Two types of limes are mainly consumed in the United States, namely tahiti limes (also called persian limes) and key limes (Citrus aurantifolia). Tahiti limes are generally larger and contain more juice than do key limes, but have a shorter shelf life. Over the years, U.S. consumers have shown a definite preference for tahiti limes by a ratio of ≈9:1 [U.S. Department of Agriculture (USDA), 2013]. Between 1980 and 2011, consumption of fresh limes in the United States increased from 43.6 to 365.4 thousand tonnes (99% are imports). This corresponds to a rise in per capita consumption from less than 0.5 to nearly 2.6 lb over the same period, representing an annual growth rate of ≈6% (USDA, 2013). The noticeable increase in the level of consumption of fresh limes observed in the United States can be attributed in part to a growing Hispanic population and the opening up of the market to imports from Mexico. Currently, the United States is the largest single-country importer of fresh limes, absorbing close to 18% of the global trade of limes and lemons (Citrus limon) in 2011 (Food and Agriculture Organization of the United Nations, 2012). The vast majority (more than 90%) of imported limes is supplied by Mexico—the world’s leading producer and exporter of limes—with the remainder being sourced from suppliers in Central and South American countries.
The overwhelming dependence on imports to satisfy U.S. domestic demand for fresh limes was not always the case. As recently as 1990, the United States satisfied more than half of it domestic needs from local production (Spreen, 2000), with the bulk of production (more than 90%) occurring in southern Florida (Miami-Dade County) and smaller quantities being produced in the southern parts of California and Texas—production is limited to these areas because of the crop being extremely cold-sensitive. The noticeable shift in the degree of reliance on U.S. domestic production is attributed to several factors. Chief among these factors are increased foreign competition, adverse weather conditions (such as drought), natural disasters (such as hurricanes), and outbreaks of pests and diseases (Roy et al., 1996; Spreen, 2000; C. Wheeling, personal communication). A devastating natural disaster was Hurricane Andrew, a category 5 hurricane, which struck the main lime-producing areas of Florida in 1992, destroying most of its industry. The extent of the hurricane’s damage is reflected in the data showing that the number of bearing trees declined from almost 1 million trees before the hurricane to a little more than 0.25 million trees after the hurricane, with production falling from ≈58,000 tons to ≈8000 tons. Correspondingly, the farm gate value fell from ≈$20 million to ≈$2.5 million (Spreen, 2000). Foreign competition has become a huge problem since 1994, when the United States signed the North American Free Trade Agreement, which opened the market to imports from its competitor, Mexico. This served to further aggravate the situation at a time when many Florida growers had embarked on an ambitious replanting program following the 1992 hurricane (M. Philcox, personal communication; C. Wheeling, personal communication).
However, despite these setbacks, the industry was poised for a recovery (J.H. Crane, personal communication; T.H. Spreen, personal communication; C. Wheeling, personal communication) when it suffered the most severe blow yet with the discovery of the citrus canker disease in the main lime-producing area. At that time, the relative resistance (tolerance) of tahiti lime to citrus canker was not known and therefore (Crane and Osborne, 2011; Dewdney et al., 2009; Folimonova et al., 2009; Spann et al., 2008a, 2008b), intense fear that the diseases would spread and jeopardize the $9 billion Florida citrus industry led to the implementation of an aggressive eradication program that lasted from 2002 to 2006. This eradication program involved the destruction of all citrus trees grown in Miami-Dade County and the enforcement of regulations prohibiting the growing of any citrus trees (commercial or otherwise) in the area [Florida Department of Agriculture and Consumer Services (FDACS), 2013]. A consequence of the program was that hundreds of thousands of citrus trees had to be destroyed, causing tremendous financial losses to growers, notwithstanding the partial compensation offered by federal and state efforts to mitigate the impact. As a result, Mexico took full advantage of the market opportunity (Fig. 1).
Times have changed though. The mandatory eradication program ended in 2006, and most of the restrictions on cultivation of the crop have been removed (except for a few dealing with the sourcing of nursery stocks, which can only be purchased from certified nurseries) (FDACS, 2013). However, recent supplies of tahiti limes from Mexico have been experiencing frequent shipping interruptions because of phytosanitary issues and adverse growing conditions in Mexico, causing shortages of tahiti limes on the U.S. domestic market and extreme price volatility (Fig. 2). For example, the cost, insurance, and freight price (CIF) for tahiti limes imported from Mexico has increased significantly, from $854/tonne in Feb. 2008 to $1524/tonne in Feb. 2011, because of phytosanitary issues in Mexico, such as sweet orange scab (Elsinoë australis) and citrus greening (FreshFruitPortal.com, 2011). Further stoking the interest of prospective U.S. producers are results of a demonstration plot of tahiti limes at the University of Florida Tropical Research and Education Center in Homestead, which have shown that reasonable yields of tahiti limes can be obtained despite the presence of citrus canker and citrus greening even in the absence of any specific control activities for the diseases (J. Pena, personal communication).
Given the renewed interest in tahiti lime production in southern Florida, the objective of this article is to assess the profitability of a hypothetical 5-acre tahiti lime orchard in southern Florida in the presence of citrus canker and citrus greening. To account for the uncertainty associated with the presence of the diseases, a stochastic budgeting technique is employed in the analysis, incorporating stochastic prices and yields based on discussions with industry experts and researchers. The analysis is focused on three possible types of management strategies currently practiced by citrus growers in Florida: 1) production without any specific control activities for citrus canker and citrus greening, 2) canker and greening management without immediate removal or replacement of infected/suspicious trees, and 3) canker and greening management with immediate removal and replacement of infected trees (Morris and Muraro, 2008). The analysis is carried out for a 20-year time horizon.
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