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Bringing The Martian Down to Earth
September 16, 2015Connecting the (Interest Rate) Dots
September 18, 2015
The grapefruit has a problem.
Where are we going? To how the plight of the grapefruit is about much more than one fruit.
The Demand Side
The grapefruit used to be one of the most popular citrus fruits. Traditionally favored by older consumers, now grapefruits are stigmatized by the medical community. Told they cannot eat them because of an adverse interaction with statins lowering cholesterol and blood pressure drugs, the older than 50 grapefruit market has dwindled. Add to that the allure of other fruits and even the difficulty of eating a grapefruit and you have a market with less demand.
You can see that grapefruit consumption is way down:
Instead we are eating apples and bananas, grapes and berries:
From: USDA
The Supply Side
On the supply side, the grapefruit has problems also. The big one is a tiny bug that attacks a tree’s vascular system. Called citrus greening, the disease has helped to halve the grapefruit harvest from 36 million boxes to 18 million boxes between 2003 and 2013. It also has tripled the cost of fertilizer and nutrients.
And the supply side impact only gets worse. Comparing the 2012-2013 season to 2007-2008, the industry needed 18 percent fewer people to fertilize trees while demand for pickers declined as did the need for packers and processing plants.
The slide in production is quite evident below:
And we have not mentioned the normal stuff like hurricanes, freezes and canker.
BUT…
The market has some good news. Growers have switched to strawberries and blueberries and olives are even a possibility. Attracted by new opportunities, developers are constructing vacation homes, hotels, an airport and an industrial complex where abandoned groves had once thrived.
Our Bottom Line: Structural Change
I suspect that we have the beginning of structural change where dying traditional economic activity is being replaced by more viable businesses. As the number of Florida’s citrus groves plummets, the amount of strawberry and blueberry production is on the rise as is local development.
The lesson from the grapefruit? Markets create incentives. When demand and supply devastate one good or service, others have the incentive to evolve.
3 Comments
Have not had a grapefruit in 25 years…..miss them, especially the juice………………….Doctors orders…..Joel
I take a cholesterol lowering drug, but fortunately grapefruits do not interact with the drug. I love my grapefruit at breakfast and am unable to drink orange juice due to the acid from the skin of the orange contaminating the juice during processing. So from reading your article, I now know why grapefruits are so expensive and of poor quality.
I recently read an article suggesting that frequent grapefruit consumption can increase the risk of skin cancer. Not sure of the accuracy of the study but I was taken aback. Always thought grapefruit was a healthy citrus.