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The fading small grove

Herald Tribune – December 16, 2008

ARCADIA – In the boom days of citrus, 60 acres of oranges could provide a hardworking family with a decent living. Most farming families had a house on their grove and did all the work. There was less disease, less government and land was cheap. Now it takes at least double that acreage for the same tenacious family to achieve the same prosperity. That assumes the grower has good luck with weather, pests and disease. “It’s tough as hell,” said Steve Sorrells of Sorrells Bros. Packing Co. in Arcadia. “Anything less than a few hundred acres and you’ve got to go find a new job.”

The days of the small citrus grower in Florida are fading away. In 1945, there were 28,699 orange farmers with a grove about five acres in size. When the last federal survey of orange groves was conducted in Florida in 2002, there were 7,072 citrus farms averaging 121 acres of trees.

The family farmer is being pushed aside by corporate growers with massive groves in multiple Florida counties.

Today there is Evans Properties, Premier Citrus, Lykes Bros., Alico, Southern Gardens, Ben Hill Griffin — now with an “Inc.” on the end — and the aptly named Consolidated Citrus, a company that alone accounts for about 40,000 acres in South Florida, mostly in Hendry, Martin and Collier counties.

Like many other family growers, Sorrells has taken on a second job as a caretaker, managing 5,000 acres of other people’s groves in Manatee, DeSoto, Hardee and Polk counties.

“It’s extremely hard for a grove to make it on its own,” he said. “It’s just hard to do without some other business with profits to put into the grove.”

Any decent Florida orange hanging on the tree is worth about a half-penny.

That is net value after the many expenses growers face: pesticides, herbicides, irrigation, property taxes, box taxes, income tax, equipment repair and the eventual costs of picking and hauling their crop for processing.

Behind most groves is a loan: short term, long term or a hybrid of the two.

The profit margin is so tight for family citrus farmers that there often is not enough money to get started in the season without borrowing against the profits that will — hopefully — come with the harvest.

One of the people most often making those loans is Bill Federer, senior vice president of Farm Credit of Southwest Florida, a grower-owned lender.

“The ones making it today are the ones that don’t have any debt,” Federer says. “Those that were marginal got out.”

When a grower comes in to offer up the farm as collateral, Federer could care less if there are citrus trees on the property. The underlying value of the land is what matters.

Federer deals with the same people, year after year, with nary a bad loan.

“New people are few and far between,” he says.

Most years in citrus growing there is not much of a margin. Many growers are content to break even over the decades, instead counting their wealth in the value of their land. It has climbed steadily as Florida’s population swelled from 4.95 million people in 1960 to more than 18 million today. But like all property in the real estate bust, it has dropped off the soaring levels of the 2004-06 boom. A good piece of grove land that fetched $25,000 during the boom is now down to about $15,000.

Federer foresees the citrus industry surviving, but evolving quickly during the next 20 years.

“With all the risk today you really need a significant return on your investment to stay in. There will always be a citrus industry, but it’ll get smaller.”

Growers are private people, and while they may open up to each other, they rarely talk dollars and cents with outsiders.

But Federer can paint the picture of a typical grower, the costs and the profits.

His archetypal farm is a 100-acre orange grove, half of it early varieties such as Hamlins and the rest later-maturing fruits like sweeter Valencias. To a smart grower, that is a typical division. The mix extends the harvest season as long as possible.

Growers are not paid by the individual piece of fruit, but by the amount of sugar a box of them contains. Sweeter is more profitable.

The arcane term used for that is “pound-solids,” a numerical representation of how many pounds of sugar are contained in a 90-pound box of oranges.

Citrus processors have a small lab of sorts to quickly determine pound-solids, but a simpler way to explain it is this: Squeeze that 90-pound box of fruit. That leaves 50 pounds of juice. Take that juice and boil away the pulp and water. What is left are a few pounds of sugar, the “solids” in pound-solids.

The number of pounds of those solids is the magic number by which a grower gets paid.

Each box of Hamlins provides about six. An average price — and no year is “average” — in recent years for Hamlins is about $1.20 per pound-solid, so that’s $7.20 per 90-pound box.

Growers average 400 boxes of Hamlins per acre. The gross revenue, then, would be about $2,880 per acre, or $144,000 for 50 acres.

Valencias are sweeter and produce a little more sugar, thus growers earn about 20 cents more per pound-solid for the late-season variety — $1.40. But Valencias also are bigger, so there are fewer per acre. Figure about 350 boxes.

The 6.5 pound-solids from Valencias would yield gross revenue of about $9.10 per box. That is $3,185 per acre or $159,250 for the 50 acres.

The 100 acres totals $303,250, which sounds great — but then come the expenses.

Chemicals, property taxes, fruit taxes, insurance, caretaking, picking and hauling would cost about $250,000 for Federer’s 100-acre grove.

That would leave the typical small grower with about $53,250.

Larger growers — the corporate entities — have economies of scale: $53,250 for every hundred acres you own is pretty sweet if you have 5,000 acres — $2.65 million assuming the same ratio.

But most citrus farmers don’t have anywhere near that acreage.

With the poor economy, the demand for orange juice, which now costs more per gallon than milk, is way down. And for growers not under a long-term contract with a processor, so are the expectations for a profitable year.

“Our industry is like any other ag industry,” Sorrells says. “We’re turning into an industry of large corporations.”

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