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Brazil squeezes OJ competition Brazil’s the Saudi Arabia of orange juice. Like the Arab oil giant, Brazil by virtue of exporting 99% of its OJ, is the world’s dominant supplier. Last year, Brazil’s two largest OJ exporters dominated supply with an 80% slice of the European market. Last year, two of Brazil’s largest OJ exporters, Citrosuco and Citrovita, merged linking together 25% of the world’s orange juice supply. But The European Commission says not so fast.

By Carole Lauriat, AJOT

Brazil is the world’s number one exporter of orange juice, followed by Florida. Together they produce roughly 85% of the world’s orange juice. There is a big difference: Brazilians drink only 1% of their production as they have better beverages to drink, like Caipirinha (a sugar/lime cocktail, know as the national drink) while 90% of Florida’s production is consumed in the US and only 10% is exported. By virtue of exporting 99% of its production of OJ, Brazil has become the Saudi Arabia of this liquid gold and is poised to capture even a bigger slice of the market, if recent events are any guide.

According to the USDA, in 2010, Brazil exported 1,223,000 metric tons (MT) of orange juice, and Brazil’s exports are expected to grow by 12% in 2011, amounting to as much as $220 billion in revenues.

Although, Brazil exported less orange juice by volume in 2010 than it did in 2009, the value of exports grew by 30% with price increases.

According to figures from the Brazilian Association of Citrus Exporters (CitrusBR), in the 2010 season (July 2009 to the end of June 2010), Brazil exported 524,981 tonnes of orange juice for US$660.17 billion. This compares to exports totaling 611,437 tonnes in the 2009 season, with revenues of $847.58 billion.

According to figures by the Foreign Trade Secretariat (Secex), the growth over 2009 was 11.48%. In terms of volume, Brazil exported 1.3 million tonnes of concentrated juice in 2009, and 1.2 million tonnes in 2010.

According to the Florida Department of Citrus, US imports of orange juice during January through December 2010 totaled 303,801,970 single-strength equivalent (SSE) gallons (down 10% compared to last year) with an FOB value of $395,897,328 for an average price of $1.30 per SSE gallon (up 30%). Of these imports, 59,049,460 SSE gallons were not-from-concentrate (NFC) (up 9% from last year).

Orange-juice imports into Florida ports represented 37% of the volume for 2010 (74% for NFC), compared with 36% of the 2009 volume (76% for NFC). Brazil supplied 56% of the volume in 2010 (94% for NFC) compared to 51% in 2009 (97% for NFC).

Brazil wins the zero sum game
In February 2011 the World Trade Organization (WTO) made a final ruling in Brazil’s favor in a dispute with the United States over anti-dumping measures imposed on its orange juice exports. The decision by a WTO dispute panel was the second major trade dispute Brazil won against the US. A year earlier, Brazil won a successful case against US cotton aid.

Brazil challenged the methodology, “zeroing,” that the US Department of Commerce used in applying antidumping tariffs on Brazilian orange juice. The US Department of Commerce uses "zeroing" for assessing duties on goods that are allegedly "dumped," or imported for less than they cost at home. According to the WTO, in zeroing, the importing authorities ignore shipments where imported goods are higher than domestic market prices and could potentially offset separate below-market shipments from the country. Many countries argue that this practice skews the average price of goods from a given country, and in this case, the WTO agreed.

Points of origin…and contention
Brazil got into the citrus business relatively late. Production as an industry began in the 1960s, but it wasn’t until recently that it overtook the US as the world’s primary source. It’s an odd rivalry with US producers. Most consumers in the US and abroad conclude their juice is coming from Florida or California. But Brazil’s OJ rarely touts country of origin. Brazil mainly exports concentrated juice, which retailers can sell and brand without indicating its origin, keeping orange juice recognized as a glass of Florida sunshine. This is particularly true in Europe, where 80% of all OJ consumed is from Brazil. Only South Korea emphasizes the Brazilian origin of its juice on packaging. Of the four main OJ suppliers to Europe, the Brazil’s Cutrale and Citrosuco are the biggest, if not the best known.

In May of 2010, Citrosuco and Citrovita merged to become the biggest orange juice producer in the world. In January of 2011 the European Commission (EC) opened an investigation into the May 2010 merger of Votorantim’s Citrovita and Fischer Group’s Citrosuco. The EC has 90 working days, until May 19, 2011 to make a final decision on whether the concentration would significantly impede effective competition within the European Economic Area (EEA) or a substantial part of it.

By merging Citrosuco and Citrovita, this new company will export to more than 80 countries and will have the capacity to process more than 40% of all orange juice produced and exported from Brazil. It will hold an important position on the global market and be responsible for the production of 25% of all orange juice consumed worldwide.

The new company will have an annual revenue of approximately US$1.2 billion, 6 processing plants in Brazil and one in the US (Florida), and 158,000 acres of owned groves for producing oranges, representing as much as 30% of its total processing, with the remaining 70% supplied by more than 2,500 independent growers. The new company will have 6,000 employees, with employment peaking at 10,000 in the harvesting season. The merger will bring synergies and operational gains in the production, processing, export and commercialization of orange juice.

Citrovita was founded in 1989 as a unit of the Votorantim Group. Citrovita operates in all stages of production, from planting seedlings to the export of juice in specially equipped vessels. All their productive assets are located in the State of São Paulo, Brazil: eight plants and more than 16 farms. The production capacity is 150 million boxes of oranges per year, which corresponds to 600 thousand tons of juice.

Citrosuco was created in 1963 by the union of Pasco Packing Company, a juice processor in Florida that included Eckes, an importer from Germany and Carl Fischer, who owned citrus groves and a packinghouse. By 1992 Fischer Group had acquired all the shares in the business. Citrosuco produces frozen concentrate orange juice, Tahiti limejuice and Murcott juice, not from concentrate orange juice, and orange pulp.

Concentrating on “not from concentrate”
Citrosuco’s main orange juice terminal is located in Santos, State of Sao Paolo, Brazil. This terminal is the largest orange juice terminal in the world. This terminal makes it feasible to export bulk FCOJ and premium quality not-from-concentrate juice. In Ghent, Belgium, the company also operates the largest European terminal in its category. This was also the first terminal in the world to operate in the receiving and distribution of bulk “not-from-concentrate juice”. This terminal along with Toyohashi, in Japan and Wilmington, Delaware in the US complete their terminal system.

The new terminal is the result of the application of the technology pioneered by Purdue University professor, Phillip Nelson. Nelson, who in 2007 was awarded the World Food Prize for his lifelong contributions to food science, is credited with developing the potential of aseptic bulk processing and packaging technology. This technology has opened the door to improving the transport of juice. By applying his method to ships, fruit juice by the millions of gallons is brought to countries that will never grow an orange, tomato or apple, and the potential of this breakthrough wasn’t lost on Citrosuco. On December 3, 1999, Citrosuco made the world’s first shipment of bulk aseptic orange juice, ready to drink, and opened up a new era in ocean transport of juice, particularly orange juice. (see picture of ship)

Citrosuco North America (CNA) has been a tenant at the Port of Wilmington, Delaware for the past twenty-eight years. At the Port of Wilmington, Delaware, North America’s chief gateway for juice imports, Brazilian juice both in fresh and concentrate is received at the facility in its specialized juice tankers, classified as “four hold refrigerated ships”. The ships are the length of two football fields and are each capable of holding 7.6 million gallons of juice. M/V Premium do Brasil and M/V Carlos Fischer, its sister ship, were built in the Kelven Flore AS shipyard in west Norway and were commissioned in August 2003. They have 16 vertically positioned cylinder juice tanks for storage of fresh juice and juice concentrate at between -10°C and - 0°C. Citrosuco’s M/V Premium do Brasil also has storage capacity for up to five hundred 20 ft. long shipping containers on-deck, of which 75 can be refrigerated. This capability is designed to help balance her operating cost, as juice tankers tend to sail empty on their return voyage. From the Wilmington, Delaware facility, distribution is to customers throughout the US and Canada.

Last September, Citrosuco North America (CNA) completed the construction of a new storage system at the Port of Wilmington for fresh orange juice imports. The expanded tank capacity will allow CNA to store juice NFC in addition to its current storage system used for its fruit juices from concentrate. With the added capacity comes the ability to handle more imports, which worry US producers from California to Florida.

The EC ruling on the merits of the Citrosuco and Citrovita merger may be problematical. With or without the merger, Brazil’s exports of OJ and other juice products seem destined to grow, not only to Europe, but also to the world.

Brazil squeezes OJ competition Brazil’s the Saudi Arabia of orange juice. Like the Arab oil giant, Brazil by virtue of exporting 99% of its OJ, is the world’s dominant supplier. Last year, Brazil’s two largest OJ exporters dominated supply with an 80% slice of the European market. Last year, two of Brazil’s largest OJ exporters, Citrosuco and Citrovita, merged linking together 25% of the world’s orange juice supply. But The European Commission says not so fast.

By Carole Lauriat, AJOT

Brazil is the world’s number one exporter of orange juice, followed by Florida. Together they produce roughly 85% of the world’s orange juice. There is a big difference: Brazilians drink only 1% of their production as they have better beverages to drink, like Caipirinha (a sugar/lime cocktail, know as the national drink) while 90% of Florida’s production is consumed in the US and only 10% is exported. By virtue of exporting 99% of its production of OJ, Brazil has become the Saudi Arabia of this liquid gold and is poised to capture even a bigger slice of the market, if recent events are any guide.

According to the USDA, in 2010, Brazil exported 1,223,000 metric tons (MT) of orange juice, and Brazil’s exports are expected to grow by 12% in 2011, amounting to as much as $220 billion in revenues.

Although, Brazil exported less orange juice by volume in 2010 than it did in 2009, the value of exports grew by 30% with price increases.

According to figures from the Brazilian Association of Citrus Exporters (CitrusBR), in the 2010 season (July 2009 to the end of June 2010), Brazil exported 524,981 tonnes of orange juice for US$660.17 billion. This compares to exports totaling 611,437 tonnes in the 2009 season, with revenues of $847.58 billion.

According to figures by the Foreign Trade Secretariat (Secex), the growth over 2009 was 11.48%. In terms of volume, Brazil exported 1.3 million tonnes of concentrated juice in 2009, and 1.2 million tonnes in 2010.

According to the Florida Department of Citrus, US imports of orange juice during January through December 2010 totaled 303,801,970 single-strength equivalent (SSE) gallons (down 10% compared to last year) with an FOB value of $395,897,328 for an average price of $1.30 per SSE gallon (up 30%). Of these imports, 59,049,460 SSE gallons were not-from-concentrate (NFC) (up 9% from last year).

Orange-juice imports into Florida ports represented 37% of the volume for 2010 (74% for NFC), compared with 36% of the 2009 volume (76% for NFC). Brazil supplied 56% of the volume in 2010 (94% for NFC) compared to 51% in 2009 (97% for NFC).

Brazil wins the zero sum game
In February 2011 the World Trade Organization (WTO) made a final ruling in Brazil’s favor in a dispute with the United States over anti-dumping measures imposed on its orange juice exports. The decision by a WTO dispute panel was the second major trade dispute Brazil won against the US. A year earlier, Brazil won a successful case against US cotton aid.

Brazil challenged the methodology, “zeroing,” that the US Department of Commerce used in applying antidumping tariffs on Brazilian orange juice. The US Department of Commerce uses "zeroing" for assessing duties on goods that are allegedly "dumped," or imported for less than they cost at home. According to the WTO, in zeroing, the importing authorities ignore shipments where imported goods are higher than domestic market prices and could potentially offset separate below-market shipments from the country. Many countries argue that this practice skews the average price of goods from a given country, and in this case, the WTO agreed.

Points of origin…and contention
Brazil got into the citrus business relatively late. Production as an industry began in the 1960s, but it wasn’t until recently that it overtook the US as the world’s primary source. It’s an odd rivalry with US producers. Most consumers in the US and abroad conclude their juice is coming from Florida or California. But Brazil’s OJ rarely touts country of origin. Brazil mainly exports concentrated juice, which retailers can sell and brand without indicating its origin, keeping orange juice recognized as a glass of Florida sunshine. This is particularly true in Europe, where 80% of all OJ consumed is from Brazil. Only South Korea emphasizes the Brazilian origin of its juice on packaging. Of the four main OJ suppliers to Europe, the Brazil’s Cutrale and Citrosuco are the biggest, if not the best known.

In May of 2010, Citrosuco and Citrovita merged to become the biggest orange juice producer in the world. In January of 2011 the European Commission (EC) opened an investigation into the May 2010 merger of Votorantim’s Citrovita and Fischer Group’s Citrosuco. The EC has 90 working days, until May 19, 2011 to make a final decision on whether the concentration would significantly impede effective competition within the European Economic Area (EEA) or a substantial part of it.

By merging Citrosuco and Citrovita, this new company will export to more than 80 countries and will have the capacity to process more than 40% of all orange juice produced and exported from Brazil. It will hold an important position on the global market and be responsible for the production of 25% of all orange juice consumed worldwide.

The new company will have an annual revenue of approximately US$1.2 billion, 6 processing plants in Brazil and one in the US (Florida), and 158,000 acres of owned groves for producing oranges, representing as much as 30% of its total processing, with the remaining 70% supplied by more than 2,500 independent growers. The new company will have 6,000 employees, with employment peaking at 10,000 in the harvesting season. The merger will bring synergies and operational gains in the production, processing, export and commercialization of orange juice.

Citrovita was founded in 1989 as a unit of the Votorantim Group. Citrovita operates in all stages of production, from planting seedlings to the export of juice in specially equipped vessels. All their productive assets are located in the State of São Paulo, Brazil: eight plants and more than 16 farms. The production capacity is 150 million boxes of oranges per year, which corresponds to 600 thousand tons of juice.

Citrosuco was created in 1963 by the union of Pasco Packing Company, a juice processor in Florida that included Eckes, an importer from Germany and Carl Fischer, who owned citrus groves and a packinghouse. By 1992 Fischer Group had acquired all the shares in the business. Citrosuco produces frozen concentrate orange juice, Tahiti limejuice and Murcott juice, not from concentrate orange juice, and orange pulp.

Concentrating on “not from concentrate”
Citrosuco’s main orange juice terminal is located in Santos, State of Sao Paolo, Brazil. This terminal is the largest orange juice terminal in the world. This terminal makes it feasible to export bulk FCOJ and premium quality not-from-concentrate juice. In Ghent, Belgium, the company also operates the largest European terminal in its category. This was also the first terminal in the world to operate in the receiving and distribution of bulk “not-from-concentrate juice”. This terminal along with Toyohashi, in Japan and Wilmington, Delaware in the US complete their terminal system.

The new terminal is the result of the application of the technology pioneered by Purdue University professor, Phillip Nelson. Nelson, who in 2007 was awarded the World Food Prize for his lifelong contributions to food science, is credited with developing the potential of aseptic bulk processing and packaging technology. This technology has opened the door to improving the transport of juice. By applying his method to ships, fruit juice by the millions of gallons is brought to countries that will never grow an orange, tomato or apple, and the potential of this breakthrough wasn’t lost on Citrosuco. On December 3, 1999, Citrosuco made the world’s first shipment of bulk aseptic orange juice, ready to drink, and opened up a new era in ocean transport of juice, particularly orange juice. (see picture of ship)

Citrosuco North America (CNA) has been a tenant at the Port of Wilmington, Delaware for the past twenty-eight years. At the Port of Wilmington, Delaware, North America’s chief gateway for juice imports, Brazilian juice both in fresh and concentrate is received at the facility in its specialized juice tankers, classified as “four hold refrigerated ships”. The ships are the length of two football fields and are each capable of holding 7.6 million gallons of juice. M/V Premium do Brasil and M/V Carlos Fischer, its sister ship, were built in the Kelven Flore AS shipyard in west Norway and were commissioned in August 2003. They have 16 vertically positioned cylinder juice tanks for storage of fresh juice and juice concentrate at between -10°C and - 0°C. Citrosuco’s M/V Premium do Brasil also has storage capacity for up to five hundred 20 ft. long shipping containers on-deck, of which 75 can be refrigerated. This capability is designed to help balance her operating cost, as juice tankers tend to sail empty on their return voyage. From the Wilmington, Delaware facility, distribution is to customers throughout the US and Canada.

Last September, Citrosuco North America (CNA) completed the construction of a new storage system at the Port of Wilmington for fresh orange juice imports. The expanded tank capacity will allow CNA to store juice NFC in addition to its current storage system used for its fruit juices from concentrate. With the added capacity comes the ability to handle more imports, which worry US producers from California to Florida.

The EC ruling on the merits of the Citrosuco and Citrovita merger may be problematical. With or without the merger, Brazil’s exports of OJ and other juice products seem destined to grow, not only to Europe, but also to the world.