Down down under

The USDA's Foreign Agricultural Service reports that Australia's citrus outlook for 2008-09 has taken a hit because of the drought there. Valencia trees continue to be pulled in favor of navel orange plantings. Even so, fresh orange exports in 2008 may be down 10% from this year, the FAS said.
From the Nov. 5 FAS report:

At the time of writing this report, Australia is experiencing a severe and prolonged drought. Despite recent rainfall, dry conditions continue to affect citrus production in Australia providing poor soil moisture in crop growing areas and low levels of irrigation water reserves in the catchment areas. In the most extreme cases, some citrus producers will be focused on keeping trees alive until more water is available, rather than trying to maximize productivity. Industry reports have provided strategies for surviving severe drought conditions while the Federal government has made available drought assistance funding to drought affected farmers. Traditionally, Australia produced mostly Valencia oranges. However, over the past decade Valencia production has given way to Navel production with Navel oranges now consistently out-producing Valencia’s. Significant imports of frozen orange juice and fresh oranges have played a role in this industry restructure. The advent of drought and the sharp declines in water availability have seen the shift towards Navel production hasten. Advances in irrigation technology and industry restructure have also been hastened by the severity of the drought. Industry sources suggest that perhaps the bulk of the impact of the drought is yet to be experienced and are anticipating even more difficult conditions in 2008/09. The full effects of current tree removal, constrained fruit set and the exit from the industry of some
producers will likely not be realized until next year. Industry sources maintain some hope however that the industry can recover once current drought conditions cease. They cite removal of older trees and the hastened progression towards production technology as vital to the industry’s long term productivity. Post advises that anecdotal evidence suggests that planting of new trees during the current drought has not subsided, and has likely increased relative to bearing trees. The removal of older varieties and the fact that newly planted trees require less water to maintain has encouraged producers to replant. The Australian citrus industry currently has about 13 organizations providing leadership services and representation. Difficult conditions currently being experienced have given rise to debate regarding industry structure. The industry is currently conducting a series of grower meetings to discuss future options.

Fresh Oranges

Total orange production for CY 2008/09 is forecast at 350 thousand metric tones (TMT), down sharply on the revised estimate for the previous year. Industry sources advise that tree removal for 2007/08 could be as high as 12 percent and that as much as another four percent of trees have effectively been “decommissioned” for the 2008/09 season. In terms of the productivity of remaining trees, industry sources advice that “fruit set” has been affected by drought conditions and this will likely significantly lower yield potential. Further,extremely low levels of irrigation water reserves will likely constrain production for the foreseeable future even if climatic conditions return to near normal levels. Production for 2007/08 has been revised downwards to 419 TMT, an historically low level which has been driven by the smallest Valencia crop for 32 years. Post notes that falling Valencia production is a long-established trend in Australia that began over a decade ago. Drought conditions currently being experienced have hastened this decline.
Exports
Exports of Australian oranges in 2008/09 are forecast at 100 TMT, down from the revised estimate of the previous year. Post advises that despite the large production decline, the reduction in exports is expected to be proportionally lower. Industry sources are anticipating improved average quality in both 2007/08 and 2008/09. A smaller crop and the associated improved management capability, together with a continuous improvement in management practices, are expected to see noticeable improvements in average crop quality. Crop quality typically has a large impact on export volumes and so export volumes are not expected to decline as much as production.