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Orange juice crisis motivates search for alternative fruits
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Orange juice prices have soared to record levels, driven by bad weather and illness in Brazil, the world’s biggest exporter, prompting manufacturers to explore whether they can use tangerines to make the drink.
Orange juice futures – which allow industry participants to hedge against price swings – have been in crisis since late 2022, when a hurricane, then a cold snap, devastated hectares of orange groves in Florida, the main producing region in the USA, second largest producer in the world. But the recovery accelerated sharply this month as the prospect of a bleak harvest in Brazil sent the market into panic.
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Orange juice concentrate futures, traded on the Intercontinental Exchange in New York, hit $4.92 per pound on Tuesday, nearly double the price a year ago.
“This is a crisis,” said Kees Cools, president of the International Fruit and Vegetable Juice Association (IFU). “We’ve never seen anything like it, even during big freezes and big hurricanes.”
The crippling shortage has raised fears of a price hike that will hit consumers and fundamentally reshape the global orange juice industry, according to the IFU.
Typically, manufacturers are able to overcome flavor differences from one season to the next by mixing stocks of frozen orange juice – which has a two-year shelf life – from the last season with the most recent harvest. But three consecutive years of decreasing supply have depleted stocks.
The long-term solution to the scarcity of oranges, according to Cools, could be to produce orange juice from tangerines, whose trees are more resistant to climate change in the growing regions.
The only long-term option “without touching the naturalness and image of the product” could be “using different species of fruit”, said Cools.
The industry is already experimenting. In Japan, which normally imports 90 percent of its orange juice, mainly from fruit grown in Brazil, the supply crunch has been exacerbated by a weak yen, further increasing import costs. Seven & i Holdings, owner of the 7-Eleven supermarket chain, has turned to the country’s domestic tangerine supply, launching a tangerine and orange juice product.
The IFU was considering embarking on the regulatory process to allow the drink to contain citrus fruits other than oranges, Cools said. This would require legislative change, first in the Codex Alimentarius food standards code established by UN bodies, and then at the national level, such as by the US Food and Drug Administration.
The current supply shortage dates back 20 years, when citrus greening – an incurable disease transmitted by sap-sucking psyllid insects that turns the tree’s fruit bitter before killing them completely – was first detected in the US.
By 2008, it had spread throughout Florida, which historically accounted for more than 80% of the US supply. Two decades ago, Florida produced about 240 million cases of orange juice a year, according to Cools. Today, exacerbated by climate change, the number has fallen to just 17 million.
Brazil intervened to make up for the deficit, but now the South American agricultural powerhouse is also beginning to face difficulties. Production this year fell by a quarter, to 232 million boxes of oranges, according to estimates from Fundecitrus, the citrus growers’ organization.
Brazilian orange groves have been hit by above-average temperatures and below-average rainfall, said Andrés Padilla, an analyst at Rabobank. Less than a third of farms were irrigated and even these had “struggled to survive”, he said.
Rabobank estimates that nearly 40 percent of orange groves in the country’s main southeastern producing region are infected with citrus greening.
The disease also causes oranges to fall earlier, meaning farmers tend to harvest earlier than they normally would, again affecting the “flavor profile,” Padilla said, adding that this “creates challenges for the industry.” of orange juice.”
The only way to cure the disease was to uproot the tree, “which the farmer doesn’t like to do because there are still oranges,” Cools said. “But the yields are bad and the quality [of the fruit] is bad.”
Industry executives say consumers will likely feel the impact for years. Many manufacturers are already passing on increased costs to their customers.
“Due to these turbulent and uncertain factors, both globally and in the UK, we have had to review the prices and sizes of our drinks,” said Sarah Baldwin, chief executive of Purity Soft Drinks.
Meanwhile, consumer demand shows no signs of slowing down. Before the coronavirus pandemic, some Americans ditched orange juice, concerned about its sugar content, and turned to supplements to get their daily dose of vitamin C, said Jack Scoville, a broker at Price Futures Group in Chicago. But “during Covid a lot of people discovered juicing again,” he said.
Additional reporting by Michael Pooler in São Paulo
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