The wholesale price of orange juice has “gone bananas”, amid concerns about poor harvests in Brazil.
Orange juice prices reached a record high of $4.95 per pound (£3.88/lb) on the commodity markets in this week. This is after the growers of the main orange-producing areas of Brazil announced that they expected the harvest to be down 24% on last year, at 232m boxes of 40.8kg – a worse fall than the 15% predicted previously.
Citrus greening is an incurable disease that affects orange trees in Brazil. It was caused by extreme heat and drought in their flowering season in the second half of last year, exacerbated by climate change.
Brazil’s poor orange crop, which accounts 70% of the world’s orange juice exports marks the third global harvest to be difficult. In addition to the problems in Brazil and Florida, the US, has also been affected by a series hurricanes as well as the greening virus, which is spread through sap-sucking insect and makes the fruit bitter, before it kills the tree.
Due to the poor crop yields, manufacturers are unable to overcome the current challenges by mixing new crops with frozen juice, which has a normal two-year shelf life.
Kees Cools told The Financial Times that “this is a crisis.” “We have never seen anything similar, not even during big freezes or hurricanes.”
IFU said that it was considering lobbying to rewrite UN food regulations, so that orange-juice can include other citrus fruits. It is also looking at rule changes on a country level.
Francois Sonneville is a senior beverage analyst at Rabobank. He said that consumer demand for oranges juice had dropped by about five percent compared to last year. This was because the price “went bananas” and consumers’ habits had changed.
The global orange juice industry has reached a crisis point. “The global orange juice industry is in crisis. The Florida industry is all but gone, and Brazilian groves have been plagued by disease and rising costs. Global orange supplies are at their lowest level in decades,” said he.
Sonneville stated that drink makers would either have to use inferior juice or create mixed juices containing other fruits like apple, grapes or mango, or they could charge higher prices. He was skeptical that mandarins would be able to replace oranges, as it would require new expenses to transport the fruit to a processing facility.
He said that the problems would continue, because it takes a long while to plant new orange trees, and farmers are considering alternative options, since demand is decreasing, and they face problems with diseases and high labour costs.
Sonneville said, “You’d have to be very careful about choosing a tree that would last for 25 years because prices may drop again next year.”
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