Will Rising Seas Raise Citrus Prices?


The plight of poor Kiribati has gone mostly unnoticed or ignored by the rest of the world, though it represents a tangible lesson of global economics threatened by climate change.  If sea level rising continues at the current rate of about one tenth of an inch per year, the little island nation will be totally submerged as soon as the end of the century.  It's easy not to care much about Kiribati, with a population and GDP that's comparable in size to an average US city like Erie.  It's much more difficult not to care about Florida, a state that accounts for nearly 7% of the US' total GDP and props up almost the entirety of the American citrus industry.  Yet Florida, like Kiribati, faces tremendous threats from the steady rise of ocean levels since half of the peninsula will vanish beneath the Atlantic waves if sea levels rise by a few meager feet.  While citrus represents nowhere near as popular a commodity as gold or oil, Florida accounts for two thirds of US production, and a rising tide can drastically affect price and supply.

Ice To See You

The ratio of salt water to fresh water on planet Earth comes it at around fifty to one.  Of that fresh water, 90% lies in Antarctica's ice caps, which extend as far as a mile down to crush the continent and prop up penguin nests.  Around 100 million years ago, Antarctica had relatively little ice and sea levels were significantly higher than today.  As the world exits the Ice Age, a climate cooling phase only two million years old, and begins to heat up -- whether by nature or by man, depending on your opinion -- the water captured in Antarctic ice sheets returns to the ocean in liquid form.  The National Atmospheric and Oceanographic Administration released a report in 2014 noting that the majority of the United States faced little threat from rising sea levels with the notable exception of the southern Florida peninsula, where two trillion dollars of infrastructure, population, business, and agriculture face the very real possibility of being washed away.  Every foot of sea level rise means that five hundred to two thousand feet of inland space will be submerged since Florida has little highland geography to ward off advancing water.

Climate and Citrus

Florida's most famous for their orange production, as the state's license plates proudly show.  California produces about half the quantity of oranges and orange juice in comparison, while Texas and Arizona account for less than 5% of total US citrus.  While Florida doesn't own the global market for citrus like they used to in the 1960s (the US now imports nearly as much orange juice from Brazil as it generates in Florida) they're still a big fish in a small pond.  Few nations have the water, sunlight, and soil needed to grow oranges in as much abundance as you'll find in the southernmost continental state.  Indeed, were it not for oceanic sea level rise, the global climate shift would likely be a boon to the citrus industry: the warmer temperatures ward off the rare winter frosts that jeopardize the spring crop, while higher CO2 levels mean healthier plant growth.  Given that sea level will likely rise by as much as two feet by 2050, however, Florida citrus finds itself in a tight spot.  Flooding trends have already hurt production, but helped the commodity.  Hurricane Katrina boosted the price of orange juice from an historic low of sixty cents per pound to nearly two dollars per pound after destroying entire groves.  Oranges represent a particularly sensitive crop, unlike Florida's other staples like tomatoes, and cannot cope with much in the way of climate volatility.  Climate volatility has resulted in commodity volatility: orange juice doubled in value between 2005 and 2007, then lost the entirety of its gains by 2009, tripled in value by 2012, and has since lost half of its peak value. 

Rebuilding A Market

The fastest-growing orange groves in the state sit right in the middle-lower portion of the peninsula, right along the risk line of global sea rise.  Northern Florida counties have experienced drops in orange production, headlined by Lake County losing 90% of their total trees while southwest Collier County gained a 600% growth in tree planting.  Is the solution to rising sea levels merely to return to the former northern regions and plant in safety?  Yes and no: the northern inland Florida counties will experience almost no change in available land even if sea levels rise by as much as twenty feet.  Where they'll suffer, however, lies in the likelihood that advancing sea water could contaminate Florida's underground aquifers, potentially devastating the entirety of the state's agribusiness.  While Florida enjoys steady rainfall in comparison to competing citrus states like California or Texas, the inland counties receive the least of it while the flood-prone coastal regions enjoy the most.  As orange trees need anywhere from one to two inches of rainfall per week for optimal growth, even a light dry spell makes it difficult to harvest a consistent crop.

Is Orange The New Black?

No foodstuff commodity reacts to climate quite like orange juice, making it particularly difficult to predict behavior ahead of time.  The inexorable rise of oceanic levels make for a ticking orange juice time bomb unless the state of Florida constructs giant seawalls to ward off flooding.  The triple threat of sea level, climate, and storms mean that orange juice represents a certainty for long-term growth for a patient investor willing to wait years to see substantial growth in their portfolio.  No commodity will be subject to short supply quite like the Florida-driven orange crop, but with futures dropping by small but steady measures, it appears that orange juice will drop before it rises in the short term.  This means that the best time to buy will likely be later in 2015, since prices rise following the hottest summer months when there are no harvests and shortened supply.

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