Brazilian producers consider alternative fruit as poor harvests exacerbate orange juice crisis

03 Jun 2024 --- Orange juice, a staple at breakfast tables across the world, has the citrus industry in a crisis, with prices reaching an all-time high. Extreme weather conditions and plant disease in Brazil, whose harvest accounts for 70% of the world’s orange juice exports, are pushing processors to consider alternative fruits to compensate for the shortage. 

The shortage is exacerbated by the destruction of acres of orange farms in Florida, which hurricanes have lashed since late 2022. Recovery seems distant, with the six-month-long Atlantic hurricane season beginning this month and lasting until the end of November.

Last week, the price of orange juice concentrate jumped to US$4.95 per pound, nearly twice the record price a year ago. Suppliers had predicted this crunch as early as February this year, and no sign of relief was expected before the 2024/2025 crop season.

Disease and drought
Estimates published in May anticipated a significant 24.4% decrease in orange production from the previous season, highlighting the severity of the situation. 

The predicted poor crop in Brazil marks the third difficult global harvest in a row. Brazil typically produces 300 million boxes of oranges per year. 

This year, citrus greening, an incurable plant disease brought on by drought and excessive heat during the flowering period, affects over 40% of Brazil’s orange groves.

“To grow oranges is now more costly, mainly due to overall inflation and specific costs like fertilizers. But the greening that affects nearly 40% of the plantations in Brazil is creating a tremendous cost of replanting and loss of income,” Kees Cools, president of the International Fruit and Vegetable Juice Association, tells Food Ingredients First.

Citrus greening affects 40% of Brazil's orange plantations.Navigating the price hike
The resultant spike in prices is having a ripple effect on orange growers and processors of orange juice.

Francois Sonneville, senior analyst for beverages at Rabobank, says: “For growers, the high price is giving some relief, but the volume of oranges they sell has come down — so, lower volume times higher prices. For processors, the picture is more difficult. Oranges have become more expensive, and higher prices for orange juice are needed.

“The more prices increase, the lower customer volume will be. With consumers already stretched thin, processors and processors of juice brands are struggling.”

Rick Dantzler, chief operating officer at the Citrus Research and Development Foundation, says the fallout of increasing costs and decreasing yields is “a perfect storm of misfortune that has hit growers.”

Consumer impact
For processors, it is becoming more expensive to produce orange juice because their processing plants are operating far below capacity, explains Sonneville.

The shortages have prompted some of them to pass excess costs on to consumers. 

However, mitigation factors exist for consumers, Sonneville points out: “Companies have inventory that was acquired when prices were lower, but currently inventory levels are low. There also might be contracts that were signed when spot prices were lower.”

Experts say consumer behavior has started showing changes. “The price of orange juice has increased when the ‘cost of living crisis’ has not yet passed. Consumers don’t want to pay more for juice but don’t want to compromise on quality. As a result, they will look outside the category or just spend less on orange juice,” he posits.

Orange juice bottlers have proposed turning to alternative fruits, like mandarin.Orange juice bottlers have proposed turning to alternative fruit, like mandarin.

This drop in demand is more noticeable for juice made from concentrate, which is cheaper than premium Not From Concentrate (NFC) juice. However, more than the shift is needed to compensate for the shortage, as orange juice is also a key ingredient in products like nectars, drinks with lower juice content, and confectionery and bakery items, reveals Cools.

Comparing mandarins and oranges
Orange juice bottlers worldwide have proposed mixing juices of other fruits, such as mandarins, in orange juice to help them survive without losing consumer acceptance. 

From a scientific perspective, it is a good idea. “We need to be open to it. Citrus breeders have been successful in breeding orange-like hybrids that look, smell, and taste like sweet oranges with significant tolerance to huanglongbing,” explains Dantzler.

According to Sonneville, the proposition makes sense for business. Consumers will look for lower-quality orange fruit drinks (e.g., nectars with a lower fruit content) or buy juices that mix orange with other fruit juices like grapefruit, mango, lemon or lime. This might work if those other flavor juices are available and cheaper. 

Mandarins, specifically, come with their share of logistical setbacks. 

Mandarins come with their share of logistical setbacks.

“Many fruits are destined for the fresh market, and it is not easy to divert this flow to the juice industry. Processing mandarins destined for the fresh market will lead to logistical problems as the Brazilian orange juice processing plants have been located at places convenient for oranges. The loss of scale and the increase in logistics will be major issues compared to Brazilian oranges in the past,” Sonneville points out.

Experts say that in the long-term, crop science will need to advance to make fruit and vegetable trees and plants more resilient and resistant to diseases and weather extremes. “This will also most likely require a change in legislation and regulation,” Cools concludes.

By Anvisha Manral