Squeezed Into Oblivion?

The rotund, early ripening Hamlins and the yellowish, elongated Pineapples have all been picked. Soon it will be the Valencias’ turn, and Mason G. Smoak plucks one of the smooth-skinned fruit from the tree and opens it with a serrated knife to see if it’s ready.

The orange, which gleams in the morning sun, is gorged with juice, and droplets explode into the air as Smoak cuts into the rind. He tastes the fruit’s flesh the way a French peasant from Perigord might savor a truffle, and nods with satisfaction.

“We’ll have to take it in and test it for sugar and acid content,” he says. “But we’ll probably harvest in the next three weeks.”

For three generations, the Smoak family has been growing oranges on the sandy ridge that runs through Central Florida like a gently undulating carpet, ever since the family patriarch, a barber, bought his first grove during the Great Depression. The Smoaks now have 3,000 acres of trees, 30 full-time employees and an annual orange crop large enough to produce 8 million gallons of juice. It reaches consumers in several forms: frozen concentrate, juice reconstituted from concentrate, juice “not from concentrate” or juice in cans.

“We’d prefer if people started bathing in it,” joked Edward L. Smoak Sr., Mason’s father.

Unfortunately for the Smoaks, and for a business so synonymous with Florida that license plates feature ripe oranges and a sprig of orange blossom, Americans these days are drinking much less orange juice. With best-selling regimens like the Atkins and South Beach diets advising people to avoid carbohydrate-laden orange juice if they want to shed weight, annual per capita consumption has fallen from nearly six gallons in the late 1990s to below five gallons.

What’s more, although most Americans may assume orange juice is from Florida, Brazil has become the global superpower of the industry, dominating markets outside the United States and even threatening Florida growers on their home turf.

Many industry figures think only a surcharge slapped on imported juice, which dates to the Smoot-Hawley Tariff Act of 1930, stands between Florida’s most celebrated consumer product and oblivion. And the tariff could conceivably be revoked in the interest of freer trade throughout the Western Hemisphere.

“Now the concern, especially among medium- and small-size growers, is, is there a future in it for me?” said Raymond D. Royce, executive director of the Highlands County Citrus Growers Assn., which represents growers in this rural area northwest of Lake Okeechobee where the Smoaks have their groves.

Already there is a glut, with enough juice and concentrate in storage to supply the United States for half a year. Tanks holding as much as 1 million gallons apiece of thick, frosty concentrate dot the Florida countryside, giant Slurpees waiting for demand to perk up.

And in this saturated market, in which growers are getting an average of 72 cents per gallon of juice produced, 24 cents less than last year, another high tide of product is on the way. From the ranks of orange trees that march down Florida’s interior from south of Orlando to the fringes of the Everglades near Immokalee, the U.S. Department of Agriculture is forecasting a record crop this season.

To improve their chances of economic survival, some growers, including the Smoaks, have expanded into other crops, from livestock to ornamental shrubbery. Others have sold off tracts for conversion into shopping centers or homes. Small growers, who could make good money a generation ago on 50 or 100 acres, have been hit especially hard.

“If there is any kind of debt connected with a grove, there’s difficulty,” said Steve West, an insurance agent whose Orlando firm has been issuing property and casualty policies to growers since 1917.

Over the last five years, West said, insurance companies have foreclosed on some mortgages they held on groves.

“When there is a short crop in Florida, the price should go up, but Brazil now can bring in its product and cover the deficit,” West said. “So the growers have difficulty meeting their loan payments due to the low price of the fruit, escalating costs such as for chemicals used in the groves, and the costs of maintaining workers.”

Nearly all of Florida’s crop is turned into orange juice. The state accounts for 97% of U.S. orange juice production, and this season’s harvest, which ends early next month, should yield 1.5 billion gallons of juice. When oranges from California, Texas and Arizona are added, this year’s domestic output of orange juice should exceed demand by 112.5 million gallons, said Robert E. Barber Jr., director of economics for Florida Citrus Mutual, an industry association.

But the challenges to Florida’s flagship crop don’t end there. A bacterium called the citrus canker has led to the felling of 2.2 million trees in commercial groves. The Sunshine State’s continued population growth has meant ever fiercer competition for land and water. Finally, and perhaps most daunting of all, there is Brazil.

Over the last three decades, South America’s largest nation, which has warmer weather and cheaper labor than Florida, has become the world’s No. 1 source of orange juice. The Brazilians have built oceangoing tankers to transport concentrate, port facilities to offload it and tank farms to store it. To guarantee themselves a presence in the American market, the Brazilians have bought many of the processing and storage facilities in Florida.

“The [Florida] industry is truly challenged to the point of whether it’s going to survive or not,” said Ron Edwards, former head of operations for Tropicana, a division of PepsiCo. Edwards, now chief executive of Evans Properties, a major Florida grower, credits the tariff imposed on Brazilian juice -- which works out to 29.7 cents per gallon for juice manufactured from concentrate -- for keeping Florida production economically viable.

Edward L. Smoak Sr. agreed. “If they do away with the tariff, this is not stubbing our toe,” said Smoak, 56. “It’s a shot to the temple.”

Last autumn, Mason Smoak, production manager for the family’s holdings, journeyed south to the state of Sao Paolo, home of Brazil’s 1.5 million acres of groves, more than twice the expanse that Florida has in oranges. Mason, 29, who has a degree in agricultural business, found the experience sobering.

“It’s just amazing the advantage they have, just by the labor,” he said. According to agricultural economists, the Brazilians can pick an orange off the tree and truck it to a processing plant for a quarter to a third of the harvesting cost in Florida.

Given the myriad challenges, some have begun asking a once unthinkable question: might Florida one day be without an orange juice industry, the same way cheaper foreign competition has led to the closing of textile mills throughout the South and smokestack industries in the Rust Belt?

“When you think things couldn’t get worse, they got worse,” said West, the insurance agent.

In this election year, an economic sector that generates an estimated $9.1 billion in wealth and employs 90,000 potential voters is also being assiduously wooed.

“The growers know the president [George W. Bush] needs the I-4 corridor, the citrus belt,” said Royce. “And so far, we have a lot of assurances the president and the government understand.”

With Florida again a key battleground in the race for the White House, Republicans and Democrats have assured orange growers and juice producers that their respective parties want the industry to prosper again, and that they support maintaining the surcharge on Brazilian juice.

To date, however, the Bush administration has not granted the industry’s wish that it pledge in writing never to grant the Brazilians unfettered access to the U.S. market. Some growers worry that after the Nov. 2 presidential election, the victor might repeal the orange juice tariff to win concessions from Brazil in other sectors covered by the proposed Free Trade Area of the Americas.

If Florida growers were to go under, U.S. consumers would be the losers, contended Andrew W. LaVigne, vice president and chief executive of Florida Citrus Mutual, the industry association in Lakeland. LaVigne said that if American orange juice production dried up, the Brazilians would achieve a virtual worldwide monopoly and be able to charge any price they wanted.

The century-old industry, which boomed after World War II with the invention of a process to make frozen concentrate so juice could be sold year-round, isn’t just counting on politicians to ensure its future. Mechanical harvesters, which shake fruit from trees, are increasingly replacing large picking crews made up mainly of Mexican migrants, and neutralizing Brazil’s low-cost labor advantage.

“In 20 years, it’s conceivable we could get the [harvesting] cost down to what the Brazilians pay,” said Fritz M. Roka, an assistant professor and economist at the University of Florida’s agricultural research station in Immokalee. Research is also underway into a high-tech fix: robot pickers.

In one regard, the evolution in Americans’ eating habits has benefited Florida. In the early 1990s, a new type of ready-to-drink orange juice that hadn’t been manufactured by adding water to concentrate began appearing in stores. Promoted as fresher and better tasting, “not from concentrate,” or NFC, has become so popular it now accounts for half of the orange juice sold in U.S. supermarkets, according to a survey for the Florida Department of Citrus, a state government agency.

And, while overall orange juice consumption keeps dropping -- in the month ending April 10, total supermarket sales were down 6% from the same period in 2003 -- sales of NFC edged up 1.4%. (Meanwhile, demand for frozen concentrate plummeted by 22%.)

Florida growers are now pondering how to produce even fresher juice by squeezing fruit right in the groves after harvest. To stop many Americans from thinking of orange juice primarily as a carbohydrate-rich drink, the state Department of Citrus has launched a $7-million national advertising campaign touting its health benefits.

“Orange juice is loaded with vitamin C, potassium and folic acid,” said Andrew Meadows, a department spokesman. “It’s the most nutrient-dense beverage you can buy.”

The citrus business is not for the faint-hearted. Freezes in the 1980s destroyed 25% of Florida’s groves, ended commercial growing north of Orlando and brought about a massive relocation of the orange crop to the more clement southwest corner of the state.

“With the prices growers are receiving this year, it’s a breakeven for some, and losses for others,” said Thomas Spreen, professor and chairman of the Food and Resource Economics Department at the University of Florida in Gainesville. Spreen said it was premature to paint doomsday scenarios, but he speculated that the industry’s greatest long-term problem could be the mind-set of consumers -- the avoidance of orange juice because it contains a lot of carbohydrates.

“If the tariff stays in place and demand keeps going down, it doesn’t do you any good,” Spreen said.

Since mid-November, the Smoaks have been harvesting oranges as the different varieties ripen, all the while keeping a worried eye on the price offered for their crop, Bush administration trade policy and competition from Brazil.

“It’s not pretty this year,” said Edward Smoak. “We basically rode a high tide for 20 years, and now the tide has subsided.”

In the early 1970s, the family got into raising beef cattle to diversify, and also to have land they could hunt on. These days, they grow pine trees for telephone poles, and an ornamental plant with large red, green and white leaves named the caladium that is a specialty of the Lake Placid area.

When the Smoaks buy land, it’s no longer enough that it possess the dry sandy topsoil preferred by citrus trees. The tract must also be close to a lake or a highway so it could be sold for residential or recreational use if the woes of Florida’s orange juice industry continue.

“That’s probably the biggest thing we’re banking on: the residual value of the land outside citrus,” Mason Smoak said. “We’re just trying to keep our eggs in more than one basket, so we’re not held victim to one commodity.”