Californian citrus growers shift their focus to the domestic market
Californian citrus growers are shifting their focus to the domestic market, as rising costs continue to put pressure on growers and the ongoing global supply chain crisis wreaks havoc for both imports and exports.
With the navel orange season “winding down” in June, President of the California Citrus Mutual (CCM) Casey Creamer gave FreshFruitPortal.com an insight into the challenges of the 2021-22 season and the future for Californian citrus.
This season “came out almost exactly to the industry’s predictions”, said Creamer, with a much lighter crop and shorter season in comparison to last year. Although citrus crops have a “cyclical nature” which causes variations from year to year, Creamer pointed out the “regional” aspect of the change.
He explained: “Southern areas didn’t see as much of a difference between last year and this year but more North, in the central valley, we saw big variances between crops,” especially mandarins.
In addition, last season’s “late hang on really caused a downward on the yield for this year.” Production for this season was somewhat stifled by “resources from the tree going to the existing crop and the new crop,” he added.
Although pricing was better this season, both crop size and pricing were “similar to our 2017-18 year”, which Creamer explained “isn’t good for us at all because our costs are continuing to rise.”
In fact, for growers “most of the concern is on the costs.” According to Creamer, a 2019-20 survey showed that costs had gone up $1000 per acre, however the situation has since worsened. Considering transportation costs, fertilizer/pesticide and labor shortages and now, inflation too, he said “we’re predicting another $1000 dollar per acre increase.”
When looking at next season, Creamer forecasted: “We’re not going to see a repeat of the excess two years ago”, on the contrary the crop is expected to be “much more average, much more manageable.”
“The big question mark”, however, is how volume and demand will affect pricing. If pricing cannot compensate for the $2000 per acre increase in costs since the start of the pandemic, “it’s in the negative for growers and it’s not sustainable long term,” added the CCM President.
Another uncertainty for the industry is California’s water situation, which Creamer describes as “very dire” considering that “a good portion” of citrus grown in the Central Valley is reliant on the Friant Water system, where “the East side, the Southern San Joaquin Valley [...] are sitting at a 15 percent water allocation for class one contractors [and a] 0 percent for class two contractors.”
Growers are having to make very difficult decisions about whether “they can continue to pump groundwater that’s available to them,” while “also implementing the Sustainable Groundwater Management Act which puts more costs and restrictions on that source.”
Although the citrus industry is already a leader when it comes to applying irrigation and sprinkler systems to combat drought, the problem is still rife. Creamer recognized that this is a “state-wide water problem” because there is water supply in the North of the state, but the demand is concentrated in the South.
One key initiative that the CCM is focussing on, in collaboration with partners is called Water Blueprint, which “seeks to build the infrastructure and work with the government [...] so that we can capture water, move it and get it into the ground”, thus, balancing out the two extremes.
In terms of shipping, as with most fresh commodities, citrus fruits can cope with small delays, but significant ones risk losing the fruits. As a result of the global supply chain crisis, there has been a “lack of export markets” and for this reason, “marketers and shippers have [...] pushed more at the domestic level.”
The President of the CCM explained that “the domestic market typically is not as good for us as the export market” economically, but “with all the hassles of exports, growers, marketers, shippers have been shipping less.”
Furthermore, experts expect little relief in port congestion in the near future and with transportation and freight prices high, Creamer foresees that “we’re going to be looking for the domestic market to move through more so than we have in the past.”
The future for imports and exports remains unknown, but adapting to changing market conditions is fundamental, so “we’ve kind of had to change our business structure,” he concluded.