Market Economist Examines The Citrus Planting Conundrum

Matthew Salois
Matthew Salois

While some growers are replanting, it is not enough at this point to buck the unsustainable path Florida’s citrus industry finds itself on. Florida Grower asked Matthew Salois, a market expert for the Florida Department of Citrus, for the numbers and their implications.

What is the general status of tree replanting in Florida?

Salois: Trees are not being replanted at the rate they are being lost. In fact, on average, of the 3.5% of trees lost every year, only 2% are being replanted. In other words, in the absence of additional losses due to disease and weather, the tree population in Florida is declining by 1.5% every year, which is significant. This fact alone sets the industry on a trend toward diminishing production and is not sustainable.

What effect is all of this having on the OJ market and in fresh fruit?

Salois: The major effect is reduced supply leading to higher market prices and in turn reduced consumption.

At what point are we talking about infrastructure being lost due to production declines?

Salois: This is a difficult number to pinpoint. But obviously, the industry is much closer to that point than ever before. Some experts like to say the tipping point is 100 million boxes, but there is no way to know. The loss of infrastructure is closely related to the efficiency of processing plants and packinghouses, which need to run at a certain critical mass point to remain economically viable.

Besides trees being taken out of production, what is happening with yields?

Salois: Overall, yields are on a declining trend. Three key factors affect the overall yield: number of fruit per tree; preharvest fruit drop; and fruit size (measured by the number of pieces of fruit to fill a standard box). The number of fruit per tree is holding relatively stable compared with historical averages, that is, we are not seeing any appreciable difference in how much fruit a tree produces prior to harvest. In contrast, the rate of fruit drop has escalated from an average of 8% to 15% between 2005-2010 to reaching 25% so far this current season. Moreover, the average size of fruit are getting smaller and smaller. On average, it’s taking between 20 to 30 more pieces of fruit to fill a box than it did prior to 2005.

What would you say to those who want to hold off planting because of HLB?

Salois: New planting efforts done by Duda’s Citrus Division, Peace River Citrus Products, and others are a clear demonstration that through careful planning and execution, new groves can be a successful investment. Our experiences with HLB thus far have shown that by engaging in aggressive psyllid control and smart nutrition programs that groves can be productive, healthy, and profitable.

The current trajectory puts production at 86 million boxes by 2023-2024. Does this take into account spreading and intensifying HLB?

Salois: No it does not. The projection ending in 86 million boxes by 2024 is optimistic in the sense that it holds steady both fruit drop and size at the current level. In other words, it assumes that the impact of HLB does not intensify.

What could be done to reverse this trend?

Salois: The reversal of possible infrastructure loss will only be accomplished by bolstered production levels. There is a double-edged sword problem at play here. The first is the direct effect of HLB, which has hurt production levels in a direct way through some tree loss, but primarily through yield reduction. The second is an indirect effect of HLB, which is a lack of new planting due to escalating production costs and growing uncertainty surrounding the future of new grove investment. This indirect effect is just as detrimental to the sustainability of the industry as the direct effect.
While a number of scientific research projects hold a great deal of promise and potential, the loss of infrastructure could occur and continue to ensue before such projects become available for widespread use. This points to the need to supplement the research plan with a “right now” plan. The industry needs to supplement the research strategy with a management tactic. One such tactic is the planting of new trees to buttress production levels until the research agenda reaches viable solutions that can be implemented. New planting investments will only occur if the appropriate economic incentives are in place. Such incentives may include innovative contracts that cover the cost of new trees or share in the investment cost. Other potential incentives include changing the tax code to allow for the expense of new trees or the deduction of lost trees.

Anything else you would like to add?

Salois: The history of the Florida citrus industry is replete with one challenge after another. And yet, the industry has always persevered. The challenge of HLB is quite possibly the greatest threat the industry has ever faced. That said, the industry has mustered the collective will and the combined wit of some of the most intelligent and dedicated professionals around. No doubt, the face of this industry is changing, and the solution will likely require a radical departure from how things once were. The industry can get through this, it just might look different in the end.
There is an important issue here, however, even larger than the industry itself. The citrus industry is a large contributor to the local economy. In some counties, local government tax revenue from citrus forms a critical part of their total income to fund vital services such as schools, libraries, water management, and emergency management. Counties such as DeSoto, Hendry, Hardee, and Highlands depend on citrus for their economic livelihood. Placed within this context, the challenges confronting the citrus industry are not just about industry survival, it’s now about community livelihood. Given this situation, the industry’s economic vulnerability now translates into a broader statewide economic vulnerability.
The good news here is that there is a clear and present impetus to solve the problem at hand. Our industry leaders and elected officials have demonstrated great success in confronting these challenges head on. The industry’s perseverance depends on their perseverance.

Topics: , , ,

Leave a Reply

Citrus Stories
Port Tampa Bay shipping channel
Citrus
May 24, 2016
Panama Canal Expansion To Bring Trade Opportunities To Florida
Agriculture Commissioner Adam Putnam says a confluence of events is putting the state's producers in a good spot to open new markets. Read More
anti-GMO corn spoof via social media
Citrus
May 24, 2016
Social Media Posts On GMOs Falling Flat [Opinion]
Hopefully, the hysteria the West has perpetuated on genetic engineering will not stifle the potential of moving our production forward enough to help feed a growing global population. Read More
non-gmo label leafy greens
Citrus
May 24, 2016
Report Says GMOs Offer No Risk To Human Health
The study stresses the need for proper resistance management, the need for a different ways to evaluate all new crop varieties, regardless of process in which they were developed. Read More
Florida Ag Commissioner Adam Putnam checks out prepared school lunches. School meals are looking more colorful these days as fresh produce finds a place on the tray.
Citrus
May 24, 2016
Full-Time Effort Required To Feed Farm-To-School Programs
Florida Commissioner of Agriculture Adam Putnam gives a shout-out to those providing fuel to kids during the school year as well as the summer months. Read More
Photo credit: USDA
Citrus
May 23, 2016
World Health Organization Experts: Glyphosate Not Carcinogenic
Risk unlikely when consuming crops treated with herbicide. Read More
Food safety meeting for growers in Florida
Citrus
May 23, 2016
Florida Growers Putting Food Safety On Front Burner
Specialty crop industry stakeholders hungry to understand what’s ahead as FDA begins implementing new food safety rules. Read More
Participants of a Citrus Health Roundtable hosted by Yara International pose for a post-event photo.
Insect & Disease Update
May 20, 2016
Yara International Pledges $100,000 To Support Florida Agriculture Students
Scholarship will fund University of Florida undergraduate and graduate students. Read More
The Latest
Citrus
May 25, 2016
Monsanto Says Bayer Bid ‘Financially Ina…
Proposal cited as undervalued, not able to address financial, regulatory risks. Read More
Citrus
May 25, 2016
NRCS Invests $4.3 Million To Combat Clim…
The Natural Resources Conservation Service in California is committing funds to help farmers and ranchers mitigate the effects of climate change and help to reduce greenhouse gas emissions. Read More
Citrus
May 24, 2016
Panama Canal Expansion To Bring Trade Op…
Agriculture Commissioner Adam Putnam says a confluence of events is putting the state's producers in a good spot to open new markets. Read More
Citrus
May 24, 2016
Social Media Posts On GMOs Falling Flat …
Hopefully, the hysteria the West has perpetuated on genetic engineering will not stifle the potential of moving our production forward enough to help feed a growing global population. Read More
Citrus
May 24, 2016
Report Says GMOs Offer No Risk To Human …
The study stresses the need for proper resistance management, the need for a different ways to evaluate all new crop varieties, regardless of process in which they were developed. Read More
Citrus
May 24, 2016
Full-Time Effort Required To Feed Farm-T…
Florida Commissioner of Agriculture Adam Putnam gives a shout-out to those providing fuel to kids during the school year as well as the summer months. Read More
Citrus
May 23, 2016
World Health Organization Experts: Glyph…
Risk unlikely when consuming crops treated with herbicide. Read More
Citrus
May 23, 2016
Florida Growers Putting Food Safety On F…
Specialty crop industry stakeholders hungry to understand what’s ahead as FDA begins implementing new food safety rules. Read More
Citrus
May 20, 2016
Florida Farmland Becoming Big Deal For I…
Real estate values in the Sunshine State dictated by money looking for a home. Read More
Citrus
May 19, 2016
Bayer Makes Bid For Monsanto
Monsanto says proposal is being reviewed by board of directors as well as legal and financial advisors. Read More
Citrus
May 17, 2016
$130 Million In Funds For Fruit And Vege…
USDA allocates funds for Extension, organic production, food safety, and technology grants. Read More
Citrus
May 17, 2016
Border Protection Intercepts New Leafhop…
First of its kind found in European shipment. Read More
Citrus
May 16, 2016
3 New Herbicides For Florida Farmers To …
Trio of unique crop protection chemistries beckoning growers to whack weeds with these. Read More
Citrus
May 10, 2016
California Citrus Industry Leaders Slam …
Proposal “defies logic,” because growers are already worried about being ravaged by citrus greening, says California Citrus Mutual. Read More
Citrus
May 10, 2016
Winning Streak Continues For Florida Ora…
Updated crop estimate from USDA reveals uptick for third month in a row. Read More
Citrus
May 10, 2016
Survey: Beekeepers Lost 44% Of Bees Last…
Responses indicate summer losses rival winter losses for second year in a row. Read More
Citrus
May 4, 2016
$6 Million Available For Antimicrobial R…
Program to develop strategies to reduce public health risks in food chain. Read More
Citrus
May 3, 2016
New Program Targets Abandoned California…
Bayer and California Citrus Mutual have teamed up to help protect the state’s commercial citrus industry from deadly citrus greening. Read More
[gravityform id="62" title="false" description="false"]