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fdocgrower.com
World Orange Juice Consumption Forecast:
Balancing Supply and Demand
Robert NorbergDep. Exec. Dir. of Research & Operations
FLORIDA DEPARTMENT OF CITRUSBartow, FL
The International Citrus and Beverage Conference51st Annual Program
Clearwater, FL
September 2011
fdocgrower.com
Source: Wired Magazine, Issue 16.11
Source: CSIRO
Agriculture Output Must Grow 70%
to Meet World Demand, UN Says
Introduction
► The world OJ situation has changed dramatically in recent years due to supply-side disruptions and demand-side influences.
► However, the world OJ situation can still provide significant opportunities for orange producers, even though many challenges remain.
3
HISTORICAL AND CURRENT WORLD ORANGE-JUICE
SITUATION
4
World OJ Production, by Country
1,202
1,511
1,667
1,790
1,511
646
1,245
1,479
966
837
0 400 800 1,200 1,600 2,000 2,400 2,800 3,200 3,600
1990
1995
2000
2005
2010
Million SSE Gallons
Brazil US EU-27 Mexico South AfricaChina Australia Turkey South Korea IsraelMorocco Belize Costa Rica
5
84% FL & BRZ
84% FL & BRZ
World OJ Consumption, by Country
554
885
1,201
1,235
1,191
1,163
1,253
1,560
1,399
1,154
0 400 800 1,200 1,600 2,000 2,400 2,800 3,200 3,600
1991
1995
2000
2005
2010
Million SSE Gallons
EU-27 US Canada JapanChina Russia Australia BrazilSouth Korea South Africa Israel TurkeyMexico Morocco India Ukraine
6
87% US & EUR
79% US & EUR
85% US & EUR
DRIVERS OF FUTUREWORLD ORANGE-JUICE
SITUATION
7
Factors that InfluenceGlobal Demand for OJ
► Economic Stability and Recovery
► New Markets and Population Growth
► Influencing Consumer Attitudes with Marketing Messages
► Availability and Pricing
8
Global Economic Stability and Recovery
9
Economic Recovery► Emerging Economies: Countries with growing
global economic interactions and responsibilities
10Source: Wikipedia.
Economic Recovery► Developing Economies: Increased industrialization
and information access for citizens
11Source: Wikipedia.
Terms Used to Describe Blocks of Developing Countries
• BRIC: Brazil, Russia, India and China
• BRICET: BRIC + Eastern Europe and Turkey
• BRICS: BRIC + South Africa
• BRICM: BRIC + Mexico
• BRICK: BRIC + South Korea
• Next Eleven: Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, South Korea, Turkey, and Vietnam
• CIVETS: Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa
12
Global Economic Growth Forecasts
13
Source: International Monetary Fund.
Global Economic Recovery
14Source: United Nations.
Most economists agreea recovery will occur,but at different ratesby country
New Markets andPopulation Growth
15
World Population Growth2.6B more Mouths to Feed
6,000,000,000
6,500,000,000
7,000,000,000
7,500,000,000
8,000,000,000
8,500,000,000
9,000,000,000
9,500,000,000
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
2032
2034
2036
2038
2040
2042
2044
2046
2048
2050
16Source: U.S. Census Bureau.
India Population Maturation2011 to 2050
17Source: U.S. Census Bureau.
China Population Maturation2011 to 2050
18Source: U.S. Census Bureau.
Consumer Perceptions and Attitudes
19
Influencing Consumer Attitudes with Motivating Marketing Messages
► Functional Attributes
► Health and Nutrition Drivers
► Nature’s Perfect Beverage
► Emotional Connections
► Vibrant, Sunny and Energizing
► Fun & Joyful, yet Safe & Comforting
20
Global OJ Availability
21
Factors that InfluenceGlobal Availability of OJ
► Disease pressures, and other production issues in traditional growing regions
► Rising cost of production and risks
► Potential for new production areas
► Global distribution and supply-chain
22
BALANCING WORLDORANGE JUICE
SUPPLY AND DEMAND
23
Demand May Surpass Supply if:
► U.S. and Europe recover and grow
► Economic recovery
► Consumer attitudes are influenced
► Emerging Markets Demand More OJ
► Population and Income Effects
► Florida and Brazil crops remain flat
24
If this happens prices, both retail and wholesale, rise.
World OJ Demand Growth Scenario(Million Single Strength Gallons)
U.S.
ROW
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
10-11 15-16 f 20-21 f 25-26 f 30-31 f25
World OJ Supply Growth Scenario(Million Single Strength Gallons)
Florida
Brazil
ROW
Growth
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
10-11 15-16 f 20-21 f 25-26 f 30-31 f
26
Filling the OJ Growth Opportunity (Million Single Strength Gallons)
Florida
Brazil
ROW
0
500
1,000
1,500
2,000
2,500
10-11 15-16 f 20-21 f 25-26 f 30-31 f
27
Satisfying U.S. OJ GrowthFlorida’s Opportunity
28
FL Baseline
Imports
FL Growth
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
10-11 15-16 f 20-21 f 25-26 f 30-31 f
Mil
lio
n S
SE
Ga
llo
ns
Defining the Florida OpportunityUS Market Growth = Maximum Profits
• Florida’s Opportunity is defined as:
1. Replace a Portion of Current Imports
• Last 12mo: 265mm ssg @ ~$1.65/ssg
2. Satisfy Future Consumption Needs
• Demand Growth (400mm ssg over 20 years):
– Population growth,
– Income recovery, and
– Motivating marketing pressures on consumers
29Supply can expand without impacting current price levels.
Florida’s Supply Challengeto Meet Future US Opportunities
30
0
30
60
90
120
150
0
50
100
150
200
250
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
20
26
20
27
20
28
20
29
20
30
20
31
Millio
n T
ree
sM
illi
on
Bo
xe
s Boxes
Trees
Florida Planting and Loss Requirements to Meet Opportunity
31
0
1
2
3
4
5
6
-6.00%
-5.00%
-4.00%
-3.00%
-2.00%
-1.00%
0.00%
2010 2015 2020 2025 2030
Millio
n T
ree
s
Loss Rate
New Plantings
SUMMARY&
CONCLUSIONS
32
“Is a slowdown in agricultural productivity growth
contributing to the rise in commodity prices?”
“If in 2050 people in low-income countries, including China and India,
consume as much meat and dairy as was consumed per person in the
United States and Europe in 1966, and if feed conversion efficiencies
improve at the same rate from 2009 to 2050 as they did from 1966 to
2008, then demand for feed grains will more than double between now
and 2050.”
“The sharp rise in food
prices has sparked fears of
a global food shortage. ”
“In a directionally
changing world, with
continually rising demand
for agricultural products
driven by population and
income growth pressing on
a finite land base, tradeoffs
among these sustainability
goals often occur.”
“Great Food Crunch. Global
food demand is colliding with
strained supply.”
“If supply does not keep pace with demand, there will beupward pressure on commodity prices. With per capita
incomes rising globally and in many poor countries
expected to increase by as much as 50%, food demand
will become more inelastic such that larger price swings
would be necessary to affect demand.”
Summary & Conclusions
► After expanding for many years until the first decade of the 21st century, the world OJ situation has leveled and declined in recent years due to a combination of factors:
► Availability issues caused by disease pressure and weather events
► Negative shifts in the attitudes and economics of consumers
► Advent of competitive and substitute products
34
Summary & Conclusions (Cont.)
► However, future prospects for OJ are more positive as:
► Disease issues are being mitigated
► Consumer attitudes and perceptions continue to be positive
► World economies recover and grow
35
Summary & Conclusions (Cont.)
► Citrus growers should take advantage of these future opportunities by expanding production capabilities.
► Investments into new production capacity is viable considering the current citrus economics environment
► Future opportunities are enhanced with relevant consumer communications
36
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