Hurricane Ian could push food prices even higher
Hurricane Ian is the latest natural disaster to impact food prices. The storm hitting Florida is already forcing orange juice futures prices to soar, and it could soon reduce the country’s fertilizer supply, which could have a huge impact.
Contract prices for frozen concentrated orange juice hit around $1.92 a pound earlier on Wednesday, up more than 5% from Tuesday, before moderating slightly.
Florida is a major producer of citrus fruits, especially oranges and grapefruits. According to satellite imagery provider Maxar Technologies, at least 75% of Florida’s citrus belt is at risk of heavy flooding rains over the next 36 hours.
Maxar’s WeatherDesk finds that at least a third of groves are susceptible to wind damage, mostly in the northwest part of the Citrus Belt.
Orange juice futures are up almost 30% so far this year. And the timing of the storm is tough on Florida farmers as citrus crops near harvest season.
“There will be quite a bit of fruit drop and fruit loss from the trees,” Maxar said.
Citrus production was already under severe pressure even before Hurricane Ian.
In July, the US Department of Agriculture estimated that US orange production would fall 13% in 2021/2022 to the lowest level in 55 years due to drought in California and citrus greening in Florida. Citrus greening is a disease that causes trees to produce fewer, smaller fruits. As a result, juice producers have to use more oranges per bottle, which increases their costs and leads to higher prices for consumers.
Prices for oranges and tangerines climbed 14.4% for the year to August. The price of juices and other non-alcoholic beverages increased by 13.1% during this period.
Meanwhile, a major producer of phosphates used in fertilizers is based in Tampa, where the storm is expected to hit hard. The producer, Mosaic, says it supplies half of all granular phosphate sold to North American farmers.
“In anticipation of the substantial impact of Hurricane Ian, we have taken appropriate measures to protect our personnel, mines, factories, port facilities and administrative offices,” said William Barksdale, director of communications for Mosaic company, in the press release.
Mosaic said employees at its Tampa headquarters and other locations were working remotely. The company said it was continuing to complete preparations at its phosphate mining and production facilities in Florida as well as Louisiana, adding that those preparations began last week.
When farmers spend more on fertilizer, they either have to raise the prices of the crops they grow or cut back and reduce the supply. In all cases, the higher prices are passed on to consumers.
Extreme weather is a major contributing factor to the massive price spike: droughts have forced US farmers to sell their cattle herds and destroy their own crops. In recent years, floods have also destroyed crops and killed livestock.
The storm comes at a time when consumers are already seeing record increases in food prices. According to the Bureau of Labor Statistics, the cost of food this year has climbed 11.4% through August, the largest annual increase since May 1979.
Grocery prices jumped 13.5% and restaurant menu prices rose 8% during this period.
–— CNN’s Chris Isidore and Vanessa Yurkevich contributed to this report.