Florida citrus industry becoming more competitive with rival Brazil's as gap closes amid strengthening real, rising labor and farmland costs in Brazil

LOS ANGELES , August 25, 2011 () – Florida citrus is becoming more competitive with its longtime rival Brazil, as the country’s growing economy in the global marketplace has come at the expense of its citrus industry, TheLedger.com reported Aug. 25.

In Brazil, the cost structure is moving toward the U.S. model, University of Florida agricultural economist Tom Spreen said. The cost gap in the country is being closed by factors including the growing strength of the Brazilian real, which is making citrus more expensive; the increasing cost of labor, which comes out of a surging economy; and farmland that is becoming more expensive as competition with sugar becomes more fierce.

In the 1980s, Brazil became the largest grower of oranges and processor of OJ in the world. Brazil has accounted for over 50% of world OJ production while Florida has provided around 30% in recent years.

While Florida OJ is primarily sold in the U.S. and Canada, Brazil built its citrus industry almost entirely off OJ exports. Juice processors in Brazil have benefited from a weak real over the past three decades, pricing and trading its OJ in U.S. dollars. Over the past five years however, Brazil’s economic boom has seen the real-dollar exchange begin to hurt processors.

Though both Florida and Brazil’s citrus can suffer from citrus greening and citrus canker diseases that hurt production, Brazil has two additional diseases, citrus variegated chlorosis and citrus leprosies, which can affect crops.

Brazilian farmers have decided to run away from diseases such as greening and CVC in recent years, with some moving from citrus and leasing their land to sugarcane, but Florida growers do not have that option due to limited citrus growing area, according to Packers of Indian River Ltd. crop adviser Tom Stopyra.

The biggest competitor for land in Brazil has become sugarcane, as the country is more advanced than the U.S. in crop-based ethanol production, both Spreen and Stopyra said. The new rush for farmland has pushed prices of land to record highs.

Brazilian orange farmers struggled last year amid a drought, which dropped its crop to the lowest in 20 years, according to Spreen’s figures. Brazilian OJ output dropped 13.6% in 2010-2011, which translates to a 38% reduction in exports to the U.S.

The shortage in Brazil helped fuel record farm prices for Florida oranges in 2010-2011, in spite of a larger crop than the previous year, Spreen said.

The primary source of this article is TheLedger.com, Lakeland, Florida, on Aug. 25, 2011.

* All content is copyrighted by Industry Intelligence, or the original respective author or source. You may not recirculate, redistrubte or publish the analysis and presentation included in the service without Industry Intelligence's prior written consent. Please review our terms of use.