SOURCE: Rabobank, N.A.

Rabobank, N.A.

November 17, 2015 13:15 ET

Easy-Peel Citrus Supply Expected to Push Citrus Marketers

Rabobank Report Observes the Forces That Will Narrow the On-Farm Profitability Gap Between Mandarins and Navel Oranges/Lemons

FRESNO, CA--(Marketwired - November 17, 2015) - The continued success of mandarin or "easy-peel" oranges in the U.S. has been at the expense of demand for conventional orange varieties. Consumers continue to favor the size, seedlessness, flavor, and easy-peel characteristics of mandarins. The increase in mandarin demand has made them currently the most profitable choice for citrus growers, however ongoing supply and demand forces will likely narrow the profitability gap between mandarins and conventional oranges, and mandarins and lemons in the coming years. These forces and their impacts on the U.S. citrus complex are examined in Rabobank's most recent Food & Agribusiness Research and Advisory note titled "U.S. Citrus -- How Does Easy-Peel Change the Game?"

With global demand for mandarins rising, conventional orange suppliers are recognizing the need to make production adjustments to adapt to the current developments in the citrus market. Roland Fumasi, Senior Analyst with Rabobank and the report's author says that orange suppliers are employing innovative strategies to tighten the current gap in profitability. "While citrus greening has continued to hamper supply in certain production areas, most of the overall supply pressures have been felt in oranges. New plantings of mandarins, to meet rapidly growing demand, are continuing," said Fumasi. "Already, California bearing acreages of mandarins has increased by 250 percent in the past decade. During the same period, California's bearing acreage of navels, Valencias, and lemons has fallen by 4, 32, and 4 percent, respectively." The research outlines the continued need for mandarin marketers to drive domestic demand and establish a branded presence in export markets, while at the same time, highlighting the tactical plans needed to be taken by navel suppliers.

Navel orange suppliers must continue to focus on improving the eating experience for both domestic and export market growth. "The value of California fresh-market navel orange exports has been growing over the past decade, from USD 324 million in 2004 to USD 521 million last season," added Fumasi. "In addition to growing and shipping more of the popular Cara Cara navels and blood oranges, leading suppliers are intensifying efforts to identify traditional navel groves, which tend to produce sweeter fruit." Evident in the report is the observation that mandarin production and consumption is continuing to climb, and navel suppliers have to continue to be innovative in their efforts to support higher prices. The report also stresses the details that must be considered by the lemon value-chain, so that the supply response to recent high prices is not overdone.

The report concludes by highlighting the fact that the continued profitability dominance of mandarins depends squarely on the efforts of a highly concentrated mandarin industry. Based on imminent increases in mandarin supply, rising global demand for lemons, renewed focus of the navel value-chain, and other supply and demand forces detailed in the report, long-run grower profitability will find more balance between citrus categories.

The full report is available exclusively to clients of Rabobank and to media upon request.

About Rabobank, N.A.
Rabobank, N.A. is a California community bank and a leading provider of agricultural financing and full-service banking products to California consumers, businesses and the agriculture industry. With more than 100 retail branches, we serve the needs of communities from Redding to the Imperial Valley through a regional structure that promotes local decision-making and active community involvement by our employees.

Rabobank, N.A. is a division of the Rabobank Group, the premier lender to the global food and agricultural industry and a financial services leader providing commercial, retail and agricultural finance solutions in 48 countries around the world. From its century-old roots in the Netherlands, Rabobank has grown into one of the world's largest and safest banks. Rabobank, N.A. is a Member FDIC and Equal Housing Lender.

About Rabo AgriFinance
As a leading financial services provider for agricultural producers and agribusinesses in the United States, Rabo AgriFinance adds value using industry expertise, client-focused solutions, and by creating long-term business relationships. Rabo AgriFinance offers a comprehensive portfolio of services that give producers the right products to prepare for, and take advantage of, market opportunities. Rabo AgriFinance representatives offer a wide array of financial services and knowledge to help customers realize their ambitions. This comprehensive suite of services includes loans, insurance, middle market agribusiness, input finance and sophisticated risk management products. Rabo AgriFinance is a division of Rabobank, the premier bank to the global agriculture industry and one of the world's largest and safest banks.

About Rabobank Food & Agribusiness Research and Advisory (FAR)
The Rabobank Food & Agribusiness Research and Advisory (FAR) group is a global team of more than 80 analysts who monitor and evaluate global market events that affect agriculture worldwide. This international team works to collect key insights into commodity markets; conduct in-depth analysis of the factors that drive sector success (or failure); and examine the megatrends that ultimately influence clients' business strategy. These analysts are internationally respected experts in sectors from protein to produce, inputs to oilseeds, and their knowledge is shared with Rabobank customers.

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