Think about it: Just seven years ago, the Florida citrus industry produced 242 million boxes of oranges. This season, our industry will grow about 142 million boxes. That’s a 41% decrease in less than a decade. As most of us know, the vast majority of the decline was caused by weather, disease, and development.
Although U.S. OJ consumption has decreased steadily over the same period, we still need significant production. The U.S. is a net importer of OJ and as such Brazilian processors are filling the widening gap between what Florida growers can produce and what U.S. consumers drink.
Consequently, I’ve had many discussions with various industry experts (both economists and growers) and I believe now is the time to invest in Florida citrus. This would have been a curious statement a few years ago when HLB first appeared and scared the living daylights out of our industry. Believe me, HLB is still an insidious threat, but many growers now feel they have the tools to keep the psyllid at bay, especially through coordinated sprays. Plus, the industry is optimistic that nutritional therapies could save the trees we have in the ground until a long-term solution emerges through our multi-million dollar research effort.
High fruit prices nearing $2.25 a pound are certainly buoying the spirits of Florida growers and fueling this interest in re-planting. True, production costs are sky high but growers are still banking modest profits that allow them to re-invest or buy more groves. Although prices will surely adjust, as they always do, I believe they can serve as a springboard to get more investors to look hard at citrus. We need more trees.
The state’s 150,000 acres of abandoned groves, which are typically discounted in price depending on land values and location, create intriguing utilization possibilities. They may require larger initial capital investment with re-planting, but can allow the grower to capitalize on the newest crop management techniques, like high-density planting, and enjoy modest growth in value of Florida farmland.
Underlying the investment in agricultural lands is the potential increase in Florida land values. Agriculture land prices in our state declined 40% to 55% during the period 2006-2009 and at some point those numbers will rebound. In addition, state infrastructure investments (logistics, port facilities, etc.) as well as favorable government policies designed to create jobs also should enhance land values in the future.
Counting On Consumption
I understand any investment carries a risk and Florida citrus is no different. We not only have to understand the dynamics of the supply side, but we also have to rectify the demand side. Somehow — and this is open to a lot of debate — we must get people to drink more OJ. The slide in per capita consumption has to stop or this conversation is a moot issue.
Despite the unknowns, it sure is nice to talk about investing in the future of our industry. The Florida citrus grower is resilient and we plan to be here for a long time.