Asparagus is a perennial crop that has a relatively long life expectancy of up to 20 years in commercial plantings. Since the crop is not usually harvested for the first 3 years, asparagus production represents a significant long-term investment for growers. In addition, since the time from planting to the first harvest takes 3 years, producers cannot quickly increase production in response to market demand. While asparagus is a native of temperate regions, its cultivation is most successful in locations where either extreme temperature or drought stops the growth of the plant, providing it with a rest period. Asparagus is produced and sold either as fresh, uncooked whole spears or processed (heat-treated canned or frozen) whole spears or cut pieces. Asparagus is a labor-intensive, high-value vegetable crop. For example, according to the U.S. Department of Agriculture (USDA), in 2000, the season-average shipping-point price for fresh asparagus was $1.14 per pound. In comparison, the price for the second and third highest value vegetables—artichokes and fresh market snap beans—was $0.64 and $0.42 per pound, respectively. In 2000, the United States produced 227 million pounds of asparagus having a value of about $217 million. The majority of the asparagus produced was green asparagus for the fresh market—66 percent was fresh, while 34 percent was processed (about 28 percent was for canning and 6 percent for freezing). Figure 1 shows the annual quantity of domestic production from 1990 to 2000. As shown in figure 1, the production of fresh asparagus in the United States trended downward until 1995, when it reached a low in part due to poor weather in California. Since then, production has been increasing. In contrast, the production of asparagus for processing has been steadily declining. The major commercial asparagus-producing states are California, Washington, and Michigan. California, the most important state for fresh production, has a harvest season from January through May. While Washington and Michigan produce some asparagus for the fresh market, the majority of their production is for the processed market. Production from Michigan occurs from May through June and Washington from May through July. In recent years, Washington has begun shifting some production from asparagus for processing to fresh asparagus, although doing so is costly for producers. Thus, when the three states are considered, domestically produced fresh asparagus is available from January through July. At other times of the year, only canned and frozen production is available from domestic sources. In recent years, imports have accounted for a growing proportion of the U.S. fresh asparagus supply and, in 1999, represented 57 percent of fresh asparagus consumption. In 1999, over 90 percent of total U.S. asparagus imports were of fresh asparagus. The growth in imports has been made possible, in part, by the Andean Trade Preference Act and the North American Free Trade Agreement (NAFTA). ATPA, which was signed into law in December 1991, eliminates or reduces U.S. tariffs on eligible products from four Andean countries—Bolivia, Colombia, Ecuador, and Peru. ATPA’s primary goal is to promote broad- based economic development in these Andean countries and to develop viable economic alternatives to coca cultivation and cocaine production by offering Andean products broader access to the U.S. market. The President proclaimed preferential duty treatment for Peru in 1993. These preferences are scheduled to end effective December 4, 2001. NAFTA, which was ratified by the Congress in 1993 and implemented in January 1994, created a free trade area between Canada, Mexico, and the United States. NAFTA provides for the gradual elimination of tariffs—from as high as 25 percent on fresh asparagus—and other trade barriers on most goods, over a 10- to 15-year period. As shown in figure 2, asparagus imports were increasing prior to ATPA’s and NAFTA’s enactment and have continued to increase since that time. For example, imports grew from 44 million pounds in 1990 to 142 million pounds in 1999—an average annual rate of increase of 14 percent, whereby Mexico and Peru provided most of the increase. According to information from the Peruvian Asparagus Institute,increases in asparagus production, assisted by the implementation of ATPA, have resulted in making asparagus Peru’s second largest export crop, after coffee. Peru has also developed a modern frozen asparagus industry and has rapidly increased exports of this product to the United States and U.S. frozen export markets, such as Japan. Asparagus accounted for 14.1 percent of Peru’s agricultural exports and resulted in employment for over 20,000 Peruvians in 1999. According to the U.S. International Trade Commission’s (ITC) 1999 study, ATPA has displaced an estimated 2 to 8 percent of the total value of domestic fresh asparagus production from what it would have been without the act. U.S. consumers, however, benefited from the availability of fresh asparagus from Peru during the months when fresh asparagus is not generally available from domestic producers—August through December. In addition, changes in consumer preference contributed to a downward shift in the domestic demand for processed asparagus. Using 1999 data, ITC estimated that the total impact of ATPA’s tariff reductions has been a 2- to 8-percent displacement of the total value of U.S. fresh asparagus production by Peruvian imports as consumers substituted asparagus imported from Peru for domestically produced product. According to ITC, asparagus and cut flowers are the two industries experiencing potentially significant displacement under ATPA. ITC measured the impact of tariff reductions under ATPA by comparing estimated market conditions under full tariff treatment versus actual market conditions under duty-free entry. A decrease in the price of imported asparagus caused by tariff reductions results in the substitution of imported asparagus for domestically produced asparagus, but the displacement is not one for one because of various reasons, such as a retailer’s preference for marketing domestically produced product. Consumers have benefited from ATPA because fresh asparagus is now available during the months when it is generally unavailable from domestic producers. This increased availability, combined with consumers’ preference for fresh asparagus, has contributed to a downward shift in the consumption of processed asparagus. Figure 3 shows that the U.S. primarily produces and ships fresh asparagus during January through July. In contrast, imports from Peru occur nearly year-round, including months when U.S. fresh production is unavailable. As the figure shows, the majority of imports from Peru occur from August through December, when there is virtually no U.S. fresh production. Only canned or frozen asparagus is available from domestic sources during this time. Fresh asparagus from Peru is available, in part, because the elimination of tariffs reduced the price of Peruvian asparagus in the United States. While imports from Peru have increased the supply of fresh asparagus in the United States, demand has been strong, as demonstrated by the increased per capita consumption of fresh asparagus. As figure 4 shows, in the mid-1980s, the per capita consumption of asparagus shifted from processed to fresh asparagus, demonstrating consumers’ preference for the latter. This shift in consumer preference accelerated in the mid-1990s, as fresh asparagus became available on a year-round basis. The shift in the per capita consumption of asparagus is part of the general trend toward increased consumer preference for fresh vegetables. In addition, the consumption of asparagus, which is a high-value product, is particularly responsive to increases in personal income, according to econometric studies. In the latter half of the 1990s, real disposable personal income increased by an average annual rate of about 3 percent. The increase in fresh asparagus consumption has helped keep prices trending upward despite the increase in supply from imports. In contrast, shifts in preference and the declining consumption of processed asparagus have kept prices for processed asparagus relatively flat, as shown in figure 5. The decline in the consumption of processed asparagus particularly affects producers in Michigan and Washington, the two states that produce the majority of frozen and canned asparagus. For example, processed asparagus accounted for approximately 86 percent and 68 percent of the production of that crop in Michigan and Washington, respectively, in 2000. Our analysis shows that processed asparagus decreased from 42 percent of domestic production in 1990 to 34 percent in 2000. Most of the decline occurred in Washington. If ATPA is reauthorized, the producers of asparagus and, in particular, asparagus for processing will likely face some continued displacement from imports, but consumers can expect continued benefits from the year- round availability of fresh asparagus. However, some of this displacement will likely occur even if ATPA is not reauthorized and the normal tariff is imposed: 5 percent in 2 of the 5 months when the majority of Peru’s asparagus is imported, and 21.3 percent in the other 3 months. This is because U.S. consumers prefer fresh asparagus, which domestic producers cannot supply in some months, and because of Peru’s advantages in climate and labor costs. In addition, consumers would likely face decreased availability and pay higher prices than they would otherwise to the extent that the increase in tariff creates a reduction in imports from Peru and hence an overall reduction in asparagus supply. U.S. asparagus producers will also face increasing competition from Mexican imports under the North American Free Trade Agreement.