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The World Orange Juice Market

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  1. The World Orange Juice Market Thomas H. Spreen Professor Food and Resource Economics Dept. University of Florida

  2. The world orange juice market is dominated by two suppliers: Sao Paulo, Brazil and Florida, USA. • Historically, these two regions have accounted for over 80 percent of world orange juice production. • The major consumption regions are the United States, the European Union, and Canada.

  3. World OJ Consumption Sources: FAS, USDA and FDOC

  4. Both Sao Paulo and Florida face major production challenges. • In Sao Paulo, these challenges include disease and the challenge from the production of sugarcane for ethanol. • In Florida, growers also face disease issues and rising factor costs including the cost of land and labor. • Even though the hurricanes of 2004 and 2004 did little tree damage, they did spread citrus canker in Florida.

  5. The state of Florida was forced to abandon an eradication program for citrus canker in January 2006 after over 25,000 ha. of citrus had been eradicated. • Citrus greening (Huanglongbing) has also been detected in both Sao Paulo and Florida. • Citrus greening has spread throughout the citrus production area of Sao Paulo. • It is still localized in Florida, but is also spreading throughout the state.

  6. Factors Affecting Orange Production in Sao Paulo • Several factors have combined to slow the growth in orange production in Sao Paulo. • Disease: CVC, Sudden Death, Canker, Greening, and Black Spot. • Competition from sugarcane. • Until recently, low prices for oranges used for processing.

  7. Sao Paulo Tree Inventory Source: USDA, FAS

  8. Sao Paulo orange production

  9. Sugar cane production in Brazil

  10. Sugar cane, sugar and ethanol production in Brazil Source: FAS, USDA

  11. Brazil Orange-Juice Exports SOURCE: ABECitrus.

  12. Orange Production in Florida • Florida orange production was strongly affected by the freezes of the 1980s. • Orange production recovered and a new production record was set in 1997-98 at 244 million boxes. • Beginning 1998, however, production stagnated due to lower prices.

  13. Orange bearing trees and acres in Florida

  14. Florida Orange Production

  15. The U.S. Orange Juice Market • Florida remains the primary supplier of orange juice to the U.S. market. • Florida growers benefit from a tariff imposed on the imports of orange juice. • Brazil is subject to this tariff, while other suppliers: Mexico, Belize, and Costa Rica are exempted from the tariff.

  16. U.S. Orange-Juice Importsa

  17. U.S. Orange-Juice Exportsa

  18. Total Florida OJ Movement

  19. Production and Price in 2008-09 • Now consider the current season. • Bearing tree numbers are down substantially due to the effects of the storms and canker eradication. • After a good crop in Florida in 2007-08 of 170 million boxes, the 2008-09 crop is likely to be a little smaller, probably 145-155 million boxes.

  20. The Florida crop is expected to be 12 percent smaller, and it will not be sufficient to fully supply the U.S. market so that the United States will need to import. • As Brazil’s crop is also expected to be smaller this season, there will be only modest downward pressure on prices. • World orange juice inventories will remain at high levels.

  21. Florida OJ Avail., Movement., and Carryout, Oct-Sep. Season

  22. Concluding Remarks • The two major processed orange production regions face major challenges. • Florida must deal with canker, greening, and higher rural land values. • Sao Paulo must deal with greening, CVC, Sudden Death, and competition from sugarcane. • With Florida and Sao Paulo both facing production challenges, will a new production region emerge?

  23. China and Mexico are the two prime candidates. Both countries have issues related to expanded citrus production. • China has isolated pockets with canker and greening. It also has real land constraints. • Mexico’s orange industry is dominated by small, poorly financed producers. Mexico’s land tenure laws limit foreign investment. • Mexico, however, is strategically located to supply the NFC market in the United States and Canada. It also has relatively cheap land and labor.

  24. There is a need to accelerate research related to greening in terms of identifying the disease in the grove and control of the Asiatic psyllid, the vector of the disease. • Although Brazilian producers report some success in limiting the impact of greening, much remains unknown about the long-term effects of the disease.

  25. Thomas H. SpreenProfessor Food and Resource EconomicsUniversity of Florida P.O. Box 110240 Gainesville, FL 32611 E-mail: tspreen@ufl.edu