Citrus Growers in State in Dilemma Over Export Plans
As damage estimates for the Christmas cold snap soar, California’s major citrus exporters are faced with yet another predicament:
Do growers such as Dole, Sunkist and SunWorld send their salvaged crop overseas to keep longtime export customers happy? Or do they keep it in the United States, where prices and demand will be extremely high?
“The possibilities are mind-boggling,” said Ray Borton, senior agricultural economist for the California Department of Food and Agriculture. “I don’t know how (the companies) will face them at this point. It puts them in an awful position.”
This dilemma also comes at a time California growers were hoping to take advantage of their first opportunity to make it big in the Japanese market.
Although the Pacific Rim is California’s No. 1 market for citrus exports, Japan has long had tight controls over such imports. In 1988, the United States and Japan worked out a trade agreement that will completely open Japanese markets to U.S. beef and orange exports in April.
But the freeze-ravaged 1990 crop will fall far short of the 2.2 million tons of navel and Valencia oranges that were harvested in 1989. That leaves marketers with tough choices.
“We are disappointed that we will not be able to take advantage of what opportunities this will provide us near term,” one major grower and distributor said. “We cannot afford to ask our growers to absorb any sort of . . . reduced prices in order to maintain presence in Japan.”
The company’s growers--many of whom farm in the hard-hit San Joaquin Valley--were so devastated by the freeze that they will need all the income they can get, even if it costs them a toehold in the competitive export market.
“Whatever ground we lose in the next eight months, we’ll just have to fight to get back,” he said. “It’s an added disappointment . . . but it pales into insignificance when you consider what happened to the agricultural community in general and the citrus community in particular in the state of California.”
At Sunkist Growers Inc. in Sherman Oaks, the harvest will be reduced nearly 40% by the freeze, which sent temperatures plummeting into the teens and turned oranges, lemons and grapefruit into rotting orbs.
When the citrus season began on Nov. 1, “we were looking at marketing 82 million cartons,” said Curt Anderson, Sunkist spokesman. “Now we’re looking at 53 million to 56 million. . . . But there’s still a lot of fruit to market. It’s not like we’re down to nothing here.”
Sunkist, like its competitors, is grappling with the export question. But Anderson is succinct when it comes to naming the determining factor: money. The fruit, he says, will follow the price, and that’s that.
Many economists contend that the best price will be in North America, that foreign markets may not pay what the domestic markets can bear because of the decreased supply here. After all, they say, Japan and Hong Kong can always import from North Africa or the Mediterranean and avoid freeze-inflated prices.
Before the freeze, Anderson said, the best wholesale price a box of navel oranges would bring was $10 to $11. Today, it has nearly doubled to the $20 range, domestically and abroad. That price could increase as losses mount.
At SunWorld International, the export question is less crucial. And the reason is simple geography. Although the company is based in Bakersfield, most of its growers are in the Rancho California, Coachella and San Diego areas, where the two-week cold snap treated fruit more gently.
Although there was serious damage in the extreme south of the state, the CDFA said, Riverside County has about 6,800 acres of unharmed unharvested navel oranges. With the supply so short, they’ll be worth big bucks for their lucky owners.
But even SunWorld will probably find its international-to-domestic sales ratio upset by the cold damage. Doug Barker, SunWorld’s executive vice president for marketing, said his company usually sells 65% of its product in the United States and the remaining 35% overseas. With freeze losses playing havoc with supply and demand, that equation will most likely shift to 50-50.
HURT BY THE FREEZE? In 1989, California orange exports grew in both value and volume. With less competition from Florida because of freeze damage, and the expanding of markets in Japan and Canada, the overall gain was a substantial 56%. In 1990, California’s freeze threw that progress into disarray. The following shows California’s changing orange exports:
Source: California Department of Food and Agriculture
