Is This the Crop That Saves Florida Agriculture?

by Tom Schenk

If you’ve driven through central and southern Florida over the last several years, you may have wondered why much of the land that used to grow oranges and grapefruit in central and southern Florida now sits fallow and choked with weeds? Most people are aware of the fatal citrus greening disease that has caused one of the greatest agricultural disasters in US history. Almost every remaining grove in the Sunshine State is infected with this disease as researchers struggle to find a cure with little to show for results.

In 2017, the growers who were still in the game were spending between $1,500-$2,500 per acre in expenses to coax a profitable citrus crop out of their dying groves. These efforts were met with almost ideal growing conditions and by all accounts it appeared that their efforts would be rewarded with one of the best crops they’d seen in years.

Until the arrival of Hurricane Irma which went through Florida like a chainsaw leaving no grove untouched.

Damage reports indicate that half or more of the unripen fruit is now laying on the ground while what remains in the trees is bruised or will eventually drop off in the coming weeks.  And if that wasn’t bad enough, many groves were left standing in water far beyond the critical 72 hours which is almost always fatal for citrus trees.

Directly and indirectly, Florida’s citrus industry creates almost 45,000 jobs which translate to almost a $9 billion contribution into Florida’s economy. Today’s citrus industry has shrunk by well over half from its peak in the late ‘90’s leaving rural towns and communities distressed and struggling to survive as families and individuals move away to find work elsewhere.  There are only 7 remaining processing plants in the state and it is highly questionable how many will remain open and viable when ultimate crop losses may be as high as 80%-90%.  There’s a point where it does not make economic sense to salvage the remaining fruit in a grove or open a processing assembly line for the smallest harvest since the 1940’s. Like any commercial real estate, ag land is generally priced as a function of its income earning value plus any development potential. Citrus grove and that used to be valued at $10,000 – $15,000 or more per acre now sells for less than half to a third of that.

But why can’t some other crop fill this void?  It’s not for lack of trying.

South Florida’s hundreds of thousands of acres of sandy, shallow soils and rainy climate narrow the field of viable crops that can be profitably grown in those conditions.  Afternoon rains continually flush fertilizers and chemicals out of the soils, into the drainage canals, and ultimately Florida’s coastal estuaries and Everglades. In spite of these challenges, many growers and outside investors have ventured into some alternative specialty crops such as peaches, blueberries, tomatoes, and strawberries.  Establishment costs, however, are very high.  In the case of blueberries, it could exceed $15,000 per acre! To make matters worse, growers have found themselves struggling with a diminishing supply of farm labor. And finally, whenever prices spike higher from either early season prices or if there is a production shortfall, floods of cheaper imports arrive in a matter of days from Mexico and South America.

  • So what can work in Florida’s unique agricultural ecosystem?

There is one ray of hope that shows great promise of restoring ag land values and revitalizing business in South Florida’s rural towns.  In 2011, an enterprising group of entrepreneurs from a company called TerViva began approaching some of the state’s largest citrus growers to establish some trial sites with a tropical/subtropical tree crop called pongamia. Pongamia is an oilseed tree that is native to Australia and India.  Conceptually, the crop is like growing soybeans on trees, but at yields 8x-10x over the best Iowa farmland. Pongamia is not new to Florida.  At the turn of the last century, it was introduced as a landscaping ornamental and today a few of these trees can still be found along the turnpike, shopping centers, and in parks in south Florida.

Creating a viable agricultural industry from scratch is not an easy task, but it has been done.  Soybeans were unheard of until they were introduced in the early 1930’s and palm oil trees were developed from the rubber plantations in Southeast Asia after WWII.  Interestingly, products from pongamia are thriving industries in India where the oil is used for industrial applications like fuel, lubricants, paints, surfactants, biopesticidal horticultural sprays, and more.  The “cake” or “meal” that remains after the oil is extracted is coveted as a great fertilizer that releases its nitrogen slowly so a plant can utilize it better. In India it is used to suppress soil-borne pests like nematodes that are the arch enemy of many of our food crops.

So what is the path to prove the viability of a new crop in the US – especially in such a challenging geography as Florida? Below is a checklist of the gauntlet it had to run.

  • Will the tree grow here?

This was the first order of business TerViva set out to prove to growers when they arrived in 2011.  The first grower who would listen to them was Ron Edwards CEO of Vero Beach – based Evans Properties. Edwards, former COO of Tropicana and co-founder of SoBe Beverages and Blue Buffalo Pet Foods, has a track record of spotting a good management team, a good business model, and an idea that had a good shot of succeeding.  Skepticism was high so Terviva offered to split the costs of the first trials.

The result was beyond expectations.  Growers such as Graves Brothers, US Sugar/Southern Gardens, DNE, Alico, Mosaic and others soon followed.  Around the state, the tree grew well in diverse sites with sandy soils, toxic soils, saline soils, and even Mosaic’s challenging clay reclamation soils. In 4 years the trees were 10’ to 16’ in height.

 

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Pongamia orchard in Florida – Photo by TerViva

The trials have shown that these trees survived hurricanes Mathew and Irma, 2 weeks in standing water, frosts, non-irrigated fields, poor soils, higher-salinity irrigation not suited for most other crops, sand, clay, pests, and heat. Indeed, pongamia can deal with Florida’s challenging climate and soils..

  • What are the costs to grow it?

Establishment costs are very similar to citrus.  Indeed, the first thing that growers noticed was that the tree could literally be dropped right into the existing citrus infrastructure. The trees cost about the same as citrus and the planting densities are equal to or slightly less than citrus. Some growers literally planted between the stumps of former orange trees. To date in Florida, no pesticides have been used.  This hardy tree has grown through a laundry list of tropical and subtropical pests that growers spend millions of dollars on to control.  The biggest annual expense is weed maintenance until that young tree can get some height and eventually shade out a lot of the undergrowth which can subsequently be managed with mowing. So annual maintenance costs tally to about $400-$500 per acre – about one third or one fourth of what citrus currently spend.  Some growers used a small amount of fertilizer, and many used none at all.  Pongamia is a legume so it enriches the soil by making its own nitrogen.

  • How is it harvested?

Almost all of the fruit and vegetable crops grown in Florida need manual farm labor and every year that has been more difficult and costly to come by. Conversely, a crew of 2 and a nut tree shaker like those used on pistachios or almonds can harvest a pongamia tree in 3-5 seconds.  Those cost benefits accrue directly to the bottom line.  For the past 2 years as some of the young trees have produced pods early, Terviva has put on grower demos to show how easy and fast the tree can be harvested.

  • Who’s going to process it?

The beauty of the pongamia industry is that everything about it is low-tech. The tree puts out a pod that is easily shelled with a nut sheller and crushed with conventional soybean crushing equipment.  It doesn’t require elaborate $100 million processing plants or exotic enzyme formulations to make it work. The bean inside that pod looks about the size and shape as a lima bean.  It consists of about 40% oil and the 60% balance is the remaining seedcake. In 2017, the forward-thinking Hardee County IDA and its head, Bill Lambert, unanimously voted to build the first pongamia crushing plant in Florida. Because of the elite varieties that Terviva is cultivating at various commercial greenhouses in the state, an acre of their trees is conservatively estimated to yield about 400 gallons of oil and almost 3 tons of seedcake!

  • Who’s going to buy the products?

This is where it gets interesting. There is a long buffet of diverse markets for this oilseed tree crop and therein lies one of its greatest advantages.  These profitable markets range at the low end from a feedstock for industrial oils, to feed, and all the way up to highly-valued biocontrol products for the organic agriculture.  Organic growers have long been familiar with the benefits of pongamia’s oil and meal products under the Indian name karanja.

Like soy, pongamia oil is a long-chain C18:1 compound that can readily be refined into biodiesel or bio-jet A fuel.  Those tests have been tested and validated by Shell, Valero, REG, and ARA Labs. Refiners view a pongamia crop in Florida as a new oilfield that faithfully produces oil every year. Fuel is the base-case end market and can produce fine investment returns.

Classified as a politically correct “non-food” feedstock it can be used to make biodegradable polymers such as fracking fluids, plastics, detergents, paints, and other industrial products.  Secondary compounds found in the oil have documented and long used in India as extraordinarily effective biopesticides as good as or more effective than more commonly known neem products that are widely used by organic farmers, gardeners, and in the fast growing cannabis industry.  Because of the lack of need for inorganic chemicals used in growing pongamia, these high-value end-products are in growing demand by organic feed and growing operations. Sales into these channels alone can double or triple the value of the cake and oil.

The seedcake or meal can be further refined to produce a (30%) high-protein animal feed, or simply be used as an environmentally-friendly, slow-release 4-1-1 fertilizer that plants can better utilize.  Because the backbone of the oil shares similar properties to various food oils, scientists have told Terviva that the secondary compounds could be stripped out to upgrade the oil to “food quality” which could be of great value in parts of the world where pongamia could be grown on a footprint not adaptable to traditional oilseed crops.

  • Bus 101

The arrival of the pongamia farming model into the staggering agricultural void created by the citrus greening disease could be a classic business school case study.  The trail has been blazed.  A deeper dive into this business model reveals some very unique attributes.  The trees high yields offer an extraordinary margin for error in any given crop year.  For many alternative oilseed row crops planted elsewhere in the US (often as a new rotational crop), the entire growing season can tolerate few hiccups or else the yields will have a difficult time justifying the risks of planting and new machinery investments.  Pongamia’s low annual maintenance costs also allow a lot of margin for adverse weather surprises.  Pongamia’s diverse downstream markets mitigate marketing risks.  Low-tech processing that can create products from fuel and feed to fertilizer and biocontrol horticultural sprays can allow plenty of flexibility to target up-cycling markets and reduce dependency on single consumer markets.  And depending on those markets, Terviva estimates that at maturity, the groves could generate a net income between $700- $1,500 per acre.

What would the ideal replacement crop look like if it showed up at growers’ doorstep? Probably something like pongamia.

Hurricane Irma’s Devastation to Florida Agriculture

by Robbie Hall, TerViva Propagation & Agronomy Associate

Hurricane Irma swept across Florida on September 10-11, 2017, leaving a wake of destruction behind. A month later, Floridians are still dealing with the aftermath. Agriculture is Florida’s second largest industry, and contributed $4 billion to the state’s economy in 2015 [1]. The Florida Department of Agriculture and Consumer Services released its preliminary report on Irma’s damage to the industry on October 4, 2017, and estimates agricultural damages totaling over $2.5 billion! Here is the breakdown of losses outline in this report [2]:

  • Total Florida Agriculture: $2,558,598,303
  • Citrus: $760,816,600
  • Greenhouse, Nursery and Floriculture: $624,819,895
  • Sugar: $382,603,397
  • Forestry: $261,280,000
  • Beef Cattle: $237,476,562
  • Fruits and Vegetables (excluding citrus): $180,193,096
  • Field Crops: $62,747,058
  • Aquaculture: $36,850,000
  • Dairy: $11,811,695

The economic assessment above accounts for some crop losses, damaged infrastructure, debris cleanup, and animals’ long-term welfare that was affected by Irma. These costs will likely increase as more information is made available. The remainder of this blog post will discuss some of the impacts from Irma in greater detail and provide some insight into what could potentially happen in the near future.

Florida’s citrus industry has been reeling over the past decade from production losses, due to the citrus greening disease [3], and Hurricane Irma was the last thing growers needed to come along. Reports range from 40% of lost fruit in Central Florida, to as much as 100% in some areas of Southwest Florida [4]. These numbers are still climbing, as damaged fruit initially left on the trees continues to drop. In addition to fruit loss, some of the trees received significant structural damage, such as broken limbs and even trunks splitting down the middle. One of the hardest hit groves near LaBelle, FL, had 70% of its trees ripped from the ground, exposing the roots of the trees. The severely damaged trees will need to be cleared out with front-end loaders. Some of the smaller trees that were blown over can be pruned, stood back up, and braced, but that will require additional labor. Paul Meador, owner of the LaBelle-based Everglades Harvesting & Hauling, brought up another point. “The trees are extremely stressed. You get what’s left of this crop off, and then next year we’ll probably have half a crop again… It’s the ugly gift that keeps on giving” [3].

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Fallen fruit sits on the ground below orange trees in Frostproof, FL, U.S. Hurricane Irma destroyed almost half of the citrus crop in some areas.
PC: Daniel Acker/Bloomberg/Getty Images

Hurricane Irma caused problems for cattle owners as well, especially in Okeechobee County. As everyone in the state frenzied to prepare for Irma’s landfall, many routine operations became interrupted. One of these instances happened with the “grain train”, a train bound for Okeechobee with 26 freight cars of ground corn, soybean meal, cottonseed meal, and other commodities used in making feed for the dairy cattle in the area. On the weekend of September 2nd, farmers anxiously awaited the overdue delivery. As the week wore on, the grain train still had not arrived. Fortunately, the State Agricultural Response Team (SART), a partnership made up of government agencies and non-profit groups, intervened and the train finally arrived Friday evening, September 8th.

Without SART’s assistance, many dairy cows could have gone without food for too long [5]. After the hurricane arrived, one beef cattle ranch in Okeechobee, the Alderman-Deloney Ranch, experienced major flooding after a surrounding dike broke loose. A group of 20 people had to move the herd of approximately 500 cattle five miles down the road to higher ground at the Triple S Ranch. The Aldermans believe that at least five of the animals drowned before they were able to be moved [6][7]. Statewide, ranchers estimate that 100 animals died during the storm. Some additional losses from this disturbance include an estimate of 7 percent of cows not breeding this year, and approximately 187,000 calves losing close to 50 lbs each while awaiting shipment to out-of-state feedlots ($75 loss per calf) [4]. Other losses to cattle owners include damage to grain bins and commodity barns, as well as rain-soaked commodities, feed, and silage [5].

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Antique windmill before hurricane Irma – PC: Robbie Hall

 

On a personal note, my family has a small cattle operation near Bushnell, FL, and we were not without our own problems from Hurricane Irma. Countless trees and large limbs fell around our property, and many came down on our barbed wire fences. We spent the rest of the week sawing up trees and rebuilding our fences around the perimeter of our property before some of our cattle decided to go out on the highway. Additionally, we were without power for six days, and by the fifth day, our cattle water troughs were empty. Thankfully, we were able to borrow a friend’s trailer that had a 500-gallon tank, and used a generator so we could pump and haul water to the empty troughs. At the moment, we still have trees and cross-fences down on the interior of our property that will need to be repaired when we have time, but our cattle at least cannot escape anymore. We were very fortunate that we did not have any structural damage to our house and barn, but our antique windmill was not lucky in surviving the storm!

RH antique mill after

Robbie hauling water to the empty trough in front of the damaged windmill after hurricane Irma – PC: Matthew Hall

This blog post was not meant to be an exhaustive discussion of all those industries affected, because really all of Florida was affected; Hurricane Irma was roughly the size of Texas, so it was thorough in enveloping the whole entire state! Florida Commissioner of Agriculture Adam Putnam has stated that he will “present the needs of Florida’s agricultural sector to Congress and ask for short-term federal disaster relief” [8]. In the meantime farmers will continue their efforts in recovering from this natural disaster. In addition to the losses incurred by the agricultural sector, Hurricane Irma could impact Florida’s economy in a couple of other ways. Some of these domestic crops may be replaced in grocery stores with foreign competition from countries such as Mexico, Honduras, and Costa Rica [1]. Also, Puerto Rico was ravaged by both hurricanes Irma and Maria, and there will likely be an influx of people moving to Florida that will be looking for jobs in construction and agriculture-related fields [8]. One thing is certain: Florida agriculture will never forget Hurricane Irma!

 

References

  1. http://www.sun-sentinel.com/news/weather/hurricane/fl-reg-irma-agriculture-tour-20170918-story.html
  2. http://www.citrusindustry.net/2017/10/05/760-million-initial-estimate-of-irmas-florida-citrus-damage/
  3. https://www.thepacker.com/node/3091
  4. http://www.wptv.com/news/state/irma-s-agriculture-toll-tops-2-5-billion-in-florida
  5. http://blogs.ifas.ufl.edu/news/2017/09/27/uf-expert-helps-ensure-grain-train-gets-feed-dairy-cows/
  6. https://www.local10.com/weather/hurricane-irma/hundreds-of-cows-rescued-from-flooded-ranch-in-okeechobee-county
  7. http://www.wptv.com/news/region-okeechobee-county/cows-dead-many-more-at-risk-after-okeechobee-county-ranch-floods
  8. http://www.floridatrend.com/article/23179/perseverance-a-priority-for-florida-farmers-post-irma