Opinion: Citrus Down In The Dumps, But Not Out

Florida citrus growers suffered a setback in March when the U.S. International Trade Commission (ITC) ruled that revoking the antidumping order against Brazilian orange juice would not result in material injury to the industry.
Consequently, if the decision stands, imports of juice from Citrosuco, Cutrale Citrus Juices, and Louis Dreyfus will no longer be assessed an additional duty to offset dumping.

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More importantly, the Brazilian juice will no longer be subject to annual reviews to assure that it is not priced below cost in the U.S. market. The good news is that the decision does not prohibit future action to offset Brazilian dumping, and is still subject to possible appeal.
Florida Citrus Mutual is extremely disappointed with this decision and we will review next steps including an appeal. Over the past five years, Brazilian processors have continued to dump cheap product into the U.S. as their residual market, and I cannot see any reason why they would stop, especially if the antidumping order goes away.

Orange Crush

Dumping is bad because it can drive domestic producers out of business while destabilizing world markets. U.S. companies can file an antidumping petition with the ITC, which will investigate the matter. If a domestic industry can prove foreign producers are selling product for less than “normal value,” including below the cost of production, then antidumping deposits can be imposed by the government.

The FDOC annually reviews sales and if the dumping stops, the deposits are refunded. If the dumping continues, then the company(s) forfeits the duties. The order can be lifted when a company successfully completes three consecutive reviews without dumping.
For more information on dumping, visit www.flcitrusmutual.com.
Since the order was imposed in 2006, it has worked well, reducing Brazilian dumping margins to single digits, preventing price declines, contributing to a doubling of bulk juice prices, and providing a safety net so that the industry could turn its attention to costly challenges of HLB, canker, and inflationary pressures.

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Poring Over The Details

Although the Commission was not scheduled to release its written opinion until around presstime, our trade counsel (Barnes Richardson) feels that the decision is probably the result of a combination of market factors and bad timing.

Retail OJ, bulk juice, and fruit prices have all increased significantly in the last five years. That’s expected when an antidumping order is doing its job. But the combination of those conditions with other temporary factors, such as low Brazilian stocks, low import volumes, and a partial FDA embargo due to the carbendazim issue, apparently led the Commission to determine Brazilian pricing is not likely to threaten the U.S. market for at least 18 months, the minimum time window projected in sunset reviews.
A reversal of market conditions, however, also might justify new charges, such as continuing erosion in demand caused by the carbendazim scare, declining bulk prices, and growing Brazilian inventories encouraged by new Brazilian government programs.

I can assure you Mutual will continue to aggressively monitor this issue to ensure Brazilian processors are playing by the rules. Please do not hesitate to contact me with questions or concerns.

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