The Big Chill
Sunkist growers scramble to save fruit
while co-op adjusts marketing strategy
By Patricia Miller
n Jan. 11, Canada
exported a most
unwelcome product to the
United States: a wave of
Arctic air that rolled
down the West Coast and settled on the
citrus groves of California and Arizona.
“Six weeks before the freeze, the
meteorologists were warning us that
one was on the radar,” says Gerald
Denni, whose Golden Valley Citrus
growing and packing operation in the
San Joaquin Valley covers about 4,000
acres of citrus. “Within two weeks, they
were getting more precise, and within
five days they were saying, ‘Watch out,
it’s coming!’”
That lead time sent growers into
overdrive, harvesting as much of the
orange, lemon and grapefruit crop as
there was room for in the packing
houses. It gave them time to make sure
their equipment was ready to protect
the groves and to keep trees and fruit as
warm as possible. That’s done two ways:
with wind and with water.
Defense of wind, water
As the temperatures drop, the warm
air rises. “If there’s a breeze, you can
bring the temperature up three to five
degrees,” says Denni, a member of
Sunkist Growers. Above the groves,
wind machines — giant fans — create
that breeze.
Below the trees, growers turn on
their irrigation systems and begin
misting the trees and fruit. It’s not the
ice coating that protects them, but the
heat that’s released as the mist changes
from liquid to solid and is captured
under the canopy of leaves.
Despite the preparation, despite the
wind machines, despite the misting,
time was against the growers. For three
nights, temperatures tumbled into the
20s and teens for long, frigid hours at
time, spelling disaster for the fruit
remaining on the trees. It also meant
disaster for the growers, packinghouses,
workers and communities that depend
on agriculture.
“The duration of the freeze did the
most damage,” says Henry Vega,
another Sunkist member who owns
about 65 acres of lemon groves. “The
temperatures stayed low for hours and
hours.”
Assessing the damage
Within days, some of the most
severe damage was obvious: brown
leaves, frozen fruit falling from the
trees. “But it’s very hard to immediately
detect frost damage in citrus fruit,”
Denni says. “The juice sacs freeze and
burst and form hollow spaces. If it’s not
too bad, the fruit may heal itself and fill
those in. If not, the juice evaporates,
leaving dry pockets. That can take four
to six weeks or more.”
So the period of wait-and-see began.
Wait and see how badly the fruit was
damaged. Wait and see how much
young tree stock was lost. Wait and see
how their cooperative’s efforts will
protect markets. And wait and see the
lasting impact on their communities.
When the freeze hit, the state of
California estimated that about $960
million in citrus was still on the trees
and that 75 percent of it may have been
lost. Governor Arnold Schwarzenegger,
in his request for federal disaster aid,
said the losses to agriculture could
exceed $1 billion — more than caused
by either the freezes of 1990-91 and
1998-99. Unlike Florida’s crop, the bulk
of California’s citrus is destined for the
retail fresh fruit market: the navel,
blood and cara cara oranges, pummelos,
tangerines, mineolas and lemons you
find at the supermarket.
Arizona’s citrus crop, while smaller
than California’s, is still worth more
than $38.5 million annually. Early
estimates predicted that 75 percent to
90 percent of the unpicked lemons,
grapefruit, tangelos and oranges in
Yuma County had been destroyed by
the freezing temperatures. At the time
of the freeze, 25 percent of the lemons
and 75 percent of other citrus were still
on the trees.
Denni says he usually sees 1.2
million cartons of marketable fruit from
his operation from January through
June. But, after assessing the damage
grove by grove, believes that only about
30 percent can be salvaged.
“A month after the freeze, we started
harvesting in the blocks with low
damage, but the majority of the fruit
will have to be separated,” he says.
“Because there was prior warning,”
Sunkist Chairman Nick Bozick explains,
“packinghouses worked around the
clock harvesting and packing as much
fruit as possible. And, as time passes and
we are able to better evaluate the freeze
effects, we are finding that more fruit
escaped severe damage than was at first
thought possible.”
Faced with a funding shortfall
because of the reduced 2007 crop,
Sunkist management immediately
focused on downsizing operations and
reducing expenses while preserving the
cooperative’s fundamental capabilities.
Despite the significant disruption to
overall business operations, Sunkist says
it “does not expect the freeze to have a
materially adverse impact on its
financial position.”
“Our attention,” Bozick says, “is now
focused on aggressively selling the fruit
that remains, on maximizing returns to
growers on the remaining fruit and on
meeting the needs of our customers.”
Ripple effect
Vega breathed a sigh of relief when
he made the post-freeze inspection of
his lemon grove in Santa Paula, which
lies near the coast. A persistent wind
from the sea, along with extensive
irrigation in the days before the freeze,
had protected the fruit and trees from
much damage.
“We fared very, very well,” he says.
Where there was damage, it was usually
on the southwest side of the tree and
where he began seeing lemons develop
the tell-tale bronzy-yellow of frost
damage. He expects that some of his
crop will heal itself, although it will be
downgraded for quality.
But while his fruit fared well, his
workers didn’t. As part of his business,
Vega provides workers to growers and
packers, not only of citrus, but of other
fruits and vegetables.
“Normally, we’d be employing 1,000
workers right now. But only about 300
to 400 are working, and we’re in a
holding pattern,” he says. “A lot of our
workers live paycheck to paycheck and
are scrambling to find other types of
work. So first we have the immediate
shock of the freeze and then the longterm
effect from the loss of these
workers in agriculture.”
Denni agrees. “This is the time when
a lot of our workers make their money
for the year,” he said when interviewed
in February. “They’re working 10 hours
a day, six days a week and collecting
overtime. Some of them have been with
us for more than 20 years, and we’re
doing everything we can to keep
them.”
California and Arizona were bracing
for this ripple effect. With less fruit to
pick, fewer workers are needed in the
groves and packing houses. Fewer
workers mean fewer paychecks being
spent in the communities. In California,
more than 20 counties have been
declared federal disaster areas and the
state is also seeking aid for displaced
workers. Tulare County in the San
Joaquin Valley estimates the freeze
could remove $800 million from its
economy.
Co-op response
As Sunkist members, Vega and
Denni are also concerned about
protecting their markets and their
brand, which is a symbol of citrus
quality for consumers.
“I’m looking for discipline from the
growers and packers not to put
damaged fruit on the market,” Vega
says. “If consumers are burned with
poor quality, studies show it takes them
60 days to buy that fruit again. I’m also
looking for my co-op to help manage
the supply.”
Sunkist estimates that volume for the
fresh market may be down nearly 50
percent.
“We still have fruit, just not as
much,” says Claire Smith,
communications director for Sunkist.
She adds that the cooperative has
beefed up its rigorous inspection
process. “As a branded product, we
have to make sure no damaged fruit has
a Sunkist sticker on it.”
To supply its domestic and
international customers, Smith says
Sunkist is using the fruit it has on hand,
implementing its global sourcing
program and outsourcing some supply,
although the cooperative is very aware
that “any time there’s a dip in supply,
other companies will try to fill the void.
“We’re radically changing our
marketing plan and switching what
advertising we can from oranges to
lemons, because we have more of them.
Because Sunkist’s marketing efforts are
funded by a per-carton assessment, our
budgets are reduced. So we’re cutting
costs and not implementing some of
the projects we had planned.”
Bozick adds, “We’re also working
hard to get disaster relief for the
growers, shippers, harvesters and
packinghouse employees who have
been severely affected.”
Despite the losses he knows he’ll
incur, Denni hasn’t let the freeze of ’07
diminish his passion for the citrus
industry. “I’m very optimistic by nature,”
he says. “And as a farmer — freeze,
drought, flood — it’s part of the territory.
We get knocked down and we pick
ourselves up. We’ll figure this out.”
Black lights, breathalyzers help detect damage
For years, the tried-and-true way to separate damaged
citrus from undamaged fruit was to put it in water. The frostdamaged
pieces, which are lighter due to the loss of juice,
would float to the top. However, damaged fruit sometimes
became trapped under the good fruit and would find its way
into the retail market.
Now grower Gerald Denni uses a mass-to-density ratio to
separate the damaged fruit in his packinghouse. The system
can handle 13 pieces of fruit per second per inspection lane,
and he has 10 lanes, enabling him to check 130 oranges
per second.
“We take 30 digital images of each orange and then it’s
weighed,” he says. “It’s very accurate, which is a benefit
to consumers because they’ll get a better product.”
But new techniques using readily available tools are
being developed to detect frost-damaged fruit in the
groves and packinghouse. The tools? Black lights and
portable breathalyzers.
A task force of researchers from the Citrus Research
Board and University of California Cooperative Extension
Service has discovered that shining black lights on the fruit
reveals tiny, bright-yellow dots on the peel if there’s been
frost damage. The more dots, the greater the damage.
Here’s how the citrus version of the breathalyzer test
works. The fruit is placed in a plastic bag and sealed for at
least 15 minutes. The bag is then pricked with a hypodermic
needle attached to a breathalyzer, which measures the
ethanol escaping from the fruit. If there’s more than .01 milligrams
of ethanol, the fruit is damaged. The higher the
reading, the more damage.
On the horizon is magnetic resonance imaging, which
Jim Thompson of the UC Extension Service says will make
all current tests for winnowing out frost-damaged fruit
obsolete.
Record-breaking sales in ‘06 to help
Sunkist weather severe crop freeze
Sunkist’s annual meeting Feb. 21 in Visalia, Calif., was a bittersweet occasion
for the 6,000-member citrus co-op. Sweet, because 2006 was a record-breaking
year for the 113-year-old co-op, which notched $1.1 billion in sales for the past
year. Bitter, because the month before the meeting growers lost as much as half
of their 2007 crop to a killer freeze.
In 2006, Sunkist’s operating structure was realigned to provide a more integrated
approach to its operations and to better use its resources, said President
and CEO Tim Lindgren. “This realignment improves the coordination of our core
domestic and export business with our newer global-sourcing and fresh-cut
programs. It also complements the ways in which Sunkist products — both
fresh and licensed — are presented and helps to increase the value of the
Sunkist brand.”
Last year’s navel orange crop was exceedingly large — 90 million cartons
industry-wide, although fruit size was small, as is typical with a big crop. Sunkist
growers enjoyed the best
Valencia orange season in a
decade, as co-op marketers
worked to maximize revenue
on a short crop.
Despite intense international
competition, lemon revenue
set an all-time record.
Lindgren credited “excellent
collaboration” between
Sunkist’s citrus juice and oil
unit and its fresh fruit sales
division for creating a price
floor under the juice market
and helping to boost peracre
returns.
Grapefruit returns were
also excellent, and Sunkist had record revenue of $42 million for seasonal specialties,
a 62-percent increase in just two years. These citrus varieties —
including specialty oranges, specialty grapefruits, tangerines and tangelos —
are an expanding part of Sunkist’s business.
In 2006, Sunkist Global LLC produced the best offshore selling season since
its inception in 2003 as a citrus global-sourcing program for the co-op. Sunkist
Global concentrated on fruit sourced from Australia and South Africa, as well as
limes from Mexico. Some domestically sourced fruit — including grapefruit from
Texas and non-member clementines — are also handled under the global program.
Much of the globally sourced fruit is sold in Southeast Asian markets,
although some is marketed in the United States and Canada.
Sunkist marketed more than 600 different products in more than 50 countries
on five continents.
Worldwide sales of Sunkist-licensed products approached $1.4 billion in
2006. Sunkist licensees introduced 46 new products in 2006.
