ECONOMIC ANALYSIS OF SUSTAINABLE CITRUS PRODUCTION IN FLORIDA

The economic impact of the citrus industry in Florida in 2007-08 was $8.9 billion (Rahmani and Hodges, 2009). The Florida citrus industry is the second largest orange and orange juice producing region in the world, ranking behind Sao Paulo, Brazil, with these two regions accounting for about 90% of global orange juice production (Spreen, FAO, 2003). The two most serious diseases confronting Florida citrus growers are citrus canker and Huanglongbing (HLB), also known as citrus greening. Both diseases have become endemic since 2006. HLB is a more devastating disease than canker as it affects tree productivity (yield) and ultimately tree mortality. The economics of citrus production in Florida is very dynamic due to disease and threats from global competition. Economic sustainability of the Florida citrus industry depends on it being cost competitive in a global market, managing and ultimately finding a cure for HLB, and growing markets for citrus products that result in profitable prices for all sectors of the citrus industry. Also, the industry must be prepared to deal with changing economics of land use brought about by expansion of urban areas, managing conflicts between stakeholder groups at the urban/rural interface, and the potential for increased land availability from groves rendered unproductive due to greening. Previous work centered around three themes: Modeling global markets for citrus juice and fruit products and economic impact of citrus on the Florida economy and research into the economic impact of two significant citrus diseases, citrus canker and HLB. The goal of this project is to provide economic analysis to evaluate emerging technologies and management strategies that potentially enable sustainable citrus production in Florida, and also evaluate potential alternative crops to citrus. Objectives: (1) Estimate the costs and returns associated with citrus production and fresh packing in Florida and analyze how those costs and returns will be affected by changing input prices and new technologies. (2) Conduct and analyze cost of production data from Brazil and other regions considered as competitive producing areas to Florida. (3) Conduct an annual survey to measure the rate of HLB infection in Florida citrus groves (4) Determine the economic feasibility of emerging technologies and management strategies developed to mitigate the impacts of HLB and canker. (5) Estimate the demand for orange juice in the U.S. and European markets and refine existing market equilibrium models of the markets for Florida citrus and its competitors. Based on the degree of HLB and canker infection in Florida citrus groves, develop and regularly update long run projections of fruit production and prices. (7) Investigate the production, marketing and economic feasibility of alternative crops to citrus such as blueberries. Expected Outputs: The models developed for these analyses will serve as the basis to develop an investment and decision-support tool for producers, lenders and researchers that will enable evaluation of new technologies and different management strategies.

Objective 1. Costs and returns data for citrus production and fresh packing, including the continuously changing costs of managing HLB and canker, will be obtained by continuing the on-going work targeted at documenting production and marketing practices in Florida. Objective 2. Data on citrus production costs from Brazil and other citrus producing regions will be collected through an established network of contacts. In-country trips will be made regularly to augment data collection directly from growers. Objective 3 was started in 2008 as a collaborative effort between IFAS, USDA's National Agricultural Statistics Service Florida Field Office (NASS) and The Florida Department of Agriculture's Division of Plant Industry (DPI). The responses enabled drawing conclusions about the HLB infection rate for orange groves and the extent management practices were being followed to control its spread. Growers are increasingly using enhanced foliar nutrition programs in an attempt to maintain production from infected trees rather than removing diseased trees. Thus, fewer growers know the infection rates in their groves. For the 2008/09 season survey, and for future surveys, IFAS, DPI and NASS combined/will combine their survey data with U.S. sugar which does its own private survey. Objective 4. Preliminary work has been done to evaluate tradeoffs among current greening management alternatives. A model that has been developed by UF/IFAS to evaluate citrus investments in Florida will be modified to give it the flexibilities to cover the range of potential variables that will be needed to evaluate emerging technologies. Objective 5. The world orange juice model used in Spreen, et al. (2003) and Florida grapefruit model shown in Busby and Spreen (1995) will be updated to reflect new tree inventory data in Florida and Sao Paulo. Changes in demand parameters will also be incorporated, and transportation costs updated. Tree mortality and fruit yield information will be modified to reflect the effect of HLB and canker. Then 10-year projections of orange and grapefruit production and prices will be developed. Objective 6 will entail both a quantitative and qualitative assessment of the economic impacts of endemic HLB. The quantitative assessment will include the use of IMPLAN to estimate the current and projected future economic impact of endemic HLB on the Florida citrus industry and Florida. These impacts will be expressed as the number of jobs, income generated, and output revenues by sector for the citrus industry. The qualitative assessment will consist of a strategic analysis of how the processing and fresh packing sectors might exit the citrus industry if fruit volumes decline substantially due to HLB. Objective 7. The economics component of this project will provide a financial assessment of the production technologies being developed for blueberry production compared to current production systems used.