Are Tahiti Limes Profitable in South Florida? A Deterministic and Stochastic Budget Analysis

ABSTRACT

Tahiti limes were an important fruit tree crop in South Florida until the late 1990s. Several factors contributed to the demise of the Florida lime industry, namely the impact of hurricane Andrew in 1992 and the arrival of Citrus Canker (CC) in 1995. The Florida lime industry was then eradicated in the early 2000s to protect the main commercial citrus industry from CC. This article focuses on the financial viability of reintroducing Tahiti lime production in South Florida. A total of 20 Tahiti lime scion/rootstock combinations were evaluated under endemic CC and Citrus Greening (CG) conditions. We created a deterministic and a stochastic budget to evaluate the feasibility of reintroducing Tahiti limes in South Florida that incorporated yields from experimental plots. We also implemented a financial analysis, that included net present value (NPV) and internal rate of return (IRR) estimations, for a 20-year period with the Tahiti lime/citrus macrophylla (TL/CM), the best performing scion/rootstock combination. Our findings indicated that Tahiti lime production in South Florida was not financially feasible; we obtained a negative NPV from both the deterministic and stochastic budgets. We conclude with a discussion of potential scenarios for the Tahiti lime industry in the US and on lessons for other crops that face similar production challenges.

KEYWORDS:

• Invasive species
• specialty crops
• citrus
• market development
• pests

Introduction

Many once dominant and profitable crops have almost completely disappeared from the landscape with concerns for farmers as well as the related industries and communities that support them. In the United States, some of the well-known cash crops that face challenging futures include tobacco, oranges, and sugar (Brown et al., 2007; Farnsworth et al., 2014; Beghin and Elobeid, 2015). In South Florida, Tahiti limes have almost disappeared completely from the region, even though the region was the primary source for the fruit in US supermarkets, restaurants, and fruit stands until the late 1990’s. A confluence of factors led to its almost complete demise by the early 2000s, including the effects of Hurricane Andrew; the ratification of the North American Free Trade Agreement (NAFTA), which allowed for Mexican fruit to enter the US market with limited barriers; and the state’s Citrus Canker (CC) eradication program (Blare et al., 2022). Using a deterministic and a stochastic budgeting technique, we evaluated the financial viability of reintroducing Tahiti limes in South Florida under the new normal of endemic CC and citrus greening (CG). The present analysis provides insights on how to incorporate production risk using stochastic modeling to analyze the reintroduction of a crop, such as those affected by invasive species, or the economic feasibility of establishing a new crop.

The arrival and establishment of invasive species have profound economic and social implications. Zenni et al. (2021) estimated that the worldwide economic cost of invasive species to be $1.29 trillion over the past 50 years. So, developing strategies to confront invasive pests are critical to ensuring the financial sustainability of agriculture and rural communities. Because of its historical importance to the state’s economy and the challenges it has faced confronting two invasive pests, CC and CG, the Florida citrus industry offers a unique perspective to understand the impact of these invasive pests. The citrus industry contributed $6.5 billion to the state’s economy in the 2018–19 season, 0.65% of the state’s $1 trillion dollar economy in 2018 (Court et al., 2020). So, the decline of the industry following CG, with yield falling by 42% since it was first discovered in Florida in 2005, has been devastating not only to the citrus industry but also the state’s economy. While orange production has always dominated the state’s citrus industry, Tahiti lime is the only citrus crop to have been eliminated from the landscape. Today, Tahiti limes are grown at a very small commercial scale in Florida. These Tahiti lime scions have been grafted with rootstocks appropriate for the calcareous soils in Miami Dade County, including Rough lemon, Alemow, Rangpur lime, and Volkamer lemon (Crane, 2020). In most cases, the trees have produced some fruit, but yield has been lower than expected.

As the retail value of Tahiti limes has risen over the past few years with domestic buyers willing to pay more for Florida grown fruit, many growers and packinghouses are interested in investing in this market. In 2022, South Florida retailers were offering $0.45/lb. at the farm level for locally grown Tahiti limes when the price in the Miami wholesale market for imported limes ranged between $0.17 and $0.34/lb (Blare et al., 2022). Because of this market, there has been hope that the industry could be revived if varieties were developed that were resistant or at least more tolerant CC and CG, which later appeared as one of the greatest threats to citrus production in Florida (Evans et al., 2014). Unlike prior research that used hypothetical scenarios to develop stochastic models to predict the production and market potential for tropical fruit crops facing disease pressure, the analysis for this article is based on data collected from field experiments with Tahiti limes scions to determine their yield potential in the presence of these two invasive pests. Thus, the results provide a more realistic estimations for the potential for Tahiti limes in South Florida and guidance for similar research attempting to estimate how shocks could affect crop production and profits.

Background

The Florida Tahiti lime industry reached a peak of 7,300 acres during the 1982/83 crop season. In August 1992 when Hurricane Andrew hit South Florida, only 1,900 acres were left standing. By 1999, the industry had partially recovered reaching 2,800 acres. All these trees were eventually removed because of the CC eradication program. After a positive confirmation of CC in September 1995, the State of Florida pursued a mandatory CC eradication program. The citrus industry was then concerned with CC becoming endemic throughout the state with a potential large economic impact on oranges and other citrus crops (Blare et al., 2022).

To assess the economic impact of the disease at the farm level, Spreen et al. (2003) estimated the economic losses to “Hamlin” and “Valencia” oranges and red seedless grapefruit growers for a CC outbreak. Using the income approach to asset valuation, they considered two scenarios, an eradication program with replanting, and CC becoming endemic in Florida. They found that the economic losses under the eradication scenario were higher compared to the endemic disease scenario. Losses for the eradication and CC endemic scenarios respectively were $6,401/acre and $4,870/acre for “Hamlin” oranges, $6,501/acre and $6,309/acre for “Valencia” oranges, and $4,006/acre and $4,012/acre for red seedless grapefruit. Despite all the efforts to prevent the spread of the disease, the USDA in January 2006 determined that CC eradication was not feasible. Then, in May 2006, the State of Florida officially ended the citrus canker eradication program (Gottwald and Irey, 2007). Consequently, the disease became endemic. While the Florida citrus industry was still learning to cope with CC, CG was detected in the state in August 2005. Several factors were favorable to the spread of CG among commercial groves. First, because of the previous experience with the CC eradication program, governmental agencies and growers decided against pursuing a similar eradication strategy for CG. Second, because of the reduced supply resulting from hurricane damage during the crops seasons 2004/05 and 2005/06, the resulting high market prices discouraged growers to remove diseased, still productive, non-symptomatic trees. The opportunity cost of removing the trees was high for the industry, specially for smaller growers (Singerman et al., 2020). With the lack of collective action by the growers to slow down the spread of the disease, eventually it became endemic. The economic impact of the disease has been devastating. Real production costs have increased by 283% from $2.71/box in the 2003/04 crop season to $10.40/box in the 2016/17 crop season (Singerman et al., 2018).

Under the new normal of endemic CG, researchers have focused on the effectiveness of different management strategies to slow disease progression and increase productivity. A wide range of management strategies have been evaluated including chemical control (Blaustein et al., 2018), insecticides (Boina and Bloomquist, 2015), nutritional management (Xia et al., 2011), biological controls (Grafton-Cardwell et al., 2013), and rootstock performance (Singerman et al., 2021). Some of these strategies have shown potential; however, little research has been conducted to assess their economic impact under commercial conditions. Li et al. (2020) used a benefit–cost ratio (B/C)¹ to assess the cost-effectiveness of several citrus greening management strategies. They found that taken together the broad-spectrum insecticide treatments were the most economical in managing the disease. Nevertheless, not every insecticide program considered in the review was cost-effective; the B/C of the insecticide programs evaluated ranged from −3.9 to 6.2. The authors also evaluated the B/C ratio of enhanced foliar nutrition. For most of the studies reviewed, foliar nutrition programs were not cost effective. One exception was the nutritional program proposed by Ozores-Hampton et al. (2017), which based on the study’s assumptions had a B/C of 1.3. Because CG is an insect vector carrying a bacterium that impacts plant nutrition, no single management strategy was successful. Therefore, Guan et al. (2020) sugested that a holistic approach would be a more appropriate management strategy. This strategy would include changes to cultural practices in addition to enhanced nutrition and insecticide applications to slow the rapid decline of a citrus grove under an endemic citrus greening situation.

Because of the long-time horizon for perennial fruit crops, hypothetical data and expert opinion may help to assess the effect that different management strategies and cultural practices may have over the profitability of a citrus operation. Singerman et al. (2018) provided some insight into the application of this method by estimating the profitability of a new hypothetical “Valencia” orange grove over a 20-year period, considering three planting densities, two yield scenarios, three price levels and two capital investment levels. The tree planting densities considered were 358, 544 and 749 trees/ha. The two yield levels were a low yield provided by the United States Department of Agriculture (USDA) for each age cohort (USDA/NASS, 2018) and a high yield level based on feedback from growers. The price levels considered were $15.62/box, $17.78/box, and $19.23/box. Under the partial capital investment, acitrus grower only invested in irrigation; for the full capital investment a new grower needed to purchase all machinery and equipment. The results indicated that new plantings with planting densities of 544 and 749 trees/acre were profitable. Nevertheless, the best outcome was a scenario with a planting density of 749 trees/ha, high yield, high fruit prices ($19.23/box) and partial capital investment. Under this scenario, the internal rate of return on a new “Valencia” oranges planting was 20%.

These prior studies examined orange production in central Florida. Although this research can provide some insight for those interested in re-introducing Tahiti lime production in South Florida, the complete re-introduction of a crop faces additional challenges than those by a large commodity crop like oranges that are still in production. By the time of the mandatory eradication program, the relative tolerance of Tahiti limes to CC was unknown; the regulatory agencies involved chose to eradicate the crop before understanding the implications of adopting alternative strategies (Crane, 2020). As Tahiti limes were eradicated in Miami Dade County before CG was a concern, little is also known about how the trees would respond to this disease. Unlike oranges, which is a large commodity crop, Tahiti limes have been specialty crop in the United States with a thin market, so reestablishing this crop may have additional challenges when compared to a larger commodity crop.

To better understand how Tahiti limes may respond to the presence of CG, Evans et al. (2014) estimated the profitability of a hypothetical five-acre Tahiti lime grove in South Florida, accounting for both CC and CG. They based their analysis on a discounted cash flow for a 20-year period using a stochastic budgeting technique where probability distributions were assigned to yield and prices, the variables more influenced by risk. Three disease management scenarios were considered. Scenario 1 had no control. Scenario 2 included a nutritional and a chemical spray to control Asian citrus psyllids. Scenario 3 included the nutritional and chemical spray from scenario 2 plus tree replacement. The yield variable was based on a discussion with industry experts and included a minimum and maximum level; it was assumed to follow a uniform distribution. In the absence of farm gate prices for Florida Tahiti limes, annual Mexican Tahiti lime import prices were used. Price was assumed to follow the Gray, Richardson, Klose and Schuman distribution (GRKS) (Richardson, 2006). The authors used a minimum, middle and maximum prices of $0.27/lb., $0.29/lb., and $0.33/lb. to characterize the GRKS distribution. Results indicated that all three disease management scenarios were profitable with scenario 3 having the highest average net returns ($2,466/acre) followed by scenario 2 ($2,292/acre) and scenario 1 ($1,182/acre), respectively. Findings also indicated that the three scenarios differed in terms of achieving the desired rates of return on investment. Scenario 2 had a 100% chance of getting a 12% rate of return and a 98% chance of exceeding a 15% rate of return.

Research on rootstocks has also gained interest because of the traits that can be introduced in scions that may make citrus trees more resistant to pests and diseases. Because of the encouraging results of Evans et al. (2014), the primary actors in the once profitable Tahiti lime industry thought that in addition to insecticide applications and nutritional sprays, a CG tolerant rootstock may be the key to bringing back the Tahiti lime industry in South Florida. Nevertheless, the performance of Tahiti limes under simultaneous citrus CC and CG pressure was not fully understood as commercial plantings were removed before both diseases became endemic.

While the studies of Evans et al. (2014) and Singerman et al. (2018) provided key insights into how citrus production would respond under disease pressure, they used expert opinion and hypothetical data to assess the financial feasibility of new citrus plantings because empirical data was unavailable as citrus fruit trees take eight years to mature. This study in constrast uses experimental data collected from field trials to provide a more realistic scenario of the financial feasibility of a new Tahiti lime planting under endemic CC and CG. It contributes to the growing literature on the assessment of cultural practices for citrus production under endemic disease and pest pressure by providing a more realistic estimate of the impact of these diseases on citrus production.

Methods

On March 2017, researchers at the Tropical Research and Education Center (TREC) in Homestead, FL established a Tahiti lime plot. They planted 239 trees with a spacing of 15 feet between-rows and 20 feet between-trees, in an experimental plot of 1.65 acres. They laid out 20 scion-rootstock combinations in four blocks, arranged in a completely randomized design with 3 replicas. The capital costs to establish the orchard at TREC, and cost information for the different inputs including labor spent on each of the activities were recorded to estimate the cost to establish and maintain the grove.

Citrus rootstocks have been shown to have significant variability in terms of CG tolerance, scion growth and fruit production (Albrecht and Bowman, 2011) (Table 1). The rootstocks US-897, US-942, US-802 and SO + 50–7 have superior greening tolerance compared to other hybrids and commonly used rootstocks (Albrecht et al., 2012; J. Grosser, personal communication). Citrus Macrophylla was used as control; it is widely used by the citrus industry.

Table 1. Scion-rootstock designation and horticultural characteristics of the scion and rootstock.

	Characteristics
Scion designation
C-4-9-33	Seedless triploid lime hybrid; large fruit, green pulp, very firm and juicy, pleasant aroma; thorny trees; early season crop
C-4-8-14	Seedless triploid lime hybrid, small key-lime sized, fragrant fruit
C-4-10-11	Seedless triploid lime hybrid; juicy, nearly seedless, variable size, flavor lime-like but slightly less acidic fruit; mid-season crop
‘Tahiti lime’	Also known as ‘Persian’ lime, seedless triploid with juicy aromatic fruit; industry standard
Rootstock designation
Citrus macrophylla	Control, standard rootstock
US-897	Citrus reticulata ‘Cleopatra’ x Poncirus trifoliata ‘Flying dragon’
US-942	Citrus reticulata ‘Sunki’ x Poncirus trifoliata ‘Flying dragon’
US-802	Citrus grandis ‘Siamese’ x Poncirus trifoliata ‘Gotha Road’
SO+50–7	Citrus sinensis/Sour orange x Poncirus trifoliata 50–7

The minimum farm size for commercial citrus production in Florida is 5 acres; however, to simplify the analysis we presented the results on a per acre basis. We assumed that a grower already owns the land or that the land could be rented for $500/acre/year, based on the land rental rate in Miami-Dade County (Blare et al., 2022). The original planting density for the trial, which was the same as the industry average, was 145 trees/acre. As the citrus industry has been evolving toward higher planting density, a planting density of 217 trees/acre with a between-rows and between-trees spacing of 20 by 10 feet, respectively, was also considered in the analysis. To account for tree mortality, a 2% replanting rate was assumed for year 1.

Initial expenditures included site preparation costs, saplings, planting cost, an irrigation system, and working capital, totaling $15,008.71/acre and $18,088/acre for the 145 trees/acre and the 217 trees/acre planting densities, respectively (Table 2). We calculated the cost of inputs, including fertilizers, herbicides, fungicides, and insecticides using prices obtained directly from agrochemical suppliers. The fertilization program included four fertilizer treatments a year, which included controlled release fertilizers as well as foliar nutritional sprays. The average costs for fertilizers and nutritional sprays for years 1 to 4 were $1,388/acre/year, and $1,955/acre/year for the 145 trees/acre and the 217 trees/acre planting densities, respectively. Weed management consisted of four annual applications of glyphosate. Additionally, rows were mowed 4 times a year at a cost of $349/acre.

Table 2. Tahiti lime/citrus macrophylla experimental fruit yield (bushels/tree).

Tree	Year 2	Year 3	Year 4
1	0.041	0.091	0.819
2	0.135	0.195	2.147
3	0.191	0.141	1.117
4	0.151	0.141	1.230
5	0.069	0.217	1.255
6	0.261	0.326	0.414
7	0.060	0.050	1.557
8	0.003	0.041	1.905
9	0.072	0.066	.
10	0.053	0.160	0.841
11	0.267	0.116	1.566

The pest control program followed the recommendations for CC and CG, it consisted of a diverse mix of active ingredients to rotate insecticides with different modes of action as a pesticide resistance management strategy (see Dewdney et al., 2022). The average cost of agrochemicals included herbicides for the first 4 years at $686/acre/year and $739/acre/year for the145 trees/acre and the 217 trees/acre planting densities, respectively. Labor rates included fringe benefits such as worker’s compensation, Social Security and Medicare, which totaled $16/hour. Harvesting and marketing costs included the cost for harvesting and transporting the fruit to the packinghouse, $6.50/bushel.

The model used the actual yield from the experimental plots from years 1 to 4, as the field experiment was 4 years long. The Tahiti Lime scion with the citrus macrophylla rootstock, proved by far to be the most productive combination and, thus, was used for our analysis (Table 2). Yield from years 5 to 8 was projected using the yield of year 4 as a base, adjusted by the historical average yield change by tree age of Tahiti limes before the canker eradication program. Tahiti lime trees reach production maturity at 8 years of age after which yield remains relatively consistent like for nearly all fruit trees. So we assumed yield from years 8 to 20 to be constant (Table 3).

Table 3. Tahiti lime/citrus macrophylla experimental fruit yield (bushel/tree).

	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7	Year 8+
Min	0.003	0.041	0.414	0.544	0.631	0.745	0.782
Max	0.267	0.326	2.147	2.147	3.269	3.861	4.054
Ave	0.104	0.143	1.254	1.682	1.950	2.303	2.418
Median	0.071	0.141	1.230	1.682	1.950	2.303	2.418

The financial analysis was conducted using a discounted cash flow layout with annual time steps; the analysis was conducted for a 20-year period. The cash flow analysis was modeled around three key areas: investment inputs, variable (recurrent) inputs, returns and residual values. The model used well known key output variables (KOVs) such as the net present value (NPV), internal rate of return (IRR), and the benefit cost ratio (B/C). The discount rate applied was 10%, the same rate used in similar studies, and represents an acceptable return for a new citrus planting (Spreen et al., 2003).

The financial model includes two types of budgeting approaches: determinist budget and a stochastic budget. The determinist approach to budgeting is based on average or expected values of yield and prices to predict point estimates of financial results. To account for potential changes in the base model, a sensitivity analysis is commonly conducted. However, the deterministic analysis is limited as it does not provide any indication of the likelihood of a particular result being achieved, and scenarios are built by changing up to two variables at a time. A more realistic approach is to use stochastic budgeting to consider some of the main uncertainties in the model and to get an insight on the probability distributions of the outcomes. The stochastic budget we used builds on the approach outlined by Richardson (2006). First, we assigned probability distributions to the variables affected by the risk factors. Second, we used the stochastic values sampled from the probability distributions used in the accounting equations to calculate production, receipts, net returns, and the KOVs. Third, we simulated the stochastic budget 500 times using random values for the risky variables. The results of the 500 samples provided the information to estimate the empirical probability distribution for the unobserved KOVs. We further analyzed this information using a cumulative distribution function of the NPV and IRR. We programmed the model in Excel (Microsoft Corp., Redmond, WA) and simulated it using the Excel Add-In, Simulation and Econometrics to Analyze Risk (Simetar, College Station, TX).

Stochastic variables carry a higher level of risk associated with a certain outcome. We modeled the stochastic variable yield (bu/acre) for years 2 to 20 based on the yield from the experiments at TREC. We simulated the yield using the univariate empirical distribution, which may be used when there are too few observations or when few experimental observations are available to estimate the parameters for the true distribution. The parameters of the empirical distribution Emp_i (S_i, F(S_i), (C_i)) include the sorted yield values (S_i), the cumulative probability distribution for the yield values (F(S_i)), and uniform standard deviates (C_i) (Richardson, 2006). Based on the yield collected at the experimental plot, we estimated marketable yield or pack out rate to be 80% of the gross yield. While price is typically one of the variables used when conducting risk analysis, for locally produced Tahiti limes, prices at the packing house were set at $25/bu ($0.45/lb.). Florida limes receive higher prices compared to imported limes (Blare et al., 2022). The stochastic gross receipts is the stochastic yield multiplied by the pack out rate and the price. We assumed that the market prices and the costs of all recurrent inputs from years 5 to 20, including labor, to be constant and estimated that the residual value of the irrigation system to be $704/acre or 20% of the initial value. The annual net cash flow is the stochastic gross receipts plus residuals less the total cost (investment plus recurrent cultural costs).

Results

For a planting density of 145 trees/acre, the deterministic model indicated that the operation was not profitable based on the different investment, input costs, yield and price assumptions (Table 4) Under the expected yield assumptions, the deterministic model forecasted a NPV of -$29,037.07/acre, indicating that the discounted costs (present value of the costs) far exceeded the discounted benefits (present value of the returns) over a 20-year horizon. Under average or expected yield, a grower would lose $29,037.07/acre over a 20 year-period, considering a 10% discount rate. The benefit cost ratio (B/C) was 0.53; for every dollar invested in Tahiti limes a grower would be lose 47 cents. Because the NPV was negative, the model generated a negative IRR. The stochastic average NPV was -$29,109.20/acre. The discounted costs far exceeded the discounted benefits. The benefit cost ratio (B/C) was 0.56. So, for every dollar invested, a grower would be expected to lose 44 cents. Therefore, the results of the stochastic model suggested that a grower would lose $29,109.20/acre over a 20 year-period, considering a 10% discount rate. Because the stochastic NPV is negative, the model did not generate an IRR.

Table 4. Profitability indicators of a deterministic and stochastic budget models associated with establishing a tahiti lime orchard in South Florida ($/acre).

	145 trees/acre		217 trees/acre
	Model		Model
Item	Deterministic	Stochastic	Deterministic	Stochastic
Main assumptions
Initial Investment	$15,081.71	$15,081.71	$18,167.32	$18,167.32
Average input costs	$6,278.56	$6,292.87	$7,212.24	$7,2010.24
Price ($/bu)	$25.00	$25.00	$25.00	$25.00
Marketable yield (expected yield bu/acre)
Year 1	0	0	0	0
Year 2	15.66	15.66	23.43	23.43
Year 3	21.30	21.30	31.87	31.87
Year 4	148.55	148.55	222.31	222.31
Year 5	195.10	195.10	291.98	291.98
Year 6	226.14	226.14	338.44	338.48
Year 7	267.16	2167.16	399.82	399.82
Years 8+	280.46	280.46	419.73	419.73
Cash flow analysis
Net present value (NPV) at 10%	-$29,037.07	-$29,109.20	-$20,348.30	-$20,454.70
Internal rate of return IRR) (%)	-	-	-	-
Benefit cost ratio (B/C) at 10%	0.53	0.50	0.69	0.73

For the higher planting density of 217 trees/acre under the expected yield assumptions of the deterministic model, the NPV was -$20,348.30/acre. The discounted costs (present value of the costs) exceeded the discounted benefits (present value of the returns) over a 20-year horizon. A grower would lose-$20,348.30/acre over a 20 year-period considering a 10% discount rate. The benefit cost ratio (B/C) was 0.69 which means that for every dollar invested a grower would lose 31 cents. Because the NPV was negative, the model generated a negative internal rate of return. The NPV from the stochastic model was also -$20,454.70/acre. The discounted costs exceeded the discounted benefits. The benefit cost ratio (B/C) was 0.73. For every dollar invested in establishing and Tahiti lime plot and in production costs, a grower would lose 27 cents. A higher planting density improved both the deterministic and the stochastic NPVs. However, the increase in yield and revenue did not offset the low productivity from CC and CG and the higher production costs under a more intensive planting density.

Under a planting density of 145 trees/acre, the stochastic NPV and the deterministic NPV demonstrated that under the assumptions made with CC and CG investing in a new Tahiti lime planting would not be financially viable (Figure 1). The Cumulative Distribution Function (CDF) of the stochastic NPV ranged from a minimum of -$38,329.40/acre to a maximum of -$20,088.30/acre. The deterministic NPV intersected the CDF of the stochastic NPV at 50%; thus, the models predicted that there would be a 50% chance of the NPV being less than the deterministic forecast under a planting density of 145 trees/acre. The CDF of the stochastic NPV and the deterministic NPV are both located to the left side of the x-axis, indicating that planting a new Tahiti lime grove is not financially feasible. Under a planting density of 217 trees/acre, the CDF on the stochastic NPV would range from a minimum of -$37,668.30/acre to a maximum of -$6,952.07/acre (Figure 2). The deterministic NPV intersects the CDF on the stochastic NPV at 50%, suggesting that there is a 50% chance of the NPV being less than the deterministic forecast.

Figure 1. Cumulative distribution function (CDF) of the net present value (NPV) for a tahiti lime orchard with a planting density of 145 trees/acre ($/acre).

Figure 2. Cumulative distribution function (CDF) of the net present value (NPV) for a tahiti lime orchard with a planting density of 217 trees/acre ($/acre).

Analysis of the expected yield under endemic CC and CG versus the commercial yield obtained before CC eradication program for TL/CM demonstrate why a new planting of Tahiti limes in South Florida is not recommended (Figure 3). Yield for 2- and 3-years old trees would be minimal. Even though yield for 4- to 8-year-old trees would be expected to improve considerably, we estimated that the average yield for years 4- to 20-year-old trees to be 48% below the yield obtained before the citrus canker eradication program. The low productivity level during the first 4 years of the grove would significantly impact the financial performance, specifically the cumulative cash flow. Model results indicated that with a planting density of 145 trees/acre cumulative losses in the first 4 years reached -$32,708.40 and -$28,899.30 for the deterministic and stochastic model, respectively. With a higher planting density of 217 trees/acre, we estimated cumulative losses during the first 4 years to be -$19,687.70 and -$33,104.80 for the deterministic and stochastic model respectively. After 4 years, half-way through the establishment period, we estimated cumulative losses to be so large that later increases in yield would not be enough to make Tahiti limes an economically viable alternative for growers.

Figure 3. Estimated tahiti lime fruit yield (bu/tree) with endemic CC and CG and yield before the CC eradication program.

Discussion

Tahiti limes were an important component of the agricultural economy in South Florida. However, the industry was practically eliminated by Hurricane Andrew and the CC eradication program. With growing demand and higher prices for this fruit, stakeholders once involved in the industry have been interested in reviving it with the expectation that it now would be profitable. The experimental yield data obtained offers insight into the potential average yield for a prospective commercial operation under the study’s assumptions that included the recommended management strategies for both CC and CG diseases, and are specific for the Tahiti Lime/citrus macrophylla scion-rootstock combination.

To determine the economic viability of this industry, we assessed the financial feasibility of re-introducing Tahiti lime production in South Florida under the new normal of endemic CC and CG. We employed a deterministic and stochastic budgeting techniques to estimate the financial returns of a new Tahiti lime planting over a 20-year period, under 145 trees/acre and 217 tress/acre planting densities. Unlike prior studies dealing with the impact of CC and CG on the citrus industry based on hypothetical data and expert opinion, we used fruit yield collected from field experiments in south Florida to see the response of the trees under the new normal of endemic CC and CG.

Under a planting density of 145 trees/acre, the deterministic NPV was -$29,037.07/acre; the stochastic average NPV was -$29,109.20/acre. The values ranged from a minimum of -$38,329.40/acre to a maximum of -$20,088.30/acre. Assuming a planting density of 217 trees/acre, the deterministic NPV was -$20,348.30/acre. The stochastic average NPV was -$20,454.70/acre. The estimates ranged from a minimum of -$37,668.30/acre to a maximum of -$6,952.07/acre. While the higher planting density of 217 trees/acre improved revenue, the estimated deterministic and stochastic NPVs over a 20-year period would still be negative. Results from the deterministic and stochastic budgets for the planting densities considered were very similar. Because the deterministic NPV intersects the CDF of the stochastic NPV at about 50%, the results of both budgets are similar. Although the deterministic and stochastic models reflected the same conclusion, the results from the stochastic budget offer a more realistic analysis by incorporating production risk into the model, as it showed the probability distribution of the stochastic NPV. It demonstrated the likelihood of getting a particular outcome.

In contrast with the findings of Evans et al. (2014), our results from both the deterministic and stochastic budgets indicated that the commercial production of Tahiti limes is not financially feasible. There are some methodological reasons behind the differences. Evans et al. (2014) simulated yield using a uniform distribution where fruit yield for the first seven years would range from a low of 70% to a high of 100% of the pre-canker yield from years 1 to 7. Then fruit yield from years 8 to 20 would range from a low of 35% to a high of 93% of the pre-canker yield for the three disease management scenarios considered. In our modeling approach, there was a very low productivity for the first 3 years when fruit yield was almost inexistent. Later, fruit yield picked up in year 4 when it was just 47% of the pre-canker yield; fruit yield from years 5 to 20 is projected to be just 48% of the pre-canker yield.

This type of analysis is critical in understanding the viability of introducing a new crop or re-introducing or a current crop following a shock such as the introduction of an invasive pest. The application of the deterministic and stochastic budgeting method using data collected in the field rather than hypothetical data provides a more realistic analysis to determine the viability of a crop. However, being able to have longer term experiment beyond four years would have given us even more robust data. This analysis provides an example of how to incorporate this data and insights for the private sector and governmental agricultural support sector to determine whether to invest in and develop a market for a crop or not. While the analysis in this study provides a less than optimistic conclusion for the re-introduction of Tahiti limes in South Florida, this study is necessary to demonstrate that now is not the time to invest in Tahiti limes and more research is needed to develop more resistant varieties or best management practices to confront CC and CG.

The news is not all discouraging, some progress has been made in developing a strategy for the Tahiti lime industry to overcome CC and CG. The Tahiti lime/citrus macrophylla rootstock/scion combination was shown to withstand the compounding pressure of CC and CG to produce fruit of commercial quality. Nonetheless, even with the higher prices offered in the market for Florida grown Tahiti limes, the production declines from CC and CG were still too large to ensure that Tahiti limes would be profitable. To re-introduce Tahiti lime production in South Florida, more research is needed to identify a scion/rootstock combination that may get fruit yield closer to the yield obtained before the canker eradication program. The not so favorable conclusions from this study are necessary when trying to determine which crops should be supported, those that have market potential, and what efforts need to be considered to ensure the viability of crops that currently are not profitable.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work was supported by the Florida Department of Agriculture and Consumer Services.

Notes

¹ A B/C ratio indicates the relationship between the costs and benefits of a particular disease management strategy. A B/C ratio greater than 1 means that the benefits of a particular disease management strategy are greater than the cost of implementing it.