USDA Purchase of Orange Juice

Tacy Callies Citrus, Florida

Mike SparksFrom Mike Sparks, CEO, Florida Citrus Mutual:

We just received some great news. The U.S. Department of Agriculture (USDA) has announced it will purchase $20 million worth of surplus frozen concentrate orange juice as part of the fiscal 2015 Section 32 bonus purchase program. Florida Citrus Mutual (FCM) made a multi-year request for significant purchases to Secretary Vilsack last month and we are fortunate this purchase was authorized just before the end of the federal government’s fiscal year with what remained of the Section 32 funds.

As you probably know, the Section 32 program supplies the USDA’s feeding programs with domestic products while improving U.S. farmers’ purchasing power. Most likely, the USDA purchase will be for 100% Florida orange juice only, although California or Texas orange juice would qualify. The USDA has made several Section 32 purchases of Florida citrus products over the years.

Florida Citrus Mutual estimates a $20 million purchase would move about 6 million pound solids which would lower inventory by about one week of supply. If this all moves before October 1, a 2.5% reduction in supply is anticipated. This purchase is expected to be worth about $.02/ps on average over the entire orange crop. Although it is relatively small on average, it means a lot in total, $12 million in Florida Citrus Farm Gate Revenue.

We believe the current $20 million OJ purchase is the initial buy in what should be a series of purchases over the next few years to help alleviate inventories. Clearly, this will have a positive effect on grower returns.

FCM thanks Secretary Vilsack and Senator Bill Nelson for their hard work on this request as well as U.S. Congressmen Tom Rooney and Dennis Ross and the entire Florida Congressional delegation. We very much appreciate all they do for our industry.