Cold Snap Brings Higher Citrus Prices

January 26, 2010

Earlier this month, a cold snap moving in from the Arctic brought freezing temperatures into Florida, wreaking havoc on the citrus industry.

Earlier this month, a cold snap moving in from the Arctic brought freezing temperatures into Florida, wreaking havoc on the citrus industry. Early reports indicate significant damage. Florida’s $9 billion a year citrus industry is responsible for nearly 70% of the country’s citrus. 

Citrus trees can suffer damage when exposed to temperatures below 28 degrees for more than four hours. Temperatures dipped to 36 degrees in Miami (when the usual temperature this time of year is 68 degrees) and Tampa hit 25 degrees, breaking its winter record. Temperatures in Tallahassee fell to a record breaking 14 degrees. The colder temperatures lasted for almost two weeks.

Total cost to agriculture alone could reach into the hundreds of millions of dollars. With less product available and steady demand, consumers will likely have to pay more for their juice this year. However, the final word on the damage won’t be out for a while.

"It takes some time to determine the effect on the fruit,” says Susan L. Pollack, Senior Economist, USDA, ERS, Food and Specialty Crops Branch. “The industry is also concerned about tree damage, which may affect crops in the next year or so. Most of Florida’s oranges are used to make juice and therefore fruit with minor freeze damage may still be used.”

Industry sources say that they are already seeing lower juice yields from the fruit that has survived and is being processed. Though there could be considerable, widespread damage, they won't know the exact impact for several months as some of the later maturing fruit may recover or may be permanently damaged.

Weather didn’t help things much in 2009, either. Late December estimates had predicted a 16% smaller citrus crop this year, even before the cold snap, due to adverse weather conditions and the loss of bearing acres from numerous diseases. In other words, prices were already under pressure. Since price elasticities are near unitary, a 10% reduction in juice availability should result in a 10% increase in prices, all other factors being unchanged.

Citrus isn’t the only crop suffering from cold snap fallout. Tomatoes grown in southwest Florida were hit hard as well. About 70% of that crop may have been wiped out completely.

“There's going to be a temporary gap in volume because of the losses from the unprecedented freezing weather we had. That's the reality for the moment,” says Lisa Lochridge, Public Affairs Director of Florida Fruit and Vegetable Association. “But growers will resume their planting schedules, and that gap is going to be short-lived.”

A 25-lb box of South Florida tomatoes, which was selling for about $10.95 to $17.95 a box back in December, peaked at $23.95 a box mid January. On a positive note, though, tomato growers in the Palmetto/Ruskin area have already started their spring plantings, says Lochridge.

Meanwhile, a package of Florida navel oranges (4/5 bushel cartons) rose to $17 mid January. That same package went for $13.50 back in December, according to the USDA Agricultural Marketing Service. Higher prices could last until supplies rebound.

“There's no question that Florida's crops were hard hit during this unprecedented freeze, but it wasn't a total loss. Right now, Florida's growers have shifted into salvage mode, harvesting the crops that do remain,” says Lochridge. “So there is product coming to market, but just at a much lower level than normal for this time of year. Agriculture is a resilient industry, and producers have already begun taking the steps needed to move forward.”