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Citrus Industry Fears for Survival
Miami Herald ^ | 11/02/03 | NANCY SAN MARTIN AND RICHARD BRAND

Posted on 11/02/2003 9:07:25 AM PST by Guard Dog

FREE TRADE Citrus industry fears for survival Free trade could be a fatal blow to Florida's signature crop if it means reducing a tariff that now makes Brazilian orange juice more expensive. BY NANCY SAN MARTIN AND RICHARD BRAND nsanmartin@herald.com

ARARAQUARA, Brazil - The oranges that weigh branches down on row after row of trees as far as the eye can see make a beautiful sight. But immersed in the intoxicating scent of citrus is a death threat to Florida's signature industry.

The sweet fruit has turned into a sour battle between the two giants of the orange world, Brazil and Florida, which together account for 85 percent of all citrus concentrate production.

At the heart of the dispute is a U.S. tariff of about eight cents a liter on imports of orange juice concentrate that has helped keep Florida growers in business since it was implemented by Congress in 1930.

But there is little question that lowering U.S. barriers to Brazilian imports would be a boon to the Brazilians and catastrophic for Florida's iconic industry, which employs 90,000 people, has annual sales of $1.6 billion and holds 800,000 acres of green space.

Although Florida's citrus industry is confronted with the lowest orange prices in decades, Brazilian grower Nivaldo Castanharo says he, too, is struggling to survive.

As the brown-haired 33-year-old walked around his family's 200,000-tree farm, he explained how the Brazilian orange market is saturated, less lucrative than in past years and desperately seeking to expand.

It cost him $2.70 last year to produce a 90-pound box of oranges, which he sold for $2.80, said the jeans-clad Castanharo. ``But if you [can export more to the United States,] you can sell more. With more access to the U.S. market, he figures he can get $4 a box -- and still undersell Florida's growers.

MARKET ACCESS

That's why Brazil is demanding greater access to U.S. agricultural markets as part of the hemispherewide Free Trade Area of the Americas (FTAA) agreement sought by Washington. Miami will host a Cabinet-level FTAA negotiating session Nov. 20-21.

The FTAA would create a 34-nation, $13 trillion trading bloc by 2005 that would phase out most barriers to foreign trade and investments and, its advocates argue, help all member nations by increasing trade across the board.

Some Florida sectors would win under the FTAA -- exporters of electronics, shippers, pharmaceutical firms and any other industries whose products would face lower tariffs in Latin America. And Brazil would have some losers -- domestic electronics manufacturers now protected by those tariffs.

Florida's citrus industry, however, would take a hit.

If Washington really wants free trade so it can increase American exports to Latin America, Brazilians argue, it must stop hampering foreigners who compete in the U.S. market.

''We are interested in market access for all products, not just agricultural products,'' Rubens Antonio Barbosa, Brazil's ambassador to Washington, said in a phone interview. ``. . . Brazil has presented a proposal to the United States. The ball is not in our court, the ball is in the U.S. court.''

Orange growers in Brazil are salivating at the prospect of expanding their exports to the U.S. market.

''Consumption is at the same level as it was four or five years ago,'' said Agnaldo De Tarso Rigolin, production manager at Cambuhy, a farm with 2.3 million trees that produces about four million boxes of oranges each year. ``We need a new market.''

But Florida growers say that repealing or even reducing the tariff would drive them out of business and give Brazil control of the U.S. market -- all in the name of a flawed effort to create an ''even playing field'' in trade.

LABOR COSTS

''We're paying a laborer $60 a day. They're paying their guys $6,'' said Scott Christmas, a spokesman for the Florida Farm Bureau. ``When their farms provide their workers with housing and education, and when they begin to abide by environmental laws, then we'd be willing to do that.''

Labor, land and water in this fertile corner of southern Brazil are so abundant and cheap that it costs farmers 33 cents to produce a pound of oranges, compared with 72 cents for Florida's farmers.

''It's an impressive industry they have,'' acknowledged Florida grower George Austin, who has visited Brazil. `` . . . We can't compete with them. It's not a level playing field.''

It's not the first time that the U.S. tariff on orange imports has been threatened. The Kennedy administration attempted to repeal the tariff in 1963. In 1970, an effort to reduce it also failed. Both moves were blocked by aggressive lobbying efforts, which continue today.

Indeed, Rep. Adam Putnam, R-Fla., a member of the House Agriculture Committee, said Florida orange growers are now engaged in frenetic lobbying in Washington to keep the tariff.

''The citrus industry is more engaged than they've ever been in history,'' Putnam said. `` . . . This is not your typical lobbying campaign. This is for survival.''

EFFECT ON CONSUMERS

Proponents of free trade argue that it would benefit consumers. Removing the tariff would cut 29 cents from the U.S. price of a gallon of imported orange juice concentrate, making for cheaper orange juice on American breakfast tables.

''Consumers have been hurt by the tariff. But they don't have an interest group. They are not organized. They don't have money behind them,'' said Jerry Haar, director of the University of Miami's Inter-American Business and Labor Program.

But Florida growers say a tariff reduction would in fact drive them out of business and give the Brazilians a commanding position from which to set prices.

''If you eliminate the tariffs, then Florida orange growers would go out of business, and that would leave Brazilian growers with a monopoly,'' said Casey W. Pace, spokeswoman for Florida Citrus Mutual, the state's largest growers group.

Florida growers also point out that the NAFTA free-trade agreement with Mexico and Canada in 1993 effectively allowed Mexican tomato farmers to wipe out their Florida counterparts -- but did little to make fresh tomatoes or ketchup cheaper.

''We don't exactly have a good track record when it comes to free-trade agreements,'' said Ray Hodge, the Florida Farm Bureau's national affairs coordinator.

It's that record that worries George Austin of LaBelle, whose 200 acres of groves scattered across Southwest Florida have been in his family since the 1930s.

Each fall, Austin hires scores of workers to pick the fruit and dump it into trucks that deliver it to a processing plant, where within minutes it is sorted, washed and squeezed. The juice is turned into concentrate and frozen, while the rinds and pulp are processed for export to Europe as cattle feed.

Austin lamented that he will probably be the last orange grower in his family -- regardless of whether the tariff weathers FTAA talks.

With low orange prices and a booming population encroaching on his land, Austin says he is telling his daughters and grandchildren to stay away from the business and is weighing opportunities to sell it.

''I have a couple of small groves in the path of progress, in areas where they're starting to build,'' Austin said. ``In those, I think the best option might be to sell it to a developer. You have to find a way to make it profitable.''


TOPICS: Business/Economy; Government
KEYWORDS: agriculture; brazil; citrus; florida; freetrade; oj; orangejuice
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To: jra
"What I said was that as a result of dumping said product into the American market that American workers would likely lose jobs."

Nice inflamatory language. Now change it to:

"What I said was that as a result of selling said product into the American market that American workers would likely lose jobs."

Selling v. dumping. Are you OK with selling?

"Dumping" is selling below cost. If that is what they are doing, I agree with you. "Selling" is at cost plus profit. If that is what they are doing, do you agree with me?

21 posted on 11/05/2003 3:56:19 PM PST by MonroeDNA (Please become a monthly donor!!! Just $3 a month--you won't miss it, and will feel proud!)
[ Post Reply | Private Reply | To 19 | View Replies]


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