Juice Imports, Fruit Prices and Production Costs

Ernie NeffEconomics

prices
Ariel Singerman

In a recent presentation titled “Juice Imports, Fruit Prices and Cost of Production,” Ariel Singerman provided the price and yield required to break even growing oranges in Southwest Florida.

“Average cultural cost of $1,847 requires prices for E&M (early and mid) and Valencias to be $2.31 and $2.01 per pound solids, respectively, just to break even,” the University of Florida Institute of Food and Agricultural Sciences economist said. A table in the presentation indicates the break-even yields at those prices are 203 boxes per acre for early/mids and 202 boxes per acre for Valencias.

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The components of the $1,847 production cost are $584 for sprays, $528 for fertilizer, $281 for tree replacement, $220 for weed management, $201 for irrigation and $33 for pruning.

Trying to cut costs to achieve profitability has its pitfalls. According to Singerman, “Significantly reducing cost of production to adjust to lower prices will have long-run consequences on grove productivity.”

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Singerman indicated the number of pound solids per box in Florida decreased significantly from the 2008-09 season to the 2018-19 season. In that period, the Valencia yield dropped from 6.54 to 6.11 pound solids per box; the early/mid yield plummeted from 6.24 to 5.27.

The economist detailed the drastic reduction in orange juice consumption in recent years, noting that per-capita consumption tumbled from between 4.5 to 5 gallons in 2004-05 to less than 2.5 in 2018-19.

“A high percentage of fruit will be out of contract in 2020-21,” stated Singerman. He added that “processors that were not in the market (for fruit) this season (are) likely to come back (due to their contracts with suppliers abroad expiring).” Some growers say they received no offers or very low price offers for their fruit in recent seasons because processors committed to buy large amounts of foreign juice after Hurricane Irma damaged Florida groves in 2017.  

Singerman’s presentation is one of the first from the cancelled 2020 Florida Citrus Growers’ Institute to become available online. The annual event was cancelled in April because of COVID-19. UF/IFAS is working to make additional presentations available to growers.

See Singerman’s full presentation here. A PDF version is also available online.

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About the Author
Ernie Neff

Ernie Neff

Senior Correspondent at Large