So Why is Orange Juice So Expensive?

by

Orange juice lovers! Prepare your pockets as the price of your favorite beverage has been forecasted to soar in the coming months. We all know the powdered variety is only half as good. However, with fresh options priced like gold, it feels like there is no other choice. So why is orange juice so expensive? This is perhaps a question that has been bothering you since the 2012 crisis in Florida. Let us start from the very beginning…

The Start of Crop Devastation

The law of supply and demand provides a clear answer to such a question. Prices increase as the supply of a commodity struggles to keep up with a strong demand. This means, scarcity is the number one culprit that drove orange juice prices up to exorbitant levels. But when and how did this situation begin? You’d be surprised that it started way earlier than 2012.

It was the year 2005 when orange production began to dwindle in Florida, which supplies about 80 percent of the country’s orange demand. After several hurricanes swarms of a small insects, called Asian citrus psyllid, were blown into the southern region of the state. These bugs carried a strain of bacteria that causes citrus greening.

With these insects bringing down entire orange trees, state growers reportedly invested over $100 million on research dedicated to discovering solutions for the disease. However, scientists were baffled. They couldn’t find a way to get rid of the parasites.

Judith Ganes, president of the research firm J Ganes Consulting, said that after a disaster, growers would normally replant all of their damaged crops. Unfortunately, that time around was different. Most of them just gave up. Since the disease has already caused widespread damage, the problem had already gone beyond control. Instead of farming for oranges, growers sold their properties to housing developers.

The 2012 Florida Freeze

Orange juice prices were steadily increasing when freezing temperatures ravaged Florida. The fruit’s numbers jumped by 9 percent as 2012 opened, reaching an all-time high of $2.1995 per pound.

Apparently, a cold snap is among the fruit’s most deadly enemies. If temperatures drop below 28 degrees Fahrenheit or negative 2 degrees Celsius for more than four hours, crops are set to wither.

To control damage, desperate measures were taken including a group that strictly monitored temperature levels within the state’s citrus belt. Although ice indeed damaged fruits and leaves, Florida Citrus Mutual’s Andrew Meadows told Financial Times that a number of growers were able to survive the harsh weather conditions.

However, the expensive price tag severely impacted orange juice sales. In February 18, 2012, a decrease of 10.4 percent in domestic sales was recorded by The Nielsen Co.

The Biggest Loss in a Century

Unfortunately, Florida’s unlucky streak was not yet over. In 2017, the state faced the biggest crop devastation it had in over a century. Hurricane Irma destroyed more than just homes and buildings. It also battered the state’s citrus industry to a pulp.

In an interview on CNBC, Florida’s Department of Citrus Executive Director Shannon Shepp said, that growers were expecting to earn profit in 2017. Instead, they were faced with losses for the first time in about ten years.

By September 2017, many growers had already raised the white flag causing already-expensive orange juice prices to spike by 25 percent. After Irma, fruits produced by the state did not go to beverage manufacturers. Instead, they were used for cleaners, oil and animal feeds.

As a result, experts are no longer as optimistic about the fruit, considered as Florida’s pride. One of them even claimed that Irma could be “the last straw” for the orange industry. With a decade marred with struggle, the state may indeed scratch out the fruit from future car plates.

Is There Still Hope?

In 2016, Meadows who represents a cooperative with a 62,000 membership, admitted that the orange industry was truly in the midst of a crisis but growers were not going to give up.

In a phone interview with The Guardian, he said that the industry had already experienced similar hardships in the past. Having overcome these challenges, growers were determined to keep planting. There was no surrendering in the fight for Florida oranges.

Unfortunately, orange juice sales have not picked up since then. Aside from the expensive prices, the demand has gone down as the modern generation has been skipping or having less breakfasts. There are those who also falsely believe and persuade others that orange juice is a high-sugar beverage that contributes to obesity.

According to John Michalik, beverages expert Global Data’s Canadian division, a majority of the American market are not well-informed about natural sugars found in orange juice.

Meadows may have been optimistic back then, but with a series of unfortunate events going on for Florida’s orange industry, the question is no longer why is orange juice so expensive. Is there still hope for the locally-grown oranges? What do you think?