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Costa Rica Could Benefit From High Price of Florida Orange Concentrate

The international price of orange juice increased by 24% between the beginning of July of this year and October 3, going from US$1.25 to US$1.55 per pound as a result of the strong impact of the passage of Hurricane Irma on plantations in Florida.

Roberto Aragon, executive director of Tico Frut, the main orange concentrate exporter in Costa Rica, said that any upward adjustment in the market would benefit companies and producers in Costa Rica, but that it would be difficult to establish that positive impact.

Costa Rica will harvest about 9 million boxes of 40.18 kilos each of orange, in the next harvest, starting December. (Mayela López)

He said that there could still be a greater rebound of the quotations, as a result of this unexpected decrease in supply. However, estimates are that a good Brazilian crop, the largest producer in the world, can alleviate the increase in prices.

Costa Rica has 24,000 hectares planted with orange, according to the latest agricultural statistical report of the Executive Secretariat of Agricultural Sector Planning (Sepsa), which belongs to the Ministry of Agriculture and Livestock (MAG).

The area has increased in the last three years, as the country had 21,000 hectares devoted to this crop in 2013.

Orange production is concentrated in plantations in the northern part of the country, in the cantons of Los Chiles, Upala and San Carlos, and in the district of Santa Cecilia, in the canton of La Cruz. These areas are the least developed in Costa Rica, so any improvement in income is very positive, Aragon stated.

Effect
Costa Rica is a very small player in the world market for orange and in the export of concentrates for juice or frozen juice, but any movement, positive or negative, in the world market, has an effect on its production.

Costa Rica’s volume for the next harvest, whose collection begins next December, for example, is estimated at 9 million boxes of 40.18 kilos of fruit. Meanwhile, the Brazilian crop is estimated at 390 million boxes and Florida was expected to produce a little more than 70 million boxes of that caliber, but production might have been cut in half by hurricane Irma, Aragon stated.

The hurricane hit the Florida keys on September 10 and the price for a pound of orange solids hit a high of $1.57 on September 12.

The representative of Tico Frut said that, last year, the pound of solids increased to almost $2 because of a decrease in the Brazilian crop. However, the volume rebound of the world’s top producer decreased prices in 2017, which are now increasing once again due to Florida’s production decline.

According to data obtained from the statistical web portal of the Foreign Trade Promoter (Procomer), exports of fruit juices and concentrates (especially of orange, but also including some pineapple) amounted to an accumulated $169 million between January and August this year. That figure is slightly lower than the $189 million achieved in the first eight months of 2016, but higher than the $137 million obtained in the same period of 2015.

Now the sector expects the price rebound to improve export earnings so that they at least replicate the value obtained in 2016 by the end of this year.

Aragon said that Costa Rica’s orange sector can grow more, in the northern area, but stated that producers needed permits to take water from rivers for irrigation, which are currently stuck in government agencies.

In addition, they also need cantonal and district roads, as well as the extension of route 32 to Limon, as in peak season Tico Frut alone, for example, mobilizes 115 to 120 containers per day to its production plant at Muelle de San Carlos. This company processes between 60% and 70% of the national orange production, according to its own estimates.