Finding Weak Links Key to Saving Florida Citrus

Finding Weak Links Key to Saving Florida Citrus

Citrus supply chain graphicExcellent work has been done to develop and promote programs to incentivize growers to remove abandoned trees, update irrigation, and replant. It has been stated that Florida needs to produce and plant 30 million citrus trees in the next few years in order to restore supply and lost acreage. This is no small task. Solutions must address supply of trees and demand for trees.

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Demand for trees is affected by grower confidence, available capital, market forces, more tolerant stock, data from public and private trials, and tools that will enable growers to produce a quality crop and hold it to maturity.

Supply is primarily impacted by nursery capacity, available capital, seed supply, tissue culture liner supply, budwood supply, regulatory structure, compliance issues (such as quarantines for canker), the role and functionality of public and private production, and other ancillary issues that affect nursery efficiency and profitability.

The Budwood Technical Advisory Committee recently formed a sub-committee to study the issue of budwood capacity. This effort is being led by Nate Jameson of Brite Leaf Citrus Nursery in Lake Panasoffkee. The sub-committee will return to the full committee with recommendations for how to ensure an adequate supply of budwood to meet industry demand.

Since the Bureau of Citrus Budwood Registration currently supplies only 11% of the budwood utilized in nursery citrus tree propagations, the issue is obviously more complex. The sub-committee will look into such issues as: increased demand for varieties not historically propagated in Florida; new variety releases; establishment of private scion and increase blocks at the nurseries; and public budwood distribution models. All of these issues factor into budwood supply. There are numerous factors that impact seed availability and each of the other variables in the supply equation.

Nursery Tree Abandonment

While we’ve explored other factors impacting supply in previous articles, lets now focus on a lesser known element that significantly impacts some nurseries’ ability to supply trees to growers in a reasonable time period. We’ll call it, “nursery tree abandonment.”

Nursery tree abandonment occurs when growers order trees, the nursery produces the trees, but the growers cancel the order prior to delivery. In many cases, these trees are ready to move to the field when the nursery learns that the grower will no longer take them. Although the grower will sacrifice the deposit, the nursery generally has more invested in the tree than the deposit covers. This sometimes occurs when a grower is dissatisfied with his or her results in the field and they are unwilling to proceed with new plantings until they gain confidence that they will be successful.

Sometimes, heavy rains make it difficult or impossible for the grower to prepare land for planting. The nursery is used as a holding mechanism. Other times, the rootstock scion combination has been identified as problematic. Word spreads fast within the grower community and very often the nursery is unable to sell the trees. This has been the case with Midsweet orange on Swingle rootstock.

One nursery I interviewed reported cancellation of more than 40,000 trees of unpopular rootstock/scion combinations. Because the trees are of the size to be transferred for planting, they are unsuitable for re-budding with a new scion. The nursery has so much money tied-up in the trees that they hold onto them in hopes of a sale. The reality is that a sale is unlikely. During the time these trees remain in the nursery, the bench capacity is unproductive, new orders are delayed, and the nursery loses money.

We express concern about nursery capacity, but nurseries will be leery or unwilling to expand until they have some means of addressing nursery tree abandonment. What good is more capacity if it is filled with abandoned and unpopular tree orders?

Dealing With Desertion

How might nursery tree abandonment impact the way nurseries function? Most have a “hold charge” or maintenance fee each month that trees are held past a pre-determined completion date. This compensates the nursery for lost capacity, which helps the nursery, but does not cure the underlying problem. Hold charges may incentivize growers to explore “halfway” houses as a way to hold trees until circumstances allow them to be planted. Some nurseries are considering ways to revise their deposit program. Some are now requiring 50% of the tree cost as a non-refundable deposit on varieties most often abandoned.

Other nurseries are establishing milestones, which once completed, trigger a payment of a percentage of the tree price. For instance, the nursery may assess 25% of the tree cost as an up-front deposit, followed by 25% at budding, 25% at a mid-term milestone, and the final payment at delivery. Each milestone payment would be non-refundable if the trees are abandoned. While much is being learned about how to ensure increased demand for citrus nursery trees and capacity to produce them, the market will invariably resolve some of these operational challenges.