THE EXPECTED COST OF AN INCOME SUPPORT PROGRAM FOR PROCESSING ORANGES

The Florida citrus industry operates in a competitive global market. However, unlike program crops, producers in this industry do not benefit from direct income support under the new Farm Bill. There is concern about the impact of elimination of the orange juice tariff on the financial health of the Florida orange industry. The purpose of this paper is to examine the level of government expenditure that would be needed to provide income support to orange producers if the orange juice tariff were eliminated. For the span of the Bill direct payments to corn are estimated to total $25.1 billion. By comparison the direct expenditures incurred for an income support program for oranges would be substantially less. In the early years with the tariff in place the expenditures are estimated to be about $300 million and would fall below $200 million by 2007. If the tariff were removed government support would initially be $925 million but would decline to about $700 million in 2007. Over the six-year period, 2002-2007, the direct payment to orange producers would be $1,538.5 million with retention of the tariff and $4,721.8 million if the tariff were eliminated.