A Case for an OJ Tax Hike

Ernie NeffOrange Juice

Ned Hancock

Florida Citrus Commission Chairman Ned Hancock on June 5 made a case for increasing the Florida Department of Citrus’ (FDOC) grower tax on oranges processed for juice.

“With a new season ahead of us, we have an opportunity to not only adjust our marketing approach to fit the needs of the ever-changing consumer but also best support the Florida grower,” Hancock stated in a report to Florida citrus industry members. “Now, more than ever, Florida growers would benefit from the promotion of NFC (not-from-concentrate orange juice) to increase consumer awareness of orange juice and support the entire orange juice category.”

Sales of NFC increase demand for Florida oranges “which, in turn, provide the best return to growers,” Hancock stated. But he pointed out that there has been a decline in recent years in the number of NFC items carried by stores in America. “We need concerted efforts to drive sales at retail with marketing programs that highlight the premium quality of NFC Florida orange juice,” he added.

Florida citrus commissioners in May asked FDOC staff to put forth four different tax rate scenarios for processed oranges. Hancock explained that the various scenarios, ranging from tax rates of 7 cents to 15 cents, include the assumption that the FDOC will receive $5 million in general revenue from the state to support domestic marketing programs.

Hancock told what the 2020-21 FDOC budget would be under the various tax rate scenarios: “At $.07 with full use of planned spend down of fund balance, the total domestic marketing budget is $8.9 million. At $.12 with no use of fund balance, the budget is $10 million. At $.12 with full use of fund balance, the budget is $12 million. At $.15 with no use of fund balance, the budget remains at $12 million. For reference, the 2019-20 budget allocated $5.7 million for domestic marketing, including $935,000 in general revenue from the state.”

He detailed ways that increasing the marketing budget would allow the FDOC’s marketing agency to increase efforts to move more orange juice. According to Hancock, those efforts include e-commerce programs, issue management, influencer outreach and “social media, web, digital and video displays and content creation that support driving sales.”

The current marketing program for 100 percent orange juice is performing well, he said. “Since its launch in January, the e-commerce program has driven more than $4.05 million in attributed sales of 100 percent orange juice, reached 294 million impressions and provided a return on ad spend (ROAS) of $4.37,” he reported. “Overall, the program has helped move more than 1 million units of 100 percent orange juice and supports continued consumers’ awareness of orange juice to drive repeat purchases.”

The Citrus Commission will consider tax rates for next season during a virtual meeting June 17 at 9 a.m. The agenda and other details about the meeting will be available here soon.

In April, Hancock reported on positive news about OJ sales; learn more.

About the Author

Ernie Neff

Senior Correspondent at Large