The orange, popular among Vietnamese people, is currently experiencing an unprecedented ‘nightmare’: skyrocketing prices and a fluctuating market due to supply shortages. Climate change has caused the price of this product to double compared to last year
Orange juice prices hit record highs due to adverse weather and diseases in Brazil, the world’s largest exporter. This has led producers to consider whether they can use tangerines as a substitute for making juice.
Futures contracts for orange juice have struggled since late 2022 when a hurricane, followed by a cold snap, devastated vast groves in Florida, a major orange-growing region in the U.S. and the world’s second-largest producer. However, the rapid increase this month due to bleak harvest prospects in Brazil has caused market turmoil.
Frozen concentrated orange juice futures, traded on the Intercontinental Exchange in New York, reached $4.92 per pound on May 28, nearly double the price from a year ago.
Kees Cools, President of the International Fruit and Vegetable Juice Association (IFU), said, “This is a crisis.” “We have never seen anything like it, even during severe frost and major storms.”
According to the IFU, the severe shortage has raised concerns that rising prices will affect consumers and fundamentally reshape the global orange juice industry.
Typically, producers can offset seasonal flavor differences by blending frozen orange juice reserves (which have a two-year shelf life) from previous seasons with fresher juice. However, three consecutive years of declining supplies have depleted reserves.
Cools suggests that a long-term solution to the orange shortage might be producing orange juice from tangerines, a fruit better adapted to climate change in developing regions.
Cools said the only long-term option that “does not compromise the naturalness and image of the product” might be “using similar fruits.”
Many industries have quickly adapted. In Japan, which usually imports 90% of its orange juice, primarily from Brazilian fruit, the supply shortage has worsened due to a weak yen, driving up import costs further. Seven & I Holdings, the owner of the 7-Eleven supermarket chain, has shifted to using domestically grown tangerines, launching a tangerine-orange juice product.
Cools noted that the IFU is considering initiating management processes to allow this juice to contain citrus fruits other than oranges.
Supply constraints today date back 20 years when citrus greening disease—a persistent disease spread by insects that makes fruit bitter before the tree dies—was first discovered in the U.S.
By 2008, it had spread throughout Florida, which previously accounted for over 80% of U.S. supply. According to Cools, two decades ago, Florida produced about 240 million boxes of orange juice annually. Today, exacerbated by worsening climate change, this number has dropped to just 17 million.
Brazil has stepped in to fill the gap, but now the South American agricultural powerhouse is also beginning to face difficulties. According to estimates from Fundecitrus, the citrus growers’ organization, this year’s production has dropped by a quarter to 232 million boxes.
Andrés Padilla, an analyst at Rabobank, said Brazilian orange groves have been ravaged by above-average temperatures and below-average rainfall. He noted that fewer than one-third of the farms are irrigated and they have been “struggling to cope.”
Rabobank estimates that nearly 40% of orange groves in the country’s main growing region in the southeast are infected with citrus greening disease.
Padilla added that the disease also causes oranges to fall off earlier, meaning farmers tend to harvest earlier than usual, affecting “flavor” once again. This creates challenges for the orange juice industry.
Industry executives say that consumers may feel the impact for years. Many producers have passed increased costs onto their customers, resulting in higher prices.
Meanwhile, consumer demand shows no signs of easing. Jack Scoville, a broker at Price Futures Group in Chicago, noted that before the Covid pandemic, some Americans had switched from orange juice due to concerns about its sugar content and turned to supplements for daily vitamin C. However, during the Covid period, many people shifted to healthful fruit juices, driving up demand.
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