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Business Observer Friday, Mar. 10, 2017 1 year ago

Food for thought

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The Florida citrus industry has been battered to a pulp the past decade. Some growers see hope in unconventional solutions.
by: Ted Carter Contributing Writer

Executive Summary
Industry. Oranges, agriculture Key. Growers are combating greening disease Trend. Some growers are embracing technological solutions.

Victory is difficult to see for Florida citrus growers in a so-far eight-year war of attrition with the Asian citrus psyllid that brought the devastating greening disease to groves across the Sunshine State.

What is in sight is a diminished but resilient industry that can live with the citrus-tree killer and make money doing it.

Like NASCAR racer Dale Earnhardt Jr. pushing to get those last drops of fuel to make the finish line, growers are trying to draw every bit of production potential out of each tree, says Ron Hamel,
executive vice president of the Gulf Coast Citrus Association, which represents 70 growers in Lee, Charlotte, Collier, Hendry and Glades counties.

“We are learning that if you stay with it, fight the psyllids and add nutrition, you can keep fruit on the trees and keep them alive longer,” says Hamel. “We are actually re-creating the industry in a lot of areas.”

Nine out of 10 citrus trees are dying of the always-lethal bacterial infection carried in the saliva of an insect the size of a pinhead known as Huanglongbing in its home of origin, China, and HLB in the United States. The disease can take several years to fully manifest through a process by which it deprives the trees, its twigs, leaves and fruit of the nutrients to sustain themselves. That leaves the fruit misshapened and unmarketable.

Lakeland-based Florida Citrus Mutual, the industry's advocacy arm, puts the statewide commercial grove acreage lost to greening at 130,000 acres.

“I would regard these as very conservative estimates,” says Alan Hodges, a University of Florida agricultural extension scientist whose specialties include citrus economics. He pegs losses to the industry at more than $4 billion and estimates the number of direct and indirect permanent jobs that greening caused to never materialize at 60,000, or about 7,500 annually.

“I have never in my professional life seen a more devastating disease, period,” adds Dean Gabriel, Hodge's UF colleague and plant pathologist.

At 90% penetration of all Florida citrus trees, the bacteria's infection numbers could hardly be worse. And crop production numbers drop more steeply by the year, says Gabriel.

The U.S. Department of Agriculture estimates this season's citrus crop at 82 million boxes, down from 120 million last season. Five growing seasons ago, Florida's groves yielded 171 million boxes, the department reports. The department lowered its forecast for all Florida oranges a full percent from mid-January to mid-February.

Money maker
Retreat has not been the order of the day.

Expansion and new grove plantings have been, however.

As 2014 closed, Fort Myers citrus giant Alico Inc. wagered $363 million that the greening crisis reflected opportunity rather than peril. It sold its sugar cane assets to help cover the cost of buying three citrus production operations and nearly 29,000 acres of groves, including Orange-Co LP and its 20,263 acres of citrus land, Silver Nip Citrus and its 7,434 acres and Gator Grove and its 1,241 acres next to the Orange-Co groves.

The purchase made the $461 million publicly held holding company the largest citrus producer in the United States. Alico also generates revenue from cattle and conservation easements, but citrus from its new acquisitions and operations in Collier, Charlotte, DeSoto, Hendry, Hardee, Highlands, Martin and Polk counties accounted for more than 95% of its revenue the last two fiscal years.

Florida Citrus Mutual called the Alico expansion “a show of optimism” that proves reports of the industry's demise are premature.

Alico lost $1.7 million in the first quarter of this fiscal year, but its earnings release notes the company harvests most of its citrus in the second and third quarters. “We typically recognize the majority of our profit and cash flow from operations in the second and third quarters,” states the release.

New approaches
Alico also recently acquired about 20,000 grove acres from Tamiami Citrus LLC, a midsize Fort Myers grower. “They were highly productive groves,” says Tamiami CEO Ron Mahan. “We just sold them because we were wanting to initiate a new strategy.”

The sale left Mahan's privately held company with about 6,000 citrus acres. The new strategy is to replant more greening-resistant varieties of trees using more productive grove designs and employing new ways to live with the disease, he says. Among new plantings are a hardier Valencia orange tree and seedless tangerines.

Mahan says Tamiami uses modern irrigation techniques to get nutrition to the trees, a process he likens to spoon-feeding.

“We are going to have a certain amount of greening,” he says. “You want to minimize that as much as possible.”

At more than $2,000 an acre, the costs of the new production methods are several times higher than a decade ago. Unlike other growers, Tamiami has not begun doubling up on its per-acre plantings, which would give it more than 300 trees an acre. That practice gives more yield in early production years but eventually the trees begin crowding out each other, notes Mahan, whose company has groves in Collier, Hardee and Highlands counties.

The new methods are primarily focused on 260 acres of new trees that represent an experimental grove of sorts. Commercial-level production from the new grove is still a couple years off. But at the end of 10 years, Mahan says, Tamiami expects to double a typical per-acre yield to slightly more than 400 boxes an acre, a level typical before the greening scourge.

“There are significant risks, but we recognize there are some potential opportunities,” Mahan says.

'Grow better'
There are other strategies in the greening battle.

Consider longtime grower Steve Sorrells of Sorrells Citrus Inc. in Arcadia. His solution has been to follow the technology, working with Bethel TriYield. A division of Bethel Farms Ltd. in DeSoto County, Bethel TriYield has teamed up with Aqua Yield of Salt Lake City to create a nano-particle delivery system. Bethel TriYield says the system gets nutrients to starving trees infected with greening.

The key is a process by which ions and nano-size particles are encapsulated inside an aqueous shield of pure H2O, says Jonathan Brown, senior vice president of Bethel Farms.

A magnetic polarization process creates the shield, in which water molecules cluster around the micro-sized nutrients that are delivered to the tree's cellular system, Brown says. In effect, the nutrients are small enough to make it through the cell blockages the greening bacteria creates. The process is a nutrient delivery system without pesticide or insecticide.

“By nature pure H20 is looking for somewhere to go,” Brown says. “It goes into that plant with ease. Because it is in a mobile state, the plant can signal wherever it wants to put that nutrient. It goes wherever it needs it.”

Sorrells has been working with Bethel's process for two years.

“The trees look better and grow better,” says Sorrells, whose family began growing citrus in the Arcadia area in the 1940s. In addition to DeSoto, his 5,000 acres of groves are in Hardee and Manatee counties.

He says he is spending less money on each acre than he was two years ago “simply by using less chemicals with this new technology.”

He recently planted a 20-acre grove on which he expects to break even at the end of four years. With Bethel's nutrient technology and prices up sustainably (in some instances to $12.50 a box, up from as low as $5 a box a few years ago), he feels he is seeing signs of a return to prosperity, however slight it may be.

“I feel like it is really beginning to kick in,” Sorrells says. “New things are out there today, things that weren't out there five years ago.”

Meanwhile, like Tamiami Citrus and other growers, Wheeler Farms, with groves in Polk and Highlands counties, has modernized its grove irrigation to more accurately target delivery of nutrients. While production is down 40% since the peak, CFO Mark Wheeler says “most of our groves are producing at a level that with increases in prices we are able to pay the bills.”

Wheeler figures the family-owned company could sell off some of its grove properties north of Dundee, in Polk County, for commercial development at about $15,000 an acre. But Wheeler says they are not there — yet.

“There are a lot of challenges but, obviously, changes create opportunities,” he says. “We still have a battle ahead of us.”

Orange production, Gulf Coast

County Total boxes, 2014-2015
Polk 16,382
Collier 7,549
Manatee 4,002
Charlotte 2,827
Lee 2,400
Hillsborough 1,239
Sarasota 249

Note: Polk is the largest orange-producing county in Florida.
Source: Florida Department of Agricultural and Consumer Services

Mark it down
With greening disease causing declines in citrus production by tens of millions of boxes annually, it is not worthwhile to aggressively market Florida's oranges and grapefruit and juices they produce, a dozen citrus growers, processors and fresh-fruit packers concluded in a joint letter in February 2016 to the Florida Citrus Commission, the appointed governing board for the Bartow-based Department of Citrus.

Taking less money from growers for marketing and leaving them more to spend on adjusting to the ravages of the greening disease give the industry “the best chance to survive and eventually rebuild,” the letter states. A roster of citrus business leaders signed the letter, including then-Alico CEO Clay Wilson; Ron Mahan of Fort Myers-based Tamiami Citrus; and David Duda of Duda & Sons.

“If you don't have the product to sell ... it just doesn't make sense,” to widely promote the product, says Mahan. That can change, Mahan says, “once we get to believe as an industry we have the trajectory turned around.”

Citrus commissioners ultimately cut the per-box tax on juice oranges and fresh grapefruit from fiscal 2015-16 levels of 23 cents and 19 cents, respectively, to 7 cents. Commissioners kept the assessment on fresh oranges at a nickel per box.

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