U.S. Lifts Supply Limits on Oranges : Move Draws Protests From California, Arizona Growers

The federal government abruptly lifted supply limits Friday on California and Arizona navel oranges, infuriating growers who claimed that the suspension threatens their profits after last season’s lean pickings and predicted that it will result in higher prices to consumers.

Agriculture Secretary John R. Block suspended the federal regulation governing the supply of navel oranges that reach market, effective Feb. 1, after prices failed to register their normal drop last month after the Christmas holiday.

“It is the view of USDA that the suspension will not substantially disrupt the orderly marketing of the balance of the California-Arizona orange crop and that price and demand will remain strong,” James C. Handley, administrator of the Department of Agriculture’s agricultural marketing service, said in a statement announcing the suspension.

Handley added that the effect of the restrictions will be monitored weekly and that the order could be reinstated “if a substantial change occurs in supply and demand.”

Reaction from growers came quickly.

“It was a mistake,” declared Curt Anderson, a spokesman for Sherman Oaks-based Sunkist Growers Inc. Anderson predicted that lifting restrictions on the flow of fruit to market will disrupt supplies and harm both growers and consumers.

Sunkist’s 6,000 grower-members account for 60% of the California and Arizona citrus crop. Only about 40% of this year’s navel crop has been harvested, he said. The move could cause growers to hold back on marketing their crops, thus creating an artificial shortage and driving up prices paid by consumers.

The marketing order covering California oranges was last lifted in 1952, leading Anderson to speculate that “buyers are leery” of what might result and therefore “are all waiting to see what will happen.” Picking was abruptly halted in some groves, he added.

Cutback in Orders

Kenneth Creason, president of the Fillmore-Piru Citrus Assn. in Ventura County, said retailers have already shown fear that the absence of restrictions will produce a glut of oranges, depressing prices and profits.

“They don’t know whether to buy or hold back for fear that someone will flood the market,” Creason said.

Sunkist, responding to reduced demand from its customers, cut back significantly on its orders during the week, Creason said.

On Monday, the day before Block announced the forthcoming suspension, Sunkist took delivery of 250,000 crates from the Ventura County cooperative, he said.

This dropped to 220,000 crates Tuesday and to 170,000 and 180,000 on Wednesday and Thursday, with only about one-fourth of that amount spoken for on Friday, “which normally is a pretty good day,” Creason said.

Because of concern over forecasts of a possible freeze this week, he added, growers had harvested heavily just as the cutback in orders was announced, leaving their packing sheds abnormally full of ripe fruit.

The federal Agricultural Marketing Agreement Act gives Block authority to suspend restrictions if prices rise above “parity”--a price measure that is intended to assure a minimum return to growers but that Anderson maintains understates such crop costs as energy and fertilizers.

But in the first three weeks of January, prices, which traditionally fall after December, continued to rise, said Roland Harris, chief of the USDA’s marketing field office in Los Angeles. Prices for fresh California and Arizona navel oranges rose to $9.12 a carton from $9, he said, compared to about $6.40 a year earlier.

Under the program, the USDA issues weekly regulations establishing the quality of fruit to be shipped to U.S. and Canadian markets at a pace intended to spread the supply over the longest possible period in order to avoid gluts and shortages and stabilize prices.

“Compared to most current calculations,” Handley said in his statement, “it was clear that the season average price would be substantially above parity. . . . Under these circumstances, continued regulation of navel oranges under the marketing order is not determined to be in the best interest of either producers or consumers.”

Anderson said Sunkist’s marketing strategy was to pace supplies so that the navel crop will last well into April, when Valencia oranges begin coming to market. This year’s crop is smaller than usual, he noted, and three straight years of freezes in Florida, along with that state’s outbreak of citrus canker and bad weather in Texas, have put California and Arizona citrus growers in a relatively good position to make up for last year’s large crop of mediocre quality fruit, which yielded low prices.

“Unfortunately,” said a USDA official, “Congress and the law don’t compensate (later) for (previous) low years.”