April 07, 2022

A Quick Glance At Investing In Citrus

by Sara Wensley

Director, Growth and Marketing

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A Quick Glance At Investing In Citrus
FarmTogether's Orosi Mandarin Grove - Crowdfunding Property
Citrus fruits have skyrocketed as a popular snack choice due to their convenience and portability. Let's take a deep dive into citrus' history, diversity, and evolution as a crop.

Ranging from sweet to tart to even bitter in the case of grapefruit, citrus fruits bring a diverse flavor profile to a range of traditional fare. They provide several health benefits and are easy to transport as a result of their acidity, which slows down rotting. As a result of these benefits, among others, citrus fruits have become a staple across the globe.

Soft citrus fruits, in particular, have skyrocketed as a popular snack choice due to their convenience and portability. Today, the most recognizable varieties are oranges, mandarins (tangerines), grapefruits, lemons, and limes. However, even beyond these varieties, their diversity spans far and wide, providing consumers with other less well-known options such as pomelos, Meyer lemons, kumquats, and "sweet oranges," like blood oranges.

Let's take a deep dive into citrus' history, diversity, and evolution as a crop.

Citrus’ Roots

While citrus is featured prominently in many cuisines worldwide, these crops are native to the rainforests of Southeast Asia. As a result, citrus trees are well-suited to thrive in regions with fertile soil, mild climates, and reliable precipitation. Historians believe that lemons and citron, a lemon-like fruit, were first introduced to the Mediterranean region from Southeast Asia between the 3rd and 1st centuries BCE. Many historians believe that possession of citrus indicated wealth and status at that time, given that citron tree pollen has been found in the sites of palaces and other royal dwellings. However, it wasn't for several centuries that other citrus fruits began to arrive in the western world; limes were first seen in the 10th century AD, sweet oranges in the 15th century AD, and mandarins in the 19th century AD.

Citrus arrived in North America in the late 15th and early 16th centuries. Historians believe that Spanish explorers first planted orange trees in Florida upon their arrival in the early 1500s to help prevent sailors from catching scurvy, a disease caused by a deficiency of vitamin C. In the mid-1800s, the first commercial production of oranges began in Florida and California.

The Many Uses of Citrus

Citrus fruits were originally used medicinally given their impressive vitamin profile, especially immune-boosting vitamin C which is critical for maintaining healthy bones, blood vessels, skin, and connective tissues. Citrus is also a great source of flavonoids, powerful antioxidants that have been linked to therapeutic benefits against cancer, diabetes, neurological disorders, and cardiovascular disease.

Today, approximately half of all citrus is grown for processing, while the remaining half is grown for fresh consumption. While Florida leads the way in citrus production for juicing and processing, California is the US leader in production for fresh consumption. Citrus is also used in animal feed, essential oils, dietary supplements, charcoal production, and industrial chemical-removing agents.  

Citrus Economics

Lemons, oranges, and mandarins have seen national average price increases over the last ten years. Mandarin prices have seen the fastest growth, at a 6.3% CAGR, followed by lemons (5.2%) and oranges (3.7%). Global citrus production was also up 4% in the 2020-2021 season, with consumption and production increasing in the US, EU, Turkey, and China.

The US, the third-largest citrus-producing nation, produces roughly 8% of the world's fresh citrus, including 11% of the world's mandarins and lemons and 3% of the world's fresh oranges. California produces 54% of domestic citrus within the US, while Florida produces 42%. Arizona and Texas make up the remaining 4%.

California, where FarmTogether's citrus properties are located, is home to prime growing regions, such as the San Joaquin Valley's "Citrus Belt" which boasts impressive citrus diversity and uniquely suited soils and climate for producing a high-quality crop. California's navel orange production has figured much more significantly in the national picture, as production in Florida has declined due to pest pressure and recent hurricanes.

In 2020, California growers produced 48% of the nation's mandarins and 93% of its lemons, the highest figures of any state. Yields for both crops have been stable, but mandarins are now the fastest-growing citrus crop in the state and globally, thanks to significant increases in planting. California's share of national mandarin acreage grew by 21% from 2010 to 2020.

Certified Organic Citrus Production

Sales of organic fruits and vegetables are projected to grow between 5% and 10% in 2022, presenting a key growth area for the citrus industry. In California, sales of organic navel oranges have increased for three consecutive growing seasons, while organic lemon sales grew 4% during the same period. Organic prices have uniformly outpaced conventional prices in citrus markets in California, as evidenced by data from the USDA Agricultural Marketing Service on orange and lemon prices over the last five years.

The Science of Modern Citrus Production

While traditional plant breeding remains an important tool for farmers to produce reliably productive and high-yielding trees, researchers are now turning their attention to citrus genomics. New plant breeding techniques within citrus are making great strides in overcoming agronomic challenges, like pests and other pressures. For example, genome editing trials in oranges and grapefruit show significant success in creating resistance for specific bacterial pathogens and shortening the time it takes for the citrus tree to mature.

One particularly threatening disease, an east Asian pathogen called Huanglongbing (HLB), has received considerable research in recent years. Transmitted by small insects known to inhabit citrus groves, this disease has rapidly expanded throughout farms in the US and abroad; it has now been recorded in at least 33 countries. A research team from the University of Florida, one of the most affected US citrus-producing states, is currently developing new, resistant varieties that could provide higher yields than traditionally-grown cultivars.

Alongside these researchers, farmers in Florida are innovating with other methods of combating HLB. Traditionally, citrus trees are planted to approximately 145 trees per acre. To make up for reduced yields from HLB, citrus growers in Florida are experimenting with high-density plantings that are up to six times more dense than the average planting.

Citrus Orchards Provide Sweet Spot for Farmland Investors

With an eye on nutrition, consumers are spending more than ever on fruits and vegetables rich in antioxidants. Meanwhile, in the organic market, demand consistently outpaces the supply. As these trends continue to grow, citrus remains a key market for farmland investors.

At FarmTogether, we feature a variety of opportunities to invest in citrus properties on a regular basis; we are excited to share these opportunities, and our vision for agriculture with our investors.

Interested in Learning More About Farmland as an Asset Class?

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Disclaimer: FarmTogether is not a registered broker-dealer, investment advisor or investment manager. FarmTogether does not provide tax, legal or investment advice. This material has been prepared for informational and educational purposes only. You should consult your own tax, legal and investment advisors before engaging in any transaction.

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