|Horticultural & Tropical Products Division||Return to the H&TP Home Page|
Orange Juice Situation
|Orange juice production in the major producing countries in 2000/01 is estimated at 2.2 million tons, down nearly 10 percent from 1999/2000, mainly the result of lower availabilities of oranges for processing. Northern Hemisphere orange juice production is forecast down nearly 11 percent, while Southern Hemisphere production is off 8 percent. Brazils production during 2000/01 is estimated at 1.1 million tons, a drop of 95,000 tons from the previous year.|
U.S. production of orange juice in 2000/01 is forecast at 988,000 tons, a decline of 7 percent from the 1999/2000 level. According to the July 11, 2001, NASS Crop Production report, Florida frozen concentrated orange juice (FCOJ) yield projection is 1.58 gallons per box of 42.0 degrees Brix. The early and mid-season portion is final at 1.54 gallons per box as reported by the Florida citrus Processors Association. The Valencia FCOJ yield is forecast at 1.65 gallons per box.
U.S. exports of orange juice are forecast at 95,000 tons, down from 100,134 tons in 1999/2000. However, through May, U.S. exports of orange juice are tracking 5 percent ahead of last years pace. U.S. imports of orange juice are estimated at 195,000 tons, a drop of 19 percent from the previous year. However, through May, U.S. imports of orange juice are running about 24 percent behind the 1999/2000 pace. In order to maintain consumption at near last years level, imports of orange juice will need to increase in the next few months, exports need to slow down, or both. U.S. consumption of orange juice during 2000/01 is estimated at 1.15 million tons, about unchanged from the 1999/2000 level. Ending stocks of orange juice are currently estimated at 369,000 tons, down nearly 14 percent from the previous year.
Japans orange juice imports during 2000/01 are estimated at 105,000 tons, up nearly 4 percent from the 1999/2000 level. Brazil is the major supplier of orange juice to Japan, accounting for over 80 percent of the total in 1999/2000. Japans fruit beverage production in CY 2000 was 2.25 million liters, up 2 percent from the previous year. Japans largest consumption of fruit beverage by type is a soft drink with some content of natural fruit juice, followed by a 100-percent natural fruit juice product. The products that contain 10-30 percent natural fruit juice showed a 135-percent increase in production in CY 2000 over CY 1999, and continue to grow strongly this year. The trend in Japans fruit beverage market is for Japanese beverage manufacturers to continue to market new soft drink products containing 10-30 percent natural fruit juice. Kirin Tropicana and Minute Maid, Japans leading fruit juice manufacturers, will launch big sales promotions for 100-percent natural orange juice this season. Japanese traders hope for a good market recovery for 100-percent fruit juice products.
FCOJ production for 2000/01 was revised to 37,000 tons, a decrease of nearly 10 percent compared with the previous year. According to sources, lower international prices and higher international stocks resulted in a decrease of FCOJ production. Juice production depends heavily on the international price of FCOJ. The forecast for oranges for processing was revised downward to 370,000 tons. Lower international prices represents smaller margins for the industry.
The export estimate for FCOJ for MY 2000/01 was revised downward due to a decrease in demand and lower prices. Furthermore, the strength of the peso against the dollar that has prevailed in 2000 and 2001 has not helped the export industry. According to industry sources, Mexico will fill 100 percent of the 2001 U.S. quota. The export estimates for 1999/2000 were also revised downward based on recent official trade data. FCOJ imports are almost negligible compared to domestic production.
Production of orange juice for 2001/02 is forecast at 12,700 tons, representing a decrease of 43 percent from the previous year, mainly due to decreased citrus production, particularly Valencias. In addition, a general increase in fruit quality is making a higher percentage of oranges suitable for the higher-return local fresh market or premium export markets. Delivery to processors for 2000/01 (local marketing year April 2001-March 2003) is forecast at 170,000 tons, down from 300,000 tons the previous year.
Orange juice consumption is estimated at 44,900 tons for 2000/01. On July 1, 2000, the government of Australia (GOA) introduced a goods and services tax (GST). The GST is charged at 10 percent for all goods with an exemption for fresh food. Under the GST, all orange juice containing more than 90 percent orange juice will be exempt from the GST, effectively making it tax free. All other orange juice will be taxed at 10 percent, lowering the overall level of tax significantly.
Orange juice imports in 1999/00 (local marketing year April 2000-March 2001) dropped slightly compared with the previous year but are expected to increase in 2000/01 as a result of the smaller crop and the lower availability of suitable fruit. In the medium-term, the reduction in the numbers of bearing Valencia trees, the increase in Navel production, and the increase in processing fruit diverted to fresh juice production are likely to contribute to a reduction in concentrated juice production and may lead to increased imports of FCOJ.
Orange juice imports are higher during June through February, with November and December being peak months. In 1988/89, an ad valorem tariff of 35 percent was implemented. This was gradually reduced to the current 5 percent on July 1, 1996. Industry groups are pushing to have this tariff increased as a result of the increased competitiveness of imported juice, particularly from Brazil.
In 1999, the GOA announced changes to legislation which are designed to strengthen labeling laws. The goal of the legislation is to prevent companies from misusing the "Made in Australia" label, and to reinforce the "Product of Australia" description. This prevents imported FCOJ from being reconstituted and then labeled as "Made in Australia." The general test for the "Made in Australia" label is that the goods have been substantially transformed and that 50 percent or more of the cost of production or manufacturing of the goods is attributable to production or manufacturing processes in Australia. The general test for the "Product of Australia" label is that each significant ingredient or significant component of the good and all, or virtually all, processes involved in the production or manufacture must take place in Australia. The legislation also regulates the use of a logo that may indicate the country of origin of the product.
The processing sector has been stimulated recently by an increase in fresh juice production. The push into fresh juice has been bolstered by the development of a "100 Percent Australian Juice" logo by the Australian Citrus Growers Inc. (ACGI) in conjunction with the Australian Horticultural Corporation (AHC) and major juice marketers. The distinctive orange squeezer logo means that the juice contains no concentrate, no artificial coloring, no added water, and no imported product. The advertising campaign has included television and newspaper coverage. Seven juice companies, including the three major juice companies representing 80 percent of the fresh juice industry, are licensed by the AHC to use the logo.
Brazils FCOJ production in 2000/01 (local marketing year July 2001-June 2002) is forecast at 1.09 million tons, down 8 percent from the previous year due to the lower volume of oranges for processing. FCOJ production for the state of São Paulo is forecast at 1.06 million tons compared with 1.14 million tons the previous year. The FCOJ industry in Brazil is highly concentrated and just a few companies are expected to operate in local marketing year 2001/02. Sources indicate that smaller companies, such as Branco Peres and Kiki, are not expected to crush oranges this upcoming season. It was also reported that Cargill will not operate its Uchoa plant, with all processing directed to the Bebedouro facility.
Brazil is presently in the midst of a critical electrical energy shortage. Low rainfall is hampering the local hydro-electric system, which supplies over 90 percent of the countrys electricity. The only near-term solution is conservation. Regarding the food industry, the government of Brazil (GOB) has called for a 15-percent reduction in use of electricity from the May-July 2000 average through the remainder of the winter dry season and has threatened significant surcharges and service cuts to enforce the needed cuts. It is hoped that the rainy season, which normally begins in November over much of Brazil, will bring relief. Longer-term solutions, such as investment in alternative generation options, are under review. According to industry contacts, the energy shortage could affect both FCOJ processing and storage at the plant and at the port. The FCOJ plants were able to set an agreement with the GOB and the 15-percent reduction will be based on the months they fully operate and not on the GOB-mandated average consumption of May-July 2000, when they were closed or only partially operating. Each company will have the freedom to share the energy they are allowed among their plants or even sell part of their quota to other companies.
Brazils consumption of FCOJ is estimated at 16,000 tons, unchanged from the 1999/00 level. Sources report that the retail market for orange juice is controlled by a few large supermarket chains which have a significant bargaining power over suppliers. In addition, supermarkets charge different taxes and fees to allow suppliers to have their products on the shelves. In addition, ready-to-drink orange juice is price competitive relative to concentrated orange juice. A 1-liter can of concentrated orange juice is about R$6-8 and yields 7-8 liters of juice ready to drink, while 1 liter of ready-to-drink juice costs R$2-2.5. Although less cost efficient, many orange juice consumers are willing to spend R$2-2.5 instead of R$6-8 because this represents a lower initial expense.
Brazils electric energy shortage may also affect future consumption of FCOJ, since Brazilian families are also required to cut 20 percent of their May-July 2000 average energy consumption. Many households are unplugging their freezers in order to reach their 20-percent reduction goal and this could eventually lead to a decrease in local FCOJ consumption. In addition, if orange juice companies have to lease or purchase energy generators powered by diesel, there will be an increase in production costs, which will be at least partially transferred to consumers.
FCOJ exports for 2000/01 are estimated at 1.19 million tons, down 4 percent from the previous year. According to contacts, May and June are not strong months for FCOJ exports since many small processing plants have already shipped their production and many companies hold stocks to blend with early orange juice from the upcoming season. Recently, the GOB has allowed orange juice companies to ship product abroad on a consignment basis.
There is no official estimate for not-for-concentrate (NFC) supply and demand in Brazil. According to updated information provided by industry contacts, approximately 490,000 tons of oranges have been crushed for local marketing year 2000/01. These include 326,000 tons crushed for the domestic market--122,000 tons for pasteurized production and 204,000 tons for fresh squeezed production--and 163,000 tons crushed for exports.
(This article was prepared or estimated on the basis of official statistics of foreign governments, other foreign source material, and, in particular, reports of Agricultural Attachés and Foreign Service Officers, results of office research, and related information. The FAS Attache Report search engine contains reports on the Orange Juice industries for approximately 10 countries, including Mexico and Brazil. For information on production and trade, contact Debra A. Pumphrey at 202-720-8899.)