Voluntary Report - public distribution

**Date:** 7/17/2006

**GAIN Report Number:** AS6045

AS6045

**Australia**

**Citrus**

**Update**

**2006**

**Approved by:**

![](media/image1.wmf)Kathleen Wainio, Agricultural Counselor

U.S. Embassy

**Prepared by:**

Mike Darby, Agricultural Specialist

**Report Highlights:**

Australian fresh orange production is forecast to fall sharply in
2006/07 to 450 TMT. At least two significant frost events perpetuated by
some of the coldest and driest conditions on record have sharply reduced
Australian citrus production, particularly Navel oranges. It is too
early in the production cycle to confirm whether these conditions may
also affect Valencia production and associated orange juice production.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Unscheduled Report

Canberra \[AS1\]

\[AS\]

Table of Contents

[SECTION ONE: SITUATION AND OUTLOOK
3](#section-one-situation-and-outlook)

[General 3](#general)

[Weather Conditions 3](#weather-conditions)

[Production 4](#production)

[Crop Quality 4](#crop-quality)

[Exports 5](#exports)

[Processing 5](#processing)

[Market Access 5](#market-access)

[SECTION TWO: STATISTICAL TABLES 6](#section-two-statistical-tables)

[Recent Reports from FAS/Canberra 7](#recent-reports-from-fascanberra)

# SECTION ONE: SITUATION AND OUTLOOK

## General

The Australian citrus industry produces Navel and Valencia oranges,
which combined produce around 500 to 550 TMT annually. The Australian
citrus industry also produces mandarins (100 TMT), lemons and limes (35
TMT) and grape fruit (12 TMT). These figures fluctuate significantly
from season to season.

Over the past decade there has been a declining trend in Valencia
production in favor of Navel oranges. Improved marketing opportunities
for Navel oranges, including export, have seen growers remove older
Valencia trees and replant to Navels. Increased imports of lower priced
orange juice have also reduced returns from Valencia oranges, commonly
sold for juice.

![](media/image2.wmf)

Valencia oranges are typically harvested from October through to March.
Navel oranges are usually harvested from June through to October and as
a result are susceptible to frost damage during harvest. Mandarins and
lemons are also harvested from June through to October.

## Weather Conditions

The majority of Australian continent has experienced prolonged drought
conditions, which began in 2002/03. The first half of 2005/06 saw a
resumption of normal weather conditions, which reverted to drought
conditions in the last quarter (April, May and June in 2006).

The Australian Bureau of Meteorology recently reported that June 2006
recorded "some of the coldest and driest" conditions for decades. South
Eastern Australia, which accounts for the overwhelming majority of
Australian citrus production, experienced the coldest month on record
(since 1950) while the period April to June was the fourth driest on
record.

The cold and dry conditions ultimately led to frost events in mid June
(15^th^ and 16^th^), which are believed to have had a significant impact
on citrus production for 2005/06. These frost events have reportedly
affected production in the majority of production areas in South Eastern
Australia including the South Australian Riverland, Murray Valley and
Riverina.

## Production

Australian citrus production (Navel and Valencia oranges) in 2006/07 is
forecast at 450 TMT, well below previous expectations of just over 500
TMT. Severe frost events, which occurred in the first half of the Navel
harvest (June 2006) is believed to have caused a sharp decline in
production. Industry sources report that it is too early to determine
exactly how much production has been lost due to this extreme weather
event.

The Navel harvest, which was previously forecast to yield around 281 TMT
in 2005/06, has been slashed by around 20 percent and is now expected to
yield around 225 TMT. Some sources believe production could even fall
lower although it remains too early say.

Valencia production in 2006/07 is currently forecast at around 227 TMT,
in line with earlier industry forecasts. The harvest, which is not due
to commence until October and runs through to February, may also be
affected by this frost. Some industry sources believe that the effect on
Valencia's could be worse due to the relatively smaller sized immature
fruit and associated lower sugar content (at the time of the frost
event) although it is not possible to say at this early stage in the
production cycle. Post will likely update Valencia production in its
Citrus Annual report due in November 2006.

Estimated production in 2005/06 has been revised downwards slightly to
547 TMT, in line with industry figures. Production of Navel oranges is
estimated at 267 TMT and production of Valencia oranges is estimated at
280 TMT, in line with industry estimates. This is considered an average
size crop, according to historical Australian Government data.

![](media/image3.wmf)

## Crop Quality

The physical impact of frost on citrus fruit can be devastating. The
effect of freezing the fruit ruptures the membrane inside the orange and
causes it to deteriorate prematurely. In other cases it may cause the
orange to "dry up".

Frost does not affect a citrus crop uniformly. In any given frost event,
large variations in damage are experienced between districts, orchards
and even between oranges harvested off the same tree. The variation
depends on the elevation of the individual orange on the tree; the sugar
content of the fruit; the elevation of the tree itself; density of
foliage on the tree and cultural practices such as irrigation
techniques.

The affect of frost damage on the Australian citrus crop has yet to be
accurately determined. Industry leaders are currently concentrating
their efforts on not allowing frost-affected fruit to enter the supply
chain, and so are counting the cost only in terms of lost production.
However, despite the efforts made by industry, exporters and retailers
remain concerned of the potential for frost-affected fruit to enter the
supply chain.

Existing training activities and materials are being used to assist
producers in determining fruit unsuitable for harvest. Citrus packers
have actively encouraged producers not to harvest fruit they feel may be
affected. Where possible, harvest has actually been halted with the
delay expected to assist pickers in determining frost-affected fruit.

Packers have also indicated that fruit that was unaffected by frost may
also be subject to other conventional deterioration such as scarring
from insect pressure, although some packers believe these more commonly
occurring problems to be no worse than average.

## Exports

Exports of Australian citrus (Navels and Valencias) in 2006/07 are
forecast at 75 TMT, down sharply on the 131 TMT estimated for the
previous year. A sharp reduction in the supply of Navel oranges suitable
for export, due to frost events, is likely to see exports fall sharply
in 2006/07. Navel oranges make up the vast majority of orange exports
and the Navel harvest has a large impact on the level of oranges
exported from Australia.

Exports for 2005/06 are estimated at 131 TMT (year ending March 2006),
in line with official Australian Bureau of Statistics figures. The
United States remains Australia's largest market receiving 26,535 MT,
slightly above Hong Kong, which received 24,582 MT. Exports to the
United States however, were valued at over twice that of exports to Hong
Kong. Exports to Malaysia stood at 21,568 MT while exports to Japan and
Singapore are estimated at 9,796 MT and 10,197 MT respectively.

![](media/image4.wmf)

## Processing

Oranges delivered for processing in 2006/07 are forecast at 180 TMT,
down on the 220 TMT estimated for the previous year. Post forecasts
juice production to be around 13,846 MT, using a conversion factor of 13
to convert deliveries to juice production.

Post expects lower navel production in 2006/07 to result in lower
domestic availability of oranges for fresh consumption. Under these
market conditions Post would expect to see a higher level of Valencias
consumed as fresh oranges on the domestic market, lowering the
availability of Valencias for processing domestically.

## Market Access

The government of Australia has recently negotiated access to the
Chinese market for Australian citrus. This negotiation included a field
visit by Chinese quarantine officials in March 2006 which concluded with
the confirmation of correct management procedure and pest mitigation
practices.

The Australian citrus industry hopes to ship citrus to China during this
harvest and is currently formulating a strategy with its business
partners. Industry sources remain skeptical of the success of such
exports in the first year as sharply reduced availability of suitable
fruit will likely constrain new market development in 2006/07.

# SECTION TWO: STATISTICAL TABLES

+-------------------+-----+------+-----+------+-----+------+--------+
| **PSD Table**     |     |      |     |      |     |      |        |
|                   |     |      |     |      |     |      |        |
| Oranges, Fresh    |     |      |     |      |     |      |        |
+-------------------+-----+------+-----+------+-----+------+--------+
|                   | **  | **R  | **  | **Es | **  | **Fo | *UOM*  |
|                   | 200 | evis | 200 | tima | 200 | reca |        |
|                   | 3** | ed** | 4** | te** | 5** | st** |        |
+-------------------+-----+------+-----+------+-----+------+--------+
|                   | **U | **   | **U | **   | **U | **   |        |
|                   | SDA | Post | SDA | Post | SDA | Post |        |
|                   | Of  | Es   | Of  | Es   | Of  | Es   |        |
|                   | fic | tima | fic | tima | fic | tima |        |
|                   | ial | te** | ial | te** | ial | te** |        |
|                   | \[O |      | \[O |      | \[O |      |        |
|                   | ld\ | **\  | ld\ | **\  | ld\ | **\  |        |
|                   | ]** | [New | ]** | [New | ]** | [New |        |
|                   |     | \]** |     | \]** |     | \]** |        |
+-------------------+-----+------+-----+------+-----+------+--------+
| **Market Year     |     | **0  |     | **0  |     | **0  | *MM    |
| Begin**           |     | 4/20 |     | 4/20 |     | 4/20 | /YYYY* |
|                   |     | 04** |     | 05** |     | 06** |        |
+-------------------+-----+------+-----+------+-----+------+--------+
| **Area Planted**  | 32  | 3    | 32  | 3    | 0   | 3    | *(HECT |
|                   | 000 | 2000 | 000 | 2000 |     | 2000 | ARES)* |
+-------------------+-----+------+-----+------+-----+------+--------+
| **Area            | 27  | 2    | 27  | 2    | 0   | 2    | *(HECT |
| Harvested**       | 000 | 7000 | 000 | 7000 |     | 7000 | ARES)* |
+-------------------+-----+------+-----+------+-----+------+--------+
| **Bearing Trees** | 6   | 6026 | 6   | 6045 | 0   | 6060 | *(1000 |
|                   | 026 |      | 045 |      |     |      | T      |
|                   |     |      |     |      |     |      | REES)* |
+-------------------+-----+------+-----+------+-----+------+--------+
| **Non-Bearing     | 1   | 1124 | 1   | 1130 | 0   | 1150 | *(1000 |
| Trees**           | 124 |      | 130 |      |     |      | T      |
|                   |     |      |     |      |     |      | REES)* |
+-------------------+-----+------+-----+------+-----+------+--------+
| **TOTAL No. Of    | 7   | 7150 | 7   | 7175 | 0   | 7210 | *(1000 |
| Trees**           | 150 |      | 175 |      |     |      | T      |
|                   |     |      |     |      |     |      | REES)* |
+-------------------+-----+------+-----+------+-----+------+--------+
| **Production**    | 461 | 453  | 500 | 547  | 0   | 450  | *(1000 |
|                   |     |      |     |      |     |      | MT)*   |
+-------------------+-----+------+-----+------+-----+------+--------+
| **Imports**       | 13  | 12   | 10  | 13   | 0   | 15   | *(1000 |
|                   |     |      |     |      |     |      | MT)*   |
+-------------------+-----+------+-----+------+-----+------+--------+
| **TOTAL SUPPLY**  | 474 | 465  | 510 | 560  | 0   | 465  | *(1000 |
|                   |     |      |     |      |     |      | MT)*   |
+-------------------+-----+------+-----+------+-----+------+--------+
| **Exports**       | 98  | 106  | 110 | 131  | 0   | 75   | *(1000 |
|                   |     |      |     |      |     |      | MT)*   |
+-------------------+-----+------+-----+------+-----+------+--------+
| **Fresh Dom.      | 176 | 169  | 190 | 209  | 0   | 210  | *(1000 |
| Consumption**     |     |      |     |      |     |      | MT)*   |
+-------------------+-----+------+-----+------+-----+------+--------+
| **Processing**    | 200 | 190  | 210 | 220  | 0   | 180  | *(1000 |
|                   |     |      |     |      |     |      | MT)*   |
+-------------------+-----+------+-----+------+-----+------+--------+
| **TOTAL           | 474 | 465  | 510 | 560  | 0   | 465  | *(1000 |
| DISTRIBUTION**    |     |      |     |      |     |      | MT)*   |
+-------------------+-----+------+-----+------+-----+------+--------+

+-------------------------+-----+-----+-----+-----+-----+-----+-----+
| **PSD Table**           |     |     |     |     |     |     |     |
|                         |     |     |     |     |     |     |     |
| Orange Juice            |     |     |     |     |     |     |     |
+-------------------------+-----+-----+-----+-----+-----+-----+-----+
|                         | **  | **  | **  | **E | **  | **F | *U  |
|                         | 200 | Rev | 200 | sti | 200 | ore | OM* |
|                         | 3** | ise | 4** | mat | 5** | cas |     |
|                         |     | d** |     | e** |     | t** |     |
+-------------------------+-----+-----+-----+-----+-----+-----+-----+
|                         | **U | **P | **U | **P | **U | **P |     |
|                         | SDA | ost | SDA | ost | SDA | ost |     |
|                         | Of  | E   | Of  | E   | Of  | E   |     |
|                         | fic | sti | fic | sti | fic | sti |     |
|                         | ial | mat | ial | mat | ial | mat |     |
|                         | \[O | e** | \[O | e** | \[O | e** |     |
|                         | ld\ |     | ld\ |     | ld\ |     |     |
|                         | ]** | **  | ]** | **  | ]** | **  |     |
|                         |     | \[N |     | \[N |     | \[N |     |
|                         |     | ew\ |     | ew\ |     | ew\ |     |
|                         |     | ]** |     | ]** |     | ]** |     |
+-------------------------+-----+-----+-----+-----+-----+-----+-----+
| **Market Year Begin**   |     | **  |     | **  |     | **  | *MM |
|                         |     | 07/ |     | 07/ |     | 07/ | /YY |
|                         |     | 200 |     | 200 |     | 200 | YY* |
|                         |     | 4** |     | 5** |     | 6** |     |
+-------------------------+-----+-----+-----+-----+-----+-----+-----+
| **Deliv. To             | 200 | 190 | 210 | 220 | 0   | 180 | *(M |
| Processors**            | 000 | 000 | 000 | 000 |     | 000 | T)* |
+-------------------------+-----+-----+-----+-----+-----+-----+-----+
| **Beginning Stocks**    | 1   | 1   | 1   | 7   | 1   | 2   | *(M |
|                         | 585 | 585 | 331 | 482 | 384 | 739 | T)* |
+-------------------------+-----+-----+-----+-----+-----+-----+-----+
| **Production**          | 15  | 14  | 16  | 16  | 0   | 13  | *(M |
|                         | 384 | 615 | 153 | 923 |     | 846 | T)* |
+-------------------------+-----+-----+-----+-----+-----+-----+-----+
| **Imports**             | 31  | 42  | 31  | 29  | 0   | 35  | *(M |
|                         | 362 | 533 | 000 | 500 |     | 000 | T)* |
+-------------------------+-----+-----+-----+-----+-----+-----+-----+
| **TOTAL SUPPLY**        | 48  | 58  | 48  | 53  | 1   | 51  | *(M |
|                         | 331 | 733 | 484 | 905 | 384 | 585 | T)* |
+-------------------------+-----+-----+-----+-----+-----+-----+-----+
| **Exports**             | 2   | 2   | 2   | 2   | 0   | 1   | *(M |
|                         | 000 | 251 | 100 | 166 |     | 800 | T)* |
+-------------------------+-----+-----+-----+-----+-----+-----+-----+
| **Domestic              | 45  | 49  | 45  | 49  | 0   | 47  | *(M |
| Consumption**           | 000 | 000 | 000 | 000 |     | 000 | T)* |
+-------------------------+-----+-----+-----+-----+-----+-----+-----+
| **Ending Stocks**       | 1   | 7   | 1   | 2   | 0   | 2   | *(M |
|                         | 331 | 482 | 384 | 739 |     | 785 | T)* |
+-------------------------+-----+-----+-----+-----+-----+-----+-----+
| **TOTAL DISTRIBUTION**  | 48  | 58  | 48  | 53  | 0   | 51  | *(M |
|                         | 331 | 733 | 484 | 905 |     | 585 | T)* |
+-------------------------+-----+-----+-----+-----+-----+-----+-----+

## Recent Reports from FAS/Canberra

The reports listed below can all be downloaded from the FAS website at:
<http://www.fas.usda.gov/scriptsw/AttacheRep/default.asp>.

  ---------- --------------------------------------------------- ----------
  **Report   **Title of Report**                                 **Date**
  Number**                                                       

  6030       Review of Permitted Seeds List for Australia        05/19/06

  6031       Ag Down Under Vol. 8                                05/19/06

  6032       Dairy Semi Annual                                   05/30/06

  6033       Wheat Australia sells 350,000 MT to Iraq            05/31/06

  6034       Ag Down Under Vol. 9                                06/02/06

  6035       Australia Actively Pursuing FTAs                    06/07/06

  6036       Wine Annual                                         06/08/06

  6037       Sugar Smut Outbreak in Queensland                   06/20/06

  6038       Ag Down Under Vol. 10                               06/23/06

  6039       Agricultural Biotechnology Annual                   06/28/06

  6040       Worst Frost in 20 Years Affects Australian Citrus   06/27/06
             Production                                          

  6041       Poultry Meat IRA Released                           06/28/06

  6042       Australian FTA with Gulf States                     06/30/06
  ---------- --------------------------------------------------- ----------