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Juice Processing Site May Keep Operating

By Kevin Bouffard
THE LEDGER

 Published: Wednesday, June 25, 2008 at 6:01 a.m.

LAKELAND | A U.S. Sugar official said Tuesday he did not expect the sale of the company's assets to the state of Florida would cause the shutdown of its citrus operations, particularly its Clewiston juice-processing plant.

That decision, however, is ultimately in the hands of state officials and the South Florida Water Management District, which will take possession of those assets, said Robert Coker, the company's senior vice president for public affairs.

"I suspect there's going to be people lining up at the water district expressing interest" in purchasing Southern Gardens Citrus Processing Corp., Coker said. "This asset has enough value that my guess is somebody will be operating this facility after we're gone."

The U.S. Sugar subsidiary operates the plant and 30,000 acres of groves, the third largest grower in the state.

Under the sales agreement with the state, Southern Gardens will operate the processing plant, which can produce more than 120 million gallons of orange juice annually, and the groves for seven more seasons beginning with the 2008-09 season, Coker said. The company has not discussed with water district officials operating the plant after that.

It's too early to discuss what the water management district will do with any of those citrus assets, said spokesman Randy Smith on Tuesday.

The intent of the deal is to use most of the land for water quality purposes, he said, but officials may decide that some groves or the plant could continue to operate after Southern Gardens turns over the keys.

The most important asset to keep running is the 52-million gallon storage tank farm at the Clewiston plant, said Bob Norgerg, an economist and deputy director of research and operations at the Florida Department of Citrus. The tanks store not-from-concentrate orange juice, the most widely sold OJ product in the U.S.

Those tanks would be hard to replace given the cost of building new ones: more than $1.50 per gallon of storage capacity, he said. That's more than $78 million.

As for the Clewiston plant's processing capacity, about 20 million boxes of oranges per year, other Florida processors, including Citrosuco North America Inc. in Lake Wales, Louis Dreyfus Citrus in Winter Garden and Peace River Citrus Products Inc. in Vero Beach, which owns a Bartow plant, could easily pick that up, Norberg said.

Even if the Clewiston plant were to shut down, the juice extractors, evaporators and other equipment would find ready buyers from other processors, he said.

On the growing side, taking 30,000 acres of orange groves out of production, which would represent annual production of 6 million to 8 million boxes, would push up farm prices other growers would receive for their oranges, Norberg said. Farm prices since January have fallen as the state's processors began building OJ inventories again.

"That could be a positive impact. Taking 8 million boxes off the market could strengthen prices," Norberg said.

Coker said he expects the water management district will take some grove land out of production for environmental purposes, particularly its largest grove in southeast Hendry County, which abuts state-owned stormwater treatment and wildlife management areas.

Some or all of the other groves in central and north Hendry may be less valuable for environmental purposes and could continue operating, he said.

Growers in Hendry, including Southern Gardens, have been hardest hit by the bacterial diseases citrus canker and citrus greening, which is fatal to citrus trees.

Norberg expressed concern that Southern Gardens may not aggressively manage those diseases in groves slated to be destroyed in seven years. That would damage other growers in the area if the disease spreads from those groves, he said.

"You've got seven years to milk the cow, and after that, they're dead," Norberg said.

Norberg was referring to a concern among Florida growers that those diseases are spreading through abandoned groves and commercial groves not aggressively managing diseases.

[ Kevin Bouffard can be reached at kevin.bouffard@theledger.com or at 863-802-7591. Visit his blog at citruspulpwash.theledger.com. ]

 


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