• TABLE OF CONTENTS
HIDE
 Copyright
 Title Page
 Abstract
 Table of Contents
 List of Figures
 List of Tables
 Trends in grapefruit productio...
 Grapefruit juice demand
 Grapefruit supply
 Supply-demand situations
 Implications
 Literature cited






Group Title: Economic information report - Food & Resource Economics Department - 221
Title: Long-term outlook for Florida grapefruit
CITATION PAGE IMAGE ZOOMABLE PAGE TEXT
Full Citation
STANDARD VIEW MARC VIEW
Permanent Link: http://ufdc.ufl.edu/UF00027328/00001
 Material Information
Title: Long-term outlook for Florida grapefruit
Series Title: Economic information report
Physical Description: iii leaves, 17 p. : ill. ; 28 cm.
Language: English
Creator: Fairchild, Gary F
Gunter, Dan L
Publisher: Food and Resource Economics Dept., University of Florida
Place of Publication: Gainesville Fla
Publication Date: 1986
 Subjects
Subject: Grapefruit juice industry -- Forecasting -- Florida   ( lcsh )
Grapefruit juice -- Prices -- Florida   ( lcsh )
Grapefruit -- Forecasting -- Florida   ( lcsh )
Genre: government publication (state, provincial, terriorial, dependent)   ( marcgt )
bibliography   ( marcgt )
non-fiction   ( marcgt )
 Notes
Bibliography: Bibliography: p. 17.
Statement of Responsibility: Gary F. Fairchild, Dan L. Gunter.
General Note: Cover title.
General Note: "June 1986."
Funding: Economic information report (Gainesville, Fla.) ;
 Record Information
Bibliographic ID: UF00027328
Volume ID: VID00001
Source Institution: Marston Science Library, George A. Smathers Libraries, University of Florida
Holding Location: Florida Agricultural Experiment Station, Florida Cooperative Extension Service, Florida Department of Agriculture and Consumer Services, and the Engineering and Industrial Experiment Station; Institute for Food and Agricultural Services (IFAS), University of Florida
Rights Management: All rights reserved, Board of Trustees of the University of Florida
Resource Identifier: aleph - 001546377
oclc - 21116365
notis - AHF9907

Table of Contents
    Copyright
        Copyright
    Title Page
        Title Page
    Abstract
        Page i
    Table of Contents
        Page ii
    List of Figures
        Page iii
    List of Tables
        Page iii
    Trends in grapefruit production
        Page 1
        Page 2
        Page 3
    Grapefruit juice demand
        Page 4
        Page 5
        Page 6
    Grapefruit supply
        Page 7
        Page 8
        Page 9
        Page 10
        Page 11
        Page 12
        Page 13
    Supply-demand situations
        Page 14
    Implications
        Page 15
        Page 16
    Literature cited
        Page 17
Full Text





HISTORIC NOTE


The publications in this collection do
not reflect current scientific knowledge
or recommendations. These texts
represent the historic publishing
record of the Institute for Food and
Agricultural Sciences and should be
used only to trace the historic work of
the Institute and its staff. Current IFAS
research may be found on the
Electronic Data Information Source
(EDIS)

site maintained by the Florida
Cooperative Extension Service.






Copyright 2005, Board of Trustees, University
of Florida





Gary F.


Fairchild


Dan L. Gunter


Economic Information
Report 221


Long-Term Outlook for
Florida Grapefruit


5.."


Food and Resource Economics Department
Cooperative Extension Service
Institute of Food and Agricultural Sciences
University of Florida, Gainesville 32611


June 1986












Abstract


Based on the 1984 Commercial Citrus Tree Census and long-range

demand forecasts, grapefruit supply/demand projections suggest that a

potential imbalance may exist by the early 1990's. Significant shifts

in production by variety and marketing district are also anticipated.

Pink seedless grapefruit is expected to account for a major portion of

production increases. The Indian River marketing district is expected

to dominate grapefruit production.



KEYWORDS: Florida grapefruit, long-term outlook, supply/demand
forecasts.







ii



Table of Contents


Page

List of Figures . . . . ... . iii

List of Tables . . . . .. .. .. .iii

Trends in Grapefruit Production . . . . 1

Grapefruit Juice Demand . . . . ... ... 4

Grapefruit Supply . . . . ... . 7

Supply Demand Situation . . . .... 14

Implications . . . . ... .. .. 15

Literature Cited . . . . ... ..... 17











List of Figures

Figure Page

1. Fresh Grapefruit Shipments . . . . 3

2. Nielsen Grapefruit Juice Sales . . . 5

3. Nielsen Prices Orange and Grapefruit Juice . . 6

4. Florida Grapefruit Tree Inventory by Marketing District 8









List of Tables

Table Page


1. Florida Grapefruit Production Trend given various future tree
planting consumption, 1986-87 through 1990-91 . .. 10

2. Florida Grapefruit Production Estimates by Marketing District,
1986-87 through 1990-91 ... .. ... . ... 12

3. Florida Grapefruit Production estimates by variety, 1986-87
through 1990-91 . . . .. . 13











List of Figures

Figure Page

1. Fresh Grapefruit Shipments . . . . 3

2. Nielsen Grapefruit Juice Sales . . . 5

3. Nielsen Prices Orange and Grapefruit Juice . . 6

4. Florida Grapefruit Tree Inventory by Marketing District 8









List of Tables

Table Page


1. Florida Grapefruit Production Trend given various future tree
planting consumption, 1986-87 through 1990-91 . .. 10

2. Florida Grapefruit Production Estimates by Marketing District,
1986-87 through 1990-91 ... .. ... . ... 12

3. Florida Grapefruit Production estimates by variety, 1986-87
through 1990-91 . . . .. . 13











Long-Term Outlook For Florida Grapefruit

Gary F. Fairchild and Dan L. Gunter


The Florida grapefruit industry will confront many production and

marketing challenges during the next decade. Critical to many current

decisions are expectations of future market and economic conditions.

This paper examines market trends, provides projected demand and supply

trends for grapefruit and grapefruit products, and discusses

implications for the Florida citrus industry. The paper focuses on the

long-term demand for grapefruit products and expanding grapefruit

production.

Florida dominates grapefruit production, usually accounting for 75%

of annual U.S. production. Texas, prior to 1983-84, usually produced

about 14% of the U.S. supply with California-Arizona producing 11%.

Florida's grapefruit production has averaged 44.5 million 85-pound boxes

per year during the past five seasons with total U.S. production

averaging 61.6 million boxes each season. Florida is the major domestic

supplier of both fresh and processed grapefruit. During the last five

seasons, Florida's fresh utilization represented approximately

two-thirds of total U.S. fresh supplies and over four-fifths of

processed grapefruit supplies.

Trends in Grapefruit Demand


There have been dramatic shifts in the demand for fresh and

processed citrus since 1940 which have resulted from the introduction of


Gary F. Fairchild and Dan L. Gunter, are Extension Fruit Marketing
Economists, Food and Resource Economics Department, IFAS, University of
Florida and Economic Research Director, Florida Department of Citrus,
respectively.












new products in the marketplace. Fresh consumption has fallen while

processed consumption has increased. Today, citrus juice dominates the

U.S. juice market. However, in recent years grapefruit juice sales have

weakened. Grapefruit juice represented 10.5% of 1978 juice sales,

compared to only 5.3% in 1984.

The general shift from fresh to processed consumption has

implications for Florida grapefruit. Approximately 35-40% of Florida's

grapefruit is utilized in fresh form, with the remaining 60-65% being

processed. Per capital consumption of many of the traditional fresh

fruits has remained fairly stable in the past 20 years as competition in

the produce section of the grocery store has increased. Per capital

consumption of fresh grapefruit moderated somewhat during this period.

Domestic fresh grapefruit shipments from Florida have been generally

declining since the 1975-76 season and fresh grapefruit exports have not

increased since the 1978-79 season (Figure 1). Today, there is a wide

variety of fruits, many of which are imported, available on a year-round

basis to the U.S. consumer. It is not realistic to expect increases in

per capital consumption of fresh grapefruit. In fact, there could be a

slight decline in per capital consumption given the competitive situation

in the produce section. The trends in consumer demand have important

implications for the viability of Florida's grapefruit industry.

The demand for citrus, like most products, is a function of the

price of the product, population, consumer income, the prices of

substitutes, and tastes and preferences of consumers. However, these

factors impact differently on various citrus products. While the

forecast values of most of these factors should have a positive impact

on demand for grapefruit juice, the magnitude of the impacts combine to

produce a relatively weak long-term demand outlook for grapefruit juice,

























FRESH


Figure 1.

GRAPEFRUIT SHIPMENTS


14.4


t DOME,"!.TIC





E EXPORTS
.... ......................................



2.8


1.4
I t


72-73 74-75 76-77 78-79 80-81


82-83 84-85


SEASON


16T

14-

127


10











particularly canned single strength grapefruit juice (CSSGJ). In the

short-run, however, expected strength in export demand for fresh

grapefruit will likely keep upward pressure on fresh fruit prices and

result in an extremely tight juice supply situation. Given low

inventory levels, the balancing of supply and demand will put upward

pressure on FOB and retail prices. However, continuation of favorable

grapefruit prices in future seasons will be dependent, in part, on how

quickly Florida's production increases to the higher levels realized in

the past and how fast the Texas industry recovers.

Grapefruit Juice Demand


Retail grapefruit juice sales for the United States increased

during the period from 1973-74 through 1977-78 and remained relatively

high in 1978-79 (Figure 2). Retail sales declined significantly in

1979-80 as the retail price increased. The increase in nominal or

current prices was in excess of price increases on other food items.

Real prices remained high in 1980-81, and sales continued to decline.

Real prices began to decline in 1981-82, and sales basically stabilized.

Sales of CSSGJ declined as a result of loss of purchasing consumers

as well as reduction in the quantity purchased by each individual buyer.

The market for frozen concentrated grapefruit juice (FCGJ) and chilled

grapefruit juice (CGJ) remained relatively strong.

Retail orange and grapefruit juice prices have increased

significantly since the December 1983 freeze (Figure 3). The January

1985 freeze led to even higher retail prices. Retail grapefruit juice

prices are currently at record high levels.




























Figure 2.
NIELSEN GRAPEFRUIT JUICE SALES


MILLION GALLONS


o i V 1'" y" o ^ "g


SEASON
Source: A.C. Nielsen
NIGRJi06


r CGJ
9C.7
S ,CSSGJ




























ORANGE


Figure 3.
NIELSEN PRICES
AND GRAPEFRUIT


JUICE


3.86

"-- 3.80


ORANGE


4 GRAPEFRUIT


"3.05


DJ JJ DJ JJ
'82' '83'
BIMONTHLY


DJ JJ
'84'


DJ JJ
'85'


4.00

3.75


3.50

3.25

3.00


2.75


2.50


2.25


DJ JJ
'80'


DJ JJ
'81'


___......._______ __ ._._.....____












Orange juice prices have exceeded grapefruit juice prices since

1983-84, reversing the price relationship observed in previous years

when orange juice was priced below grapefruit juice. The lower relative

grapefruit juice price in 1985 has contributed to the strengthening of

the grapefruit juice market. However, anticipated lower orange juice

prices resulting from increased supplies in conjunction with the

relatively tight supply/demand situation for grapefruit juice are

expected to erode the current strength observed in the grapefruit juice

market. Thus, in spite of the current strength, anticipated demand

conditions suggest that the grapefruit market may return to the

relatively weak situation observed in recent years and remain in this

situation until the consumer base is expanded.

Grapefruit Supply


Of equal importance to decisions in the industry are projections of

production. Estimated future production trends are based on the

commercial tree inventory by age and historical yields as well as

assumed future tree planting and loss rates.

The 1985 update of the 1984 commercial inventory by the USDA shows

the first decline in the number of grapefruit trees since the commercial

inventory program was initiated (Figure 4). Florida's grapefruit tree

inventory declined from 10.8 million trees in 1982 to 9.6 million trees

as of June 1984, an 11.1% decline. The increase in the tree inventory

from 1974 to 1982 resulted from increased plantings in the Indian River.

The commercial inventory remained relatively stable in the Interior

between 1974 and 1982 at 4.8 to 5.0 million trees. The inventory

declined significantly in the Interior between 1982 and 1984. Losses in





























FLORIDA


9.6 /


9


3+


Figure 4.

GRAPEFRUIT TREE INVENTORY
By Marketing District



TOTAL
9.9 .......... INTERIOR
--.. INDIAN RIVER


4---- 6.4
4.9 7 --- -
-- ..............................................
4.7
3.6


YEAR


I 1 1976 19 I 1
1974 1976 1978 1980 1982 1984












the Interior were partially offset by increased Indian River plantings

which have continuously increased since 1974.

Seedy grapefruit trees compose 9% of Florida's commercial inventory

with white seedless trees representing 47.4% and pink seedless trees

accounting for 43.6% of the commercial inventory. As of 1984, just over

26% of Florida's total grapefruit trees and nearly 47% of the pink

seedless trees were less than ten years of age. Nearly one-third (31%)

of the grapefruit trees planted in the Indian River were less than ten

years of age as of 1984. Indian River plantings account for 62% of the

white seedless trees, 78% of the pink seedless, and 8% of the seedy

grapefruit trees in the State. Overall, 64% of the total grapefruit

tree inventory is planted in the Indian River with 36% planted in the

Interior.

Grapefruit yields observed during the ten seasons from 1973-74

through 1982-83 by variety and production/marketing district were

incorporated into the production estimates. The production estimates

include the assumption that tree losses observed between 1974 and 1982

will be observed over the next decade. In order to test the sensitivity

of the production estimates to planting rates, production estimates were

based on the average planting rates observed during the 1979-1983 period

as well as variations from this rate.

Based on the average planting rate assumption, the long-run

grapefruit production trend is expected to increase from an estimated 47

million 1 3/5-bushel (85 pound) boxes in 1986-87 to about 54 million

boxes by 1990-91 (Table 1). Thus, production is expected to return












Table 1. Florida grapefruit production trend given vairous future tree

planting assumptions, 1986-87 through 1990-91.

Future Tree Planting Assumptions

Season Halfa Averageb Doublec

-------------- million boxes --------------

1986-87 47 47 47

1987-88 47 47 47

1988-89 50 50 50

1989-90 52 52 55

1990-91 52 54 58

a One-half 5-year average annual planting rate (1979-1983).

b Five-year average annual planting rate (1979-1983).

c Double 5-year average annual planting rate (1979-1983).










to the record level observed in 1979-80 by the early 1990's. Divergence

among the production estimates based on various planting assumptions

becomes apparent by the 1989-90 season. The impact of planting rates on

future production becomes more dramatic beyond 1990. Depending on the

tree planting rates in the next few years, Florida grapefruit production

could easily reach the 60-70 million box level by the mid 1990's.

However, due to the uncertainty of nursery stock availability as well as

current planting and replanting intentions, production estimates beyond

a five-year horizon are subject to considerable variation.

Based on the average planting rate, grapefruit production in the

Indian River is projected to increase steadily over the next five years

from 25 to 32 million boxes. Production in the Interior is expected to

remain constant at about 22 million boxes (Table 2), based on the

average planting rate. By 1990-91, Indian River production is expected

to be 50 percent greater than that of the Interior.

Pink seedless grapefruit will become a more important part of the

grapefruit crop. Production of pink seedless fruit is projected to

increase from 16 million boxes in 1986-87 to 22 million boxes by 1990-91

(Table 3). White seedless production is anticipated to increase

moderately from 26 million boxes in 1986-87 to 28 million boxes by

1990-91. Projected 1990-91 production of white seedless grapefruit is

expected to be four million boxes less than the record 1979-80

production. Within the next five years pink seedless production is

estimated to be 40 percent larger than the record 15.8 million boxes

produced in 1979-80. These projections assume that the average planting

rates observed in 1979-83 will continue.

The production estimates reveal several significant trends in












Table 2. Florida grapefruit production estimates by marketing district,

1986-87 through 1990-91


Season Interior Indian River Total

-------------- million boxes -------------

1986-87 22 25 47

1987-88 21 26 47

1988-89 22 28 50

1989-90 22 30 52

1990-91 22 32 54

Estimates based on average annual planting rates from 1979-1983.








13



Table 3. Florida grapefruit production estimates by variety, 1986-87

through 1990-91


Season Seedy White Seedless Pink Seedless Total

----------------- million boxes -----------------

1986-87 5 26 16 47

1987-88 4 27 16 47

1988-89 5 27 18 50

1989-90 4 28 20 52

1990-91 4 28 22 54












grapefruit production over the next five years. First, total Florida

grapefruit production is expected to increase by 10 million boxes

from the USDA October estimate of 44 million boxes for the 1985-86

season. Thus, the industry will see record crops by the early 1990's.

Second, the Indian River will account for 60% of anticipated grapefruit

production within five years. Third, pink seedless grapefruit

production will increase at a much faster rate than white seedless

in the future. Pink seedless represents 36% of the USDA estimated

1985-86 grapefruit crop. By 1990-91, pink seedless is projected to

account for 41% of grapefruit production.


Supply-Demand Situation


Comparing the production estimates with the long-run demand

estimates suggests that production increases will likely exceed demand

growth. Assuming that grapefruit juice prices moderate back to 1982-83

levels in real terms, and remain level, the domestic grapefruit juice

market is expected to expand at an annualized rate of .9% during the

next decade. Florida grapefruit production is expected to increase from

the current season level of 44 million boxes to 54 million boxes by

1990-91, an increase of 10 million boxes. The extent to which an

imbalance develops will be dependent upon changes in domestic and

foreign fresh fruit demand and export demand for grapefruit juice as

well as the extent of the overall U.S. supply change. Retail demand

models for fresh grapefruit were not estimated due to inadequate

retail-level data. However, increased supplies projected for Florida

and the potential return of Texas to the market suggest increased

competitive pressure in the fresh grapefruit market during the years











ahead.

The Texas grapefruit industry was severely frozen in 1983, and as a

consequence, the industry is still basically out of the market.

However, the Texas industry is expected to recover. Acreage devoted to

grapefruit production may not return to the pre-freeze level.

Indications are that the marginal production areas will not be

rehabilitated. Expectations are that some of the areas will be shifted

into orange production. While specific forecasts for Texas are not

available, many believe that Texas grapefruit production may not attain

levels observed prior to the freeze.

Given the static nature of fresh grapefruit markets in recent

years, it is probable that larger crops in Florida and Texas will result

in downward price pressure. The expectation for a weak domestic

grapefruit juice market over the next decade emphasizes the need for

continued development efforts of both domestic and export markets.


Implications

The grapefruit supply/demand projections suggest that a potential

imbalance will exist by the early 1990's, with Florida having

record-level crops to market. Significant shifts in production by

variety and marketing district are also anticipated. Pink seedless

production is expected to account for a major portion of the production

increase.

Given U.S. consumer preference for pink grapefruit, an increased

volume of pink grapefruit is expected to enter fresh market channels and

reduce the white seedless market share. This shift would mean an

increase in the volume of white grapefruit available for processing











unless the export market for white grapefruit is expanded.

The expected larger volume of pink grapefruit in Florida in

combination with a recovery of the grapefruit industry in Texas could

reduce returns on grapefruit substantially from current levels. The

expected production trend suggests the need for increased emphasis on

fresh market development and expansion with continued efforts to insure

acceptability of Florida fruit in the export market.

In addition to increased competitive pressure in the fresh fruit

market, increased production is likely to impact even more dramatically

on the processed product prices and returns. The demand estimates

suggest only modest growth in the U.S. market for grapefruit juice over

the next decade. Sales are not expected to return to the historic high

levels observed during 1977-78 and 1978-79 even if prices moderate to

1982-83 levels in real terms. The expected increase in grapefruit juice

sales in the U.S. market is not forecast to absorb the potential supply

increases. Liberalization of the grapefruit juice quota in Japan

could allow expansion of the market in the years ahead. Markets are,

however, not developed overnight. The expected larger crops in the

future suggests a need for increased attention to development and

expansion of additional markets as well as attention to expansion of the

domestic market.

Demand expansion is only part of the equation. Informed planting

decisions will perhaps keep supply in line with expected increases in

the market. The modest increases expected in grapefruit juice demand

and the fresh grapefruit market situation suggest a need for only modest

supply increases if prices are to be maintained. If growers continue

recent planting trends, production will probably increase faster than

demand unless markets, particularly export markets, can be expanded.













Literature Cited


1. Florida Crop and Livestock Reporting Service. 1985. Citrus,

October Forecast (and previous reports), Orlando, Florida.

2. Florida Crop and Livestock Reporting Service. 1985. Citrus Tree

Census, Orlando, Florida.

3. Florida Crop and Livestock Reporting Service. 1984. Commercial

Citrus Inventory 1984 (and previous reports), Orlando, Florida.

4. Florida Crop and Livestock Reporting Service. 1984. Florida

Agricultural Statistics, Citrus Summary, 1984, Orlando, Florida.

5. Florida Department of Citrus. 1985. A. C. Nielsen Food Index

Annual Summary 1984. Market Research Report. Lakeland, Florida.

6. Gunter, Dan L. and Mark G. Brown. 1985. Florida Citrus Outlook

1985-86 season, Working Paper 85-12, Economic Research Department,

Florida Department of Citrus, Gainesville, Florida.

7. Gunter, Dan L., Mark G. Brown, and Gary F. Fairchild. 1985.

Long-run Supply/Demand Forecasts for Florida citrus 1985 through

1995, CIR 85-1. Economic Research Department, Florida Department

of Citrus, Gainesville, Florida.




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