LAKELAND, FLA. -- Even though California's citrus industry was clobbered Christmas week by freezing weather, the long-term outlook is for citrus prices to continue dropping.
Florida's bulk orange-juice prices at the wholesale level were flirting with $1 a pound in recent weeks, before the California freeze, reflecting a precipitous drop of about half their value in the past year.
Such a sharp decline means that the average U.S. consumer, who drinks about 5.2 gallons of orange juice a year, would save about $10 a year if the savings were fully passed on at the retail level.
Large orange crops in Florida and Brazil and prospects for even larger crops in the future are pushing prices lower.
To the Florida citrus industry, the free-fall in prices in the past few months could well be the ominous opening to a decade of depressed prices, profits and plantings. It could also be a time of unprecedented opportunities for the industry to regain control of the domestic market for orange juice and to expand sales worldwide, analysts say.
The painful, free-market fact is that as Florida growers produce more fruit in years to come, their very success at producing bumper crops will almost guarantee lower prices. Only a year ago, after the Christmas 1989 freeze, the scenario seemed so different.
Florida suffered through six freezes in the 1980s, which together accounted for the loss of about half a billion acres of citrus trees. That is about twice the size of the entire California industry.
Florida growers planted farther south at a furious pace and now -- despite the massive tree losses -- have a record number of trees, more than 78.8 million. Brazil, the world's leading orange producer, and Mexico also went on planting sprees, spurred primarily by high prices resulting from the Florida freezes.
This decade could see the world swimming in orange juice and season-average prices at $1 a pound or lower -- in inflation-adjusted dollars -- for most of the decade.
If the projections for those low prices prove accurate, growers' revenue will be so low that tree planting could come to a virtual standstill, grove care will suffer and, ultimately, some growers will go out of business, analysts say.
Florida's current orange crop is expected to total about 165 million boxes -- or almost 1.5 billion pounds -- while Brazil is now churning out almost 300 million boxes and Mexico grows another 50 million boxes.
Robert Behr, chief economist for the Florida Department of Citrus, predicts that with Florida's crop expected to soar to 258 million boxes by the year 2001, the need for imported Brazilian juice should shrink rapidly -- from about 23 percent currently to 6.1 percent within a decade.
But analysts say Brazil will not give up its U.S. market share without a fight. Florida growers are beginning the debate on how to deal with the competition without battling solely on the basis of price -- a battle that analysts say Brazil would win.
A strategy in the early stages of discussion calls for the state to focus on an "all Florida" orange juice promotion to isolate Brazil in the marketplace.
The theory is that the Citrus Department could use its more than $30 million advertising budget to begin urging consumers to look for "all Florida" orange juice. Consumers would be urged to look for a symbol on the carton -- the Florida Sunshine Tree, for example -- as a way of selecting a product that contained 100 percent Florida juice.
Opinions differ as to how mature the U.S. orange juice market really is, but the potential for growth in foreign markets is clear.
While U.S. consumers drink an average of 5.2 gallons of orange juice a year, the British drink 2.6 gallons, Germans drink 2.2 gallons, the French drink 1.9 gallons and the Japanese barely register on the scale with 0.1 gallons per person.
Japan has agreed to lift orange juice quota restrictions in 1992, a move that analysts say could provide a market for 150 million gallons of orange juice a year.