American demand for orange juice is decreasing, and consumption is down more than one third over the last decade. This shift is attributed in part to the rising popularity and availability of other kinds of beverages, such as boutique flavored waters and other tropical juices or juice blends. Luckily for Florida orange growers, there is a strong market for their product in South Korea to make up the difference.
Until the Korea-US Free Trade Agreement (KORUS FTA) was implemented in 2012, most of South Korea’s orange juice supply came from Brazil, the world’s largest orange grower. Oranges and related products from the US, the world’s second largest grower, were subject to a 54% tariff when entering the Korean market, making them more expensive than Brazil’s. In the two years since the FTA went into effect, all that has changed and American product is now being consumed at a very high rate in Korea. Though the overall rate of consumption in South Korea has not gone up, the fact that American oranges are now cheaper than Brazil’s has caused US exports to Korea to rise dramatically. In 2011, around 3 million gallons of orange juice were exported to Korea in total. Through the first four months of 2014 alone, over 13 million gallons had already been exported.
Florida’s orange crop is smaller than usual this year, due to a disease that causes the fruit to prematurely die before ripening. The high demand in South Korea is helping to ensure revenue stability as American growers cope with the decrease in output. In 2012, while the tariffs were still being phased out, fruit and nut exports to Asia were worth $430 million to Florida’s economy. With tariffs permanently out of the way, the surge in orange juice exports to Korea looks set to continue, ensuring that the impact of smaller crops and declining domestic demand is tempered for now.