DENVER, Nov. 13, 2018 (GLOBE NEWSWIRE) -- Domestic orange production has been declining steadily over the last two decades, with citrus greening disease being the leading cause of decreased acres and productivity. As the gap between domestic production and consumption has widened, imports have increased to boost dwindling domestic orange juice supplies. The U.S. sources virtually all its orange juice imports from Brazil and Mexico, with Brazil accounting for 66 percent of imports in 2017.
Even aside from another hurricane or other adverse weather event in the state, a steady decline in Florida orange production is expected to continue over the next three years as old groves devastated by greening disease are gradually replaced and new ones come into production. In the meantime, imports from Brazil will likely increase, according to a new report from CoBank’s Knowledge Exchange Division.
In 2017 the U.S. imported 34.8 million and 17.9 million single strength equivalent gallons of OJ from Brazil and Mexico respectively, accounting for 99.3 percent of OJ imports.
“With so much juice being imported and only two countries accounting for virtually all imports, supply risks can be of greater concern than sourcing domestically,” said Tanner Ehmke, manager of CoBank’s Knowledge Exchange. “Importers must also juggle transportation costs, foreign exchange rates, political trade risks and production risks in exporting countries.”
Domestic orange acreage is down almost 40 percent from its high of 20 years ago. Florida, the nation’s orange juice engine, has seen the biggest acreage decline as the state has battled Huanglongbing or citrus greening. Spread by the Asian Citrus Psyllid insect, the incurable bacterial disease lowers production before ultimately resulting in the death of orange trees.
Florida growers are implementing a variety of strategies to stay in the game and bolster orange production, but the situation remains challenging. With no clear fix to citrus greening in sight, domestic fruit and juice supply pressures will continue in the near term. Projections by the Florida Department of Citrus suggest that production is expected to decline modestly over the next decade as tree mortality rates continue to exceed replanting rates.
Consumer Demand Slips
While OJ supplies have been shrinking, so too has domestic demand for the juice. Consumption has been declining steadily for the past two decades and continues to fall. Current consumption of 2.4 gallons per capita is less than half of the peak of nearly six gallons per capita in the late 1990s.
Shifting consumer preferences, increased competition from a more diversified beverage market and higher prices have all contributed to the gradual decrease in consumer demand for OJ.
“While the slump in OJ consumption is concerning, it hasn’t been all bad for Florida’s citrus industry given the circumstances it has faced over the last several years as a result of citrus greening,” said Ehmke. “The reduced availability of OJ has resulted in a 20 percent jump in retail prices over the last decade, which has provided some relief during a very difficult time. The simultaneous decline in demand and supplies has limited the juice deficit, thus curbing the run-up in prices.”
Citrus greening will remain a long-term threat to Florida orange production in the next 3 – 5 years despite growers’ efforts to lessen the impact of the disease. Replanting and improved mitigation practices are lifting expectations that production will stabilize and may even increase once new groves come into production. In the meantime, processors will continue to rely on orange and juice imports from Brazil, and to a lesser extent Mexico, to meet U.S. consumer demand.
To read the full report, visit cobank.com.
About CoBank
CoBank is a $128 billion cooperative bank serving vital industries across rural America. The bank provides loans, leases, export financing and other financial services to agribusinesses and rural power, water and communications providers in all 50 states. The bank also provides wholesale loans and other financial services to affiliated Farm Credit associations serving more than 70,000 farmers, ranchers and other rural borrowers in 23 states around the country.
CoBank is a member of the Farm Credit System, a nationwide network of banks and retail lending associations chartered to support the borrowing needs of U.S. agriculture, rural infrastructure and rural communities. Headquartered outside Denver, Colorado, CoBank serves customers from regional banking centers across the U.S. and also maintains an international representative office in Singapore.
For more information about CoBank, visit the bank's website at cobank.com.