World OJ Situation: Florida Growers Role in Future Opportunities

Transcription

1 World OJ Situation: Florida Growers Role in Future Opportunities Robert Norberg Dep. Exec. Dir. of Research & Operations FLORIDA DEPARTMENT OF CITRUS Bartow, FL fdocgrower.com FLORIDA CITRUS INDUSTRY 7 th ANNUAL MEETING Bonita Springs, FL June 2011

2 Introduction The world OJ situation has changed dramatically in recent years due to supplyside disruptions and demand-side influences. However, the world OJ situation can still provide significant opportunities for orange growers, although many challenges remain. 2

3 HISTORICAL AND CURRENT WORLD ORANGE-JUICE SITUATION 3

4 OJ Production & Supply Trends 4

5 Florida & Brazil OJ Production Trends 5

6 World OJ Production, by Country 6

7 World OJ Production, % Share by Country 7

8 OJ Consumption Trends 8

9 World OJ Consumption Trends 9

10 World OJ Consumption, by Country 10

11 World OJ Consumption, % Share by Country 11

12 DRIVERS OF FUTURE WORLD ORANGE-JUICE SITUATION 12

13 Factors that Influence Global Demand for OJ Economic Stability and Recovery New Markets and Population Growth Consumer Perceptions and Attitudes Availability and Pricing 13

14 Global Economic Stability and Recovery 14

15 Economic Recovery Emerging Economies: Countries with growing global economic interactions and responsibilities Source: Wikipedia. 15

16 Economic Recovery Developing Economies: Increased industrialization and information access for citizens Source: Wikipedia. 16

17 Other Terms for Largest Developing Countries BRIC: Brazil, Russia, India and China BRICET: BRIC + Eastern Europe and Turkey BRICS: BRIC + South Africa BRICM: BRIC + Mexico BRICK: BRIC + South Korea Next Eleven: Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, South Korea, Turkey, and Vietnam CIVETS: Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa 17

18 Global Economic Recovery 18 Source: International Monetary Fund.

19 Global Economic Recovery Source: United Nations. 19

20 New Markets and Population Growth 20

21 World Population Growth 2.6B for Mouths to Feed Source: U.S. Census Bureau. 21

22 India Population Maturation 2011 to 2050 Source: U.S. Census Bureau. 22

23 China Population Maturation 2011 to 2050 Source: U.S. Census Bureau. 23

24 Consumer Perceptions and Attitudes 24

25 Consumer Perceptions and Attitudes Functional Attributes Health and Nutrition Drivers Nature s Perfect Beverage Emotional Connections Vibrant, Sunny and Energizing Fun & Joyful, yet Safe & Comforting 25

26 Global OJ Availability 26

27 Factors that Influence Global Availability of OJ Disease Pressures, and other production issues in traditional growing regions Potential for new production areas Global distribution and supply-chain 27

28 WORLD ORANGE-JUICE SUPPLY AND DEMAND SCENARIOS 28

29 Demand May Surpass Supply if: U.S. and Europe recover and grow Economic recovery Consumer perceptions and attitudes Emerging Markets Demand More OJ Population and Income Effects Florida and Brazil crops are flat If this happens prices, both retail and wholesale, rise. 29

30 World OJ Growth Scenario (Million Single Strength Gallons) 30

31 World OJ Supply Growth Scenario (Million Single Strength Gallons) 31

32 Filling the OJ Growth Opportunity (Million Single Strength Gallons) 32

33 Satisfying U.S. OJ Growth Florida s s Opportunity 33

34 Defining the Florida Opportunity Satisfy Future US OJ Opportunity 1. Replace Current Imports 250mm ssg FOB ~$1.65/ssg 2. Satisfy Consumption Needs Demand: Population, Incomes and Attitudes Prices: Unchanged from Current Levels Opportunity: 500mm ssg in 20 years (1%/year) Supply Challenges Disease Uncertainty and Costs Nursery Trees Stocks and Costs 34

35 Florida s s Supply Challenge to Meet Future US Opportunities Boxes Trees 35

36 Florida Planting and Loss Requirements to Meet Opportunity New Plantings Loss Rate 36

37 Orange Tree Propagations Registered Propagations Mandatory Protection Since Source: 2010 Annual Report. Bureau of Citrus Budwood Registration.

38 Tree Planting Economics Investment Sensitivity Analysis Assumptions New Citrus Planting With land cost of $3,000/acre Tree Density: 270 trees/acre Average Attrition Rate: 5% Cost of Production: $1,561/acre 2009/10 Budgets, SW FL Hamlins With HLB Maintenance Expenses With Resetting Costs Source: Ron Muraro, various publications and estimates. 38

39 Breakeven Price Sensitivity vs New Tree Cost Delivered-in Breakeven Cost Source: Ron Muraro, various publications and estimates, basis previous assumptions. 39

40 SUMMARY & CONCLUSIONS 40

41 Summary & Conclusions After expanding for many years until the first decade of the 21 st century, the world OJ situation has leveled and declined in recent years due to a combination of factors: Availability issues caused by disease pressure and weather events Economic stagnation especially in developed economies Advent of competitive and substitute products 41

42 Summary & Conclusions (Cont.) However, future prospects are more positive as: Disease issues are being mitigated Consumer attitudes and perceptions continue to be positive World economies recover and grow 42

43 Summary & Conclusions (Cont.) Citrus growers should take advantage of these future opportunities by expanding production capabilities. Investments into new production capacity is viable considering the current citrus economics environment and enhanced by expected opportunities and maintenance of US OJ tariff. 43

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