Food Business News - February 23, 2016 - 25

Market Insight

The

demise
of
orange
juice
he Florida orange crop is
forecast to be the smallest in 65 years, but frozen concentrated orange juice
futures remain far from record
highs due to declining orange
juice consumption and the availability of imports from Brazil.
Florida is the orange state,
really the orange juice state, accounting for about 60% of U.S. orange production of which 90% or
more is processed for juice. Processors transitioned from more
than 90% of juice production in
the form of frozen concentrate
in the early 1990s to more than
90% fresh chilled juice by 2000.
California provides most of the
oranges consumed fresh in the
United States.
Florida's citrus growers have
survived hurricanes, droughts,
freezes and land development for
more than a century. But the latest challenges - citrus greening
disease and declining consumption - have combined to deliver
such a devastating blow from
which some wonder whether the
industry will survive.
"Citrus greening, the plague
that could wipe out Florida's
$9 billion orange industry, begins with the touch of a jumpy
brown bug on a sun-kissed
leaf," National Geographic said
in a 2014 article.
The disease, a bacterium that
causes Huanglongbing, known as

February 23, 2016

citrus greening, is spread by the
Asian citrus psyllid, a tiny winged
insect. The disease limits nutrient flow in the tree causing fruit
to remain green, sour and hard
and often fall before harvest, and
eventually killing the tree.
There is no cure for the disease despite hundreds of millions of dollars from the U.S.
Department of Agriculture, the
state of Florida and private industry spent on research. Citrus greening first was detected
in Florida in 2005. It has since
spread to every state, including California. The only solution has been for growers to rip
out trees. It has the potential to
wipe out the state's citrus industry, or at a minimum, cause
it to "risk losing relevance and
economic impact," as stated in
a 2015 Chicago Tribune story.
Returns per tree for processing
oranges have nearly tripled in the
past 10 years for Florida growers,
but nearly 30% fewer trees have
offset some of those gains.
Florida's orange-bearing area
was estimated at 405,500 acres
in 2014-15, down 3% from 201314, down 28% from 564,800
acres in 2003-04 and down 35%
from 624,900 acres in 1996-97,
according to U.S.D.A. records
back to 1978.
Orange production in the
2003-04 season was 242 million
90-lb boxes, the second highest

on record after 244 million
boxes in 1997-98. Production
plunged 38% to 149.8 million
boxes in 2004-05 and has never
been over 171 million boxes
since. Citrus canker and hurricanes wreaked havoc on the
industry in the early 2000s.
Production in 2015-16 was
forecast by the U.S.D.A. at 69 million boxes as of February, down
29% from 2014-15 and the lowest
since 67.3 million boxes in 195051. The Florida Department of
Citrus last fall said the state's orange crop could fall to 27 million
boxes by 2026, which would be
the lowest since the early 1940s.
At the same time, orange juice
consumption has been declining for years due to a combination of rising prices and high
carbohydrates. Orange juice
consumption peaked in 1998
and has declined nearly every
year since, with the lack of "sit
down" breakfasts a contributing
factor. More recently, concern
about carbohydrates, or sugar,
has discouraged juice consumption, despite recommendations
by the U.S.D.A. in its Dietary
Guidelines to include juice as
part of a healthy diet.
The U.S.D.A. forecast U.S.
orange juice production in
2015-16 at 329,000 tonnes,
down 25% from the prior year,
while consumption was forecast at 600,000 tonnes, down

11%. The difference is mostly
made up by imports of 300,000
tonnes, mostly from Brazil, partially offset by exports of 90,000
tonnes, for a net draw down in
ending stocks of 61,000 tonnes
to 300,000 tonnes.
So while the Florida orange/
citrus industry struggles, there
won't necessarily be a lack of
orange juice, which only adds
to growers' struggles.
Researchers at Texas A&M
University have developed bioengineered orange trees that
can survive citrus greening disease. It's estimated the regulatory process to clear the trees
for commercial production will
take three or four years, and
a few more years before the
trees would be producing a viable quantity of fruit to make
an impact. Of course the question then arises: Would consumers who already are shunning orange juice because of
its high sugar content be ready
to drink bioengineered orange
juice from an industry that has
focused on "natural" as a key
marketing approach? FBN

RON STERK

rsterk@sosland.com

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Food Business News - February 23, 2016

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