Specialty Crop Access to U.S. Markets: A Case Study of Indian Mangoes
by
Peyton Ferrier, Everett Peterson, and
Maurice LandesEconomic Research Report No. (ERR-142) 39 pp, November 2012
What Is the Issue?
Certain specialty crops produced in other countries, such as
Indian mangoes, have gained greater access to U.S. markets since
2007, when USDA's Animal and Plant Health Inspection Service
changed its regulatory protocols for ensuring goods are free of
pests. One treatment option considered under the 2007 protocols as
an effective quarantine measure for neutralizing nearly all insect
pests is irradiation. Using the example of U.S. imports of Indian
mangoes, we examine the role of irradiation in mitigating pest
risks from imported fresh produce; the costs associated with
treating, shipping, and marketing fresh produce imports in the U.S.
market; and the resulting levels of prices and availability of
Indian mangoes for U.S. consumers. (For more information on 2007
regulatory changes, see:
http://www.aphis.usda.gov/import_export/plants/plant_imports/index.shtml.)
What Did the Study Find?
Increased access of foreign fresh produce to the U.S. market,
facilitated by risk-mitigation options such as irradiation, can
improve U.S. consumer welfare. While increased variety and
availability of goods are likely to benefit consumers, the size of
these benefits depends on whether these goods are able to capture a
substantial market share. In the case of U.S. imports of Indian
mangoes, India's share of the U.S. market remains small and
dependent on the apparent willingness of some consumers to pay high
prices for India's mango varieties relative to competing varieties
from larger exporters, such as Mexico. Our findings indicate that
these high prices arise primarily from transportation costs and
high wholesale margins and not from the regulatory or treatment
costs.
• Irradiation, a postharvest treatment that neutralizes a wide
range of pests, can facilitate access to the U.S. market for fresh
produce that may not be able to meet U.S. regulatory requirements
by other means. The costs of irradiation are likely to fall if the
treatment becomes more commonly used.
• Irradiation and other regulatory compliance costs appear to be
low relative to other logistical and marketing costs for fresh
produce accessing the U.S. market. Innovation and increased scale
that reduce transportation costs and wholesale margins are likely
to yield greater gains in imports and result in more imported
produce being available to U.S. consumers than are reductions in
irradiation costs.
• While the benefits to U.S. consumers of improved availability
and lower costs associated with an individual niche product, such
as Indian mangoes, may be small, the cumulative gain to U.S.
consumers from improved access to a broad range of specialty crops
likely would be substantially greater.
How Was the Study Conducted?
This study uses a partial equilibrium model of the U.S. and
Indian mango markets to estimate the value of increased imports of
Indian mangoes arising from changes in costs associated with
irradiation treatment, shipping, and wholesale margins. Demand is
modeled using a constant elasticity of substitution utility
framework, calibrated with trade and price data from USDA's Foreign
Agricultural Service and Agricultural Marketing Service, as well as
from the U.S. Department of Commerce's Bureau of Economic Analysis
and Census Bureau. Costs are modeled using detailed wholesale and
retail data provided by the Indian Ministry of Agriculture's
Agricultural Marketing Information Network (Agmarknet), as well as
cost information obtained through interviews with Indian
traders.