FCM Mutual Musings: OJ Tariff Critical To Florida Citrus

As policymakers continue to discuss free trade pacts, and Brazil’s economy expands by leaps and bounds, it is crucial to remember the importance of the orange juice tariff on the future of Florida’s citrus industry.

The orange juice tariff was created with passage of the Smoot-Hawley Act in 1930. The Act imposed a tax of 70¢ per single strength equivalent gallon on imported citrus juice. With the rise of Brazil’s processed citrus industry, that country’s OJ exporters now pay the bulk of the tariff duties each year. Since the tariff’s inception, the Florida citrus industry has waged many battles to keep it in place. After much negotiation and legislation over the past several decades, the tariff now sits at 29¢ per gallon on frozen concentrate and 17¢ per gallon on not from concentrate orange juice.
The money derived from the tariff — up to $90 million per year depending on imports — now goes to the U.S. Treasury, although there is an ongoing effort lead by Florida Citrus Mutual to direct a portion of the dollars into a citrus research trust fund to finance worldwide citrus research.

Economic Reckoning

The citrus industry provides a $9 billion economic impact annually on the state of Florida and employs nearly 76,000 people. If the tariff is reduced or eliminated, those significant economic benefits would be lost.
Florida Citrus Mutual’s economic analysis concludes that without the tariff, Florida fruit prices would decrease by 15¢ per gallon per year at current pricing and import rates. This equates to almost $150 million in grower revenue per year.
 
A farm gate decrease of this magnitude would immediately reduce Florida production. Plus, higher prices to Brazilian growers would actually increase production in that country and result in the migration of world OJ production from Florida to Brazil.
Why is this bad? Because 90% of the world’s orange juice is manufactured in two locations: Florida and Brazil, making orange juice one of the most concentrated commodities in the world from a production standpoint. Eliminating the tariff would give Brazil a monopoly on the world orange juice market. Not only would this be disastrous for Florida’s economy but consumers would most likely experience soaring retail prices.
Proponents of free trade seek to increase competition, decrease cost to the consumer, and encourage additional players to enter the market. The lack of a tariff would create a cartel-like marketplace that promotes just the opposite.

Deep Impacts

Florida citrus growers are the most efficient producers in the world, implementing cutting edge agricultural techniques to maximize yields. This efficiency is achieved while adhering to expensive environmental and labor standards that are non-existent in Brazil. Consequently, the OJ tariff levels the playing field while stimulating competition that wouldn’t occur if it were not in place. Policymakers should not view this fact as rhetoric. Brazilian juice processors have a history of dumping below cost juice into the U.S. marketplace in order to undercut competitors and put them out of business. The predatory practice is a violation of international trade law. Right now, a handful of Brazilian processors are under a strict order by the U.S. government to ensure they are not continuing to dump juice in the U.S. Any reductions in the tariff would further exacerbate the inequalities that have been endemic in this market for the past 20 years.
 
Finally, and most importantly, hundreds of rural communities in Florida’s interior rely heavily on the citrus industry for economic stability, tax base, school funding, and social programs. These towns would suffer immensely if the tariff wasn’t in place and production waned. The 13 active processing plants in Florida require a certain amount of fruit to remain economically viable and certainly reduced production would put them at risk of closure.
At a time when the state’s economy is unsteady and jobs are a premium, the importance of a viable citrus industry cannot be understated. The orange juice tariff goes a long way in keeping us intact. Florida Citrus Mutual will continue to fight for it.

Leave a Reply

Featured Stories

All Vegetables Stories >All Fruits Stories >All Nuts Stories >All Citrus Stories >

The Latest

Apples & PearsInvasive Pest Found First Time In U.S. At Border Crossi…
October 20, 2014
Moth known to feed on apples, apple buds, leaves, and shoots, is found in a container full of pump valves originating in China. Read More
More Vegetables6 Savory Tomato And Pepper Varieties For Florida Grower…
October 20, 2014
Leading vegetable seed companies highlight a half dozen high-performance selections for producers in the Sunshine State. Read More
CitrusGrowers Need To Take The Ball And Run — Now! [Opi…
October 18, 2014
Help yourself, your farm, and fellow colleagues by becoming more involved in your industry. Read More
CitrusLegendary Florida Citrus Grower And Advocate Passes
October 17, 2014
Joe L. Davis Sr. will be remembered for his straight talk and sage advice. Read More
GrapesNew American Viticultural Area In Northern California E…
October 17, 2014
“Eagle Peak Mendocino County” lies entirely within the North Coast viticultural area. Read More
GrapesMapping Grape Crown Gall Tumor Disease
October 17, 2014
Scientists are close to cracking the disease’s genetic code, a major boon to vineyard protection. Read More
NutsAlmond Growers To Promote Bee Health
October 16, 2014
Almond Board of California announces comprehensive Best Management Practices. Read More
Cucurbits6 Juicy Watermelon Selections For The Sunshine State
October 16, 2014
Leading vegetable seed companies highlight a half dozen high-performance varieties for Florida producers. Read More
CitrusDiversification Is King For Small Farm’s Success
October 16, 2014
Being flexible and adapting to the times critical for Central Florida's Vo-LaSalle Farms. Read More
CitrusAsian Citrus Psyllid Moves Into Northern California
October 15, 2014
First detections made of damaging insect in Santa Clara and San Joaquin counties. Read More
Farm ManagementVidalia Onion Committee Reaches Younger Audience with D…
October 15, 2014
“V is for Vidalia” campaign focused on social and digital media outreach. Read More
VegetablesSakata Seed America To Debut “Tasty 10 By Sakata Coll…
October 15, 2014
The collection includes a new variety and will be launched at the PMA Fresh Summit Oct 17-19. Read More
Insect ControlBagrada Bug Continues To Spread In California’s Brass…
October 15, 2014
The pest is expected to be a problem through December. Read More
Vegetables8 Blazing Hot Pepper Varieties [Slideshow]
October 15, 2014
Check out these 8 hot pepper varieties from the nation’s leading seed breeders and distributors. Read More
NutsKeep In Mind Availability Of Soil Fumigants
October 15, 2014
Almond growers must be aware of restrictions pertaining to soil fumigants prior to replanting. Read More
Food SafetyCalifornia Leafy Greens Marketing Agreement Revises Web…
October 15, 2014
The California Leafy Greens Marketing Agreement's revised website provides food safety news and resources. Read More
CitrusScientists Uproot Common “Superweed” Myths
October 15, 2014
A new fact sheet is available that explores the truth behind two fallacies.   Read More
CitrusUF/IFAS Joins In On Specialty Crop Block Grant Bonanza
October 15, 2014
Researchers partnering with FDACS and USDA on 24 separate projects to strengthen the produce market sector. Read More