1. Impact of Changing Fertilizer Prices on Citrus Production Costs Ronald P. Muraro UF/IFAS – Citrus REC rpm@crec.ifas.ufl.edu Presented at 2008 Citrus Expo Seminar UF/IFAS CREC Lake Alfred, FL September 04, 2008

2. Preliminary Production Costs for a 10+ Year Old Southwest Florida Processed Orange Grove Preliminary 2007-08 Without Greening Preliminary 2007-08 With Greening $/Acre% of Total$/Acre% of Total Weed Control & Herbicide Costs 223.3217.5223.3212.5 Spray-Pesticide Costs 182.8414.3432.8724.2 Fertilizer Costs 416.1032.6416.1023.3 Pruning/Topping 37.873.037.872.1 Tree Replacement/Resets 139.0010.9261.1014.6 Irrigation & Ditch Maintenance 278.5621.8278.5615.6 Citrus Greening Management & Canker Decontamination 0.00 0.0 136.00 7.6 Total 1,277.69100.01,785.82100.0

3. Increase in Fertilizer Costs for a 10+ Year Old Southwest Florida Processed Orange Grove Without Citrus Greening Costs 2002-032006-07 Preliminary 2007-08 $/Acre % of Total$/Acre % of Total$/Acre % of Total Total Production Costs762.29100.0978.75100.01,277.69100.0 Fertilizer Costs Material124.5016.3209.3221.4385.5730.2 Application 16.05 2.1 26.28 2.7 30.53 2.4 Total Fertilizer Costs140.5518.4235.6024.1416.1032.6

4. Change in Production Costs for Southwest Florida Processed Oranges – 2002-03 to 2007-08 – Without Citrus Greening Costs % Change

5. Other Than Greening Costs, Fertilizer Is Now The Largest Cost Component of Operating A Citrus Grove 10+ Year Processed Orange Grove in Southwest Florida – Without Citrus Greening Costs 2002-03 $762/Acre Preliminary 2007-08 $1,278/Acre

6. Trends in Florida (U.S.A.) Fertilizer Prices – 1999 to 2008

7. Trends in Sao Paulo (Brazil) Fertilizer Prices – 2002 to 2008

8. What is Driving Higher Fertilizer - Nutrient Prices Increased world demand for fertilizer-nutrients The cost of transportation; higher energy costs Declining value of the U.S. Dollar Source: The Fertilizer Institute, Washington, D.C.

9. Increase in World Demand for Fertilizer Nutrients from 2001 to 2006 Nitrogen11% Phosphate13% Potassium17% China, India and Brazil were largest contributors for world nutrient demand growth. Source: The Fertilizer Institute, Washington, D.C.

10. Top Five Fertilizer Nutrient Countries Consuming Countries Importing Countries Nutrient Producing Countries Exporting Countries ChinaUnited StatesChinaRussia IndiaChinaUnited StatesCanada United StatesBrazilRussiaUnited States BrazilIndiaCanadaBelarus PakistanFranceIndiaGermany Source: The Fertilizer Institute, Washington, D.C.

11. Fertilizer prices are expected to increase for the 2008-09 season. What can be done to keep fertilizer Costs down for 2008-09?

12. Example Processed Orange Production Curve Pound Solids Yield Response to Increasing Nitrogen Fertilization

13. Example on Reducing the Impact of a 30% Increase in 2008-09 Fertilizer Prices -- Processed Orange Grove Without Citrus Greening Management Costs Preliminary 2007-08 30% Price Increase with Normal Fertilization 2008-09 30% Price Increase with 75% Fertilization 2008-09 $/Acre % of Total$/Acre % of Total$/Acre % of Total Total Production Costs1,277.69100.01,401.47100.01,266.50100.0 Fertilizer Costs Material385.5730.2509.3536.3382.0130.2 Application 30.53 2.4 30.53 2.2 30.53 2.4 Total Fertilizer Costs416.1032.6539.8838.5404.9132.6

14. Summary / Conclusion / Comments

15. Costs of Operating A Florida Citrus Grove Are Increasing Rapidly ________________________________________________________ Major causes of increasing costs – Fuel/Energy Costs – Fertilizer Costs

16. Fertilizer Costs Are Increasing Faster Than Other Caretaking Costs ______________________________________________________ Increasing World Demand for Fertilizer Nutrients - China, India, Brazil Higher Energy Costs Higher Transportation Costs Indication is fertilizer costs will continue to increase

17. To Mitigate Expected Increase in 2008-09 Fertilizer Prices ______________________________________________________ Consider reducing the amount of fertilizer applied –However, reducing fertilizer applied should be considered a one year strategy due to the possible negative impact on future yields; i.e. unless current fertilization rate is already above optimum level.

18. To Mitigate Expected Increase in Future Fertilizer Prices ______________________________________________________ Consider establishing a fertilizer experiment in your own grove –Set aside a one or two rows for evaluating different fertilizer application rates –Using variable rate fertilization equipment, apply several fertilizer application rates over one or two rows above and below current rates –Check leave nitrogen, observe condition and color of trees, differences in yields and compare to the trees receiving your traditional fertilizer program

19. Current Citrus Cost Information Can Be Obtained at UF/IFAS CREC Website: www.crec.ifas.ufl.edu/extension/economics www.crec.ifas.ufl.edu/extension/economics