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1/37
For a change, I thought I'd tweet about oranges.
From previous twitter threads people will know we import oranges from North Africa including Egypt & Morocco, from Israel and South Africa almost entirely tariff-free. But sometimes a leaver will ask.
What about the USA?
For a change, I thought I'd tweet about oranges.
From previous twitter threads people will know we import oranges from North Africa including Egypt & Morocco, from Israel and South Africa almost entirely tariff-free. But sometimes a leaver will ask.
What about the USA?
2/
Normally I do two things. I first point out that yeah Floridian oranges would be great ... if you don't mind oranges that have been sprayed with antibiotics banned in Europe and even Brazil.
floridaphoenix.com/2019/01/02/don…
Normally I do two things. I first point out that yeah Floridian oranges would be great ... if you don't mind oranges that have been sprayed with antibiotics banned in Europe and even Brazil.
floridaphoenix.com/2019/01/02/don…
3/
I then use numbero.com and point out that retail prices of oranges in London appear to cheaper than in Jacksonville, Florida.
However, I've never been entirely satisfied with this particular comparison for a couple of reasons. Firstly it uses crowd-sourced data.
I then use numbero.com and point out that retail prices of oranges in London appear to cheaper than in Jacksonville, Florida.
However, I've never been entirely satisfied with this particular comparison for a couple of reasons. Firstly it uses crowd-sourced data.
4/
And secondly, there could be all sorts of reasons why prices are marked up at different rates by the time oranges reach retail.
It would be much better if we could look at market prices and what it would really cost to obtain oranges from the USA instead of Spain.
And secondly, there could be all sorts of reasons why prices are marked up at different rates by the time oranges reach retail.
It would be much better if we could look at market prices and what it would really cost to obtain oranges from the USA instead of Spain.
5/
This thread explains the methodology I used which may bore some [most] people but I'm doing it as a sanity check so other nerds can check my work. I'll post a shorter thread with just the salient facts later.
Firstly let's look at EU data. The citrus dashboard is a start.
This thread explains the methodology I used which may bore some [most] people but I'm doing it as a sanity check so other nerds can check my work. I'll post a shorter thread with just the salient facts later.
Firstly let's look at EU data. The citrus dashboard is a start.
6/
The dashboards provide a quick summary of the market for a particular crop, livestock or commodity.
It shows prices for each main orange producer Italy, Spain, Greece and Portugal, but really I want this in a format I can easily use in a spreadsheet.
ec.europa.eu/agriculture/da…
The dashboards provide a quick summary of the market for a particular crop, livestock or commodity.
It shows prices for each main orange producer Italy, Spain, Greece and Portugal, but really I want this in a format I can easily use in a spreadsheet.
ec.europa.eu/agriculture/da…
7/
What I want to be able to do is produce a graph a bit like the dashboard graph but also showing market prices in the USA.
I had hoped that I would be able to get the source data for the EU dashboard from Eurostat. But it only has annual figures.
ec.europa.eu/eurostat/web/a…
What I want to be able to do is produce a graph a bit like the dashboard graph but also showing market prices in the USA.
I had hoped that I would be able to get the source data for the EU dashboard from Eurostat. But it only has annual figures.
ec.europa.eu/eurostat/web/a…
8/
Thankfully there is an alternative. This page link to monthly fruit prices and the data is available in Excel format. It's not all good though. The report, while up to date on other fruits only has data on oranges up to April 2017 and is a bit patchy.
ec.europa.eu/agriculture/ma…
Thankfully there is an alternative. This page link to monthly fruit prices and the data is available in Excel format. It's not all good though. The report, while up to date on other fruits only has data on oranges up to April 2017 and is a bit patchy.
ec.europa.eu/agriculture/ma…
9/
Patchy because the harvesting season in Europe is only from around October to May. Unlike bananas and some other fruit, oranges cannot be ripened once picked, beyond the harvest season they must be cold-stored which affects the quality long-term.
eurofresh-distribution.com/news/spain%E2%…
Patchy because the harvesting season in Europe is only from around October to May. Unlike bananas and some other fruit, oranges cannot be ripened once picked, beyond the harvest season they must be cold-stored which affects the quality long-term.
eurofresh-distribution.com/news/spain%E2%…
10/
So the data reflects this. The season is longer closer to the equator, we thus also import from Northern Africa & Israel during this period. Outside of the harvest season, we rely on imports from outside the EU, particularly from South Africa.
ec.europa.eu/agriculture/si…
So the data reflects this. The season is longer closer to the equator, we thus also import from Northern Africa & Israel during this period. Outside of the harvest season, we rely on imports from outside the EU, particularly from South Africa.
ec.europa.eu/agriculture/si…
11/
If we're going to do any kind of meaningful comparison it's important to understand what these prices represent and thankfully the report (page 614 in the PDF) helps here.
The are the prices at the first point of sale outside of the packing station.
ec.europa.eu/agriculture/si…
If we're going to do any kind of meaningful comparison it's important to understand what these prices represent and thankfully the report (page 614 in the PDF) helps here.
The are the prices at the first point of sale outside of the packing station.
ec.europa.eu/agriculture/si…
12/
Now I have the data on EU prices I need to find the equivalent for the USA States.
My first thought is the United States Dept. of Agriculture seems like a good bet. If we Google 'USDA Price of oranges' the first his looks like it's struck gold.
So let's open it up up.
Now I have the data on EU prices I need to find the equivalent for the USA States.
My first thought is the United States Dept. of Agriculture seems like a good bet. If we Google 'USDA Price of oranges' the first his looks like it's struck gold.
So let's open it up up.
13/
So this is from August 2018 and I really wanted something current but this will do for the moment. What can it tell us about orange prices?
nass.usda.gov/Publications/T…
So this is from August 2018 and I really wanted something current but this will do for the moment. What can it tell us about orange prices?
nass.usda.gov/Publications/T…
14/
Page 15 explains how pricing is calculated. The base price used is the free on board (FOB) price. This is the price a buyer pays to have the goods brought to their doorstep, depot/port and loaded for shipping. The buyer takes responsibility for shipping & insurance costs.
Page 15 explains how pricing is calculated. The base price used is the free on board (FOB) price. This is the price a buyer pays to have the goods brought to their doorstep, depot/port and loaded for shipping. The buyer takes responsibility for shipping & insurance costs.
15/
A brief but clear explanation of FOB and other related terms can be found here. What's important to understand is that it is going to cost an importer even more than the FOB due to shipping costs. This is true of all imports and distance is a factor.
incotermsexplained.com/the-incoterms-…
A brief but clear explanation of FOB and other related terms can be found here. What's important to understand is that it is going to cost an importer even more than the FOB due to shipping costs. This is true of all imports and distance is a factor.
incotermsexplained.com/the-incoterms-…
16/
In the USDA document Pg16 gives info on average monthly Californian prices in dollars per box FOB. Further down are other states and prices are shown per type, naval etc.
Packinghouse door (PHD) and 'on tree' prices are worked back from the FOB price.
But how big is a box?
In the USDA document Pg16 gives info on average monthly Californian prices in dollars per box FOB. Further down are other states and prices are shown per type, naval etc.
Packinghouse door (PHD) and 'on tree' prices are worked back from the FOB price.
But how big is a box?
17/
That's shown on page 33. Surprisingly it depends on the State. California (80lb), Florida (90lb) and Texas (85lb) all use different sized boxes. No single market harmonisation.
So this is all good info but it would be handy to have the source data in a manageable format.
That's shown on page 33. Surprisingly it depends on the State. California (80lb), Florida (90lb) and Texas (85lb) all use different sized boxes. No single market harmonisation.
So this is all good info but it would be handy to have the source data in a manageable format.
18/
Another Google search reveals that the USDA has a dedicated statistics website. Which hopefully helps us out.
I'd not come across this before. Is it any good?
Another Google search reveals that the USDA has a dedicated statistics website. Which hopefully helps us out.
I'd not come across this before. Is it any good?
19/
Yes it is! It turns out it is exactly what I was after; a searchable database with monthly orange prices where I can download the results. This is what I was hoping Eurostat would have. Let's get the data for each state going back 5 years or so.
quickstats.nass.usda.gov
Yes it is! It turns out it is exactly what I was after; a searchable database with monthly orange prices where I can download the results. This is what I was hoping Eurostat would have. Let's get the data for each state going back 5 years or so.
quickstats.nass.usda.gov
20/
I imported that data into a spreadsheet and set to work.
I need to format a new date column so that it's sortable. I then made a pivot table using the date for the rows and state & price type for the columns. I'm filtering out non-FOB prices for the moment to avoid clutter.
I imported that data into a spreadsheet and set to work.
I need to format a new date column so that it's sortable. I then made a pivot table using the date for the rows and state & price type for the columns. I'm filtering out non-FOB prices for the moment to avoid clutter.
21/
Now I can make a chart for the FOB values and visualise the prices.
This is starting to look pretty good. But remember the box size is different for each state. So I might as well adjust for that and convert prices to $/100kg to make it easier to compare to the EU later.
Now I can make a chart for the FOB values and visualise the prices.
This is starting to look pretty good. But remember the box size is different for each state. So I might as well adjust for that and convert prices to $/100kg to make it easier to compare to the EU later.
22/
Here's the result. Note that oranges are being marketed outside of the normal orange season. This is largely accounted for by the sale of the Valencia variety. Valencia trees bear fruit much later with Valencia oranges marketed right through to October and the new season.
Here's the result. Note that oranges are being marketed outside of the normal orange season. This is largely accounted for by the sale of the Valencia variety. Valencia trees bear fruit much later with Valencia oranges marketed right through to October and the new season.
23/
The report I linked to earlier shows the marketing season for each variety.
nass.usda.gov/Publications/T…
The report I linked to earlier shows the marketing season for each variety.
nass.usda.gov/Publications/T…
24/
The 'Oranges, Fresh Market' prices where no variety is specified is just the weighted average FOB for each state. So I can get rid of that.
The 'Oranges, Fresh Market' prices where no variety is specified is just the weighted average FOB for each state. So I can get rid of that.
25/
I threw away the statewide weighted averages as I want to get to a unified USA price.
Remember I'm trying to see if it is economic to import from the USA so I'm going to using the lowest price for each month.
Looking at the FOB only to get the methodology right first.
I threw away the statewide weighted averages as I want to get to a unified USA price.
Remember I'm trying to see if it is economic to import from the USA so I'm going to using the lowest price for each month.
Looking at the FOB only to get the methodology right first.
26/
Now I have the lowest FOB I will add the lowest packinghouse door and 'on tree' prices. 'PROCESSING' prices are for oranges turned into orange juice and are not necessarily the same quality as eating oranges so I'll show them with a dotted line.
Now I have the lowest FOB I will add the lowest packinghouse door and 'on tree' prices. 'PROCESSING' prices are for oranges turned into orange juice and are not necessarily the same quality as eating oranges so I'll show them with a dotted line.
27/
The next step is to covert the prices from $ per 100kg to € per 100kg. I'm using the Sept 2019 exchange rate from the site below. I'll deal with the issue of floating exchange rates afterwards.
ofx.com/en-gb/forex-ne…
The next step is to covert the prices from $ per 100kg to € per 100kg. I'm using the Sept 2019 exchange rate from the site below. I'll deal with the issue of floating exchange rates afterwards.
ofx.com/en-gb/forex-ne…
28/
To take account of varying exchange rates I'm plotting the prices in € per 100kg using both the current exchange rate and I'm also plotting the values converted using the exchange rate for the relevant month. I'll take the lower of the two values for a new graph.
To take account of varying exchange rates I'm plotting the prices in € per 100kg using both the current exchange rate and I'm also plotting the values converted using the exchange rate for the relevant month. I'll take the lower of the two values for a new graph.
29/
So this is the result. It's showing the lowest USA prices for orange in Euros using favourable exchange rates. I'm now in a position to use this and plot it against prices from the EU's citrus dashboard.
So this is the result. It's showing the lowest USA prices for orange in Euros using favourable exchange rates. I'm now in a position to use this and plot it against prices from the EU's citrus dashboard.
30/
Now that I have the EU prices on the screen it looks like the FOB prices are redundant. It would certainly de-clutter the graph to remove them, so that's what I'll do.
Now that I have the EU prices on the screen it looks like the FOB prices are redundant. It would certainly de-clutter the graph to remove them, so that's what I'll do.
31/
I've added a black horizontal line for the threshold of the EU's Entry Price System (EPS).
During the months shown, when the EPS is in use, imports of oranges from outside of the EU potentially face an extra tariff, but only should the imports price go below €34.50/100kg.
I've added a black horizontal line for the threshold of the EU's Entry Price System (EPS).
During the months shown, when the EPS is in use, imports of oranges from outside of the EU potentially face an extra tariff, but only should the imports price go below €34.50/100kg.
32/
I explained a little about what the EPS trigger price is in his thread here (as well as in numerous other threads).
I explained a little about what the EPS trigger price is in his thread here (as well as in numerous other threads).
33/
This is the final version of the graph. I have removed the on-tree prices for oranges from the USA. Firstly just to declutters but also because our EU prices as ex-packing house and the comparison with US on-tree prices is less relevant than with US packinghouse door prices.
This is the final version of the graph. I have removed the on-tree prices for oranges from the USA. Firstly just to declutters but also because our EU prices as ex-packing house and the comparison with US on-tree prices is less relevant than with US packinghouse door prices.
34/
So what's the conclusion?
I think it's clear that oranges in the USA are not competitive with oranges from Spain and other EU countries. So a trade deal with the USA would not lower the price of oranges if we imported them from there.
But this raises another question ...
So what's the conclusion?
I think it's clear that oranges in the USA are not competitive with oranges from Spain and other EU countries. So a trade deal with the USA would not lower the price of oranges if we imported them from there.
But this raises another question ...
35/
What about oranges from other sources? I've maintained for some time that oranges from Morocco and other countries virtually never face tariffs even under the entry price system because they almost never breach the EPS trigger price.
What about oranges from other sources? I've maintained for some time that oranges from Morocco and other countries virtually never face tariffs even under the entry price system because they almost never breach the EPS trigger price.
36/
In making this contention I've relied on a study conducted almost 15 years ago together with ad-hoc checks on the SIV and import prices.
In making this contention I've relied on a study conducted almost 15 years ago together with ad-hoc checks on the SIV and import prices.
37/37
I thought it would be interesting to update this study; and that's what I've been up to recently. But that is a story for another thread.
/END
I thought it would be interesting to update this study; and that's what I've been up to recently. But that is a story for another thread.
/END
