Bad news if you like breakfast with a little orange juice. The food industry, already hardened by the crisis of lemon, garlic and olive oil, to name just a few cases in recent months, is preparing for another challenge. And deep. Brazil’s orange plantations, which have a significant presence in the industry globally, are currently going through turbulence felt on two fronts: concentrated juice prices and the industry. The former has skyrocketed to historic levels. Second, the industry is already looking for ways to weather the storm; even if this means “rethinking” what we currently understand by orange juice.

One thing is clear: curves are coming for the industry.

orange crisis. That word “crisis” is what Keeds Cools, president of the International Fruit and Vegetable Juices Union (IFU), uses when referring to the orange juice situation, without being sketchy or hot-topic. “We’ve never seen anything like this, even during major freezes and hurricanes,” he added during an interview this week. Finance Times.

It sounds grandiose, but Cools’ analysis is accompanied by facts and figures. Brazil, the world’s largest orange grove with a production of approximately 16.75 million metric tons in the 2022/2023 season, is preparing for a weak harvest with a significant “thorn” compared to last year. It gets worse because it’s not the first time. And this adds to the challenges facing Florida, another major hub in the US and a major global producer.

Are the numbers that bad? They’re definitely not flattering. And the industry already had bad forecasts from the beginning. Guardian He explains that producers of the main orange plantations in Brazil have admitted that they expect a significant decline in their harvests, with a 24% decrease compared to last year. Moreover, with a balance of 232 million boxes of 40.8 kilograms, the result would worsen the 15% decline that the industry was already expecting.

This percentage decline has repercussions that go far beyond the country. As Statista points out, Brazil is the world’s largest producer of oranges. In the 2022/2023 campaign, it actually came in second, beating China by 2.2 times. The situation is also made worse because this is not the first global harvest to suffer difficulties, compounding the industry’s difficulties in Florida, where production has also declined: 20 years ago it would have produced 240 million cans of orange juice. Today, this figure has dropped to 17 million.

reflection on prices. This scenario is already reflected in the price, which is probably the most sensitive and meaningful indicator in the market. Bloomberg statistics show that a pound of orange concentrate, the equivalent of a pint, paid $4.84 on Wednesday. It exceeded 4.90 during the week; This was almost twice as high as a year ago.

Acknowledging that orange juice reached an “all-time high” on Tuesday, charts from the Trading Economics platform provide insight into the price increase over the past few years and months. The data is based on juice futures, negotiations between major parties where the industry is trying to fully protect itself against periods of reduced production.

What are the reasons? Behind the crisis in the industry lies a cocktail of factors that clearly sums up the situation. Guardian “Florida’s industry is nearly wiped out, and fields in Brazil are plagued by disease, rising costs and unfavorable growing conditions, leaving the world’s supply of orange juice at an all-time low for decades,” said Francois Sonneville, senior beverage analyst at Rabobank.

In Florida, plantations have been affected by hurricanes and cytic greening, also known as CG or “yellow dragon”, a bacterial disease that affects the production, quality and appearance of citrus trees. It spread throughout Florida for years. The person responsible for transmitting this is a sap-sucking insect. Asian citrus pysllid. Brazil’s orange trees are not spared from “greening” either. Moreover, there they deal with above-average temperatures and less rain than usual.

A difficult panorama. The panorama is not simple. There are already those in the industry who warn that the effects of the crisis will be felt for years. Rabobank estimates that in the main orange-producing region of southeastern Brazil, greening has affected about 40% of orchards; This means that the disease affects the oranges, the flavor and ripening of the oranges, and the fruit tree itself.

In dealing with such challenges, the industry is able to use frozen juice from one season to the next, but this can only be stored for a few years and after a few not-so-good harvests, the margin for using the reserve diminishes.

I’m looking for alternatives. Looking at this view, the sector has already taken action. And he seems willing to look for alternatives with other citrus fruits to weather the storm. Cools already notes that the long-term option could include the use of “different fruits,” “without affecting the naturalness and image of the product.” More precisely, the industry is looking at tangerines and their greater resilience to climate change.

It’s not all theory. In Japan, the crisis is particularly intense due to dependence on foreign oranges, especially those from Brazil, and the weakness of the yen making imports more expensive. So the owners of the popular supermarket chain 7-Eleven decided to look for alternatives and use the national supply of tangerines. Its aim is to offer its customers an alternative in the midst of the crisis: tangerine juices and orange juice.

Is this orange juice? Not everyone looks at the tangerine with the same hope. In statements collected by GuardianSonneville admits he was skeptical about its use because of the expense it would require to ship it. In any case, he admits, producers will have no choice but to look for alternatives such as raising prices, using lower quality juice or making others combined with apples, mangoes or grapes. The analyst currently sees a decline in consumer demand coinciding with the rise in prices.

Farmers and producers are not the only ones watching the crisis. This situation also seems to be followed with interest by the International Fruit and Vegetable Juice Union (IFU); An organization that is considering activating the regulatory process that would allow juice to contain citrus fruits other than oranges, Cools assured. This may seem like a minor issue, but changes will need to be made both at the Codex Alimentarius standards published by the United Nations and at the national legislative level. For now, experts warn sailors: “The orange juice industry is in crisis.”

Image | Mateusz Feliksik (Unsplash)

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