The U.S. simply cannot catch a break, with Hurricane Irma threatening the entire state of Florida. Still very much reeling from the devastating effect of tropical storm Harvey — which essentially destroyed Houston, Texas — the nation will now have to brace for Irma’s potential Category 5 hurricane. While the primary focus is of course on the safety of all Floridians, the unprecedented storm will likely send shockwaves to our domestic commodity markets.
Florida oranges are exported throughout the country and across the globe; in fact, the “Sunshine State” is the second-largest producer in the world of the vitamin-rich fruit. According to VisitFlorida.com, Florida oranges ultimately end up producing “more than 90 percent of America’s orange juice.” Internationally, the state’s agricultural commodity markets conduct significant business with key partners, including Canada, Japan, France and the U.K.
More significantly, Florida oranges ultimately contribute approximately $9 billion annually to the state economy. From this aggregate haul, $1 billion are allocated to tax revenues, which goes towards critical expenditures in education, transportation, and health care. As well, Florida’s citrus-based commodity markets employ nearly 76,000 people — “this number exceeds the total labor force in 45 of Florida’s 67 counties.”
While the mainstream media focuses on the upfront costs of Hurricane Irma in terms of human lives and infrastructures, the stark reality is that we could be facing the complete annihilation of Florida oranges. If so, such apocalyptic wreckage would cripple the state’s commodity markets.
Well prior to the wrath of tropical storm Irma, Florida oranges were already facing a crisis point. At the start of this century, it produced more than 200 million boxes of the fruit. Last year, as reported by CNBC, “the state produced only 65 million boxes, which was the smallest crop in more than 50 years” Moreover, orange trees can tolerate wind speeds up to 50 mph. Hurricane Irma, on the other hand, is projected to deliver speeds up to 155 mph.
At wind speeds ranging between 50 mph to 75 mph, citrus-related commodity markets could lose about 33% to 40% of production. But when dealing with a storm that may very well produce speeds in excess of 200% of the orange tree’s natural limit, the end result is tragically evisceration.
This is no exaggerated matter. According to AccuWeather, virtually every inch of Florida is under extreme threats towards life and property. No part of the state’s agricultural commodity markets will be spared. We shouldn’t just think of Hurricane Irma as an isolated problem. Instead, the ripple effects would be felt globally in terms of higher prices and insufficient supply of a critical asset.