Orange juice (OJ) sales from Mexico to the United States now exceed those from Brazil, according to a recent study by CitrusBR. CitrusBR is an entity representing Citrosuco, Cutrale and Louis Dreyfus, the three largest exporters of Brazilian OJ.
The study indicates sales from Mexico to the United States began to gain strength in 1993 and have skyrocketed since 2008. In 2008, the study states, the U.S. import tax on Mexican frozen concentrated OJ (FCOJ) was zeroed under the North American Free Trade Agreement, while Brazilian product continued to pay $415.86 per ton.
In 1993, when the U.S. tax on OJ from all sources was $490.02 per ton, Brazil exported 144,500 tons of FCOJ to the United States, and Mexico exported 9,800 tons to the United States. In 2019, Brazil’s exports to the United States had dipped to 71,100 tons, and Mexico’s exports to the United States had soared to 74,700 tons. In 1993, Mexico’s U.S. market share was 6 percent and Brazil’s was 89 percent. In 2019, Mexico’s U.S. share was 46 percent and Brazil’s was 44 percent.
The study states that the United States imports from 150,000 to 160,000 tons of FCOJ per year.
The CitrusBR study indicates that Mexico has a good quality product, similar to that produced in Florida, and a land freight cost about 50 percent cheaper than Brazil’s maritime logistics cost. Those factors allow Mexican OJ to continue gaining space in the U.S. market.
According to the study, Mexico has 340,000 hectares of producing orange orchards and Brazil has 400,000 hectares.
The study attributes the increase in Mexican supply to the United States to the increase in production of boxes per tree, renovation of orchards and cultural treatments.
Also according to the study, the U.S. Department of Agriculture reported that a severe drought has hurt Mexican orchards this year, and orange juice production is expected to decline by around 60 percent. As a result, the study states, Brazil may expand sales to the U.S. market, as long as Florida stocks aren’t enough to meet demand. But the study says any Brazilian gain will only be cyclical.
Florida Citrus Mutual this summer testified to federal agencies regarding the effects of OJ imports from Mexico; learn more here.
Source: Citrus BR, as published in Valor Economico, a Brazilian financial newspaper
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