Hurricanes, HLB, and a global pandemic have had Florida’s orange juice market roiled in recent years.
Dr. Marisa Zansler, Director of Economic and Market Research with the Florida Department of Citrus (FDOC), provided attendees of the 2021 Florida GrowerSM Citrus Show a detailed look into U.S. movement of OJ and demand projections going forward.
Irma and HLB
Hurricanes hitting in the right (or wrong) spot have the potential to disrupt Florida’s citrus industry. Hurricane Irma did just that in 2017, and her effects are still being felt. Continuing declines in production due to HLB intensifies the problem.
“Following Hurricane Irma, there was a great deal of uncertainty surrounding the prospects of Florida production,” Zansler noted. “Would trees weather the aftermath of the storm? What would juice quality be like? For processors, this meant decisions had to be made.”
Those decisions to increase imported juice had to be made in a landscape where Florida production had been in decline. Orange production, which accounts for 91% of the state’s citrus crop, is less than a quarter of the production of the 2003-2004 season prior to the detection of HLB.
“The significant decline in citrus production over the past several years, primarily associated with the impact of HLB and Hurricane Irma, has directly threatened the funding of the program (FDOC) whose mission it is to ensure the sustainability and economic well-being of the Florida citrus grower,” Zansler said.
Imports Fill the Gap
Before the COVID-19 pandemic, OJ sales had decreased by about 5.5% annually, as each year OJ promotional dollars fell and the product became less top of mind for consumers. COVID-19 changed that trend. Since mid-March, Nielsen volume sales are up by more than 63 million additional equivalent gallons, which translates to about 11 million grower boxes. By the end of 2020, sales were tracking with 2016 sales levels. OJ is on the rise due to consumer awareness of its health and immunity benefits and people eating from home due to the pandemic. Zansler noted market research backs up this assertion of why OJ sales are up.
The sales activity resulted in lower beginning inventories (October 2020) for not from concentrate (NFC) OJ. In fact, it was down by 26% year-over-year. That is about a 5-million-box deficit, which tracks along with the 2015-2016 season — a year considered to be a shortage of NFC inventories.
This shortage and the lower Florida crops after Hurricane Irma have prompted increased imports of OJ from Mexico and Brazil. But it is important to note that Florida OJ processors receive more than 90% of their NFC juice from the state’s orange crop. The exception to this was the 2016-2017 through 2018-2019 season due to the hurricane. When looking ahead at NFC, Zansler said there will be continued demand for Florida fruit.
“If this trend persists for NFC, Florida processors would need to move about 390 million gallons at a minimum,” she said. “Based on early projections, existing inventories would be needed. We currently have a 14-week supply for the season through early January. The last time we saw this volume movement was 2016-2017. Then the inventory was closer to a 20-week supply.”
With that said, imports will be required to meet demand for NFC in the U.S. Zansler also noted it is important to now invest in promotion to grow consumer awareness to maintain or strengthen demand in the future. That’s because marketing efforts often have a lag effect. She also said growers need to replant trees, reduce production costs, and improve yields to meet market demand while fully acknowledging the challenges HLB presents to meet these goals.
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