Brief:

• Prices of oranges, tangerines and other types of citrus jumped 6.8% in February as overall food prices continue to rise, according to the U.S. Bureau of Labor Statistics’ Consumer Price Index.
• Food prices climbed 1.4% last month and saw their largest 12-month increase since 1981. Fruit and vegetable prices saw the steepest monthly rise among the major food at home segments at 2.3% — its largest such increase since March 2010.
• Prices for citrus fruits have increased 16.2% over the past year, according to BLS data, due to cold weather and disease harshly compounding an already constrained supply, even as demand has been growing.

Dive Insight:

The jump in citrus prices comes amid a difficult growing season for farmers in states including Florida, California and Texas. The USDA noted in its citrus report in January that the production forecast for the crop was significantly lower than previous years.

The report predicted inclement weather and citrus greening disease would make this an especially tough season. Freezing temperatures in Florida and Texas have hurt this season’s orange crop. Citrus greening, which has no cure, has spread across Florida and Texas, according to The Wall Street Journal. The disease reduces yield for farmers and impacts the quality of the fruit, making it less appealing to consumers. It also makes fruit grow smaller, have higher acidity as well as lower sugar content.

Meanwhile, supply chain problems have further complicated operations for farmers. Emily Ayala, an owner of Friend’s Ranches farm in Ojai, California, told CNBC that farmers in her locale dumped around 10% of their supply of healthy oranges that were not able to make it to market because there was no available labor or freight to transport it.

The higher citrus prices have trickled down to consumer products. Orange juice prices increased 13.8% across 2021, according to USDA data cited by The Washington Post. While juice sales had been declining for years because of consumers’ concerns over its typically high sugar content, orange juice saw a resurgence in popularity at the start of the pandemic.

The beverage is still linked to immune health for many because of its high vitamin C content. Consumers continue to value beverages that contain functional benefits after two years of the pandemic, so demand for orange juice remains high. According to a report from Tridge in July 2021, orange juice sales are expected to grow at a compound annual growth rate of 2.35% until 2025.

Other types of food have also seen prices rise. Dairy and related products climbed 1.9%, its largest monthly increase since April 2011.

Source: supplychaindive.com