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

fdocgrower.com