Orange juice prices are set to stay high for the next decade even though production this season is expected to improve, and wholesale prices will need to be passed on to consumers, Rabobank has warned.
The agricultural lender said orange juice wholesale prices had historically been determined largely by availability but this was changing because of rising production costs and reduced yields in key growing areas. In Brazil, for example, increased harvesting and fertiliser costs, among other factors, had led to the price of 6.8kg of fresh oranges delivered to the processing plant going up from $0.47 in 2003/04 to $0.92 now, Rabobank said.
"The increased cost price will need to be passed on in order to restore profitability and stimulate investment," Rabobank said. Recent high prices might go down in the short term, but "orange juice prices are likely to stay high," it said.
The agricultural lender said orange juice wholesale prices had historically been determined largely by availability but this was changing because of rising production costs and reduced yields in key growing areas. In Brazil, for example, increased harvesting and fertiliser costs, among other factors, had led to the price of 6.8kg of fresh oranges delivered to the processing plant going up from $0.47 in 2003/04 to $0.92 now, Rabobank said.
"The increased cost price will need to be passed on in order to restore profitability and stimulate investment," Rabobank said. Recent high prices might go down in the short term, but "orange juice prices are likely to stay high," it said.
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