Spend Matters welcomes this guest post from Liliana Gonzalez, of Mintec.
The citrus sector is a major industry in the U.S., with the value of production surpassing $1 billion last season. The sector is of particular importance in Florida, with the state producing around 65% of the total U.S. citrus crop.
Over the past 20 years, the sector has been under constant challenges to perform, with citrus trees experiencing major issues following the onset of citrus canker disease in Florida in 1994. Citrus canker is a bacterial disease that causes premature leaf and fruit fall, a decline in fruit health and, consequently, lower production. It has affected commercial and residential citrus trees in the U.S. and also in Brazil.
But it doesn’t stop there. Citrus fruits have also been affected by the devastating citrus greening disease that stops the fruit maturing — so it stays green (hence the name). At the moment there is no cure, and what makes it more difficult is that trees may not show symptoms for years, so it is harder to eliminate infected plants and stop the spread of the disease.
The season has just finished in the U.S. While there was a very promising start to the season, falls in output were seen for citrus in Florida and Texas, with final production estimates of all citrus down 4% year-over-year at 9.02 million tonnes. However, not all the regions showed a decline; California’s citrus production rose 6%, while Arizona also rose 11% y-o-y.
A breakdown of the major citrus prospects for the season is as follows:
- Oranges: Production ended 6% lower than the previous season, with output reaching 6.4 million tonnes. Florida saw an 8% decline in output due to high fruit drop and smaller fruit sizes. Texas also experienced a decline in output, with production down 18% from last season. Despite the drought, output in California rose 6% y-o-y, mostly due to higher-bearing acreage, higher fruit set per tree and larger fruit size. Preliminary forecast for 2015/16 orange crop indicates a decline of 9% y-o-y, once again due to the challenges mentioned above.
- Grapefruit: Production was down 12%, to 840,000 tonnes y-o-y, due to lower yields and reduced fruit-bearing acreage in Florida. Lower fruit harvesting has limited the amount of fruit sent to processing, down 14% when compared to the previous season. A larger proportion of grapefruit has been sent to the fresh market due to steady demand for fresh produce. Preliminary forecast for 2015/16 crop indicates a decline of 5%.
- Lemons: Production reached 555,100 tonnes, down 3% year-over-year. In contrast with oranges and grapefruit, California is the largest state producer of lemons. Domestic demand in the states has remained strong, with consumption up 5% y-o-y. To meet this increase in demand, imports into the U.S. rose sharply in 2015, up 74% compared to last season, due to the high domestic prices and good international production. Most of the imports came from Mexico. Preliminary forecast for 2015/16 lemon crop indicates a decline of 6%.
Overall, lower production coupled with strong domestic demand is likely to lead to citrus fruit prices remaining high in the coming season, as the industry continues to find ways to adapt to the challenging factors experienced in the last few years.