The squeeze on orange growers
As profits fall and prospects fade, Florida farmers may launch a feistier approach.
LAKE WALES, FLA
. - Sweat drips down Manuel Avila's cheeks as he tips another giant tub of Valencia oranges into the mechanical mobile "goat" that collects them before they're taken off for pressing.
The Mexican man is used to the midday heat of early June, having harvested for the same Polk County grower every year since 1970. But he's never seen a crop like this. By the time picking ends in another two weeks, Florida's 800,000 acres of groves will have yielded a record 245 million boxes of oranges.
Although fruit is plentiful this season, the citrus growers have little to cheer about. Oversupply means dwindling prices, and this year, thanks to the success of low-carb diets, glasses of orange juice have been pushed aside in favor of protein shakes and plates of bacon.
"We've got all this inventory sitting around and we're just not selling juice," said Bo Bentley, Mr. Avila's boss and a third-generation farmer. "We can't sell at a profit and it's hitting the industry hard. We've got to tell people about the health benefits and get them drinking juice again, or there are going to be a lot of small growers going out of business."
Florida growers say they've never had it easy. In recent years, outbreaks of citrus canker and the threat of cheap Brazilian juice flooding the market (it's currently held at bay by US tariffs), have tested their resilience. But this year, the mood of the $9.1 billion industry is especially somber, and many of its 90,000 workers believe they are threatened as never before.
Each American now drinks an average of 4.7 gallons of orange juice per year, down from 5.8 gallons in 1997. Meanwhile, the prices paid to farmers for their fruit have been sliding for a decade. This year, they sank by nearly one-third, to an average of 60 cents per pound.
Although this season's record harvest of 245 million boxes is only one million more than in 1997-98, according to the state Department of Agriculture, insiders predict an oversupply of about 112.5 million gallons of juice. Suppliers have overwhelmed major producers such as Tropicana, Florida's Natural, and Minute Maid.
Here in central Florida - a landscape part theme parks, part mobile-home enclaves, and part orange groves with their lines and lines of trees - Mr. Bentley's woes are typical.
"This last year has been brutal, just brutal," he says. He blames a lack of retail sales and weather that's made for a monster crop. But the bottom line, he says, is that current price levels just aren't profitable. He's hanging on to his thousands of acres in Lake Wales. But he knows of several other growers who have been tempted, once again, to sell their land and cash in on rising real estate prices rather than gamble their future to the vagaries of the citrus trade.
As the industry strives to win back domestic consumers, it's made the message of good health its central plank. Florida's Department of Citrus has abandoned its strategy of defense against the low-carb lobby and will instead launch a charm offensive, playing up orange juice as a nutrient-packed tonic.
The first salvo was a TV ad in which rutabaga, liver, okra, Brussels sprouts, and a banana were blended to make a concoction providing the same nutrients, vitamins, and minerals found in one glass of orange juice.
Dan Gunter, who takes over as the department's chief executive on July 1, has plans to expand the campaign this summer, provided that the governing Citrus Commission approves a $67.1 million budget at this week's meeting. The budget calls for growers to pay a three- to six-cent tax increase on every box sold.
The new focus is welcome, says Andy LaVigne, chief executive of Florida Citrus Mutual, the state's largest trade association. But he says concern remains over using a tax hike to pay for it all.
"I've heard from growers that we should have some progress before we tax another three cents this year," says Mr. LaVigne. "We're looking into a year when prices may not be any better and there is also a new director, a new advertising plan, and a new advertising agency, so there is a lot of uncertainty." The need for a new strategy is clear, he says. "But there's so much turmoil - let's make sure we're not throwing money at it, because we're not going to have a lot this year."
Though Bentley knows the new taxes would hit small growers hard - "some of these guys are already bleeding red ink," he says, "and they're not going to be about to see the benefits of advertising" - he supports the ad strategy. "It doesn't matter how good your product is if you don't show the consumer you've got a product. Let's try out some new ideas ... and try to increase the retail sales."
Many in the Florida industry were buoyed last month when US negotiators indicated that when they attend this summer's talks about the proposed Free Trade Area of the Americas, they'd leave out some as-yet unspecified "import- sensitive agricultural products." Brazil, the world's largest producer of orange juice, had been seeking greater access to the North American market through the lifting of a 29.7 cent per gallon US tariff on imported juice. Florida Mutual, backed by industry-friendly politicians such as Florida Gov. Jeb Bush (R) and US Rep. Adam Putnam (R), has long campaigned for the tariff to be retained.
Back in the Lake Wales groves, Manuel Avila is also looking ahead, getting ready for the next season's crop estimates and inspecting oranges that are already the size and color of small limes. "It looks like it will be another big harvest," he said.
For Avila and Bentley, that could yet turn out to be a good thing.