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Citrus Industry Transformation
Is Now Upon Us

We have written much about Sunkist, and as we were preparing to attend the Produce Marketing Association it was nice to receive word that some good things were happening there:


Bravante Produce, a well-known grower/shipper in the California citrus industry, is the newest member of Sunkist Growers, the grower-owned citrus marketing cooperative headquartered in Sherman Oaks, California.

“We are excited about our affiliation with Sunkist,” said George Bravante, Managing Partner of the Reedley, California-based operation. “Sunkist has an excellent marketing and transportation network and a brand name that is known worldwide for its premium products. We’re looking forward to enjoying the benefits of Sunkist membership, which we believe will enable us to improve volume and profitability.”

Bravante Produce is a premier grower, packer and shipper of fresh citrus, with a modern three-year-old packing facility in Reedley, California, and groves throughout the San Joaquin Valley. With a product list that includes Navel and Valencia oranges, lemons and Minneolas, Bravante is bringing 2,000 plus acres of citrus into the Sunkist system.

“We’re extremely pleased to welcome Bravante into our organization,” said Russ Hanlin, Sunkist’s President and CEO. “They are an experienced, respected grower and packer, and bring to our system nearly 1.4 million cartons of quality citrus and a philosophy of excellence that matches our own.” Bravante is projected to add 1 million field cartons of Navels, 200,000 field cartons of Valencias, 150,000 field cartons of lemons, and 20,000 field cartons of Minneolas to Sunkist’s portfolio for the 2009-10 season.

In addition to his citrus acreage and packinghouse, George Bravante grows and markets fresh table grapes and has wine vineyards and a winery in St. Helena. He also sits on the board of directors of ExpressJet Airlines, Inc., the exclusive regional jet provider for Continental Airlines. Ken Collins is the packinghouse’s experienced General Manager.

Indeed Russ Hanlin, Sunkist’s current President and CEO and the son of a very well regarded Sunkist President, has brought a sense of stability to Sunkist… much needed after the loss, on a previous CEO’s watch, of the giant Paramount Citrus and setbacks related to serious freezes.

As a father of young children, though, we see a very obvious switch in the market. When the Pundit was a boy, a Navel orange was a treat. To the Jr. Pundits, a navel orange means adult intervention to peel or slice; they will take a Clementine anytime and enjoy it without parental control.

Just as we were contemplating all this, a veteran of the California citrus industry sent his thoughts, prompted by word that Bravante was joining up with Sunkist:

A range of market forces seem to be coming together, and the Navel orange industry is beginning to feel the squeeze.

The first blow, in recent history was the freeze in January of 2007, which hurt a lot of California Navel orange growers, and there are many of these growers who only have Navels.

However, layered over the 2007 freeze has been the meteoric rise of California-grown easy-peelers, mostly Clementines and W. Murcotts, which have virtually killed demand (and prices) for early season Navels. A whole range of older early season varieties, such as Newhall, TI’s, and Bonanzas, and other varieties planted on early season rootstocks have fallen out of favor because of their undesirable size, shape, and flavor profiles and no longer produce marketable price returns against easy-peelers.

Ads for Navel oranges for American Thanksgiving, for example, have virtually become extinct, as Californian, Spanish, and Moroccan easy-peelers have taken the lower 48 domestic market and Eastern Canada, while Japanese, Korean, and Chinese mandarins control all of Western Canada. In eastern North American, the ‘freight window’ allows easy-peelers to be delivered by sea, in some cases for less-per-pound than trucks can deliver from California.

Export demand to Asia (a large market component in California Navels) is feeling the pressure from a last season ‘extension’ into Asian markets from producers like Australia and South Africa, and more and more by early and mid-season Chinese production finding its way throughout all of Southeast Asia. California Navel returns are being compromised and cannibalized at every turn.

Low market returns and a preponderance of low demand varieties among its primary growers are likely factors in the demise of Sunny Cove Citrus’ packing business recently sold to Booth Citrus. Reportedly, the largest growers at Sunny Cove judged they do not have the economies of scale to support the packing operation, and will concentrate on ‘growing only’. With low Navel returns the last 3 seasons, financial considerations may have been a factor to concentrate ‘capital’ in the ‘hard asset’, the groves, rather than packing and marketing services.

The move to Sunkist by Bravante away from its own citrus sales and marketing staff (grapes they have retained) seems to be a move done as a consequence of these factors previously outlined. Everyone who is primarily a Navel grower in California is looking to find a way to improve their returns to survive.

In the next 5 years, demand for California Navels harvested prior to January 1st will be under extreme pressure, especially for most of the early varieties, from increasing production and demand for a whole range of varieties of California easy-peelers. There will likely be an increasing ‘attack’ on January through March varieties of Navel oranges as well as a whole range of irradiated (no seeds) varieties, like Tango, as they come into production and continue to extend the season for high flavor, easy-peelers, which consumers continue to favor over larger sized citrus fruits.

It appears that we are witnessing a true shift in the seedless citrus paradigm away from oranges to easy-peelers, and the implications are enormous not only for growers but for packers, as how citrus is packed and sold evolves toward something witnessed in other fruit categories. Consumer preferences, the proliferation of new varieties and related cultivars, and an end to seasonality will continue to have a great impact on the ‘future of citrus fruit’ production and consumption.

Back in the Pundit’s early days on Hunts Point, the Pundit’s family business had gotten the contract to sell Maroc brand Clementines in the US. Fisher Bros had the big deal up in Canada, but when the boat came from Morocco into New Bedford, Massachusetts, we got a small share of the fruit to develop the US market. We worried about storing the open-topped European cases in Hunts Point and eventually persuaded the Moroccans to add a mesh cover.

It was an unusual item as it was designed to be sold in the crate it was shipped in and it took a little time to persuade retailers this was a great idea. Still, the appeal of the fruit was instantaneous: sweet, seedless, easy-to-peel and small so a child could eat a whole one and an adult could eat a few.

At the time, we asked friends in California if they could grow some of these and most told us that the labor to harvest would be prohibitive. Yet it seems to have all been worked out.

This letter is telling us that the transformation is now upon us. It won’t be easy — just ask grape growers who had lots of seeded varieties or apple growers who only grew Red Delicious — but the pace of change in modern agriculture is accelerating.

And calculations of return on investment can no longer assume that the useful life of a fruit-bearing tree is a horticultural question. In many cases, the market for a particular variety will have disappeared long before the tree has ceased to bear fruit.

So the return on investment has to consider the expected marketing window for a variety, not the biological life of the tree.

Many thanks to our writer for helping us explore the intricacies of the citrus market.

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