Why Trade Winds Citrus Limited is having a Citrus Fruits Shortage in Jamaica in 2017

It has now come to this; we're experiencing a shortage in Citrus fruits such as oranges, Ortanique, grapefruit, lime.

So much so that if you are a farmer of any of these produce, your prices should be trending upwards as declared in the article “Shortage Creates Price Surge For Fresh Citrus”, published Friday August 18, 2017 by Avia Collinder, The Jamaica Gleaner. 

Not only have prices tripled of the past 5 years, but there is now an influx of imported citrus products. This means that domestic citrus producers are actually competing with imports as wholesalers and retailers take advantage of cheaper imports.

So what is causing the shortage in citrus fruits in Jamaica?

Citrus Fruit Shortage in Jamaica - Disease impact as Higglers are at the Farmers’ gate

For one citrus tristeza virus and greening diseases. These diseases have cut national production by 50% since the year 2000.

According to Technical Director of the JCGA (Jamaica Citrus Growers Association) Dr Percy Miller, in 2000 Jamaica produced:

1.      4.7 million boxes of citrus

2.      2 million of that number were Valencia sweet oranges

3.      500,000 of that number were Grapefruit

4.      2.2 million of that number were limes, ortanbiques and other varieties

This shortage has created a spike in prices that is benefitting farmers but hurting the Citrus Industry as a whole. Higglers and fresh fruit resellers outcompete the Fruit Juice Processors such as Jamaica Beverages Limited and TWCL (Trade Winds Citrus Limited) as they can pay higher prices at the farmgate.

This translates to prices as high as JA$2,000 to JA$3,000 per box at the end of crop in June 2017. Five year ago, prices were at JA$810 to JA$1,000 per box.

Dr Percy Miller confirms as much, as farmers are literally taking the Fruit Juice Processors to the bank, quote: “Most of the fruit is going into fresh fruit sales. Higglers come to the farm gate and pay top price. Now that production has fallen to the extent it has, no way farmers will overlook the top dollar of the fresh fruit market and send to the factory”.

Farmers benefit from Higher Prices - Higglers outbidding manufacturers at the Farmgate

Let's do the math, shall we?

When the fruit is sold at the factory, farmers get JA$110 per pound. This translates to JA$500 and JA$700 per box at the factory gate, dependent on juice quality.

Higglers on the other hand are willing to pays as much as JA$2,000 to JA$3,000 a box, which on average contains 15 dozen oranges. They then resell at JA$200 per dozen, which works out to be JA$3000, a profit of JA$1000 if the farmer had settled at the lower price.

This leaves very little citrus fruits such as oranges for Jamaica Beverages Limited and TWCL to process into fruit juices as pointed out by Dr Percy Miller: “At under two million boxes, there is not enough processing fruit available to keep two factories going. So there is only one factory which processes the fresh fruit now and its Trade Winds, which has a captive supply”.

But rather than complain, the 2 main citrus fruits processors, Jamaica Beverages Limited and TWCL, have decided to innovate.

Trade Winds Citrus Limited and the Citrus Industry - The Citrus Industry requires innovation

TWCL (Trade Winds Citrus Limited) operates its own orchards in St Catherine and is the largest citrus producer in Jamaica with:

1.      4 Farms

2.      2,700 acres of citrus groves

3.      350 boxes per acre yield from mature groves averages

Good to note here a Box consists of 15 dozen fruit which can be:

1.      Valencia and Parson Brown oranges

2.      Pineapples

3.      Ortaniques

4.      Limes

TWCL is a manufacturing power house as well and they have the following facilities:

1.      Fresh fruit packing house

2.      Concentrate plant

3.      Puree plant

4.      Juice blending

5.      Bottling plant

6.      Refrigerated distribution system

The fresh fruit packing house prepares fresh citrus for the local and export markets, which they've begun selling domestically and on the international. To this end, they've begun replanting almost 2000 acres of their orchards, to quote Managing Director of TWCL, Peter McConnell: “We have started replanting citrus for the first time in six years by putting in a 15-acre block of irrigated citrus this year. Once we have seen these trees start to produce - in the next three years - and we are satisfied with the productivity, we will embark on a massive planting programme to replant more than 2,000 acres”.

TWCL has invested heavily in increasing the output of their orchards as pointed out by Peter McConnell, quote: “Crisis creates opportunity. The Citrus Industry is in crisis. Supplies are low but prices are high, so there is opportunity. TWCL is investing in sustaining our existing groves and planting new ones”.

TWCL has been seeing a 50% decline in the supply of fresh fruit for juice processing over the last four (4) years.

TWCL is also tapping into vegetable juice markets to be sold under their Tru-Juice and Wakefield as noted in my blog article entitled “Why Wisynco Group and Trade Winds Citrus to increase Sales and Launch new Products”.  

As for Jamaica Beverages Limited, there is a rather depressing and cautionary tale of what can happen when the Citrus Industry has problems supplying Fruit for processing into Juice. Jamaica Beverages Limited is restructuring under bankruptcy protection as noted in the article “Jamaica Beverages Trustee To Propose Rehab Plan”, published Wednesday August 9, 2017 by Avia Collinder, The Jamaica Gleaner.

They had ceased processing local fruit in 2016 as they only able to get a fraction of the citrus fruits needed to satisfy their needs. They have also been affected by the theft of some JA$36 million worth of fruit concentrate as noted in the article “$36M Factory Heist - Juice On The Run As Huge Quantities Of Fruit Concentrate ‘Walk’ Out Of A Company’s Warehouse”, published Sunday September 11, 2016, by Ryon Jones, The Jamaica Gleaner.  

Importation and the Citrus Industry - Edged Sword for Local Fruit Juice Processors

Importation is now creating competition, as the lower cost for imported processed citrus juice and dried concentrate means their competitors can process fruit juice for resale. Other distributors, including wholesalers and retailers can opt to just sell pre-packaged juices in Jamaica.

The high prices on the international markets also benefit the large local Fruit Juice processors, as they can now make money from the export of their fruit juice while supplying the local market.

Their only problem is securing supplies for the manufacture of their own fruit juice brands, as is the case with Tru-Juice and Wakefield as pointed out by Peter McConnell, quote: “We are still able to supply the local fresh fruit market without a problem, but the amount needed for our juices - we don't have enough - so we are using a blend of our oranges and imported concentrate. We are exporting fresh fruit to the Caribbean because the prices are very good; but any of the more competitive markets, we are not bothering with that. We are concentrating on the markets where we get the best returns”.

Some world trade data from the United Nations stats reveal the problem more clearly:

1.      US$1.8 million in imported citrus in 2016 for Jamaica

2.      US$1.40 per pound for FCOJ (Frozen concentrated Orange Juice) futures on the international market.

So importation to supply juice manufacturing demand is expensive for all manufactures even as it presents an opportunity for them to trade on this very same market, to quote Peter McConnell: “We are dependent on imports from Belize to supplement shortfall in local production. Based on the high cost of FCOJ on the world market, our margins are negatively affected, but all juice manufacturers are in the same situation. Seven years ago, we had excess and were seeking market for our concentrate. Now it's completely reversed”.

Still, it also creates an opportunity for Agricultural scientists to develope techniques to make citrus fruits that have a shorter growing cycle and can be grown in a greenhouse. Other fruit juice markets aside citrus fruits also lie waiting to be exploited.