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Florida Citrus Greening -- What Comes Next?

February 1, 2017

The situation sounds like the plot of some horror movie in which a small, nearly microscopic, parasite destroys civilization as we know it. Unfortunately, that is nearly the real world situation that has been facing Florida orange growers for the better part of a decade. The small creature that is indirectly creating the problem is the Asian citrus psyllid and what they do is deliver a bacterium that in turn infects the citrus tree host with a disease called Huanglongbing or HLB, commonly refered to as citrus greening.

The disease is deadly over time, spreading from the leaves to the roots. While the disease spreads though the tree, the result is fewer and smaller fruit, premature dropping of the fruit, and fruit that fails to fully color. There are some techniques that have somewhat mitigated HLB’s effects to an extent, but the cost is high.
HLB has had a devastating impact. The crop for 2016-17 is forecast to be 26% down from 2015-16… and 2015-16 was the lowest crop in fifty years. Overall production is down 66% since the 2003-04 season.
Growers have to work harder and spend more to produce less. Juice processors are not assured of sufficient fruit to operate efficiently. And U.S. consumers can expect to see continued upward pressure on the price of orange juice. 
Simply put, HLB represents a genuine threat to the entire Florida citrus industry and everyone is feeling the impacts. It is thought that the industry needs to plant many millions of trees over the next decade just to restore the crop to the level that would ensure that juice makers could operate profitably. The U.S. House has passed a Citrus Bill that is designed to provide tax incentives to growers for new plantings. That may be a step in the right direction, but we generally lack faith in government solutions to market problems.
So to our original question -- what comes next? Florida’s citrus industry is clearly in a dire situation. What are the implications as the Florida citrus industry literally withers? 
We see a few areas for potentially significant developments. 
First, the survivors who continue to operate successfully in Florida will be very well capitalized, major operators who can support the research and growing practices necessary to successfully produce fruit in the era of HLB and rebuild the groves.
A second situation to watch will be the disposition of the land that defunct growers have abandoned. For sure, if we’re correct about larger, more financially secure operators entering or surviving the market, they will have need for land to repopulate the groves.
Additionally, we also see conversions of former citrus land to vegetable production as opposed to trying to take on HLB again. In the last two years, we have sold numerous dead or dying citrus groves to buyers motivated by an interest to convert the land to non-citrus farming operations. Some growers are even experimenting with crops previously untested in Florida, such as avocados, macadamia nuts, olives, and peaches, though the jury is still out on the long term viability of these options.
While Florida may have a citrus problem, the opportunity for other agricultural endeavors still presents significant opportunity for Florida farm and ranchland. A strengthening economy is also resulting in more residential and commercial development, presenting additional opportunities for the repurposed use of defunct groves.
This real life horror story may not end the Florida citrus industry, but we think it’s safe to say it will continue to force dramatic changes in the industry and Florida’s agricultural landscape. 

 

 

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About Murray Wise

Murray Wise founded the Westchester Group in 1986 after acquiring the Champaign, IL division of the Sandage Companies, a traditional farm management and brokerage firm…

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