Economic Importance
of Florida Citrus
Robert P. Norberg - Florida Department of Citrus
USDA/ARS ‘SWAT Team’ Workshop, Ft. Pierce, Florida
April 22, 2008
Presentation Agenda
„ The Department of Citrus
„ Florida Orange Outlook and Situation
„ Industry Effort to Solve Greening
2
Florida Department of Citrus
“Who We Are”
www.floridajuice.com
Florida
Florida Citrus
Citrus Commission
Commission
Florida
Florida Department
Department of
of Citrus
Citrus
Created in 1935
Responsible for:
ƒ Regulation
ƒ Research
ƒ Market Promotion
4
Florida
Florida Citrus
Citrus Commission
Commission
Florida
Florida Department
Department of
of Citrus
Citrus
„ First organization in USA established to
insure quality and promote a food
commodity
„ Model for subsequent marketing orders
¾ Idaho Potato Commission
¾ Washington State Apples
¾ Alaskan Seafood
5
Florida Citrus Commission
„ ‘Twelve practical citrus
persons who are resident
citizens of the State,
each of whom is actively
engaged in growing, …
packing and processing.’
601.04 (1)(a) F.S.
„ “Appointed by the Governor,
confirmed by the Senate.” 601.04 (2)(a) F.S.
6
Funding
„ Financed by excise tax assessed on
each box of citrus*
„ Two to four percent of the orange
grower’s annual return
„ Historically, 75% spent on marketing.
Reallocating to research in 2008-09.
*Imposing a tax on growers for generic advertising and promotion
of Florida citrus is protected from First Amendment challenges. 7
Economic Impact
$9.3 Billion
¾ Over 600,000 acres
¾ Nearly 80,000 FTE
jobs
8
Source: An Economic Assessment of the Future Prospects for the Florida Citrus Industry, March 2006. Spreen, et al.
Florida
Florida Farm
Farm Receipts
Receipts
Share,
Share, 2005
2005
Other
12.5%
Livestock
18.7%
Foliage
12.6%
Field Crops
7.5%
Florida
Citrus
21.1%
Other Fruits
and Nuts
3.7%
Vegetables
20.2%
Melons
3.7%
9
SOURCES: Food and Agriculture Organization of the United Nations (FAO), FASS.
Over
Over 10,000
10,000 Florida
Florida Citrus
Citrus Groves
Groves
Employee
Employee up
up to
to 40,000
40,000 People
People
10
30,000
30,000 to
to 40,000
40,000
Seasonal
Seasonal Pickers
Pickers
11
Over
Over 50
50 Harvesting
Harvesting
and
and Hauling
Hauling Companies
Companies
12
Over
Over 40
40 Fresh
Fresh Fruit
Fruit
Packinghouses
Packinghouses
13
Packinghouses
Packinghouses Employee
Employee Over
Over 7,500
7,500
People
People and
and Generate
Generate >$400mm
>$400mm in
in
Direct
Direct and
and Indirect
Indirect Value
Value
14
There are 18 Large
Processing Facilities
15
Processing
Processing Fruit
Fruit Alone
Alone
Requires
Requires Up
Up to
to 1,000
1,000 People
People
at
at Each
Each Processing
Processing Plant
Plant
16
Processing
Processing Facilities
Facilities are
are Highly
Highly Capital
Capital Intensive
Intensive
Requiring
Requiring State
State of
of the
the Art
Art Extraction,
Extraction,
Evaporation,
Evaporation, Pasteurization,
Pasteurization, Handling
Handling and
and
Storage
Storage for
for >1,000,000,000
>1,000,000,000 Ga
Ga of
of juice/year
juice/year
17
There
There are
are 10
10 Packaging
Packaging Plants
Plants
Connected
Connected to
to aa Fruit
Fruit Processing
Processing Facility
Facility
Packaging
Packaging Requires
Requires Another
Another 500
500 People
People Per
Per Plant
Plant
and
and Produces
Produces >$3,000,000,000
>$3,000,000,000 in
in Added
Added Value
Value
18
Other
Other Relevant
Relevant Citrus
Citrus Facts
Facts
„ Provides >$2.7B in annual labor
spending
„ Generates >$300mm annually in
indirect business taxes
„ Over 90 intermediate fruit buyers
and contractors
„ 23 citrus organizations and agencies
19
Florida
Florida Importance
Importance in
in
World
World Citrus
Citrus Market
Market
„ Florida Share of global orange
production
„ Florida share of global grapefruit
production
20
Florida
Florida Oranges,
Oranges, Grapefruit
Grapefruit
&
—06/07
& Specialty,
Specialty, 02/03
02/03—06/07
;:
Florida
Grapefruit
Oranges
12.6%
83.6%
Specialty
3.8%
SOURCE: Florida Agricultural Statistics Service (FASS).
21
World
World Orange
Orange Production
Production
Selected
—07/08 Averages
Selected Countries,
Countries, 05/06
05/06—07/08
Averages
%
% of
of World
World Total
Total Production
Production
22
SOURCE: USDA.
World
World Fresh
Fresh &
& Processed
Processed Orange
Orange Utilization,
Utilization,
Selected
—07/08 Averages
Selected Countries,
Countries, 05/06
05/06—07/08
Averages
%
% Share
Share of
of Country
Country Orange
Orange Crop
Crop
80%
75%
58%
50%
47%
44%
34%
33%
25%
21%
14%
12%
7%
3%
2%
1%
0%
20%
25%
42%
50%
53%
56%
66%
67%
75%
79%
86%
88%
93%
97%
98%
99%
100%
United States
Brazil
Cuba
Cyprus
Italy
Israel
Greece
Australia
Spain
Argentina
Mexico
South Africa
Turkey
China
Egypt
Morocco
Japan
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
23
SOURCE: USDA.
Utilization
Utilization of
of Florida
Florida Oranges
Oranges Florida
Fresh
—06/07
Fresh Vs.
Vs. Processed,
Processed, 02/03
02/03—06/07
Processed
95.3%
Fresh
4.7%
SOURCE: FASS.
24
World
World Processed
Processed Oranges
Oranges
Country
—04/05
Country Shares,
Shares, 00/01
00/01—04/05
Florida
34.6%
Total U.S.
36.1%
Brazil
50.2%
Other
13.7%
SOURCES: Food and Agriculture Organization of the United Nations (FAO), FASS.
Other
U.S.
1.5%
25
World
World Fresh
Fresh Oranges
Oranges
Selected
Selected Country
Country Shares
Shares
05/06
—07/08
05/06—07/08
Other
41.3%
China
19.5%
Florida
1.2%
Brazil
18.3%
SOURCE: USDA.
Total U.S.
6.6%
Mexico
14.3%
Other U.S.
5.4%
26
World
World Fresh
Fresh &
& Processed
Processed Grapefruit
Grapefruit Utilization,
Utilization,
Selected
—07/08 Averages
Selected Countries,
Countries, 05/06
05/06—07/08
Averages
%
% of
of World
World Total
Total Production
Production
27
SOURCE: USDA.
World
World Fresh
Fresh &
& Processed
Processed Grapefruit
Grapefruit Utilization,
Utilization,
Selected
—07/08 Averages
Selected Countries,
Countries, 05/06
05/06—07/08
Averages
%
% Share
Share of
of Country
Country Grapefruit
Grapefruit Crop
Crop
Argentina 35%
65%
Israel 36%
64%
United States 47%
53%
Cyprus 64%
36%
South Africa 69%
31%
Mexico 71%
29%
Cuba 87%
13%
China 100%
0%
Italy 100%
0%
Turkey 100%
0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
28
SOURCE: USDA.
World
World Fresh
Fresh Grapefruit
Grapefruit
Selected
Selected Country
Country Shares
Shares
05/06
—07/08
05/06—07/08
China
58.3%
Florida
10.1%
Total U.S.
17.6%
Other U.S.
7.5%
Mexico
7.7%
SOURCE: USDA.
Other
16.4%
29
World
World Processed
Processed Grapefruit
Grapefruit
Selected
Selected Country
Country Shares
Shares
05/06
—07/08
05/06—07/08
Florida
47.2%
Total U.S.
57.5%
Israel
13.6%
Other U.S.
10.3%
Argentina
10.4%
Other
Mexico
9.2%
9.3%
SOURCE: USDA.
30
U.S.
U.S. Fresh
Fresh Grapefruit
Grapefruit Exports
Exports
45%
40%
36
%
35
%
400
35%
300
30%
25
%
350
250
% of World
1,000 Metric Tons
% of World (FAO)
39
%
450
40
%
Production (USDA-FASS)
25%
387
397
353
396
227
251
392
368
200
20%
00-01
SOURCES: USDA, FASS, FAO.
01-02
02-03
03-04
04-05
Season
05-06
06-07
07-08
Est.
31
Long
-Term Outlook
Long-Term
Outlook
„ Florida Citrus Production
„ Florida Orange-Juice Production
„ Production and Tree Losses
„ Assumptions of Simulations
„ Simulation Results
32
Production
Production and
and
Tree
Tree Losses
Losses
Florida
•
„ Hurricanes
„ Diseases
¾ Canker
¾ Greening
¾ Tristeza
„ Development
33
Path of Hurricanes:
CHARLEY
– August 13, 2004
FRANCES
– September 5, 2004
JEANNE
– September 26, 2004
WILMA
– October 24, 2005
34
Florida Citrus Boxes –
Before and After the Hurricanes
Item
2003-04
Actual
2007-08
Actual
- Millions of Boxes -
Percent
Decline
-%-
Orange
242
169
<30>
Grapefruit
41
25
<39>
Specialty
9
6
<33>
TOTAL
292
200
<32>
Source: USDA/FASS , April 2007-08.
35
Florida
Florida Bearing
Bearing Orange
Orange Trees
Trees
Florida
90
79.6
Million Trees
80
70
60
56.6
59.6
50
40 32.7
07-08
06-07
05-06
04-05
03-04
02-03
01-02
00-01
99-00
98-99
97-98
96-97
95-96
94-95
93-94
92-93
91-92
90-91
89-90
88-89
87-88
86-87
85-86
30
Season
SOURCE: Florida Agricultural Statistics Service.
36
Percent
Percent Annual
Annual Orange
Orange
Tree
Tree Loss
Loss Rate
Rate
10%
9%
9.3%
8%
7.7%
7%
6%
5%
4%
3.8%
3%
2%
1%
0%
1.2%
94-96
4.3%
1.9% 2.3%
96-98
98-00
00-02
02-04
04-06
06-08
37
Assumptions
“There are known known's;
known's there are
things we know we know. We also
know there are known unknowns;
unknowns that
is to say we know there are some
things we do not know. But there are
also unknown unknowns – the ones
we don’t know we don’t know.”
Defense Secretary – Donald Rumsfeld
38
Assumption:
Assumption:
Yields
Yields
„ Average (1993-94 thru 2003-04)
„ Density: about 140 Trees/Acre
„ Historical Yields/Acre by Age Group
39
Assumptions:
Assumptions:
Planting
Planting and
and Demand
Demand Growth
Growth
„ 2007-08: 2.7 Million Trees
„ Thereafter dependent on price
„ cap: 6 million trees/year
„ Demand growth: 1% U.S. and
2% rest of the world
40
Base
Base Scenario
Scenario Assumptions
Assumptions
„
No-hurricane yields: average of 93/94–03/04.
„
Canker yield reductions of 10% for early &
midseason oranges and 5% for Valencia oranges.
„
Greening loss rates of 150%, 113% and 75%
above base rates (Mid-90s: avg 2.5%) for 1-3,
4-11, and 12+ year-old trees, respectively.
„
Restricted planting levels in 06/07 and 07/08;
unrestricted levels dependent on price thereafter.
„
Growth in U.S. and rest of the world OJ demands
of 1% and 2% per year, respectively.
41
Alternative Scenarios
„ LOW GREENING:
¾Greening loss rates of 100%, 75% and 50% above
base rates for 1-3, 4-11, and 12+ year-old trees.
„ HIGH GREENING:
¾Greening loss rates of 300%, 225% and 150% above
base rates for 1-3, 4-11, and 12+ year-old trees.
„ HIGH DEVELOPMENT:
¾Loss rates are increased by 1.5% across tree ages.
„ HURRICANE YIELDS:
¾Average yields over 2004-05, 2005-06 and 2006-07.
„ HIGH DENSITY:
¾Densities are increased to 200 per acre.
42
Florida
Florida Orange
Orange Production
Production Projections
Projections
180
Million Trees
170
Hig
160
ity
ens
D
h
ee
Low Gr
ning
Base
150
140
g
enin
e
r
hG
Hig
ent
High Developm
130
SOURCE: Florida Agricultural Statistics Service.
Season
17-18
16-17
15-16
14-15
13-14
12-13
11-12
10-11
09-10
08-09
120
43
Catastrophic
Catastrophic Scenarios
Scenarios
„ Assumes existing trees die at an
exponential rate. In 2009-10 a
new, resistant tree is discovered
and plantings begin at a rate of
6mm trees per year.
„ Scenario 1: 2.0tx
„ Scenario 2: 1.6tx
44
Scenario
Scenario 1
1 –
– 2.0
2.0ttx
x
200
600,000
Production
175
525,000
450,000
New Acres
125
375,000
100
300,000
75
225,000
50
150,000
25
Old Acres
Acres
75,000
0
SOURCE: Florida Agricultural Statistics Service.
Season
28-29
27-28
26-27
25-26
24-25
23-24
22-23
21-22
20-21
19-20
18-19
17-18
16-17
15-16
14-15
13-14
12-13
11-12
10-11
09-10
0
08-09
Million Boxes
150
45
Scenario
Scenario 2 –
– 1.6
1.6ttx
x
200
600,000
Production
175
525,000
New Acres
450,000
125
375,000
100
300,000
75
225,000
50
150,000
Old Acres
25
Acres
75,000
0
SOURCE: Florida Agricultural Statistics Service.
Season
28-29
27-28
26-27
25-26
24-25
23-24
22-23
21-22
20-21
19-20
18-19
17-18
16-17
15-16
14-15
13-14
12-13
11-12
10-11
09-10
0
08-09
Million Boxes
150
46
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47