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The US stopped drinking 46 000 tonnes of juice during 2010-11

Friday April 06 2012
Volume: 40 Issue: 14

Where is Brazils FCOJ industry heading? FOODNEWS Editor, Neil Murray, interviews Christian Lohbauer, president of the Brazilian Association of Citrus Exporters (CitrusBR).

NM: Has Brazil rebuilt its FCOJ stocks sufficiently?

CL: Yes. We have 311 000 tonnes which is our control inventory, and the rest, another 214 000 tonnes, is new inventory. It is not a high level, and not low like last year, but somewhere in the middle.

NM: Will these stocks grow if world consumption continues to be stagnant?

CL: We are still working on the possibility of exporting 1.2 million tonnes of FCOJ in 2012 that is our average export total for the last 10 years. But the US decline in consumption is significant: down 11% in the first two months of the year, because of this carbendazim thing. The subject has to come out of the media: the contamination from misinformation was amazing.

NM: Why has China slowed down its FCOJ buying?

CL: The price is too high. The Chinese are very sensitive to price. The bottlers cannot pass on an increase to the consumer. This is our main problem in China: consumer purchasing power. It is fine in the big cities, but outside them in the country, they do not have much money. The second obstacle is the consumption behaviour in China. The hot drinks (tea) tradition there is very strong. When you have high prices, these small companies we call them firefly companies because they appear and glow very brightly for a short time appear from nowhere. These small groups, all together, have a big impact.

NM: Is Citrus BR concerned at the relative lack of interest in orange juice?

CL: Oh yes. I have been working in this business for three years and you do not have to be a genius to know we have a consumption problem. We are in the planning stage of a universal orange juice promotion. We should be ready to communicate it to an agency in six months. We do not know if all stakeholders in the industry growers, producers, supermarkets will participate, but we are working on it.

NM: Why is the US market falling so fast?

CL: It is because of competition from other drinks. There is a huge advertising investment in soft drinks, juice drinks, energy drinks, waters. In the last eight years, orange juice consumption in the US has fallen by 25%. It was 1.0 million tonnes, and it is now about 800 000 tonnes. In 2010-11, the US stopped drinking 46 000 tonnes of orange juice. It was consuming about 850 000 tonnes in 2010 and 804 000 tonnes in 2011. That is equivalent to the entire Brazilian market in pre-packed juice (I am not talking about freshly squeezed juice here).

NM: What markets are growing?

CL: China is growing. In 2003, China consumed 44 000 tonnes of FCOJ. Now it is about 80 000 tonnes. This is important growth, in just eight years: doubled in size, but it is still one-tenth the size of the US consumption. Mexico and Russia are growing. Japan is static.

NM: How long will it take to replace carbendazim? Two or three years?

CL: Less than that. So far, we have asked the citrus processors to take it out. Forty per cent of the industrial oranges belong to the industry anyway. In six months, at the most eight, from February, we will be exporting carbendazim-free (or less than 10 parts per billion) FCOJ to the US. Some companies might achieve this a little sooner.

NM: How much will this cost?

CL: There is an impact on the cost of each box. I could not say how much, but there is an impact. Carbendazim is one of three fungicide products that we use in rotation, to avoid a resistance developing. So it accounts for one-third of fungicides and it was the cheapest. We calculate the whole impact on the business was USD50 million. We sold 170 000 tonnes to the US. Seventy thousand tonnes were already there when the problem started. Then 60 000-65 000 tonnes were NFC juice, and there is no problem there. Half of what was left was affected, and we had to take it back and find new markets, and we have calculated this cost at USD50 million.

NM: Do you think the FCOJ price is likely to fall later this year? If so, why? If not, why not?

CL: I really do not know. I cannot say anything about price.

NM: Will Brazils harvest be bigger than last year?

CL: It seems so, yes. Last year we forecast 387 million boxes for São Paulo and Minas Gerais, and the official number was 377 million boxes.

NM: Is Brazil being successful in its fight against citrus disease?

CL: This is interesting. There is a new study from Fundecitrus, showing good results for the first time on control of greening, based on the management system. The conclusion is that they have finally found a way to manage greening, through things like the protected nurseries, tree removal and co-operation between neighbours.

NM: Is the growing area for orange still under threat from sugar cane and other biofuels?

CL: We have never had precise figures for the number of sugar cane producers or the acres substituted for cane. Last year, sugar prices were very good. In 2009/10, orange juice was cheap so there was a stronger impetus to change. Now, orange juice is expensive, so...

NM: Will the government continue to support the industry for another year, five years, ten?

CL: We do not know, but we will know very soon. The most important thing now is that we will soon complete Consecitrus. We must go to CADE (Brazils regulator) in the next few weeks. We intend to start the new season with Consecitrus established.

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