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BRAZIL,
FLORIDA BATTLE OVER CITRUS TARIFF
HEATS UP
Publication: The
Lakeland Ledger
Printed: Sunday, November 9, 2003
Written By: Nancy San Martin & Richard Brand |
ARARAQUARA, Brazil -- The oranges that weigh branches down on row after row of
trees 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 industry, which
employs
90,000 people, has annual sales of $1.6 billion and holds 800,000 acres of green
space.
(Polk County leads the state's citrus-producing counties with 100,202 acres of
commercial
citrus groves. It also led in citrus production in the 2002-03 season
with nearly 36.6 million boxes harvested.)
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.
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 34nation, $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.
"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, 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," said
Putnam,
a Bartow Republican. " This is not your typical lobbying campaign.
This is for survival."
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 Lakeland-based 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.
Austin lamented that he will probably be the last orange grower in his family
-- regardless of whether the tariff weathers FTAA talks.
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