The tidal wave of transition in the California citrus industry is peaking, according to Citrus Mutual president Joel Nelsen of Exeter, Calif.

Industry norms are being swept away with the sound of dozers pushing out thousands of acres of Valencia and early navel oranges.

In their place clemetines and other tangerine varieties and later harvested navel oranges are being planted.

“Different varieties of citrus will be in production by the end of the decade,” Nelsen reported to the 22nd Agribusiness Management Conference in Fresno.

California citrus is an industry in transition because of five continuous years of less than satisfactory revenues in an industry of family farmers.

The industry paradigm is being formulated by retail consolidation that has eliminated the law of supply and demand as a barometer of price, said Nelsen.

“Price is now dictated and with a perishable commodity the ability to negotiate in a free market system is non-existent,” said Nelsen.

Off-shore, subsidized imports also are changing the California citrus business. Highly subsidized imports are competing domestically and eroding traditional export markets, said Nelsen.

Nelsen said EU citrus producers receive more than $1 billion per year in assistance, and the Spanish clementine industry admits to government support of more than $300 million.

The cost of doing business in California is impacting the citrus industry just like it is every business in the state.

Ancillary costs high

“The actual cost of farming has not increased dramatically,” said Nelsen. “All the ancillary costs are driving the family farmer from existence. Insurance costs, workers' comp, utilities, licenses, fees and assessments are all being absorbed since they can't be passed on. Our labor costs exceed the competition by a significant margin as well.”

Nevertheless, the $1 billion California citrus industry will survive. It will be in fewer, more resilient hands. New, more modern packing houses are being built.

Navel oranges will remain the dominant variety followed by tangerine/clementine varieties, then lemons and finally Valencia oranges.

“The citrus industry's economic impact will not change; just the manner for achieving revenue goals will be different,” reported Nelsen.

Identifying the problems was the first step for the industry.

“We've done that and more, and we're moving forward,” said Nelsen.

e-mail: hcline@primediabusiness.com