A revenue decline in 2013 will be offset by strong growth in the five years to 2018.
Los Angeles, CA (PRWEB) October 30, 2013
The Orange and Citrus Grove industry's products are among the most eaten fruits in the United States. Per capita consumption of citrus fruits is increasing, while these fruits are receiving an additional boost from downstream demand as total consumption rises with the growing population. However, competition from international fruit suppliers and the effects of recent diseases have been detriments to citrus groves' revenue growth. In all, revenue for the Orange and Citrus Grove industry is expected to decrease 2.1% per year on average to $3.2 billion in the five years to 2013.
According to IBISWorld Industry Analyst Antal Neville, “Import competition intensified in the past five years as low-cost producers in Mexico and other countries increasingly supplied cheaper fruit to downstream fruit processors, where the appearance of fruit is less important.” Although US farmers have a comparative advantage in fresh-fruit production by supplying high quality, attractive fruits, improved transportation and the added luxury of eating off-season fruits contributed to 4.0% annualized import growth in the past five years. But adverse environmental factors that decreased production volumes meant that US producers were not meeting demand. A cold spell in 2010 ruined close to 10.0% of Florida's citrus fruits that year. The bacterial disease known as citrus greening has caused an even greater threat as it consumes more trees, rendering their fruit green, misshapen and bitter. The effects of the disease reduced 2013's harvest enormously, causing revenue to decline 16.6% over the year.
In the five years to 2018, the industry is expected to recover slightly. The National Export Initiative will make exporting easier for producers and aims to double the nation's export values by 2014. Additionally, government-backed programs, such as the “Fruits and Veggies- More Matters” campaign launched in 2007, will continue to educate Americans about the health benefits of eating fruits and encourage them to increase consumption of produce. As these programs continue to resonate with consumers, demand for citrus will increase. “An industry effort to produce a genetically modified disease-resistant tree may also triumph in the next few years,” says Neville.
The Orange and Citrus Groves industry is overwhelmingly characterized by the presence of family-held individual farms. In most cases, fruit producers operate as partnerships or sole proprietorships rather than as corporations. There is a long-term trend toward fewer farms across the agricultural sector, which also applies to the Orange and Citrus Groves industry. This trend is a result of rising costs and competition that are making it difficult for smaller operations to succeed. Owners of these small orchards are forced to form cooperatives or sell their land, leading to fewer farms that are larger than before. A likely outcome of this consolidation will be that orchards become more profitable as capital investments are spread across larger tracts of land. However, despite farm consolidations, the industry remains fragmented.
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IBISWorld industry Report Key Topics
Farmers in the Orange and Citrus Grove industry primarily grow citrus fruits, including oranges, grapefruit and lemons. Citrus fruits grown in this industry are used in downstream processing industries (e.g. juices, canned vegetables) and sold as fresh fruit for final consumption. Farms are considered part of the Orange and Citrus Groves industry if at least half of their revenue is derived from growing these fruits.
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