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
CitrusWestern Growers Praises Introduction Of California Emergency Drought Relief Act
July 30, 2015
Legislation contains short- and long-term provisions to deal with the historic drought. Read More
CitrusGroup Food Safety Audits May Help Prepare You For The Produce Rule
July 29, 2015
Group food safety audits, slated to be available next spring, may save small- to mid-size growers time and money. Read More
CitrusNew Director Named For Florida’s Citrus Research And Education Center
July 28, 2015
Michael Rogers takes a positive charge at finding solutions to greening. Read More
Washington Capitol building
CitrusHouse Passes Bill To Block State GMO Food Labeling Mandates
July 27, 2015
The legislation would offer a federal standard for voluntary labeling of foods containing GMOs.   Read More
Citrus2 Dozen Florida Nurseries Vying For Coveted Cannabis Growing Licenses
July 27, 2015
With only five spots available to produce the low-THC ‘Charlotte’s Web’ strain, tedious review process is in full swing. Read More
Insect & Disease UpdateSecond Case In A Month Of Citrus Greening In California
July 24, 2015
More trees testing positive for disease within close proximity of original find. Read More
CitrusUSDA Expands Crop Insurance Options For Fruit And Nut Growers
July 24, 2015
The USDA announced the expansion of crop insurance to provide additional options for fruit and nut producers. The Supplemental Coverage Read More
The Latest
woman smashing an alarm clock with a hammer
CitrusDon’t Become A Time Crunch Casualty
July 31, 2015
Finding the balance between work life and home life is easier said than done for GenNext Growers. Read More
money
CitrusBankrupt Florida Farm To Yield Plenty Of Land, Equipmen…
July 30, 2015
As many as seven different buyers could be part of this Chapter 11 proceeding. Read More
CitrusWestern Growers Praises Introduction Of California Emer…
July 30, 2015
Legislation contains short- and long-term provisions to deal with the historic drought. Read More
CitrusGroup Food Safety Audits May Help Prepare You For The P…
July 29, 2015
Group food safety audits, slated to be available next spring, may save small- to mid-size growers time and money. Read More
CitrusNew Director Named For Florida’s Citrus Research And Ed…
July 28, 2015
Michael Rogers takes a positive charge at finding solutions to greening. Read More
Washington Capitol building
CitrusHouse Passes Bill To Block State GMO Food Labeling Mand…
July 27, 2015
The legislation would offer a federal standard for voluntary labeling of foods containing GMOs.   Read More
Citrus2 Dozen Florida Nurseries Vying For Coveted Cannabis Gr…
July 27, 2015
With only five spots available to produce the low-THC ‘Charlotte’s Web’ strain, tedious review process is in full swing. Read More
CitrusUSDA Expands Crop Insurance Options For Fruit And Nut G…
July 24, 2015
The USDA announced the expansion of crop insurance to provide additional options for fruit and nut producers. The Supplemental Coverage Read More
FFVA 2015 Annual Convention logo
CitrusFlorida Fruit & Vegetable Association Annual Conven…
July 23, 2015
Association's 72nd gathering to feature high-profile speakers, up-to-the-minute Issues Forums, and some fun to mix in with the business of the day. Read More
CitrusMarketing Order Amendments Referendum Set For Fresh Flo…
July 22, 2015
Changes include the authorization and regulation of new varieties. Read More
Shannon Shepp
CitrusInterim Executive Director Named For Florida Department…
July 22, 2015
Shannon Shepp will take on leadership duties immediately after unanimous Citrus Commission vote. Read More
CitrusInternational Report Confirms 2014 As Earth’s Warmest Y…
July 21, 2015
Scientific compilation notes climate markers continue to show global warming trend. Read More
non-gmo label leafy greens
CitrusGMO Labeling Battle Moves To House Floor
July 21, 2015
The Safe and Accurate Food Labeling Act of 2015 was passed by the Agriculture Committee last week and will head Read More
Doug Ackerman
CitrusFlorida Department Of Citrus Executive Director Resigns
July 21, 2015
Doug Ackerman steps down after traffic incident. Read More
CitrusWOTUS Wranglings Leaving Agriculture High And Dry [Opin…
July 17, 2015
In late May, the EPA announced the highly anticipated final rule re-defining the waters of the United States (WOTUS) under Read More
man expressing opinion through bullhorn
CitrusStay Opinionated, My Farmer Friends
July 15, 2015
How far are you willing to go to defend your beliefs? Read More
CitrusSouth Florida Water Managers Keeping Close Eye On Dry C…
July 15, 2015
Traditional wet season has been anything but so far as certain parts of the region now experiencing “extreme drought.” Read More
Washington Capitol building
CitrusUnited Fresh Washington Conference Connects You With Ke…
July 14, 2015
United Fresh has announced the Washington Conference, which will be held Sept. 28-30 in Washington D.C. The conference offers an Read More