Value of citrus and noncitrus production falls 3 percent from last year's record - 1990 late-December California temperature freeze causes sharp decline in citrus production that offsets higher value of non-citrus crop - U.S. Dept. of Agriculture, Economic Research Service report

Situation and Outlook Report: Fruit and Tree Nuts, August, 1991

The California freeze in late-December 1990 caused a sharp decline in the value of citrus production which more-than-offset the higher value of the noncitrus crop.

Deviating sharply from a general upward trend, the value of all citrus production (valued at the equivalent packing-house or processing-plant door) dropped 17 percent, from $2.67 billion in 1988/89 to $2.21 billion in 1989/90 (figure 1). The decline in the value of the Florida citrus crop more-than-offset the increase in California's citrus crop which rose from $743 million to $910 million. The December 1989 freeze greatly reduced the number of boxes of oranges harvested in Florida in 1989/90 and lowered the yield of juice per box, which further reduced the price received by growers. Florida orange production recovered significantly in 1990/91 as the 1989 freeze did relatively little permanent damage to the trees. The December 1990 freeze that devastated the California orange crop caused fresh orange prices to rise sharply in 1991. Florida more than doubled the quantity of oranges shipped to the fresh market, up from 5.2 million boxes in 1989/90 to 11.1 million in 1990/91. However, the large recovery resulted in an increase of only 2.7 percentage points in the use of oranges for the fresh market, from 4.7 percent in 1989/90 to 7.4 percent in 1990/91. In contrast to citrus, the total value of noncitrus crops (valued at the packing-house or processing-plant door) rose from $5.3 billion in 1989 to a record $5.5 billion in 1990, continuing a long-term upward trend. Higher prices more-than-offset smaller crops for apples, pears, and peaches, resulting in a dramatic increase in the value of noncitrus production. The value of the U.S. apple crop alone rose from about $1 billion in 1989 to over $1.4 billion in 1990.

Trend in Real Prices Received by Growers Is Flat

Indexes of prices received by fruit growers are calculated from the prices of seven fruits: apples, grapefruit, lemons, oranges, peaches, pears, and strawberries. The index is often used to indicate general price movements for the entire fruit industry. Weights for the seven fruits cannot be directly compared because the pricing unit varies: pounds for apples, peaches, and strawberries; boxes for grapefruit, lemons, and oranges; and tons for pears. The all-fruit index trended up during the last two decades but has shown considerable variation (figure 2). Much of the year-to-year variation is associated with freezes in Florida. Deflating the all-fruit index by the Consumer Price Index for all food shows that the trend in real all-fruit prices has been essentially flat since 1970.

Nonbearing Trees Point To Larger Florida Orange Crop

The 1990 inventory of commercial citrus trees in Florida indicated that about one-fourth of the 732,767 total acres had nonbearing trees. Most of the nonbearing-tree acreage planted in 1987, 1988, and 1989 was in Florida's southern and east coast growing areas, but some included replacement trees in existing groves. The 1980's were laced with killing freezes in Florida. Major freezes occurred in January 1981, 1982, 1985, and 1986. December freezes occurred in 1983, 1985, and 1989. The January 1981 and December 1983 freezes were particularly hard. From 1980 to 1986, bearing citrus acreage dropped about 229,000 acres from 597,432 in 1980 to a decade low of 367,581 in 1986 (table 1a). From 1986 to 1990, bearing orange tree acreage increased 5 percent, or 19,342 acres. New plantings to replace freeze-damaged trees and to establish new groves nearly doubled nonbearing acreage between 1980 (about 50,600 acres) and 1986 (about 99,000 acres). However, since 1986, nonbearing orange acreage has increased sharply to 156,574 acres in 1988 and 165,304 acres in 1990. The 1988 to 1990 increase in nonbearing orange acreage is even more dramatic because 1990's nonbearing acreage only included trees 1 to 3 years of age, while in 1988 and prior years the nonbearing acreage included trees 1 to 4 years of age. This dramatic rise in nonbearing acreage points to sharp increases in Florida orange production in the 1990's. The Florida Department of Citrus projects round orange and temple production to increase from 174 million boxes in the 1991/92 season to 276 million boxes by the turn of the century. The December 1990 freeze in California severely damaged or killed many trees and several years will be required for production to return to prefreeze levels. Industry estimates indicate that the 1991/92 California orange crop will be about 75 percent of prefreeze production.

New Citrus Crop Insurance Offered in California

The Secretary of Agriculture announced on July 10, 1991, that a special, 3-year citrus crop insurance policy would be available for California citrus growers who are not enrolled in the Federal Crop Insurance Program. The insurance, available for purchase between July 15 and August 15, 1991, covers the 1992, 1993, and 1994 crop years. For the 1992 crop, coverage is limited to 50 percent of losses caused by frost, freeze, excess moisture, and hail. For the 1993 and 1994 crops, growers had the option of insuring 50, 65, or 70 percent of losses from full multiple perils (crop loss due to any natural cause). The first-year guarantees under the policy will be determined by grove inspections. The second- and third-year yield guarantees will be based on production history and appraisals of crop potential. The total premium for all covered crop years was due within 45 days after the grower accepted the insurance offer. When the December 1990 freeze occurred, only 3 percent of the 249,000 eligible citrus acres in California was insured for crop loss.