CITRUS GROWERS NERVOUS ABOUT CANKER, DROUGHT

EILEEN COURTER

TAMPA (FNS) -- While Florida citrus growers celebrate their near-record harvest of oranges this year, they are keeping a wary eye on a couple of conditions that could impact next season.

One looming factor is the severe drought that has hit much of the Sunshine State. While hope rises with each rare passing shower that much-needed rain will arrive, most forecasters expect no significant short-term relief. That could impact the later orange crop, mainly Valencia, just now producing blossoms on trees, according to growers and state citrus officials. If the drought continues, the trees could begin to shed potential fruit, in effect dampening the season even before it begins.

"Most of Florida's commercial citrus is irrigated," said Scott Butler, general counsel of the Florida Farm Bureau, Gainesville, Fla. "However, that never completely substitutes for Mother Nature. Early spring is when the new crop sets on the tree. When the blossoms fall off, you've got your little oranges. If at that time a tree doesn't get adequate moisture, it will abort a lot of those small oranges."

Citrus canker is still another wild card. The disease has already spread among commercial lime growers in South Florida, and about 500,000 trees have been destroyed to date in Dade, Broward, Collier and Monroe counties. After a recent tour of the hardest-hit groves by U.S. Agriculture Secretary Dan Glickman, the four counties were declared federal disaster areas.

So far, the impact on orange groves has been minimal, although it has forced the removal of trees from residential areas as far north as Sun City Center, outside Tampa.

According to Robert Barber, an economist with Florida Citrus Mutual, Lakeland, Fla., eradication efforts have gotten much more aggressive in recent weeks. Previously, authorities removed all trees within a 125-foot radius of a confirmed infected tree. Now the circumference is up to 1,900 feet -- a distance that can wipe out an entire grove of 260 acres, he added.

And, growers would be prohibited from replanting any trees for two years. The severity of the eradication efforts -- burning of trees and quarantines -- match the tenacity of the plant disease, which can be spread by wind, and even the claws of passing songbirds who alight a single time on an infected branch. If the canker reaches commercial groves, citrus supplies could shrink, Barber said.

"The potential impact would be greater for grapefruit than for oranges because grapefruit doesn't have the same market share as oranges. And, there is some problem with [tree] yield. If the canker gets on the stems as well as the fruit itself, it can cause the fruit to drop and stunt the growth."

Phillip Lesser, director of economic and market research at the Florida Department of Citrus, also in Lakeland, said the state's more than 100 million citrus trees are being surveyed and monitored intensely for signs of infection, a procedure that will continue for some time.

"The state has about 85 million orange trees, 14 million grapefruit trees and 6 million tangerine trees," he said. "The reason everybody is taking citrus canker so seriously is it is a very transferable disease and can spread shockingly quickly."

Lesser noted that the impact of the lime citrus canker situation on consumer prices might be less severe than feared, since most limes consumed in the United States are imported from Mexico. Florida only produces about 15% of the domestic supply, so the loss of Florida's lime crop would translate into only a 5% drop in overall supply.

However, buyers could well face a price increase in all citrus next year, because Mexico is also suffering from drought conditions in its own growing regions, he said.

The bottom line for supermarket buyers and produce managers: there should be a good supply of oranges and orange juice in the immediate future, and consumers appear willing to continue paying top prices, especially for much-in-demand not-from-concentrate juice, said industry observers.

The U.S. Department of Agriculture forecasts this season's Florida orange crop at 226 million boxes. Each box weighs 90 pounds and produces just over 6.5 gallons of juice. The FDC reports the average supermarket price for juice in January was $4.32 a gallon, near a nine-year high. That isn't expected to drop, even in the face of the strong harvest, Lesser noted.

Industry statistics show that roughly 215 million boxes of this year's 226 million boxes of Florida oranges will be processed into juice. That figures out to about 1.4 billion gallons.

"We Americans drink 5.75 gallons of orange juice per capita, or a total of not quite 1.6 billion gallons. So even with a large crop like this, the United States is a net importer of orange juice. This crop is not enough to allow self-sufficiency in the United States," he said.

Some trends Lesser is seeing in supermarkets:

Ready-to-serve continues receiving more and more space at the expense of small cylindrical cans of frozen juice that dominated 20 years ago and now account for only 20% of sales.

More consumers are selecting premium orange juice. Of the 215 million boxes destined for processing, 90 million will go into not-from-concentrate product.

Consumers rank orange juice and broccoli as the healthiest of all foods.

Barber pointed out Florida produced an even larger orange crop two years ago, followed by last year's 1998-99 crop, which was unusually small due to drought. Now, orange production is up again to perhaps the state's second or third largest crop ever.

"With grapefruit, our production is actually going to be less than last year, and substantially smaller. In the previous two seasons we had crops of around 65 million boxes. This year is going to be about 46 million boxes. That is partially due to the low grower prices we've had the last four of five years. There's been a reduction in grapefruit acreage, Also, Hurricane Irene came in early this season and blew a lot of fruit off the trees," Barber said.

As for prices, he indicated he's not certain there's been a connection between what growers get, what the packing houses sell the fruit for, and what consumers pay in the checkout line.

"Consumers shouldn't really see higher prices at the retail level because they didn't see lower prices when grower returns got driven down into the dirt," Barber said.

"We'd like to see grapefruit prices come down [in supermarkets]. Last year, with the short crop of oranges, orange juice prices went up quite a bit in the stores. According to the A.C. Nielsen data, prices were up 60 to 70% on average. Now we're getting a larger crop but we're not seeing prices come down."

Supermarkets have been raising prices, especially on branded products such as Tropicana and Florida's Natural, agreed Ron Dubin at OJ Investments, Arcadia, Fla.

"The figure I've heard is around $2.89 for a 64-ounce container. The price doesn't seem to affect sales. That has prompted many supermarkets to take advantage of a high markup on relatively small shelving space," he said. "They've increased the facings in their chilled juice area. Winn-Dixie and a lot of the Florida stores have certainly done that. I believe up north Kroger and others have done the same thing because citrus juice from Florida has become very profitable. According to tracking information from Nielsen data, there are quite a few stores here and there that have out-of-stocks. It's been a greater problem in the Northeast than in the South and West."

Meanwhile grower prices have been stable, or actually lower, this year than before. Given the possible impact of drought and the citrus canker, coupled with strong consumer demand, Dubin suggested that supermarket produce buyers reaffirm their relationships with their most reliable grower/shippers.

"Get with your suppliers and make sure you've got strong contracts and a good supply coming in next year in event of a shortfall," he said.

James Cordier, a broker at Liberty Trading Group, St. Petersburg, suggested that buyers go into the futures market for next year and put on long hedges to protect against drought, canker and the Medfly -- which isn't here yet.

"I think prices are at extremely low levels and will probably not go much further," he said. "It appears with the large crop and strong demand, [wholesale] prices are very near bottom and the only movement I could see prices making in the next six to 12 months would be up."