Economic Potential of Producing Tahiti Limes in Southern Florida in the Presence of Citrus Canker and Greening

Thursday, July 25, 2013: 2:00 PM
Springs Salon D/E (Desert Springs J.W Marriott Resort )
Edward Evans, Associate Professor , University of Florida, Homestead, FL
Fredy Ballen, Economic Analysis Coordinator II , University of Florida, Homestead, FL
Jonathan H. Crane , University of Florida, Homestead, FL
Currently the United States is the largest single country importer of fresh 'Tahiti' limes, absorbing close to 20% of the global trade of limes and lemons in 2009. Of the 365 thousand metric tons of limes consumed in the United States in 2010, imports accounted for about 99%. The vast majority (more than 90%) of the lime import is supplied by Mexico—the world leading producer and exporter of 'Tahiti' limes—with the remainder being sourced from suppliers in Central and South America countries. The overwhelming dependence on imports to satisfy 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  with production occurring  in the extreme parts of south Florida (Miami Dade County) and parts of southern California. The noticeable shift in degree of lime self sufficiency is attributed to several factors. Among such factors were increased foreign competition, devastating hurricane and outbreaks of pests and diseases. The latter, considered to be the worse of the three, involved the discovery of two devastating citrus diseases present in Florida, namely citrus canker and citrus greening. Efforts to rid the  production areas of citrus canker led to an  aggressive program of eradication beginning in 2002 involving the destruction of all citrus trees grown in Miami Dade County and enforcement of regulations prohibited the growing of any citrus trees (commercial or otherwise). Although since 2006 the program has been abolished, after being deemed cost-ineffective, and production restrictions removed, growers have been reluctant to restart production because of substantial losses they incurred and uncertainty surrounding growing the crop in the presence of the diseases. Given the renewed interest in 'Tahiti' lime production, the aim of this paper is to assess the downside risk involved in producing limes in the southern Florida region in the presence of these two invasive species. To account for the uncertainty associated with the presence of the diseases use is made of stochastic budgeting technique and Monte Carlo simulation involving the modeling of stochastic prices and yields. The investigation is carried out for a hypothetical 5-acre lime orchard in southern Florida. The results suggest that production of 'Tahiti' limes can be profitable if steps are taken to manage the diseases, but contrary to popular view, it might be better to wait until the trees become fully unproductive before replacing them.