Florida Facing Worst Orange Harvest Crisis in a Century, Orange Prices Soar

Officials predict that disease and hurricanes will result in significantly lower harvest

Florida Facing Worst Orange Harvest Crisis in a Century, Orange Prices Soar
Image: Pixabay
October 17, 2016

The Sunshine State is facing the worst orange harvest since records began in 1913, and prices for the fruit are surging as a result.

Florida's orange trees—used mostly for producing juice—have been severely impacted by disease and hurricanes. Harvest totals have fallen for five successive seasons in consequence. The harvest this year, predicted the U.S. Department of Agriculture (USDA), will total only 70 million boxes of the fruit—a drop of 14 percent from 2015's total and a massive decrease from the days at the turn of the century when more than 230 million boxes—each containing 90 pounds' worth of oranges—were being produced annually.

This drop has resulted in the prices of orange juice futures to almost double in a period of 13 months, leading producers to reduce carton sizes and make more drinks blending orange with other fruit juices so that consumers will avoid facing too large a price increase. The futures traded on the Intercontinental Exchange went from $1.03 per pound in September 2015 to $2.05 per pound last week, and some analysts are predicting that they could reach $2.20 by the end of the year.

The devastation of the orange crop started back in 2005 when a bacterium causing huanglongbing—also known as citrus greening or HLB disease—was discovered in southern Florida. Since that time, a tiny flying insect called the Asian citrus psyllid that carries the malady has been blown across the state by hurricanes that also felled orange trees.

Although farmers have spent more than $100 million in researching methods of fighting the disease, so far scientists have not been able to figure much out.

"Farmers are giving up on oranges altogether," said Judith Ganes, president of commodities research firm J. Ganes Consulting. "Normally after a freeze or a hurricane, the growers would replant 100% of their plants. But the disease has been spread all over by hurricanes, and made it totally uncontrollable. Farmers are giving up and turning to other crops or turning land over to housing."

According to Ganes, citrus greening—which causes fruit to drop before ripening and eventually kills the trees—is "effectively like the trees having cancer with very low survival rates."

The DOA stated last month that almost one third of the orange crop in Florida fell from the trees before it could be harvested during the most recent season. This is a grim statistic compared with seven percent only five years ago.

Ganes stated that prices have been increasing because both Florida and Brazil's São Paulo state—the other main global source of orange juice—have been suffering from the disease. As the wholesale price has gone up, she said, orange juice companies like Coca-Cola's Minute Maid and Pepsi's Tropicana have had to come up with more creative ways to sell juice to consumers.

"To get round the price rise, they are making the cartons smaller or blending orange with other fruits or water," Gaines claimed.

Andrew Meadows from Florida Citrus Mutual agreed that oranges are in crisis, but he said that Florida farmers are not giving up yet.

"We've been through things like this before," he said. "We're not packing up and giving up on the industry."

So far, customers have not seen big increases in prices not only because of smaller cartons, but also because they are consuming less orange juice for breakfast than did the previous generations. This means that demand is also down.

John Michalik is a beverages expert working for market research group Global Data. According to him, the demand for orange juice has been falling for more than 10 years as more people skip breakfast and worry about the high sugar content.

"U.S. consumers have it in their mind that orange juice is high in sugar, which it is, but it's natural sugars that don't contribute to obesity," he said. "People are not having the full breakfast at home like they used to. Now almost all breakfasts are a coffee and sandwich or snack on the go."