Box Tax Could Increase for Florida Oranges

Tacy CalliesFlorida Citrus Commission

box tax

Florida citrus officials are taking another look at raising a tax on growers as they wait to see if a legislative boost in marketing dollars becomes a victim of the coronavirus.

The Florida Citrus Commission (FCC) on May 20 directed staff members to include in a budget proposal due in June the impacts of raising from 7 cents to 12 cents or 15 cents a per-box tax on oranges. Growers pay the tax to help market their crops.

In addition to a tax hike that could help increase marketing from $3 million in the current year to more than $9 million, staff would have to provide options of no increase to the box tax and the continued use of remaining “fund balance” dollars.

“It appears that there’s still two schools of thought: spend more, spend less,” FCC Chairman Ned Hancock said during a video conference call.

In November, the FCC rejected a proposal to raise the box tax to 12 cents, despite small growers indicating a willingness to pay a higher tax rate if it would get people to drink more orange juice.

Larger growers successfully argued that Florida growers shouldn’t be fully funding the national marketing effort, which would also benefit other U.S. and international growers.

Penciled into the Florida Department of Citrus (FDOC) effort to increase consumer demand is a $3 million increase for marketing that was included in a $93.2 billion state budget approved in March by the Legislature. The budget, which will take effect July 1, still has not gone to Gov. Ron DeSantis, who has line-item veto power.

“I think we all feel confident that the governor is probably going to sign the budget as is or hopefully leave us alone,” said Florida Citrus Commissioner Paul Meador, president of LaBelle-based Everglades Harvesting & Hauling Inc. “Next year, I think it’s going to be a very, very large challenge. So, do we want to suffer this year, or do we want to suffer next year? That to me is the hedge we’re going to be built on next year.”

FCOC Executive Director Shannon Shepp said the governor has been supportive of the funding, but future spending could be affected by reduced state tax dollars caused by the coronavirus pandemic.

“Clearly, the only thing that’s known is the fact that our state is under a state of emergency that we’ve never seen before,” Shepp said. “It’s really just a matter of where those funds might be necessary elsewhere. Now, on the other side of that, we’ve heard from our legislative leaders and from the governor that we have a hefty rainy-day fund.”

The FCC is expected to present a tentative budget in June, with the box tax up for a final vote in October, when the department’s fiscal year begins.

DeSantis on May 11 said his review of the state budget remains on hold pending another round of federal stimulus money, which is expected to address state and local governments and could also dictate how state lawmakers readdress the spending plan.

FCC member Bill Poulton, senior director of global procurement for PepsiCo, suggested the commission hold off on a box-tax hike for a year, instead using money in the fund balance.

“I understand the desire to want to invest more than the $3 million that we would see in marketing, but if we were to maintain the same rate, we would have the next year to monitor all the different variables that none of us can predict at this moment,” Poulton said.

But Florida Citrus Commissioner Marty McKenna, president and owner of McKenna & Associates Citrus, said the agency has the past five years played “kick the can down the road” on its budget.

“We can’t cut money and save our way out of this dilemma,” McKenna said. “You know, we’ve got to produce to get our way out of this dilemma, and our marketing people have to produce to be able to get us out of this dilemma.”

Citrus marketing has declined over the past decade as growers have seen production numbers decrease because of issues such as citrus greening disease, development pressure and changes in drinking habits.

The goal of any marketing effort would be to drive a positive message of the benefits of orange juice — high in vitamin C, fiber and potassium for heart health and to lower blood pressure — against negative perceptions of sugar in the fruit.

Jackie Hopkins, who is with the FDOC’s marketing-agency partner Edelman/Edible, said the coronavirus has increased online searches about health and immunities while people have spent more time at home.

“We’ve seen a huge shift, almost a 30 to 50 percent increase in year-over-year purchasing of comfort food,” Hopkins said. “Obviously, that’s showing us sort of the shift in nature of how COVID is impacting people’s needs in terms of their health and the types of products that they’re buying.”

Source: News Service of Florida