NEW YORK — Rabobank, a bank serving the global food and agriculture industry, is predicting the orange juice crop in Florida will be stagnant during the next 10 years, even despite an increase in this year’s harvest over last.
Hurricanes and plant diseases have led to a decline in total acreage and yields per acre in Florida, and urban encroachment is encouraging many farmers to sell their land and get out of citrus farming. With fewer countries filling the gap between declining output and consumer demand, Brazil has taken advantage of the opportunity to expand exports to the United States, according to the report "Brazilian orange juice: Opportunities and challenges in the global market."
"Stakeholders in Brazil’s orange juice sector have a unique opportunity before them," said Stephen Rannekleiv, vice-president of food and agricultural research. "Growing international demand for orange juice and decreased U.S. production gives Brazil the opportunity to step up and fill the gap."
Mr. Rannekleiv also said the pressures on the U.S. market have created opportunities for the U.S. and Brazil to create strategic alliances.
"Those alliances give U.S. beverage companies a reliable and efficient orange juice supply so they can focus on domestic marketing and creating products that are more cost effective," Mr. Rannekleiv said.
But Brazil also faces challenges in the orange juice market. Rising oil prices have increased demand for ethanol in Brazil, leading to an increased demand for sugar cane, and sugar cane is competing for land in citrus growing regions. The declining U.S. dollar also has reduced profitability of exporting to the U.S., Rabobank said.
"Given Brazil’s dominance of global citrus production, it would seem to have a clear opportunity to increase its share of the U.S. orange juice market," Mr. Rannekleiv said. "However, to do so will require Brazilian growers and processors to overcome their own set of challenges."
According to the U.S. Department of Agriculture’s December forecast, the Florida all orange forecast is 168 million boxes, 30% above 129 million boxes produced last year but 31% below the record high utilization of 244 million, excluding temples, in the 1997-98 season. The all orange forecast for the United States was 228,100,000 boxes compared with 176,280,000 boxes produced last year.
The U.S. and Brazil account for half of the world’s supply of oranges and 85% of the world’s orange juice processing capacity, according to Rabobank.