By Thomas H. Spreen
As many of you know, I have been part-owner of a small citrus grove company in Florida. My long-time partner was Bob Behr, CEO of Florida’s Natural. He was a student in the first class I taught at the University of Florida in the spring of 1977. He and I made our first grove purchase in 2000, had sold everything by 2009 and went back in 2014. Beginning in early 2019, we discussed the future of our partnership as I have already retired from the University of Florida and Behr was thinking about his remaining time at Florida’s Natural. I casually mentioned this to my younger son who is now an assistant professor at the University of Maryland.
Soon thereafter, to my shock and surprise, my son indicated that he and a friend from Gainesville would be interested in buying out Behr. We collectively agreed on a price, and Bob sold his interest in Summer Breeze Fruit Company to my son and his friend, a certified public accountant (CPA), on Dec. 31, 2020.
The entrance of two new investors into Florida citrus is significant for several reasons. First, these two young men have never invested in agriculture before. They saw this investment as a way to diversify away from the stock market. Florida citrus has long depended upon non-agricultural investors to supply the capital needed by the industry. Although no statistics are available on the level of absentee ownership in Florida, it is considerable and not limited to Florida-based investors.
FINANCING REVITALIZATION
The Florida citrus industry is facing a number of threats, the most important being huanglongbing (HLB or commonly called citrus greening). The impact of HLB has been to reduce both per-acre box yields and per-box juice yields. Combined with citrus canker, it has had a devastating effect on the fresh fruit industry and has forced the closure of many packinghouses. Reduced grove profitability has caused many to exit the industry. Even large orange-producing companies have reduced acreage.
It is apparent that the Florida citrus industry needs new investors to help finance the revitalization of the industry. Young professionals such as my son and his CPA friend are needed to invest in an industry with a current economic outlook that is not positive but has historically recovered from past adverse events such as the freezes of the 1980s and the hurricanes of 2004 and 2005.
Citrus fruit and juice remain important components of the North American diet. Despite the decline in citrus production in Florida, orange juice consumption has remained stable, especially over the past few seasons. Consumers still want citrus juices. The success of seedless mandarins from California confirm that consumers also want fresh citrus products. The Florida industry must continue to search for solutions to suppress HLB and citrus canker and allow profitability to return to Florida citrus growers and investors.
A POSSIBLE STRATEGY
What is a strategy that could be implemented to attract new investors? A prospectus could be developed by one of the grower organizations or University of Florida Institute of Food and Agricultural Sciences Extension based upon realistic yields, fruit prices and costs. That prospectus could be made available through the internet to investment companies who have both large and small investors as clients.
Recruiting new investors for the Florida citrus industry is not unlike attracting consumers to buy Florida citrus. Materials could be developed which enumerate the benefits of investing in a healthy product, which stress the need to maintain a diversified portfolio that includes investments other than equities, and which tout the benefits of supporting U.S.-based production of food.
Thomas H. Spreen is professor emeritus in the Food and Resource Economics Department of the University of Florida and senior economic consultant in the Economic and Market Research Department of the Florida Department of Citrus.
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