Citrus ‘box tax’ hike aimed at juicing sales

Florida News

TALLAHASSEE, Fla. (The News Service of Florida) — Florida orange growers will pay more to keep up a surge in juice sales spurred by the COVID-19 pandemic.

The Florida Citrus Commission voted 6-3 on Wednesday to increase a tax that growers pay on each box of oranges to help cover a $9.8 million global marketing campaign intended to promote the health benefits of orange juice.

The change increases the “box tax” growers pay from 7 cents for each 90-pound box of oranges they fill to 12 cents per box. Grapefruit and specialty fruits will remain at 7 cents a box.

Commissioner Ellis Hunt Jr., president of Hunt Brothers, Inc. in Lake Wales, said he understands growers could use the extra money, as the industry is expected to produce less citrus this season in Florida while facing higher production costs and increases in imports. But Hunt agreed with the Florida Department of Citrus staff members and their marketing experts about the need to maintain a spike in sales attributed to the pandemic.

“I talked to some younger generation, 30-year-olds, and we’ve all witnessed the increase in sales just because of COVID, and they don’t want to see that momentum lost,” Hunt said. “They’re willing to take a little money out of their pocket to keep that momentum going. … You’d hate to look back and think, ‘Man, we should have tried to capture that momentum and kept it going.’”

Commission Chairman Ned Hancock, a grower from Avon Park, expressed concern about increasing costs at a time when the crop is expected to be down.

“I know we have a unique opportunity because of COVID to build awareness,” Hancock said. “But when I put on my grower hat, I’m not sure that my finances will carry over this year.”

About 95 percent of Florida’s orange crop, still the largest in the nation, is processed into juice.

As with an effort a year ago to raise the box tax, opposition came from large institutional growers, noted Commissioner Marty McKenna, whose citrus caretaking and consulting operation spans Polk, Highlands, and Hardee counties.

The vote Wednesday also required up to $1 million to be shifted from daily operations of the Department of Citrus to the marketing campaign.

The Bartow-based agency had to scramble to revise the budget for the current fiscal year after the U.S. Department of Agriculture this month forecast a 15 percent decline in orange production for the recently started 2020-2021 growing season as compared to last season.

The department in June based revenue projections for the 2020-2021 growing season on the production of 67.65 million boxes of oranges, 4.89 million boxes of grapefruit, and 1.02 million boxes of specialty crops — mostly tangerines and tangelos.

But the U.S. Department of Agriculture this month projected Florida’s citrus industry producing 57 million 90-pound boxes of oranges, 4.5 million boxes of grapefruit, and 1.1 million boxes of specialty crops. The state produced 67.3 million boxes of oranges during the 2019-2020 season.

If no changes were made to the box-tax rate, the reduced forecast would have cut $1.1.07 million from the department’s $19.875 million in projected revenue for the current fiscal year.

The marketing campaign is expected to target people that have changed habits around wellness, family gatherings, and even their work environments, said Jackie Hopkins, who is with the commission’s marketing agency, Edelman/Edible.

“As we can all understand, there’s been a significant change in the way that people have been working over the last nine months,” Hopkins said. “But taking that into consideration, these are individuals who are working from home. And also, important here is that 56 percent of this audience say they sit down daily to enjoy their daily breakfast.”

The campaign is expected to use online Walmart and Kroger banner ads and team with social media “influencers,” people who have built online brands based on supposed knowledge and expertise on specific topics.

Hopkins said ads with Walmart have returned $4.43 for every $1 spent. Department staff members said similar advertising on websites such as Amazon haven’t produced comparable returns.

A report presented to the commission Wednesday indicated the sales of orange juice surged in the spring as businesses closed and people sheltered at home. And while the initial surge has slowed, sales indicate people continue to stockpile orange juice.

“The Florida citrus industry continues to be in a state of recovery following several years of decline, including efforts to mitigate the impacts on returns from higher production costs, reduced overall tree replant rates and annual declines in fruit availability that have had irremediable impacts on industry infrastructure,” the commission staff’s 2020-2021 outlook stated. “As consumers indicate a renewed awareness of the health and wellness benefits of citrus in recent months, the recovery of the industry is crucial to meet both short-term and long-term demand.”

Florida growers have struggled for years against residential and commercial development, foreign imports, changing drinking habits, and citrus greening, an incurable bacterial disease.

Also, the past two seasons growers have struggled to find places to send their crops. Juice processors did not expect Florida citrus production to rebound quickly from Hurricane Irma in 2017 and signed three- and five-year supply deals with growers from countries including Mexico and Brazil.

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