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Citrus growers fret tax increase

The Citrus Department wants to raise per-box taxes to boost advertising, but growers say they have been through enough.

By WILLIAM R. LEVESQUE
Published June 24, 2006

Stan Carter is at wit's end. Canker keeps rearing its ugly head in the 1,700 acres of citrus he manages for McArthur Farms in St. Lucie County. It's ruining trees and dropping fruit.

Fuel costs are up. Insurance is up. The federal government just slapped a quarantine on the shipment of Florida fresh fruit to other citrus-producing states and territories to stop canker's spread.

And growers are still recovering from massive hurricane damage from the past two years, with some grapefruit growers on Florida's east coast having lost up to 80 percent of their crops.

So when the Florida Department of Citrus this year proposed a per-box tax increase assessed growers of 35 to 66 percent, Carter viewed the hike the way he might look at a pest gnawing away at a healthy orange tree.

"You know, a tax increase just doesn't make sense," he said Friday. "Not now. We're all under the gun figuring out how to survive. We recognize the need to advertise. But there's got to be a limit. We're already taking a beating."

Florida citrus commissioners, who govern the department, are facing a surprisingly wide ground swell of opposition from growers big and small to the proposed tax hikes for the 2006-07 fiscal year as they prepare to take a vote on the measure next month.

Andrew Meadows, a spokesman in the citrus department, downplayed the critics, saying, "I don't know that I'd call it opposition as much as I'd call it negotiation."

The department has said the increases are necessary to recover lost marketing and advertising ground after two years of hurricanes, reduced crops and the resulting reduced department revenue.

The hikes, department leaders have said, are offset by higher prices growers are getting for their fruit due to reduced crops. The size of the increase would depend on the variety grown and whether the fruit goes to fresh markets or to make juice.

The proposal would raise the department budget from $51.6-million to $66-million.

On Wednesday, commissioners delayed a vote after hearing even more disconcerting news: A 2006-07 orange crop first estimated at 180-million boxes might fall 20-million boxes short, leaving the department with less tax revenue than expected, even if they vote for a tax hike.

It's enough to test any commissioner's nerves.

David Wheeler, a new commissioner whose family owns about 2,500 acres of oranges, grapefruit and tangerines scattered across five counties in South and Central Florida, said his first instinct is that a tax increase is necessary to pay for the generic advertising that stimulates demand for juice and fresh fruit.

But then he sees all those growers speaking out against any hike.

"I'm struggling with it," Wheeler said. "My personal feeling is we need to support the advertising and promote the product. But I was elected to represent other growers, and I understand why they're not in favor of increasing taxes."

Jim Snively, a Polk County grower with about 70 acres of citrus, told commissioners on Wednesday that his caretaking and harvesting costs rose $1 per box last year, souring him on any tax increase.

"As a small grower, it's a big impact on us," he said, suggesting commissioners keep the tax rate right where it is for juice oranges.

Up to 95 percent of Florida's orange crop goes to make juice, and the department, charged with promoting Florida's $9-billion citrus industry, has recommended a tax increase for juice oranges from the current 18.5 cents to 25 cents per box, a 35-percent increase.

Allen Morris, an agribusiness Realtor and consultant with wide experience in citrus, warned commissioners that orange juice and grapefruit consumption is in decline nationally.

Orange juice sales are down from $3.88-billion in 2000-2001 to $3.51-billion five years later, a 10 percent drop, he said.

Grapefruit juice sales are down even more precipitously, from $234.8-million to $142-million, a drop of nearly 40 percent.

"Without growing demand, prices will not stay high enough to enable making a profit in the higher-cost environment Florida growers are headed into," Morris said. The department's proposed budget and marketing programs, he said, "are the best chance the Florida grower has to realize profitable prices in the future.

"Underfunding the required programs accomplishes nothing but to waste the Florida grower's money," he said in a presentation to commissioners.

Ken Keck, the department's executive director, told commissioners, "I do believe what staff has put forward is a responsible budget. ... It avoids a call from the governor that you guys are deficit spending."

Commissioners provided little hint about how they might vote, though chairman Stephen Ryan said, "We do care what the industry has to say."

So far, four major industry groups representing most of Florida's growers and processors have recommended the tax rate stay flat at 18.5 cents. Two groups representing growers in Highlands County and the Peace River Valley suggested a tax rate of 22 cents for processed oranges, 3 cents short of the department's goal.

For grapefruit growers, the department's proposed tax hike is especially high.

The department has recommended a 40-cent per-box tax on all grapefruit, whether it's sold fresh or to make juice. That's up from the current 24-cent tax on juice grapefruit and 25-cent tax on fresh grapefruit, respectively 66.7 percent and 60 percent increases.

"We need the extra income because we've just been clobbered by hurricanes," said Doug Bournique, executive director of the Indian River Citrus League, which represents growers in the world's largest grapefruit-growing region.

The league recommended the grapefruit tax rate remain the same.

"Our growers just don't want to see tax increases," Bournique said. "It's not the right time for the industry. Economically, we're just trying to stay in business."

--William R. Levesque can be reached at levesque@sptimes.com or 813 226-3436.

What is a 'box' of citrus?

A 1 3/5 bushel, two-compartment, open-top wooden container used in the field to hold citrus during harvesting; also refers to the equivalent of 90 pounds of oranges, temples or tangelos; 85 pounds of grapefruit; or 95 pounds of tangerines.

Source: Florida Department of Citrus

[Last modified June 24, 2006, 06:48:29]