If you have noticed the price of orange juice is higher than you remember, there is a good reason. And supermarkets are not to blame.
A soaring global orange juice price has bumped up local juice prices amid other rising manufacturing costs, such as power and labour costs.
And that makes it bad news for juice companies that rely on imported juice concentrate as an essential ingredient.
But for local farmers, the outlook has improved.
Citrus farmer Tim Vandenberg farms at Gol Gol near the Victorian-New South Wales border in the Sunraysia region.
After two disastrous years, during which fruit became worthless due to floods and bad weather, the quality of his crop this year is much better.
And the sky-high global juice price is also helping profitability.
Mr Vandenberg said despite better production this season costs have increased in the past few years brought about by COVID-19, the Ukraine war, and increased wages for staff.
“The prices, in general, have improved, but in saying that too, you know, as an industry, they had to improve for everyone’s sake,” he said as they finished off this season’s harvest of oranges, limes, mandarines, and lemons.
“We’re into the Valencia [orange] varieties now. They’re almost done.
“It’s probably a little bit earlier than usual, but everything seems to be going quite well.”
Farm operations manager Steve Do and citrus farm owner Tim Vandenberg check this year’s harvest. (ABC Mildura-Swan Hill: Tamara Clark)
Citrus disease cripples global crop
Better local prices have been driven in part by other major production regions.
Global indicator orange juice concentrate futures reached an all-time high last month soaring more than 63 per cent since the start of the year.
Orange production in Florida, in the US, has been hit by an outbreak of the bacterial infection citrus greening disease.
Brazil, which produces about one-third of the world’s oranges, is also being affected by the disease, and drought conditions have seen production drop.
The South American nation also accounts for 75 per cent of global orange juice concentrate exports, and the United States Department of Agriculture says the lower Brazilian crop has halved global concentrate stocks.
Australian farmers have enjoyed better growing conditions than producers in Brazil and Florida. (ABC Mildura-Swan Hill: Tamara Clark)
These global developments are bad news for juice companies that rely on imported juice concentrate as an essential ingredient.
The joint managing director of South Australian-based juice company Nippy’s, Jeff Knispel, said the higher concentrate price affected companies like his.
Jeff Knispel (left) with his son Ben Knispel, joint managing directors of the Nippy’s Group. (Supplied: Nippy’s Group)
Mr Knispel said many Australian juice companies used imported, frozen juice concentrate because it was generally cheaper.
“Even in our case, at heart we are a fresh juice company, [but] there are times and for seasonal reasons where some concentrate has to be used,” the second-generation juice maker said.
He said that when the cost of imported concentrate soared, local juice companies would try to buy juice locally.
“So suddenly everybody within Australia is after oranges rather than expensive concentrate,” Mr Knispel said.
He said that while it would not mean a huge spike in juice prices in shops, it was just another challenge companies like his must deal with along with all the other rising production costs.
This explains why the price of a 2-litre bottle of Nippy’s orange juice has jumped about 20 per cent in the past 18 months from about $6.50 to $8.
“We’ve got to cover the rising costs … we’ve got to be competitive buying fruit from the growers, and we’ve got to pass that on,” he said.
Mr Knispel said demand was strong despite the rising cost of juice.
“We haven’t seen a downturn due to higher pricing at this point, [but] fruit juice sales have plateaued a little bit for about a decade, while the population is growing,” he said.
He blamed the stalled sales growth on “negative publicity related to sugar content.”
Farmers celebrate better crops, better returns
A better global and local juice price is good news for farmers like Mr Vandenberg and Darren Minter, who farms nearby at Mildura.
The higher price is helping Mr Vandenberg’s business recover after several poor years. (ABC Mildura-Swan Hill: Tamara Clark)
Last season, Mr Minter received about $20 a tonne for grade-4 oranges, but it cost him about $100 a tonne to pick them, so he made a big loss on this low-quality produce.
“The prices this year have moved up to about $300 a tonne, so we are going to be making some money on our by-products for a change,” he said.
He said after two “very disastrous years” brought on by La Niña weather patterns, the big difference this year was better growing season weather, meaning more than half his crop met premium quality standards.
According to Hort Innovation, much of the top-quality fruit, or about one-third of the citrus crop, is exported. One-third is sold locally, and the rest is for the juice market.
“I’ve lost money for the past two years in a row,” Mr Minter said.
“The past few years, the prices have never really dropped, but the quality of our fruit has.
“So this year, we’re hoping it all comes together and the final payouts are rather nice.”
Farm operations manager Steve Do has been working hard to harvest the crop. (ABC Mildura-Swan Hill: Tamara Clark)
As he wrapped up the harvest, Mr Vandenberg was optimistic that the global juice price would remain high for several years as Brazil and the US took time to recover, but he said fresh fruit prices needed to remain at current levels.
“The pricing and the current structure needs to be at least where it’s at or more for people to remain or further grow their businesses in the citrus industry,” he said.
Source : ABC News (AU)