Orange, grapefruit growers saw record share in juice profits

LAKE WALES -- Executives at Florida's Natural Growers squeezed every last nickel to achieve a record profit share for its grower members in the 2014-15 season.

And Florida growers will need every last penny in the ongoing war against the fatal bacterial disease citrus greening, said Dennis Broadaway, chairman of the board at Citrus World Inc., the parent company of Florida's Natural, the nation's third-largest orange juice retailer.

"Citrus World's overall performance this past season was one of the best, if not the best, in the cooperative's history," Broadaway told about 240 people at Monday's annual meeting. "The fruit returns (profit shares) for this past season once again hit record highs."

The record returns were achieved through cutting operational expenses by more than $2 million in 2014-15, Broadaway said, combined with a 1.3 percent increase in sales revenue for all Florida's Natural products, which includes juice blends and lemonades. The cooperative reported 2014-15 net sales of $459.5 million, up from $453.4 million in the previous year.

The Florida's Natural brand also held onto its 20 percent share of the not-from-concentrate orange juice market despite a nearly 7 percent decline in U.S. orange juice sales in 2014-15, said Chris Groom, vice president of sales and marketing. That compares to the 36 percent share held by Bradenton's Tropicana Products Inc. and more than 24 percent by Minute Maid's Simply Orange brand.

International sales last season rose 3 percent, led by a 57 percent increase in South American sales, Groom said. Sales to restaurants and other institutional outlets also grew and could rise to more than 10 percent of Florida's Natural total sales volume in 2015-16.

Citrus World is a juice processing cooperative owned by 14 organizations representing nearly 1,000 Florida orange and grapefruit growers. Most of the juice it produces is sold under the Florida's Natural brand, and the cooperative returns a share of profit on those sales to the members.

The cooperative in the 2014-15 season returned $1.85 per pound solids to members for early and mid-season orange varieties, picked from October to March, and $2.10 for Valencia oranges, harvested between March and June. Grapefruit growers received $1.67 per pound solids.

And that's before Florida's Natural took advantage of a tax break available only to cooperatives, Chief Financial Officer William "Chip" Hendry said.

The tax break amounted to 5 cents per pound solids for the season, he said, and Florida's Natural passed along the entire amount to its growers.

Pound solids is a standard industry measure for the amount of juice squeezed from fruit. A gallon of orange or grapefruit juice contains roughly one pound solids.

The combined 2014-15 return for all oranges set a record in the cooperative's history, even before the tax break, said CEO Bob Behr said. The grapefruit return is the third-highest return in the cooperative's history.

Including the tax break, the Florida's Natural return for early-mid oranges equaled the 2014-15 industry average of $1.90 per pound solids as reported by Lakeland-based Florida Citrus Mutual, the grower's trade group, and the Valencia return exceeded the industry average of $2 per pound solids.

The Florida Department of Citrus reported last season's average farm prices at $1.94 per pound solids for early-mids and $2.16 for Valencias. It reported the average price of $1.34 for the 2014-15 white grapefruit crop and 97 cents for red grapefruit.

Behr argued those price estimates reflect mostly the cash market prices for citrus in 2014-15, a small amount of the Florida citrus crop. Most citrus is sold under multi-season contracts, which are not entirely based on the cash market, he said.

The final 2014-15 farm prices will be based on U.S. Department of Agriculture data, which won't be available until next year, Behr said.

"We think, when the final numbers are in, we're going to be competitive," he said.

Hendry told the audience Florida's Natural orange returns averaged 2 percent higher than the industry average for the three seasons through 2013-14, based on USDA data. Its grapefruit returns were 9 percent higher.

Whatever the official numbers, Florida orange growers voted with their feet in the latter part of 2014-15, Behr said. Florida's Natural processed nearly 15.3 million boxes of fruit last season, an increase of 1.3 million boxes compared to the previous season.

Most of those 1.3 million additional boxes were Valencia oranges as growers sought higher returns following the collapse of the cash market for late-season oranges, he said.

This story was originally published November 10, 2015 at 5:24 PM with the headline "Orange, grapefruit growers saw record share in juice profits ."