Hurricane Irma could pinch Canadian wallets, food-price experts warn.
Flooding in Texas sent gasoline prices soaring, and the monster storm that is speeding toward Florida could have broad ripple effects on global commodity prices, too. This time, the grocery aisle is where consumers would feel the pain.
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The item that might see the sharpest price increase is orange juice.
That’s because Florida is to OJ what Texas is to gasoline. The Lone Star State is home to a quarter of U.S. crude oil refining capacity. The Sunshine State is the world’s second-largest producer of orange juice after Brazil.
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If Irma strikes the state’s orange production, “there is the potential for price increases to be big enough that retailers would pass them along to consumers,” said Michael von Massow of the University of Guelph.
The magnitude of the price hike will depend on the exact trajectory of the hurricane, which has recently been downgraded to a Category 4 storm, and just how hard it hits the orange crop, he added.
Orange juice prices spiked when Hurricane Andrew devastated Florida in 1992, recalls Sylvain Charlebois, dean of the Rowe School of Business at Dalhousie University.
Price gains for orange juice in the commodities market haven’t quite been so sharp in anticipation of Irma so far, he noted – but that could change.
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If the storm does cause significant damage to the orange crop, higher prices will probably reach the grocery shelves in November or December, according to Charlebois.
And those steeper price tags could be there for a protracted period, said von Massow.
That’s because oranges grow on trees. “If you damage trees, you limit long-term production capacity.”
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The same holds for Florida’s citrus crop in general.
In addition to oranges, consumers might also see higher prices for grapefruits, in particular, said von Massow.
Florida was expected to provide 60 per cent of the U.S’s oranges and nearly half of the U.S.’s grapefruit this year, according to the U.S. Department of Agriculture.
And more expensive OJ will drive up the price of a host of other products, said Charlebois. Most fruit-juice mixes contain orange juice, as do many desserts and bakery products.
Still, the recent strength of the Canadian dollar should soften the impact of those potential prices increases, said von Massow.
Irma could also strike parts of Georgia, but those yield losses would likely be less severe, he added. That’s because the state accounts for a small share of U.S. production of fruits and vegetables.