The global orange juice crisis is caused by disease and bad weather

Just as the world is coming out of the tea crisis, another breakfast staple, orange juice, is in the spotlight. Supply constraints have led to prices shooting up by more than 20% in a year.

The primary cause of this orange juice shortage is the significant hit to the orange harvest in Brazil, which accounts for nearly 70% of the global supply of orange juice. This year’s harvest is expected to be down by 24% compared with last year – and this is the third harvest in a row that has been difficult.

Orange trees in Brazil, as well as in the US, have been affected by citrus greening disease. This incurable disease is caused by sap-sucking insects that turn the fruit bitter before killing the tree.

Trees in Florida have been hit by a series of hurricanes as well as the greening disease – with both being attributed to climate change. In terms of disease, trees are thought to be most vulnerable in regions where temperatures stay around 25°C for most of the year.

Short-term ‘solutions’ present major challenges

Producers have considered mixing the new crop with frozen juice, which has a lifespan of about two years. And the International Fruit and Vegetable Juice Association has been lobbying for UN food regulations to be relaxed to allow the addition of other citrus fruits, such as mandarins, to orange juice.

But these “solutions” would present major challenges for the industry in the longer term. Mixing juices requires additional processing, and the logistics and transportation of mandarins and other fruit to processing facilities would add costs, ultimately increasing the price of the juice.

At the same time, consumers might expect lower prices for blended juices. So this mismatch in the expected and actual price could stifle demand – in turn, restricting investment in new orange trees.

Labour costs in places such as Florida are already high, and the lack of further investment would make manual work unaffordable. Taken together, these factors could even prompt the market failure of one of the world’s staple drinks.

How to keep orange juice on the table

Addressing this problem requires some long-term strategic thinking. The supply chain for orange juice includes sourcing and harvesting, cleaning and sorting, juicing, pasteurisation, packaging and sometimes additional processing.

Multiple businesses are involved: growers, food handlers, fruit processors, blending houses, juice packers and soft drink producers. All operate differently. For example, in Florida, orange growers are diversifying into agribusiness companies, while in Brazil, large processors still source part of their harvest from their own land.

Tags: prices, orange juice