University of Florida Institute of Food and Agricultural Sciences (UF/IFAS) Extension economist Ariel Singerman discusses a recent article he wrote titled “How Much Can Florida Growers Afford to Spend on Caretaking Processed Orange Groves?” The article addresses the grove management decisions growers must make in the face of recent orange price declines. It points out that an average grower would need to cut back significantly on production expenses just to break even. The article also provides a break-even analysis to help growers determine the cost of production per acre they can afford for different orange price levels.
Regarding grove production costs, Singerman says, “Of course it varies, but according to the data that I collected last season, the average cost of production per acre is $1,847 … Some growers are spending less than that and some are spending more than that.” At the Florida Department of Citrus’ projected price of $1.62 for early- and mid-season oranges this season, Singerman projects that a grower spending $1,847 per acre would need to produce 294 boxes per acre just to break even. Unfortunately, that break-even production level is 92 boxes per acre more than last season’s statewide average yield of 202 boxes per acre for early- and mid-season oranges.
Singerman’s calculations for Valencia oranges indicate a similar dilemma, with growers likely needing to either significantly increase yield or significantly decrease production costs to break even.
A major problem for many growers this season is that many who did not have contracts to sell their fruit were getting no offers for their oranges, at least as of late 2019. If they receive nothing for their fruit, they would obviously need to cut their production costs to zero to break even. This no-offer situation was created when Hurricane Irma hit the Florida citrus industry hard in September 2017, drastically reducing production. Processors consequently bought much imported orange juice to make up for the expected downturn in Florida production.
“Apparently they (processors) have multi-year contracts to buy imported juice,” Singerman says. That means Florida growers could continue to get no offers or low offers for their fruit for years to come.
Singerman and others have indicated that some Florida growers are now receiving offers of about $1 per pound solids for their oranges. “That would require them (growers) to go down to $545 per acre (production cost), which is pretty low,” Singerman says.
An interview with Singerman on this topic is featured in the Jaunary episode of the All In For Citrus podcast, a joint project of UF/IFAS and AgNet Media. Listen to the full podcast here.
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