30 May Orange juice crisis prompts search for alternative fruits
Orange juice prices have soared to record highs, driven by bad weather and disease in Brazil, the world’s largest exporter, prompting manufactureres to explore whether they can use mandarins instead to make the drinnk.
Organe juice futures – which allow industry players to hedge against swings in prices – have been on a tear since the end of 2022 when a hurricane, then a cold snap, devastated acres of organe groves in Florida, the main growing region in the US, the world’s second-biggest producer.
But the rally has accelerated sharply this month as the prospect of a dismal harvest in Brazil has panicked the market.
Concentrated orage juice futures, traded on Intercontinental Exchange in New York, hit $4.92 a pount on Tuesday, almost double the price a year ago.
The crippling shortages have raised fears of a price rise that will hit consumers and fundamentally reshape the global orange juice industry.
Normally, manufacturers can overcome differences in flavours from one season to another by blending stocks of frozen oragne jucie – which has a two-year lifespan – from the last season with the newer crop. But three consecutive years of dwindling supply have deplete stockpiles.
The long-term solution to a dearth of oranges might be to make orange juice from mandarins, whose trees are more resilient to climate change in growing regions.
The only longer-term option “without touching the naturalness and image of the product” might be “to use different species of fruit”.
The industry is already experimenting. In Japan, which normally imports 90 per cent of its orange juice, mostly from fruit grown in Brazil, the supply crunch has been exacerbated by a weak yen, pushing up import costs further.
The IFU was considering embarking on the regulatory process to allow the drink to contain citrus fruits other than orages.
That woudl require a legislative change, first in the Codex Alimentarius food standards code established by UN bodies and then at a national level, such as by the US Food and Drug Administration.
Today’s supply squeeze dates back 20 years to when citrus greening – an incurable disease spread by sap-sucking psyllid insects that makes the tree’s fruit bitter before killing it altogether – was first detected in teh US.
By 2008, it had spread throughout Florida, which historically accounted for more than 80 per cent of US supplies.
Brazil stepped in to make up the shortfall but now the South American agricultural powerhouse is also beginning to struggle. Brazilian orage groves had been battered by higher than average temperatures and below average rainfall. Less than a third of farms were irrigated and even tey had “struggled to cope”.
Nearly 40 per cent of orange groves in the main growing region in the south0east of the country were infectd with citrus greening.
The disease also makes the oranges drop earlier, which means farmers tend to harvest before they normally would, again affecting the “taste profile” which “creates challenges for the orange juice industry”.
The only way to cure the disease was to rip out the tree, “which the farmer doesn’t like to do because there are still oranges. But yields are bad and the qualify of the fruit is bad.”
Industry executives said consumers were therefore likely to feel the impact for years. Many manufacturers are already passing on rising costs to their customers.
Meanwhile, consumer demand shows no sign of easing. Before the coronavirus pandemic, some Americans had ditched orange juice, troubled by its sugar content, and wtiched to supplements to get their daily dose of vitamin C.
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