Growers Sustain Losses

Ernie NeffEconomics

Not many watching a recent virtual Citrus Expo presentation were surprised by Ariel Singerman’s declaration that “taking into account total cost, on average, growers sustained a loss” in the 2019-20 Florida citrus season. Singerman, a University of Florida Institute of Food and Agricultural Sciences economist, pegged the average per-acre losses at $1,606 for early-midseason oranges and $1,254 for Valencias.

Singerman estimated cultural costs for a Southwest Florida processed orange grove in 2019-20 at $1,722 per acre. The largest expenditures were $522.81 for foliar sprays, accounting for 31 percent of cultural costs, and $410.51 for fertilizer, representing 24 percent. Other costs and their percentages of total expenditures were $292.46 for resetting six trees per acre, 17 percent; $249.96 for weed management, 14 percent; $192.41 for irrigation, 11 percent; and $53.84 for pruning, 3 percent.  

Growers also had expenses such as interest on operating costs and capital investment, management costs and a variety of tax assessments. When those were added to the $1,722 cultural costs, the average total cost per acre was $2,095. 

Singerman noted that growers, on average, cut production costs in 2019-20, especially the costs of fertilizer and nutritionals. “Those reductions are a response to the significant decrease in prices this season,” he said. “Reducing cost of production to adjust to lower prices will have long-run consequences on grove productivity. And unfortunately, this is likely to have further impact on the number of growers that will remain in business.”

In addition to reporting this season’s losses, Singerman posed several considerations for 2020-21. “A high percentage of fruit will be out of contract in 2020-21,” he stated. “Production is down in Brazil and in Mexico. Processors that were not in the market (for growers’ fruit) this season are likely to come back (due to their contracts with suppliers abroad expiring). The question is, what contract prices will they offer, and what cost of production would those contract prices cover?”   

See Singerman’s full presentation here. The presentation, and the continuing education units available to those who watch it, will remain online through the end of 2020.

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About the Author

Ernie Neff

Senior Correspondent at Large