OJ prices are rising: Florida orange production expected to fall to lowest level in over 80 years
(CNN) — The combination of extreme weather and a disease impacting citrus fruit is expected to drive down Florida’s orange crop to its lowest level since before World War II, shrinking the state’s already dwindling supply and promising to send orange juice prices even higher.
In the 2022-2023 season, Florida is expected to produce 20 million boxes of oranges, the Department of Agriculture said Friday. That would be a 51% decline from the prior year, and the smallest amount produced since the 1936-1937 season.
The paltry crop is a result of the ongoing problem of citrus greening, a disease that has plagued Florida orange trees and squeezed supply for years, combined with a January freeze and the dual blows of Hurricanes Ian and Nicole, explained Shannon Shepp, executive director of the Florida Department of Citrus, a state agency.
The shrinking production in Florida could hurt consumers who are already dealing with the rising cost of groceries. The price of orange juice, which had already climbed considerably this year, will likely get even more expensive in the first half of 2023 as a result of these supply chain issues.
But it’s the orange growers who will likely pay the greatest price.
“It is an incredibly heartbreaking moment for growers,” Shepp said. “To grow a crop for nine months and then watch it fall to the ground, or watch trees blow over, is incredibly devastating,” she added. “In a time when you’re seeing declined production anyway, it’s a kick in the gut.”
The majority of Florida’s oranges are used for orange juice production. To make up for the deficit, orange juice makers will have to find supply elsewhere, including from the international market, noted Shepp.
A drastic reduction in Florida oranges
Citrus greening isn’t a new disease, but it’s become increasingly problematic for Florida.
For a while, greening was primarily a problem internationally. But by 2008, it had taken hold in Florida, Shepp said. “By now, we’re estimating that 100% of [Florida] groves are impacted,” she said.
The disease cuts off key nutrients to orange trees. During the course of the disease, which is incurable, the infected tree produces fewer oranges and of lower quality. Over time, it can kill a tree entirely.
The disease, plus bad weather, has led to a drastic reduction in Florida’s orange yield over the years. In 2004, Shepp said, Florida produced 240 million boxes of oranges — more than ten times the amount predicted this year.
Florida growers are working on ways to fight the disease, such as studying trees that seem to be impervious to greening, breeding disease-resistant varieties and using screens to protect trees from the insects that spread the infection.
“This was the season that that growers were going to start implementing new greening mitigation strategies,” Shepp said. But the bad weather put those plans on hold and exacerbated the situation.
Prices going up
With supply down, orange juice prices will get even more expensive.
“We’re going to have higher prices because we’re so short on supply — historically short,” said Tanner Ehmke, lead economist for dairy and specialty crops at CoBank.
This year, orange juice future prices have spiked by about 42%. Wholesale price swings don’t immediately reach retail, but retail prices follow those trends. Ehmke expects that consumers will see the impact of the supply disruption in the next three to six months.
Already, orange juice prices have jumped about 7% in retail in the year through November 26, according to data from NielsenIQ. Still, orange juice prices are rising at a slower clip than food inflation overall.
Domestic supply matters to orange juice prices, but is balanced out by imports from places like Brazil and Mexico. In recent years, in fact, the United States has been importing more orange juice than it has been producing domestically, noted David Magaña, senior analyst for horticulture at Rabobank.
Minute Maid, for example, sources from Brazil, Costa Rica and Mexico, in addition to Florida. The brand has contingency plans to ensure that it has enough supply, a spokesperson said.
Now, with Florida’s crop so low, the United States can lean on international producers. That will help keep prices from skyrocketing, Ehmke said. “The imports are gonna soften prices,” he said. “Prices are gonna go up. But they can’t go up that much, because we’re gonna have new supply coming in from abroad. “
Moreover, he said, as consumers struggle with high prices in the grocery store, they may cut back on items like orange juice, especially if it gets more expensive. Already, sales of orange juice by unit fell about 4% in the year through November 26, per NielsenIQ.