Brazil and Florida coming to blows over orange juice 'dumping' charge: US Department of...

Brazil saw its frozen orange juice exports soar last year, especially after Florida suffered a series of hurricanes. The United States will have to import a lot of Brazilian juice to make up for that. Florida growers have filed an anti-dumping suit against Brazil.

That's what's happening

The US Department of Commerce agreed Feb. 8 to investigate the complaint by the group and three of its members--Florida's Natural Growers in Lake Wales, A. Duda & Sons Inc. in Oviedo, and Southern Gardens Processing Corp. in Clewiston--against the largest juice processors in Brazil: Sucocitrico Cutrale Ltd., CitroSuco Paulista S.A., Louis Drey fus Citrus and Cargill Inc.

On March 3, the US International Trade Commission (ITC) voted to pursue the case. That was after one Florida processor, Peace River Citrus Products, withdrew from the complaint--but only because it thought another Brazilian operator, Citro Vito Agro Industrial Ltd., should have been added to the list of defendants.

"Brazilian juice has been sold in the futures market at prices almost as low as before hurricane damage occurred, undermining the ability of growers and processors to recover from those devastating losses," complained Andy LaVigne, head of Florida Citrus Mutual.

The growers association charges Brazilian companies dumped orange juice in the United States during the past year at prices below both their European prices and below their costs of production. It said the "dumping margins" ranged from 37% for frozen concentrated juice to 78% for not-from-concentrate juice.

But representatives of Brazil--a huge force in the world orange juice market--say their products don't hurt their US competitors, and attributed any US losses to low-carbohydrate diet trends and last year's catastrophic hurricane season--which, they added, make imports necessary in order for the US to meet demand.

Investigators heard testimony from the two sides Jan. 19 at the ITC. The fact-finding conference marked the latest step in a heated rivalry between Florida and Brazilian citrus groups, recalling that which already led to imposition of punitive tariffs on shrimp from Asia and Latin America.

For January through November last year, Brazilian FCOJ exports totaled 1,175,944 tons, compared to 1,138,070 the year before (the full year's total was 1,347,226). Most of the 2004 exports went to Europe (851,378 tons for 11 months, versus 788,324 in 2003, and 924,892 for all of 2003. Exports to NAFTA (North American Free Trade Agreement) countries, including the US, were actually down sharply from 191,431 to 138,893 for the 11 months.

But it's apparently different for the United States alone. According to Dow Jones, imports through Dec. 18 amounted to 5.77 million gallons, way up from 3.04 million a year earlier. Brazilian imports have rescued Florida in past years, when freezes--something unknown in Brazil--have devastated the orange crop there. But when times have been good, Florida has tried to cash in on the export business itself--most notably with Japan. But it isn't certain how much impact last fall's hurricane had.

"In spite of extensive hurricane losses and damage, citrus trees in most areas are in good condition," the Florida Agricultural Statistics Service reported. "We expect bad years and losses from bad weather or bad luck, and we've bounced back many times," added Marry McKenna, president of Florida Citrus Mutual. "We don't seek charity, but we also don't want to have our hands tied by unfair competition."

Even so, orange production for 2004-05, at 176,000 boxes, is expected to be far less than the 242,000 recorded for 2003-04. And Hugh Thompson, president of the American arm of Brazilian producer Cutrale, noted that his company has two major processing plants in Florida. Those plants buy Florida oranges to make their juice, he said, and Cutrale has invested more than $200 million in production there.

"Given our investment in Florida, we are not about to do anything that would jeopardize or even threaten the health of the Florida orange juice industry," Thompson said. "We believe that we are as much a part of that industry as any one of the petitioners in this case--in fact a larger part of the industry than any one of the petitioners."

In Brazil, meanwhile, the Agricultural Trade Office (ATO) at Silo Paulo adjusted Brazil's orange crop forecast for the 2004-05 marketing year (July through June) to 467 million 40.8 kg boxes (Mbx), up 13 MBx compared to previous estimate, due to better yields than initially expected as a consequence of the precipitation that occurred during the April-July 2004 period in the Sao Paulo commercial area.

Total Brazilian FCOJ production for 2004-05 has been revised upward to 1.33 million tons, 65[degrees] Brix, up 38,000 tons from the previous estimate. In spite of the lower industrial yield reported by the processing plants, a higher volume of fruits is expected to be crushed. The Silo Paulo industry is likely to crush 310 Mbx, up 15 Mbx from a previous estimate, whereas other FCOJ processing states should crush 12 Mbx, down 1 Mbx compared to the previous figure.

ATO/Sao Paulo forecasts total Brazilian FCOJ exports for 2005-06 at 1.225 million tons, 65[degrees] Brix, the same as a revised forecast for 2004-05, due to stable demand for the product. The Sao Paulo industry should account for 1.175 million tons, with the reminder coming from other states. In spite of lower orange juice production forecast in Brazil for 2005-06, export levels should not drop sharply, being sustained by high 2004-05 carryover stocks.

Brazil's Frozen Orange Juice Exports
(Quantity in Tons; Value in Thousands of US$)

TOTAL SALES              2003-04              2003-04 *

Country          Quantity     Value    Quantity     Value

Belgium            468,935   370,124     168,441   136,065
Netherlands        230,244   206,794      86,833    83,587
USA                149,061   112,903      66,700    54,666
Japan               79,991    74,776      22,615    22,940
Australia           19,814    15,757       4,467     3,785
China               35,923    30,036       7,345     6,394
South Korea         26,063    23,063       5,481     4,713
Switzerland         16,992    15,054       4,131     3,966
Puerto Rico          8,384    10,115       2,669     3,430
United Kingdom         414       305         112        99
Others              35,225    30,687      10,270     9,041

TOTAL            1,071,045   889,613     379,066   328,686

TOTAL SALES            2004-05 *

Country          Quantity    Value

Belgium            149,110   113,962
Netherlands         88,631    64,213
USA                 52,210    37,832
Japan               23,476    19,977
Australia            7,245     5,238
China                6,261     4,982
South Korea          5,118     4,307
Switzerland          2,939     2,461
Puerto Rico          2,780     2,522
United Kingdom       2,375     1,570
Others              12,444     9,608

TOTAL              352,589   266,673

Source: Brazilian Department of Foreign
Trade (SECEX); * July-October