes, spearmint oil, Both the national and regional cantaloupe and market saturation (Espinoza-Arellano, raisins, tomatoes, and walnuts (AMS-USDA, industry governing plans noted that the Mex- 2003). The UNPH functioned from the 1970s 2009). Numerous state-level marketing orders ican cantaloupe market is subject to market until the early 1990s (Macı´as-Macı´as, 2000) are also in effect. A full list of California saturation and would benefit from volume and was officially renamed the National marketing orders and marketing agreements or flow-to-market controls. Volume controls
440 HORTSCIENCE VOL. 46(3) MARCH 2011 enabled under U.S. marketing orders include cantaloupes are sold, and t(t = 1,2.T = 7) time between the price in the market j with the shipping holidays, longer-term market ship- periods, the model can be expressed as: Lagunera region’s total cantaloupe production ments (e.g., prorates), market allocations, re- XT XI XJ in month t. t 1 serve pools, and marketing allotments. These MaxG = p pcijt xijt The cantaloupe producer price ( ppijt)was grower-generated regulations can establish a t=1 i=1 j=1 calculated by subtracting the marketing margin ceiling on the maximum quantity of produc- XT XI (mijt) from the wholesale price: tion that can enter certain markets during pt 1 cp x it it ppijt = pcijt mijt ½7 a season or a period within the season (Powers, t=1 i=1 1990). Effective volume controls can raise XT XI XJ Cantaloupe middlemen and producer prof- t 1 producer returns by limiting supplies in markets p ctijtxijt its are given by Eq. [8] and [9]: or uses that are more inelastic while diverting t=1 i=1 j=1 XT XI XJ supplies to markets or uses with higher elastic- XT XI t 1 ity of demand (Neff and Plato, 1995). Empirical t 1 Gin= p pcijtxijt p cait;t+1xit;t+1 t=1 i=1 j=1 findings suggest that volume controls can in- t=1 i=1 XT XI XJ crease and stabilize farm-level prices (Carman XT XI t 1 t 1 p ppijtxijt and Pick, 1988; Kinney et al., 1987; Powers, p dð pp xit;t+1Þ½1 it t=1 i=1 j=1 1990; Shepard, 1986; Thor and Jesse, 1981); t=1 i=1 thus, these mechanisms may have the potential XT XI XJ t 1 to enhance Mexican cantaloupe producers’ re- Subject to: p ctijtxijt ½8 t=1 i=1 j=1 venues and profits. Not using these tools results XI in a significant comparative disadvantage for xijt $ yjt ½2 the Mexican industry relative to U.S. fruit, XT XI XJ i=1 t 1 vegetable, and specialty crop producers. Gpro= p ppijtxijt Cantaloupe melons are a case study in XJ t=1 i=1 j=1 U.S.–Mexico market complementarity, mar- xijt # xit + xit 1;t XT XI t 1 ket risks, and both disappearing and unex- j=1 p cpitxit ploited market opportunities. A case study of t=1 i=1 d xit 1;t xit;t+1 ½3 Mexican cantaloupes is presented here as an XT XI "# pt 1 ca x example of the information and data necessary XI XJ it;t+1 it;t+1 for strategic industry efforts, which can im- t=1 i=1 y = aj xijt ½4 prove Mexican growers’ economic conditions. jt XT XI i=1 j=1 t 1 This case study will be of interest to p dðppitxit;t+1Þ½9 agribusinesses and agricultural sectors in Mex- t=1 i=1 y ; xijt; xit;t+1 $ 0 ½5 ico and other countries that are attempting to jt stabilize agricultural subsectors, enhance grow- whereforthemontht, pt-1 = (1/1 + i )t-1 is the Middlemen profits are equal to incomes ers’ profits, and increase competitiveness. Rec- t derived from cantaloupe sales less the costs of discount factor with it equal to the inflation ommendations for institutional and policy rate; pc is the wholesale cantaloupe price in buying the melons from growers and less changes will be made here, drawing on exam- ijt transportation costs. Producer profits are equal market j coming from i; xijt is the quantity of ples from the United States. cantaloupes shipped from municipality i to to total revenues from sale of cantaloupes less Given the challenges facing Mexican can- production costs, storage costs, and shrinkage market j; cpit is the cost of cantaloupe pro- taloupes, it is essential that Mexican producers duction in i; x is the quantity of melon valued at producer prices. strategically organize, plan, and position their it The model was solved four times. The first produced in i; ctijt is the cost of transportation industry. The need for strategic planning within from i to j; ca is the unit cost of storage in solution was based on average annual actual the Mexican cantaloupe industry has been re- it,t+1 Lagunera region cantaloupe market conditions municipality i from month t to month t+1; xit,t+1 cognized at both the national and regional is the quantity of cantaloupes stored in i from t for 2006, 2007, and 2008. The second solution levels. This case study will illustrate opportu- included a 20% reduction in July and August to t+1; yj is cantaloupe consumption in market nities for and potential outcomes of strategic j; d are percent shrinkages; pp is the producer cantaloupe production in the Lagunera region. industry efforts. it A 20% reduction in production was chosen for price in i;andaj is the share of market j in total annual cantaloupe consumption. the analysis because observed monthly pro- The objective function [Eq. (1)] is subject duction in July and August is often 20% to 30% Methodology to supply and demand restrictions. Eq. [2] less than average monthly observed production indicates how market j cantaloupe consump- in the period of analysis (2006–2008). This An optimization model was used to exam- tion is supplied; Eq. [3] defines how canta- situation indicates that the 20% reduced pro- ine opportunities for increased revenues and loupe production in municipality i is allocated; duction used in the model scenario is feasible. profits in the Mexican cantaloupe industry, Eq. [4] states that cantaloupe consumption in Although the federal government has no au- specifically in the Lagunera region. The model thority to force cantaloupe producers to reduce market j is equal to a percentage (aj)oftotal incorporates the spatial and intertemporal di- consumption; and Eq. [5] establishes the planted area or total output, it is conceivable mensions of the region’s cantaloupe market. model’s non-negativity conditions. that farm-level decisions to reduce area or Formulation of the model was based on micro- The effect of Lagunera region cantaloupe production could be influenced by grower economic theory of the firm with the objective production or availability on the wholesale organizations, with support of the SAGARPA function of maximizing the total earnings of price was specified as: and state-level agencies, to avoid exceeding cantaloupe producers and cantaloupe industry " output thresholds that result in excess supply. middlemen. The results of this model illustrate XI XI XT The third solution included a Lagunera strategic opportunities for cantaloupe pro- region cantaloupe storage program and flow- pcijt = qijt + hijt xit+ xit 1;t ducers in the Lagunera region and provide a to-market controls. This scenario assumes i=1 #i=1 t=1 template for planning and management for the XI XT that excess supply will be stored during some larger Mexican cantaloupe industry. xit;t+1 ½6 months rather than for the entire growing Using the methods of Takayama and Judge i=1 t=1 season. Producers in the municipalities of (1971) and assuming i(i = 1,2.I = 7) Lagunera Tlahualilo and Mapimi recently implemented region municipalities where cantaloupes are where qijt and hijt are the intercept and co- a storage program to stabilize prices; how- produced, j(j = 1,2.J = 11) markets where the efficient of a function measuring the relationship ever, the current capacity of the storage
HORTSCIENCE VOL. 46(3) MARCH 2011 441 warehouses is insufficient for significant supply 116,329 t per year with 75.1% of the supply would be necessary to build, operate, and management (CP-FONAES, 2002; Gonza´lez- generated in June, July, and August. Without maintain the facilities used to store large Alvarado, 2005). The fourth solution assumed storage, cantaloupe consumption was equal to volumes of cantaloupes during a few months that Lagunera region cantaloupe production production (Table 2), which was distributed of the year. This investment would be idle was equal in every month during all production among the seven municipalities as follows: during most of the year because very little fall months. This assumption is reasonable be- 31.4% in Mapimı´, 24.2% in Matamoros, and winter vegetable production occurs in the cause: 1) Lagunera region climatic conditions 16.6% in Viesca, 9.1% in Tlahualilo, 7.8% Lagunera region; underuse of warehouses and and soils are not an obstacle to this pattern of in San Pedro, 7.9% in Gomez Palacio, and a low rate of return on the facilities investment production; and 2) 100% of the region’s can- 3.0% in Lerdo. would be realized. Another problem for the taloupes are grown under irrigation. Program- If all Lagunera region cantaloupe produc- industry would be increased shrinkage and med plantings would be necessary for this tion had been sold at the actual prices in the product deterioration during the storage pro- uniform output plan. average year, then producers’ total incomes cess, resulting in reduced producer revenues The first, second, and fourth solutions and profits would have risen to 218,590,000 and profits. included the assumption that quantities of and 122,291,000 pesos, respectively. These The fourth scenario explored in the model Lagunera region cantaloupes stored were zero amounts were calculated using monthly aver- involves strategic production planning over in all months; the third solution’s assumption age wholesale prices; thus, producers who time. If cantaloupe availability by municipal- was that the total quantities of cantaloupes sold their cantaloupes for less than the average ity were equal in every month during which marketed were 8,800 and 18,000 t in May and monthly price would have earned less. cantaloupe production in the Lagunera region June, 23,200 t in July, August and September, Model results with the assumed 20% re- is possible, then temporary excess supplies and 10,000 t in October and November. duction in regional supply during the months would disappear. This strategic effort would The data used in the model came from of July and August are presented in Table 2. require staggered, uniform production over several sources. Cantaloupe production data This change in supply volume is predicted to in- time. For example, if cantaloupe production by municipality and month were obtained crease cantaloupe prices and improve pro- in a particular municipality enters the market from the Sistema de Informacio´nAgropecuaria ducers’ profits from 1051 to 1193 pesos/t. With over a 2- (or 4-) month period, then no more y Pesquera de la Secretarı´a de Agricultura, the supply reduction, total profits from Lagu- than 50% (or 25%) could be marketed every Ganaderı´a, Desarrollo Rural, Pesca y Alimen- nera region cantaloupe production would stay month. Planned production and uniform flow- tacio´n (SIAP-SAGARPA, 2009a, 2009c). Data almost constant (e.g., 122,291,000 versus to-market in the Lagunera region would in- for the distribution of Lagunera region canta- 122,622,000 pesos), and growers would have crease producers’ profits by 23,616,000 pesos loupe in different markets were obtained from the opportunity to use land released from relative to the baseline scenario. This positive the Lagunera region SAGARPA delegation cantaloupe production to grow other crops. impact leads to the conclusion that, of the (SAGARPA-RLCD, 2009). The reduction in supply during the summer three scenarios presented, planned production Monthly wholesale price data for canta- months could thus positively impact pro- is the best strategy for cantaloupe producers in loupes in the relevant consumer markets are ducer earnings. the Lagunera region (Fig. 2). The planned from the Sistema Nacional de Informacio´n e Cantaloupe storage and flow-to-market con- production strategy would not require costly Integracio´n de Mercados (SNIIM, 2009). Can- trols are strategies that also show promise for infrastructure investments and would improve taloupe production costs were obtained from increasing Lagunera region producers’ reve- growers’ economic conditions; however, the SIAP-SAGARPA (2009b); the producer-level nues. These actions would consist of storing strategy would require a high degree of in- price was derived from the wholesale price part of the region’s cantaloupe production in dustry coordination and cooperation. taking into account the marketing margin. Data the months of high supply to create a more Espinoza-Arellano et al. (2005) report that used to obtain the producer-level price were from uniform flow of the product into the market. Lagunera region cantaloupe producers are SIAP-SAGARPA (2009b) and SNIIM (2009). Storage would occur during months of low poorly organized and act as individual agents Truck transportation costs include fees prices with flow-to-market increasing during in ways that reduce their negotiation power charged in 2009 and were obtained from months when cantaloupes are relatively scarce with industry middlemen. Therefore, in the individuals who move cantaloupe from the and prices are higher. This volume manage- absence of improved producer-level organiza- Lagunera region to Mexico City, Puebla, and ment would help stabilize grower-level prices tion and planning, top-down manipulation of Toluca. The average cost (pesos per t km–1) throughout the season by increasing prices water availability could help achieve improved was multiplied by the transportation distance during traditional low-price months and re- economic conditions for cantaloupe growers. matrix, which includes the destination cities of ducing prices received during months when With 100% of cantaloupe production in the Monterrey, Mexico City, Guadalajara, Puebla, cantaloupe prices are traditionally higher. Lagunera region occurring under irrigation Toluca, Chihuahua, Aguascalientes, San Luis A large percentage of total production (both gravity-fed and pumped water), imple- Potosi, Morelia, Leon, and Torreon; and the would have to be stored in June, July, August, mentation of a regional irrigation schedule cantaloupe origin points of Matamoros, Viesca, September, and October to achieve the desired could be used to influence production planning and San Pedro in Coahuila and Tlahualilo, flow-to-market management of 23,169 t during and uniform flow-to-market. Ceballos, Go´mez Palacio, and Lerdo in Du- the months of July, August, and September; Regardless of the type of strategic pro- rango. All monthly monetary values were de- 10,000 t in October; and 6,954 t in November. duction planning, storage, or flow-to-market flated using the national consumer price index The level of necessary storage capacity would management, any of these interventions will obtained from INEGI (2009). be 2,111, 5,961, 22,368, 5,011, and 2,612 t in have only moderate effects on producer profits. All monthly data included in the model June, July, August, September, and October, This is because of the large marketing margin were 3-year averages; all averages from May respectively. Because cantaloupes cannot be (up to 60% of the wholesale price) that exists to November were calculated using 2006, stored for more than 21 d, monthly storage between cantaloupe growers and cantaloupe 2007, and 2008 data. The model solution was quantities would need to be less than monthly traders (e.g., middlemen). However, any form obtained using the MINOS procedure written production in every month during which can- of strategic production planning, storage, or in GAMS (Brooke et al., 1998). taloupes are harvested in the Lagunera region. flow-to-market management would also be ex- With this storage and volume management pected to aid in improving growers’ market Results and Discussion plan, cantaloupe producer profits would be position and create conditions for their in- higher by 1,854,000 pesos relative to the average creased negotiating power. Lagunera region cantaloupe production baseline year. and profits by month under different model Although storage and flow-to-market man- Conclusions and Recommendations scenarios are shown in Table 2 and Figure 2. agement can improve cantaloupe producers’ During the period 2006–2008, cantaloupe economic conditions, this strategy has several Mexico’s reorientation of agricultural pol- production in the Lagunera region averaged limitations. First, extensive financial resources icy since the late 1980s has led to reduced
442 HORTSCIENCE VOL. 46(3) MARCH 2011 Table 2. Lagunera region cantaloupe production, storage, and profits by month under different scenarios or strategies. Producer Production Storage Producer Middlemen Production Storage Availabilityz income cost costy profitsx profitsw Month Tons of cantaloupe Thousands of pesos Actual (baseline) Lagunera region cantaloupe situation, annual average, 2006–2008 May 8,823 0 8,823 20,468 7,027 0 13,441 27,927 June 20,111 0 20,111 40,200 15,846 0 24,354 53,668 July 27,188 0 27,188 46,884 22,782 0 24,101 65,865 Aug. 40,053 0 40,053 61,557 33,879 0 27,678 66,509 Sept. 7,601 0 7,601 18,772 6,454 0 12,318 23,341 Oct. 8,002 0 8,002 19,096 6,286 0 12,809 25,229 Nov. 4,551 0 4,551 11,613 4,023 0 7,590 14,587 Total 116,329 0 116,329 218,590 96,297 0 122,291 277,126
20% decrease in July and August Lagunera region cantaloupe production May 8,823 0 8,823 20,468 7,027 0 13,441 27,927 June 20,111 0 20,111 40,159 15,846 0 24,313 53,709 July 21,751 0 21,751 40,687 18,226 0 22,461 58,056 Aug. 32,041 0 32,041 56,804 27,102 0 29,702 64,186 Sept. 7,601 0 7,601 18,758 6,454 0 12,304 23,355 Oct. 8,002 0 8,002 19,099 6,286 0 12,812 25,226 Nov. 4,551 0 4,551 11,612 4,023 0 7,589 14,589 Total 102,880 0 102,880 207,587 84,964 0 122,622 267,048
Storage and Lagunera region cantaloupe flow-to-market controls implemented May 8,823 0 8,823 20,469 7,027 0 13,442 27,926 June 20,111 2,111 18,000 37,204 15,846 695 20,663 46,842 July 27,188 5,961 23,169 44,174 22,782 1,745 19,646 51,867 Aug. 40,053 22,368 23,169 47,336 33,879 7,162 6,295 26,760 Sept. 7,601 5,011 23,169 45,323 6,454 1,452 37,417 83,048 Oct. 8,002 2,612 10,000 22,117 6,286 829 15,002 33,272 Nov. 4,551 0 6,954 15,703 4,023 0 11,680 24,397 Total 116,329 38,063 113,284 232,326 96,297 11,883 124,145 294,112
Lagunera region cantaloupe production planning over time implemented May 6,771 0 6,771 16,006 5,538 0 10,468 22,094 June 23,019 0 23,019 44,222 18,869 0 25,353 58,083 July 23,019 0 23,019 44,241 18,869 0 25,372 58,065 Aug. 21,247 0 21,247 41,994 17,764 0 24,230 55,096 Sept. 14,704 0 14,704 33,085 12,113 0 20,972 41,014 Oct. 14,704 0 14,704 33,080 12,113 0 20,967 41,019 Nov. 12,865 0 12,865 29,576 11,031 0 18,545 36,896 Total 116,329 0 116,329 242,204 96,297 0 145,907 312,267 zCantaloupe availability (consumption) in the month t is equal to production in the month t, plus inventories from month t-1 to month t, less shrinkages in the product stored from month t-1 to month t, less inventories from month t to month t+1. yIncludes shrinkages. xProducer profits are equal to producer income less production cost and storage costs. wMiddlemen profits are equal to incomes derived from cantaloupe sales less the costs of buying melons from growers less transportation costs.
Fig. 2. Lagunera region cantaloupe production and profits by month under different scenarios and strategies, 2006–2008.
HORTSCIENCE VOL. 46(3) MARCH 2011 443 producer-level horticultural industry plan- cantaloupe producers would benefit from the Kinney, W., H. Carman, R. Green, and J. O’Connell. ning and coordination of growing and mar- types of coordinated activities that currently 1987. An analysis of economic adjustment in keting activities, especially relative to their benefit many U.S. fresh fruit, vegetable, and the California–Arizona lemon industry. Gian- counterparts in the United States. U.S. fruit, specialty crop producers. nini Foundation Res. Rpt. No. 337. California vegetable, and specialty crop producers ac- Agricultural Expt. Sta., Berkeley, CA. tively take advantage of legislation, which Lucier, G. and R.L. Dettmann. 2008. Vegetables Literature Cited and melons situation and outlook yearbook. permits them to organize in the interest of U.S. Dept. of Agr., Economic Res. Serv., VGS- orderly marketing (although the exact definition Aguilar-Huerta, A. 2009. A punto de desaparecer el 2008. 19 Jan. 2010.
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