The world market for organic citrus (fresh and juice) is expected to rise steadily in the coming years, providing interesting export opportunities.
The EC market for fresh organic oranges, tangerines and lemons is dominated by Italy and Spain, which benefit from duty free access to other EC countries, a common EC regulation on organic agriculture and the preference of EC traders and consumers for European organic products. This leaves limited room for outside suppliers during the EC harvest season. However, there are opportunities for exporting organic grapefruit and limes, which are short in supply. Furthermore, there is growing demand for organic citrus from May to September, as local production is low or absent.
There are more opportunities for fresh citrus exports to the US and Japan. Although the United States produces organic citrus, demand may exceed supply and its import tariffs on fresh citrus are very low. Mexico is well placed to take advantage of this gap, but there is also room for other suppliers, notably in Latin America. Suppliers have to pay particular attention to pest and disease problems, as the USDA phytosanitary rules on citrus imports are extremely strict. The Japanese market for fresh organic citrus also offers interesting prospects if exporters can meet the new JAS organic regulations and the tough phytosanitary requirements. Shippers have to take drastic quality control measures if fumigation at the entry port is to be avoided.
The market for organic citrus juices is presently extremely small, accounting for some 0.3 percent of total citrus juice consumption. Given the average 2-percent market share of organic foods in developed countries, there is considerable potential for growth. FAO has projected the volume of organic citrus juice that could be consumed in the world in 2010 using 2 different growth scenarios (see Figure 2).
The first scenario assumes that the market for organic orange juice takes off from the year 2004. Annual growth rises up to 40 percent and then gradually decreases to 10 percent in 2010. The choice of these rates is based on the observation of past growth for other organic product categories. Under this scenario organic citrus juice consumption is projected to exceed 500 000 tonnes in single strength equivalent, accounting for slightly under 2 percent of citrus juice sales in developed countries.
In the second scenario consumption grows at 20 percent annually until 2006. Then annual growth decreases gradually to reach 10 percent in 2010. Consumption of organic citrus juices is projected at approximately 250 000 tonnes SSE, representing slightly less than 1 percent of total citrus juice sales in developed countries.
It seems that producers have anticipated significant growth, while demand has not really taken off yet. This has led to a fall in prices. Further decrease in the price premium is expected in the coming years, as the European Union, the United States and Brazil have the capability of increasing their output markedly. The extent of this decrease will depend on how fast demand catches up with supply.
Brazil is highly competitive on the world FCOJ market and is expected to retain his lead in the organic FCOJ market. For other developing countries producing citrus juices and located near the main markets, exporting organic NFC juice may be a better option (distance to markets matters more for NFC juice than for FCOJ due to the higher transportation costs of NFC). For example, Mexico and Central American countries might have an advantage in supplying the US market, while Mediterranean countries could find opportunities in the EC market. Due to the relatively high tariffs on orange juice, those countries which enjoy preferential trade agreements with the major markets will have a comparative advantage.
In conclusion, exporters seeking to supply organic citrus and citrus juices to the major industrialized countries should pay particular attention to the following parameters:
- Ability of their organic citrus industry to meet the specific needs of the targeted market (phytosanitary requirements, quality, packaging, quantity, consistency and timing of deliveries)
- Competitiveness of their organic citrus industry (production costs)
- Distance to markets and transportation costs
- Tariffs in the targeted market and possible preferential market access agreements
- Acceptance of their organic certification body by the targeted market
Potential suppliers should assess the profitability of producing and exporting organic citrus products using various price premium scenarios.