The Brazilian Industry of Orange Juice

Brazilian Industry oF ORANGE JUICE

B r a z i l ia n I n d ustry o F OR A N G E JUICE

Louis Dreyfus Commodities www.ldcommodities.com.br Cutrale www.cutrale.com.br Citrovita www.citrovita.com.br Citrosuco www.citrosuco.com.br Associadas

A IndĂşstria Brasileira de suco de laranja

A I n d Ăşstr ia B r a si l e ir a d e su co d e lar a nja

Associates

Citrosuco www.citrosuco.com.br

Citrovita www.citrovita.com.br

Cutrale www.cutrale.com.br

Louis Dreyfus Commodities www.ldcommodities.com.br

Brazilian Industry oF ORANGE JUICE

B r a z i l ia n I n d ustry o F OR A N G E JUICE

Louis Dreyfus Commodities www.ldcommodities.com.br Cutrale www.cutrale.com.br Citrovita www.citrovita.com.br Citrosuco www.citrosuco.com.br Associadas

A IndĂşstria Brasileira de suco de laranja

A I n d Ăşstr ia B r a si l e ir a d e su co d e lar a nja

Associates

Citrosuco www.citrosuco.com.br

Citrovita www.citrovita.com.br

Cutrale www.cutrale.com.br

Louis Dreyfus Commodities www.ldcommodities.com.br

From the oranges grown in Brazil, the world’s most Three out of every five glasses of OJ consumed on the planet come from Brazilian fields.

1

widely-consumed juice is produced.

CONTENTS

Brazilian industry of orange juice

message from the President

5

History 6

Citrus Belt 10 12 Brazilian Citrus Belt

Planting and Harvesting 16 19 An Orchard is Born 20 Planting Technology 21 Research and Development 23 Harvesting the Fruit 26 Labor Relations 27 An Orchard of Laws

The orange market 28 30 Ways to Sell Oranges 31 Pricing

Processing 32 35 Stages of Production 36 Production of Frozen Concentrate Orange Juice–FCOJ 37 Production of Not-from-Concentrate Orange Juice–NFC

Logistics 40 43 The Journey of a Global Juice 44 Logistics and Distribution

50 World Consumption

CitrusBR

53 Foreign Trade

Brazilian Association of Citrus Exporters

Consumption 48

Sustainability 56 58 Orange Juice and Sustainability

Rua Iguatemi 448 sl 701

62 A Modern, Humane and Sustainable Industry

01451-000 São Paulo SP Brasil

64 Infographic on the Integrated Citrus Production Chain

T +55 11 2769.1205 www.citrusbr.com citrusbr@citrusbr.com

Glossary 68 Credits 69

result of hard work, scientific expertise, and a unique biome that allows the nation to produce a great deal in a relatively small area, thus preserving nature.

The leadership of the Brazilian citrus production is recognized worldwide. CitrusBR – the Brazilian Association of Citrus Exporters – is the representative body for Brazilian producers and exporters of citrus juices.

Founded in 2009 by the companies Citrosuco–Fischer Group, Cutrale, Citrovita–Votorantim Group, and Louis Dreyfus Commodities, CitrusBR’s foremost objective is to defend the collective interests of the sector, both nationally and internationally, interacting with other entities in the agribusiness, and promoting the consumption as well as

ORANGE. THE WORLD’S FAVORITE JUICE

Brazil is already a world leader in food production — the

5

the image of Brazilian orange juice.

On the following pages, readers can understand the

Brazil produces more than

complexity of the citrus production chain, from the orchard

50% of the world’s orange

to the worldwide consumer market.

juice, exports 98% of its production, and accounts for 85% of worldwide orange juice exports.

Christian Lohbauer Executive President citrusbr@citrusbr.com

History

More than just a beverage, orange juice has been a friend of humanity. At the time of the great explorations, this fruit became

lacking sufficient vitamin C in their diet. According to researchers,

being structured in the hinterlands of São Paulo state. At that time This material is about an industry

appeared the first outlines for a juice processing industry in the

whose history began more

environs of the city of Limeira. The first shipments of orange juice

and widely- consumed fruit juices ever known. This is the world of Brazilian oranges.

13 2010

Price of orange juice on the international market reaches record levels.

More than 50% of all orange juice consumed in the world comes from Brazil.

the orange’s fame as a source of good health dates back to this time.

great transformation began in 1920, when the ‘citrus belt’ began

for producing one of the tastiest, sustainable

12 2006

a “poster girl” for the fight against scurvy, a disease affecting sailors

Although oranges had been present in Brazil for four centuries, the

than 40 years ago and today is responsible

History of the orange in Brazil

were destined for Argentina, England and other European countries.

Gradually the region was consolidated as a major producer of oranges in Brazil.

11 2003 Innovation in the juice market with the development of NFC (Not-From-Concentrate) juice and exportation of this product.

9 1981

10 1984

Innovation within the FCOJ shipping system to replace traditional steel drums with tanker trucks and bulk cargo vessels, in addition to building companyowned port terminals in 1985.

Severe frost in the orange groves of Florida ushers in a phase of substantial prosperity in the Brazilian Citrus Industry.

Today, the orange is making the opposite journey it made 400 regions around the world, the orange became one of the most globalized fruits

years ago; instead of being brought to the Americas, the world’s most widely–consumed juice is exported from the Americas to

centuries ago. Originally from China, the

destinations around the globe. Three out of every five glasses of OJ

orange made its way westward across Asia

consumed worldwide are produced in Brazil and — just like those

to Turkey, and continued on to Spain and

ancient caravels who braved the sea — modern vessels carry up to

Portugal. From the Iberian peninsula it was brought to the Americas, arriving in Brazil over 400 years ago.

1.2 million metric tons of juice to the most remote parts of the world (in FCOJ Equivalent).

7

Born in Asia and currently found in diverse

7 1963

8 1970

Brazil’s first factory of frozen concentrate orange juice (FCOJ) is established. In the first year of operation, more than 6,000 metric tons of juice are exported.

5 1939 World War II almost completely paralyzes Brazilian exports of fresh oranges, which leads to an oversupply of the fruit in Brazil. During this period, production of orange juice using the ‘hotpack’ system begins, to fill orders for the British army.

3 1889 Favored by the proximity of the consumer market and conditions such as climate, soil and temperature, the citrus industry gains momentum in the Center-South region of Brazil.

1 1501 Photo from the 1930s, when the orange juice industry was just getting started

Portuguese explorers bring the first citrus trees from Spain to Brazil for the purpose of creating supplies of vitamin C, an antidote for scurvy. Adaptation of this fruit tree in Brazil is so favorable that it’s even confused with native trees.

Expansion of orchards in São Paulo state, driven by the juice industry and export incentives, leads Brazil to occupy a prominent position on the international market.

6 1961 The citrus industry expands to the regions of Araraquara and Bebedouro, in the state of São Paulo.

4 1927 The São Paulo state government creates the Citrus-Farming Service, linked to the Agronomy Institute of Campinas and the Luiz de Queiroz School of Agriculture, University of São Paulo.

2 1873 Seedlings of Baía orange trees are shipped to California (USA), from where this variety spreads throughout the world. Baía oranges originated in Brazil, most likely from a mutation of a select variety.

The preference of citrus growers for late varieties — in virtue of

place to develop can be proven by the amplitude of the

their higher productivity — has occurred to the detriment of the

harvest period. Between the months of May and January,

mid-season varieties that are well accepted on the market for

the fruit can be found being harvested in some region of

fresh fruit, leading to a shortfall of the fruit, mainly in September,

the nation. However, this does not mean that production

and consequently greater competition between the industry

is homogeneous throughout the year; to the contrary:

and fresh fruit market during this period.

between September and November there is a major concentration of the fruit being delivered to juice industries.

In addition to being widely accepted on the fresh fruit market, the Pera variety has a higher content of soluble solids, which

Even considering that there is an amazing variety of

are simply the sugars that comprise the raw material for juice

oranges around the world, eight species are predominant

concentrate. These two factors, coupled with the production

in Brazil. In this regard, there are oranges picked earlier in

deficit just at the time that Pera oranges are producing, cause this

the year and those picked later in the year. Hamlin, Pera,

variety to bring higher prices than the other varieties destined to

Valência and Pera-Natal are the most common juice

the juice industry.

varieties, whereas the Baía and Lima varieties are typically destined for fresh consumption.

Aiming to reduce the period of shortfall, growers are changing the profile of their orchards by increasing early-harvest trees

Today, 55% of the plants grown in the orange groves in With diversified varieties, Brazil can have an orange harvest practically every month of the year

São Paulo state are Natal, Valência and other late-harvest varieties; 23% are Hamlin and other early-harvest varieties; and 22% are Pera as well as other mid-season varieties.

and reducing late-harvest trees. In orchards with trees aged 0 From the oranges grown in Brazil, the world’s most widely-consumed juice is produced.

Three out of five glasses of OJ consumed on the planet come from Brazilian factories

Harvesting period by orange variety and % of production Early-season (hamlin, westin, rubi, pineapple)

Mid-season (pera)

Late season (valência and natal)

to 2 years, early varieties represent 23%; mid-season varieties represent 22% of the total harvest; leaving the late-harvest varieties with a 53% share.

The planting of different varieties is also a way to manage disease control and reduce the impacts of climatic adversities. The improvement of citrus varieties is being done with traditional

23%

improvement techniques.

22%

In the citrus belt — an area covering 300 counties between São Paulo and Minas Gerais in southeastern Brazil — there 55%

are several research institutes devoted to the orange, which seek solutions for preventing and fighting diseases as well as

may jun jul aug sep oct nov dec jan feb mar apr Source: Prepared by Markestrat based on CitrusBR

improving the quality of the fruit.

9

The Orange in Brazil

The assertion that the orange found in Brazil the ideal

11

1. Suitable soil 2. Available water 3. Adequate rainfall 4. Topography 5. Available and qualified labor force 6. Availability of inputs 7. Local infrastructure

Citrus Belt

Seven reasons that make S達o Paulo the most important citrus-producing region in Brazil:

Citrus Belt

Brazil’s Citrus Belt is located amidst the well-maintained highways in the state of São Paulo and covers 375 counties, many of which are surrounded by sugarcane fields. Distributed into five major regions across an area of 1.3 million hectares, orange farming is the third most important agricultural activity in the state, behind sugarcane and livestock.

The region accounts for more than 80% of Brazil’s Truck loaded with fruit on a farm in São Paulo.

Total area of orange groves in the citrus belt reaches 600,000 hectares, and orange is the third most important agricultural activity in the state.

The orange groves coexist in harmony with the legal reservations (areas destined for the preservation of local fauna and flora).

Brazilian legislation is very strict, and every producer must leave an area of 20% of native woodlands preserved.

orange production.

Within the state, the strength in relative terms is even greater; of all the oranges produced in São Paulo, 93% Brazil

come from the citrus belt. This geographic distribution of production revolves around a structured industrial

in 11 cities, in addition to other smaller factories.

São Paulo

Historically, Northern São Paulo state has been the most important region for fruit production, particularly in cities Orange farming employs over 200,000 workers in direct and indirect occupations.

The fruit is harvested at the right stage of ripeness, for the juice to meet the same standard of quality.

such as Matão and Bebedouro. However, due to diseases such as greening and significant changes in rainfall

Number of trees in regions of the Brazilian Citrus Belt Northwest

30,35 million trees North

Central

25,81 million trees

patterns, the citrus industry in the southern part of São Paulo state has grown exponentially.

The citrus belt is divided into five macro-regions: Central, South, North, Northwest, and Castelo. Even so, the

76,28 million trees

climate has great influence on the vigor and longevity South

Castelo

The Citrus Belt is an area covering over 300 counties in Southeastern Brazil — the largest concentration of orange groves in the world.

30,66 million trees

of citrus trees, as well as the quality and quantity of fruit.

Orange trees (as other citrus plants) are best adapted to

41,57 million trees

In the 2009/10 harvest, 165 million trees produced 397 million boxes of oranges, in an area of only 1.2% of Brazil’s overall croplands.

Source: “O Retrato da Citricultura Brasileira”, 2010

climates with temperatures ranging from 23°C to 32°C with high relative humidity.

13

complex, with four major industries that have 14 factories

Orange production in the citrus belt, as well as its destinations,

Major producers of orange

have been changing over time. Production has fallen around

2009-2010 season

11% over the last 15 years. When analyzing the behavior of production distribution over the same period, there has 25,0% Other

been a clear increase in production destined to industry and,

25,2% Brazil

consequently, a reduction in production destined to the market for fresh fruit.

3,3% Iran 3,4% Indonesia

Production destined to industry rose from 76% of the Citrus Belt’s overall production in 1995 to 86% in 2009, i.e., a growth

165 million orange trees that produce nearly 400 million boxes of oranges a year.

5,1% Egypt 6,0% Mexico

of 10%, unlike the case with the fruit destined for fresh

8,7% China

consumption, which accounted 24% in 1995 and fell to 14% in 2009, a reduction of 10%.

6,4% India

Florida and São Paulo account for 81% of orange juice production worldwide.

The state of São Paulo alone accounts for 53% of the total.

Land Use in Brazil

15

Today there are about

12,1% United States

4,9% Spain

Hectares x 1000 Hectares x 1000

% of total

% of overall cropland

Brazil - Total area

851,487

-

-

Overall croplands

67,660

7.9%

-

837

0.1%

1.2%

Sugarcane crops

8,140

1.0%

12.0%

Coffee crops

2,170

0.3%

3.2%

21,057

2.5%

31.1%

Orange crops

Soy crops

Evolution of world production of orange juice São Paulo and Triângulo Mineiro production

Florida production

World production

3,000

2,814

2,781

2,664

2,500

2,626 2,441

2,422

Sources: USDA, FAO, IBGE, CONAB, CitrusBR

2,328 2,000

2,421

1.051

982

2,332

1.006

854

2,225

1.024

960

817

858

2,236

644

1.001

2,282

2,441

2,433

653

783 577

732

2,019 563

1,500

1,000

500

1,096

1,098

1,340

1,153

1,324

1,089

895

1,430

1,072

1,369

1,165

1995/96

1996/97

1997/98

1998/99

1999/10

2000/01

2001/02

2002/03

2003/04

2004/05

2005/06

1,369

1,363

1,133

1,065

2006/07

2007/08

2008/09

2009/10

0 Source: “O Retrato da Citricultura Brasileira, 2010”

Planting and Harvesting

17

More than plants and fruits, this sector is a genuine machine for producing new technologies to attain the highest standards of quality

Nearly 165 million trees in Brazil Average of 850 trees per hectare 230% is the increase in the density of orchards praticed in 1980 39% is the increase in productivity from 1995 to 2008

An Orchard is Born

Since the mid-1990s, a structural change has been taking place in Brazil’s croplands. With the advance of new production technologies and enhancement of management tools, there has been a notable shift in the distribution of the orchards.

Today, out of all the oranges supplied to industry, around 65% of production for juice comes from slightly more than 5% of the growers, which shows a huge concentration in the supply of oranges. The industries, in turn, own roughly 35% of the orchards.

The average life span of the orange trees is around 20 years, which demonstrates the need for long-term planning. Anyone getting into the orange market cannot think of it as a short-term

only begins after the third year of a tree’s life cycle, when the first fruits appear. That’s not counting the nearly two years (on average) required for the overall planning of the business. This means that the return only comes several years later.

Still, orange growing has presented itself as a good deal for more specialized producers who work in economy of scale.

1

1. S eeds are handled to farms, where they will be planted to start producing 3 years later

3. W orker caring for the plant before it reaches the point of being taken to an orchard, when its productive life will begin

2. G reenhouses are used so the seedlings receive the best care while they’re still young

4. Adults orchards form huge oranges mazes, where millions of boxes will be harvested

2

3

Compared to the orchards of the past, there is a major difference in relation to what was done just 20 years ago, when the number of 4

trees was around 250 trees per hectare.

The main change is in the production technology itself. Currently, there is a much higher number of trees per hectare, reaching more than 800 trees per hectare (an increase of 230%), which reflects the productivity of a farm. This is because, on average, one tree produces two 40.8-kg boxes.

19

business opportunity, especially because the return on investment

Technology developed in Brazilian orange chain helps boost the income of growers and industry

hectare. Today, these figures can reach over 1,600

were born in Brazilian orchards. Control of citrus

boxes per hectare.

canker, for example, is the result of Brazilian research that helped the world to rid its orange

In a quick calculation, considering the spot market prices prevailing in Brazil of US$8.80 per box in the 2009/2010 growing season, this means that a grower with 250 boxes will receive revenues of US$2,200 per hectare, while a grower whose orchard is denser will each US$7,400 in the same area. In terms of income,

groves of this terrible disease. Today, most efforts are geared toward a cure for a cure for a disease named greening.

Several research centers are working to develop new varieties of fruit, as well as new production technologies and ways to prevent and fight diseases.

there is an increase of 233% just by raising the number of trees per hectare.

The Citrus Defense Fund (Fundecitrus), the Sylvio Moreira APTA Citrus Center, the Luis de

1. Plant nurseries specializing in seedlings are an important part of the business

Irrigation is another technology that has been

Queiroz College of Agriculture, associated with

gaining ground in Brazilian orchards, particularly

the University of São Paulo, and the Campinas

in the drier areas of São Paulo state.

Agronomic Institute, of the São Paulo state

Brazil has a long tradition of solving problems and finding new technologies

1. T he work force to tend the plants receives specialized training

government, are references in research and In citrus farming, there is the possibility of

development for new technologies.

adopting different systems, but on average, the water requirement of citrus trees varies from 900 to 1200 mm of water per year. Demand for water 2. P roper plant treatment is important to lead the plant smoothly into adulthood, when it is transplanted in an orchard

is high during periods of sprouting, blossoming, fruit set and early fruit development, and lower in periods of ripening, harvesting and rest periods.

Currently around 15% of São Paulo orchards are

3. T he life of an orange tree begins in small trays, with specially planted substrates

The orange juice processing and exporting industry is a partner in many projects, financially collaborating with research efforts, or even using orchards as laboratories for new discoveries. The challenges for the coming years have already

2. A fter reaching the adult phase, the plant blooms vigorously, producing spectacular fruits

been defined. Among them, fighting the most relevant diseases, increasing productivity of the

irrigated. However, the need for water compared

orchards, and bringing income to orange growers,

to other crops such as soybeans, corn and coffee,

key partners of the industry. Maintaining citrus

make orange a low water consumption crop,

farming as one of the most profitable agricultural

basically using what is known as “rescue irrigation.”

activities per hectare, as well as its high levels of sustainability, are also among the challenges for the future that started more than 40 years ago.

3. T rained technicians look for imperfections and diseases all the time

21

Many advances in worldwide citrus production

Research and Development

Planting Technology

In 1980, a grower could produce 500 boxes per

orange harvests practically all year round. Harvesting is done manually. In its entire production chain, the sector employs over 200,000 workers, generating a payroll of more than US$600 million per year.

Occupational safety is a major concern of the orange juice processing and exporting industries. Brazil has some of the strictest labor laws in the world, and supporting workers is fundamental to the success of this sector.

Currently, juice industries own 35% of the orchards producing juice oranges, of which 100% of the

Harvesting the Fruit

In Brazil, due to climatic and soil conditions, there are

Harvesting and processing May to February Harvest year July to June

manpower is strictly regulated by law. There is no child labor or any type of exploitation whatsoever, and

AY

M

JUL

JUN

JUL

MAR MAARPR APR B FE B FE

relationship with employees is constantly overseen by Brazilian authorities, whose fight against distortions in

Harvest year October to September

The orange harvest is a combination of manual and mechanical work, and the pickers play a key role in the process

In light of all these facts, consumers of Brazilian orange

JUL

AY

MAR MAARPR APR B FE F

outside Brazil.

JUN

M

EB

generating and distributing wealth both within and

JUL

Florida USA

AU G AU G

O O SEP SEPCT CT

within the strictest technological and social standards,

M

JUN

JAN

juice can rest assured that this is a food product made

AY

DEC

in the entire productive chain.

Harvesting and processing October to May

JAN

labor relations has contributed to significant advances

DEC

scale producers. In these orchards, the company’s

V NO

large-

JAN

primarily,

DEC

and,

JAN

medium-sale

DEC

small-scale,

SĂŁo Paulo Brazil V NO

The other 65% of production is in the hands of

AU G

O O SEP SEPCT CT

AY

M

AU G

V NO

compliance with the law.

JUN

V NO

authorities, such as the Public Prosecutors, assuring

23

the sector is constantly watched by the competent

25

Personal protective equipment has undergone

between labor laws applied in cities and in rural areas. But not in

major adjustments in recent years. The clothing,

Brazil, which in 2005 implemented what is known as Normative

designed for comfort even in the warmest tropical

Instruction 31 (NI 31), ushering in a series of new rules so that

regions of Brazil, protects from the effects of sunlight.

workers in the countryside would receive the same treatment as

Sunglasses are also part of the equipment, as well

workers in cities and industries.

as gloves and boots that offer protection against different types of accidents.

When a glass of orange juice produced in Brazil is served anywhere in the world, a set of social rules is served along with it. Not only

The regulations governing farm work were developed

the taxes and social contributions that will guarantee retirement

by a tripartite committee with the presence of the

benefits for the workers, but strict standards of health and safety

National Confederation of Rural Workers, the National

and the innumerous rules established in NI 31 travel the world

Confederation of Agriculture, and the Ministry of

together with the beverage.

Labor and Employment. The standards developed

An Orchard of Laws

Labor Relations

In many countries around the planet, there are severe differences

In the 2009/10 harvest, Brazilian production totaled 397 million 40.8-Kg boxes

consensually between employers and employees were ratified by the Labor Ministry. However, the

is more important than assuring that this beloved beverage is

content of those standards for which no consensus

produced in accordance with the strictest ethical standards, such a

could be reached was arbitrated, which in a certain

relevant issue to increasingly demanding consumers.

way transferred to the countryside many of the

Labor relations in Brazil comply with strict criteria, assuring the best labor practices on the market

27

For Brazil’s orange juice processing and exporting industry, nothing

standards required in urban work.

With a total of more than 200,000 workers directly or indirectly

Citrus farming generates a contingent of more than 200,000 jobs directly and indirectly

involved with the orange juice processing and exporting industry,

If on one hand this represented an advance for the

there is always a weakest link that must be protected. The orange

sector, on the other hand there was an increase in

pickers currently enjoy advanced working conditions compared to

the cost of operations, which decreases margins

many countries, even in sectors unrelated to farming.

and requires a great deal of skill to comply with rules designed for urban environments and that require adaptations not provided for in the legal code.

Use of Personal Protective Equipment (PPE) is mandatory.

Still, the orange juice processing and exporting industry believes that only socially responsible products have a place on the world market, something it has been fulfilling for over 40 years, in one of Brazil’s most traditional industries.

Workers are required by law to wear safety equipment, provided by the employer.

29

THE ORANGES MARKET

Trucks loaded with oranges make the journey from farm to factory, thousands of times in hundreds of municipalities. Logistics is a key part of the chain.

n Long-term contracts with fixed

predetermined prices; n Long-term contracts with or

without a guaranteed minimum price and with price triggers indexed to the audited averages, obtained from the selling prices from the industries to bottlers;

As in other commodities, the orange market is influenced by supply and

processing is a ritual that takes place between April and

demand. However, it’s not only consumption that determines the pricing, since

December. However, there is a heavy concentration from

there have been no major changes in volumes exported by Brazil in nearly a

September to November, when the majority of the crop reaches

decade. The main factor that determines the price of a box of oranges (and

ripeness. The sale of fruit occurs at the factory gate and growers

consequently orange juice) is the supply of fruit, influenced by the world’s two

can choose not only the company they want to sell their fruit to,

major citrus-growing regions: São Paulo (Brazil) and Florida (USA).

but also the type of contract that best meets their needs.

As shown in the graph below, the ups and downs both in oranges by the box

Among the most commonly used types of contract, there are

and orange juice quotes in New York are directly tied to climatic effects that

two major groups: sale on the spot market, whereby growers

impact the supply of the fruit.

receive the quote of the day for their fruit; and medium- and long-term contracts, in which growers may choose minimum and maximum price variables depending on their marketing strategy. Then there are those fruit suppliers that make both

The price that the industry pays for oranges is a result of current and future international juice prices, as well as market expectations regarding future supply and demand of oranges at the time that each orange purchase contract is negotiated.

n Long-term contracts with or

types of bargaining: they lock their costs with medium- and

without guaranteed minimum price directly linked to daily quotes and annual averages of the price of the commodity on the New York Stock Exchange;

long-term contracts and use the spot market as a way to wager

Another factor to be considered in competitiveness is the import tariffs paid

on the market.

in the United States and Europe for entry of Brazilian orange juice, plus the

n Orange purchase contracts during

2007/2008 and 2008/2009, producers with long-term contracts

the harvest at the price of the day, known as the spot market;

logistics and port costs incurred on the Brazilian product to be shipped to these destinations.

were benefitted more than those who chose the spot market.

n Long-term lease or sharecropping contracts.

However, in the 2009/2010 harvest, those who opted to sell oranges in the spot market earned more money. There is no

Comparative analysis of production and consumption of orange juice at 66° brix equivalent and the price of FCOJ on the New York Stock Exchange

perfect model, and each farmer must study the pros and cons most income.

Destination of orange production in the brazilian citrus belt

From the total volume available to industry

14% Fresh fruit for consumption

15% Used for NFC 85% Used for FCOJ

Source: “O Retrato da Citricultura Brasileira”, 2010. Prepared by Markestrat based on CitrusBR data.

Production Demand Production and Consumption of Orange Juice in thousands of metric tons in values equivalent to 66° brix

of each model and choose the strategy that will bring in the

86% Available for industry

31

Each type of contract offers risks and rewards. In the harvests of

Pricing

THE ORANGES MARKET

Example of Contract Types:

The coming and going of fruit: The delivery of oranges for

2.700

2.600

2003/04 Very high inventories of juice due to good harvests in Brazil and Florida keep prices low on the New York Stock Exchange.

Quotation - NYSE 2008/09 e 2009/10 Two consecutive smaller harvests in Brazil and Florida reduce global inventories of juice and raise the stock quotes staring in mid-2009.

$ 180.83

2.500

2.200

$ 170

$ 150

2.400

2.300

$ 190

$ 127.92

2004/05 e 2005/06 Successive hurricanes in Florida decrease the juice production in the region raising NYSE quotes to record highs.

$ 124.30

$ 122.55

$ 130

$ 110 2006/07 e 2007/08 A combination of good crops in Brazil and Florida, plus the drop in demand for juice following the trend started in 2004/05, raise world inventories too high, pressuring the stock quotes for heavy losses in the 2008/09 season

2.100

$ 83.91 2.000

$ 90

$ 85.74 $ 70

$ 66.95 1.900

2003/04

2004/05

2005/06

2006/07

2007/08

2008/09

2009/10

$ 50

33

Processing

The factories are equipped to receive hundreds of trucks per day.

Once unloaded, the fruits are immediately stored, starting the process of extraction and industrialization of the orange juice.

industry, responsible for producing the most widely-consumed

1. Receiving the fruit fruit samples are taken from each truck for analysis of juice yield, Brix, acidity and color.

2. Storage in bins after receipt and inspection, the oranges are stored in bins, or storage silos.

juice in the world. This is a large-scale process, which makes use of modern production technology combined with one of the planet’s best environments for producing this fruit.

The quality of the beverage is also tested with regard to contaminants, taste and aroma. This allows a constant quality standard, always maintaining the same characteristics.

3. Washing of the fruits the oranges pass over wash tables, where there are spray nozzles on the top and plastic brushes on the bottom to clean the fruit mechanically, with or without the aid of detergents.

4. Selection and classification The oranges are chosen by operators on selection tables. Damaged and bruised fruit are removed and the others go to the classifiers that separate them by size and are then sent to the extraction lines.

On average, only 25% of the water used by industries comes from outside sources; the rest comes from the process of concentrating the juice.

35

Processing

On the following pages, you can learn a little about the Brazilian

Modern and Sustainable Industry: the Brazilian citrus industry is a pioneer in good agricultural and industrial practices.

5. Extraction the fruits are separated according to their size so they can be processed by lines of extractors appropriate for the size of the fruit, where the juice is extracted mechanically.

6. Blending and Homogenization After extraction and concentration, the juice is technically rated according to appearance and flavor that are ideal for export.

In the mid-2000s, something new began to arrive at European

reason for the success of this beverage around the world.

port terminals. A kind of orange juice with characteristics

Much of the water is removed from the product within the

somewhat different from traditional concentrate juice, namely:

evaporators. This process inactivates the microorganisms that

not-from-concentrate (NFC) — or simply ready-to-drink juice.

are responsible for degradation of the liquid.

Instead of having the water extracted during processing and After the separation process, the juice goes to an evaporator,

then reconstituted after being purchased by the bottlers, this

specially developed for the citrus industry, where the volatile

drink is pasteurized with the water from the orange itself.

components are separated and then recovered.

It is a superior product in terms of taste, since it resembles freshly squeezed juice, a privilege that few countries can have.

After this first stage, a product that came in with total sugar levels (soluble solids) of 10-11 Brix comes out with a content

The final product is stored for up to one year, frozen or chilled.

of 66 or 65 Brix — the standard for FCOJ.

Because not-from-concentrate juice occupies a volume 5 to 6 times larger than concentrate, the cost of storing it chilled

In the concentration process, the juice loses a volatile fraction

Not-From-Concentrate Juice

is high. Therefore, its storage and distribution chain is aseptic.

in which the essences are found.

Another difference of NFC compared to FCOJ is that it The recovered components are the essences, in aqueous

becomes solid when frozen, preventing the juice from being

and oily phases, which are sold to companies that produce

pumped. Therefore, for small amounts exported, not-from-

aromas and fragrances. In some cases, the juice goes through

concentrate juice is packaged in drums, which means a higher

a process of homogenization, reducing its viscosity in order to

cost compared to bulk sales. For large amounts of NFC juice,

optimize evaporation.

storage is usually done in aseptic tanks with a capacity of up to 4 million liters.

The concentrate juice is cooled and blended with other quantities of the same product to reach an acceptable standard

The juice must be stirred periodically to prevent the separation

of quality. Then it goes to storage tanks refrigerated to freezing

of the juice and dissolved solids and to maintain uniformity of

temperature, where it can be stored for a period of up to

Brix. In Brazil, where most of the juice is destined for export,

two years.

the aseptic tanks are installed at port terminals and not at the factories. To prevent re-pasteurization of juice before shipping,

The bulk storage system is called a ‘tank farm’ in the business.

technologies were developed to allow transport in ships

In these tanks, the juice is stored until transported by tank

specially designed for this purpose.

trucks to the port.

37

CONCENTRATE JUICE

The major star of this market, concentrate juice is the main

From every 1000 kg of oranges, 553 kg of juice are extracted, the rest are by-products:

not-from-concentrate juices. There is a thriving market for orange byproducts — accounting for about 7.5% of the business.

There are three major groups of byproducts: terpenes — responsible for the manufacture of some types of biodegradable resins and Juice

1000 kg

553 kg

Essence oil 0,1 kg

Essence Aroma 1,1 kg

Pulp 30 kg

solvents; essential oils — from wich aromas and fragrances are derived; and finally the bagasse/pomace — which can be made into animal feed, among other uses.

Peel oil 3 kg 65º Brix Concentrate 100 kg

One Fruit, Many Products

The business involving oranges goes beyond concentrate and

Orange and Orange Juice By-Products

After separation of the juice and the pulp, the latter still goes through a process where unwanted components are removed, such as the

Evaporated water 452 kg Fonte: The Orange Book, Tetrapak

bagasse and the seeds. The “clean” pulp is sent to equipment where

Utilization of the Orange

there is a new process of pasteurization, or heat treatment, and then frozen before being sent to storage.

0.5% aqueous phase 0.1% oil phase

Orange juice can be sold to the end consumer in three different ways:

If the pulp remaining after juice extraction is not used for commercial

Integral

Concentrate

Reconstituted

purposes, it can be washed to extract substances dissolved in the

no added sugar and at its natural

partially dehydrated, from which part of

made from juice concentrate,

concentration.

the natural water was removed.

with water added. Must meet the same quality

juice. This product is called pulp wash, and can (if legislation permits)

parameters as the integral juice.

2.7% sacs 0.9% d-limonene 1.8% essential oils

be mixed with juice on the production line, prior to the concentration 44.8% orange juice

process.

49.2% peel, seeds and bagasse

% of juice in different types of beverages:

The emulsion of oil and water coming from the juice extracting process also has other substances, such as particles of peel and pulp,

Juice 100% pure juice, extracted from the fruit

pectins and sugars. The objective is to recover the oil from the peel by

Parts of the orange

removing the other substances and losing as little oil as possible in this

seed juice segment

process, which occurs through two stages of centrifugation.

Nectar 25% to 99% of juice, depending on the specific legislation

Non-carbonated soft drink less than 25% of juice; in many countries, only 3 to 5% juice

segment wall

It’s economically advisable to include a system of pressing and drying of the orange peel and solid residues in large juice processing plants.

central core

The fruits rejected upon receipt, the peel and bagasse resulting from

oil segment

the extraction process, as well as the pulp and other solids, are sent to the dryer, where they are dried and pelletized to serve as a fibrous feed for livestock.

albedo flavedo

39

Peel, bagasse and seeds 413 kg

From the factories to the most distant places, Brazilian orange juice is shipped largely by producer industries with high-tech storage methods — chilled for concentrate and aseptic for NFC — which are specialized in this

41

extremely complex logistical process.

Tankers specially designed for shipping orange juice leave the Port of Santos, in Brazil, loaded with thousands of tons of concentrate orange juice and NFC. This is a complex operation, where the beverage is transported from the factories to the tanker trucks into the bulk juice terminals at the Port of Santos, and pumped onto the orange juice tank ships, with no contact with the outside

Each exporting company owns or charters terminals and vessels in Brazil, Europe and the US — the primary destinations of Brazilian orange juice. But Brazilian orange juice also reaches more distant destinations such as China and the Middle East.

Logistics

environment.

in São Paulo — the cradle of Brazilian citrus. On the journey ahead, it has to brave the Atlantic or Pacific Ocean until it can unload the precious drink at far-away terminals in Europe, United States, Asia, and Oceania.

From the time it’s produced until the time it reaches the bottlers that carry out the blending and sell the beverage on the retail market, there is no contact whatsoever between the product and the outside environment, which also makes the orange juice producing industry a logistics industry as well.

Transportation of this product is usually done in tank trucks or tank ships in chilled drums. A small portion is packed in aseptic bags that are placed in drums for subsequent transport in refrigerated containers.

The largest Brazilian processors have their own terminals in Brazil, Europe, United States, Japan and Australia, and there are many ships designed exclusively for transporting frozen concentrate orange juice and other bulk citrus products.

There are two ways to transport not-from-concentrate juice: frozen or chilled. Both are done under aseptic

The capacity of an orange juice ship is

conditions. The problem of transporting NFC frozen

up to 40,000 metric tons

is that, unlike concentrate (which even when frozen remains viscous and is still “pumpable”), not-fromconcentrate juice (NFC) turns into a block of ice, therefore must be shipped in refrigerated containers, requiring differentiated logistics.

43

juice concentrate, leaving from the Port of Santos

The Journey of a Global Juice

A ship can carry up to 40,000 metric tons of orange

Thermally insulated truck leaves the factory

Non-stop: every 10 minutes, 365 days a year, a juice truck travels down the ‘Serra do Mar’ coastal mountain range

45

Truck in its way to the Port of Santos

Vessel loading without contact with external environment

Refrigerated vessel transporting orange juice

Logistics and distribution

The expansion of NFC juice production in Brazil in late 1990s led

From the tanker vessel, the product is pumped into receiving

to the development of bulk maritime shipping of chilled juice.

lines that feed tanks located on the mainland. From these tanks,

The most common method is to use one-ton bags, transported

the product is sent to blending stations, where different types

in recipients placed inside refrigerated containers.

of concentrates are blended to achieve a product that meets consumer demands.

The shipping of concentrate and not-from-concentrate juice to other continents has been improved through heavy investments

In this stage, other ingredients may be added, and then the juice

in new technologies developed by the major juice producers.

is pumped into tanker trucks that will distribute it.

Nowadays, the use of company-owned vessels for shipping juice reduces costs and assures that the quality of the juice is

In the case of not-from-concentrate juice, there are also specific

maintained until reaching its destination.

terminals for receiving and unloading this product. Before the ships are unloaded, samples are taken from the inner tanks

In large European ports such as Rotterdam in the Netherlands

to confirm that the juice is microbiologically acceptable. The

as well as Ghent and Antwerp in Belgium, there are exclusive

pipping system is sterilized and the juice is transferred from the

terminals for receiving bulk orange juice concentrate. This type

vessels to storage tanks at the port. Pasteurization equipment is

of terminal is also found in Florida and New Jersey, United States,

located in the juice receiving area, if required.

47

the port of Toyohashi, Japan, and the port of Newcastle, Australia.

Transportation of orange juice from the factory to the bottlers

Frozen terminal

Tank ship

Frozen terminal

Frozen tank truck

Chilled tank truck

Frozen/chilled terminal

Tank ship

Frozen/chilled terminal

Chilled tank truck

Frozen/chilled tank truck

Frozen terminal

Tank ship

Frozen terminal

Frozen/chilled tank truck

Bottlers

Frozen tank truck

FCOJ/NFC

NFC

Blending house

Beverage Producers

INDUSTRIAL PROCESSING

FCOJ

widely consumed beverages in the world. It has 34% market share in the juice category. Among all beverages, Brazilian orange juice has a 0.91% global market share.

But with each passing day, people are decreasing their consumption of this longtime favorite beverage, and global consumption is dropping at a rate of 1.6% a year.

49

Global consumption

Brazilian orange juice is one of the most

Another important point is the cultural habits of developing

flavored drinks are the most widely consumed beverages

countries located in the Middle East and Asia. These

in the world. Among all the options on the market, these

populations do not have the habit of consuming 100% pure

drinks account for 0.91% of the global market. This is a

juice. Non-carbonated soft drinks and nectars are more

leadership achieved through a variety of factors ranging

common, which impacts sales because they contain only a

from a universally accepted flavor to the possibility of

certain percentage of juice. The solution, therefore, is to make

supplying different markets in the world frequently.

Europeans and Americans drink or resume drinking more

But the latest news is not so good. In the last decade,

orange juice — a difficult task, but doable.

consumption has been falling at a rate of 1.6% a year. In the U.S. — responsible for the consumption of 38% of

Taking into account the 40 countries that are the top buyers

all juice in the world — the demand for orange juice has

of orange juice from Brazil, representing 99% of world

fallen nearly 25% in the last decade. The reasons for this

consumption of orange flavor, a detailed analysis shows

reversal are directly linked to the growth of other drinks that have been taking away its market share. In recent years, bottled waters are the fastest growing beverages.

The juice category is growing too, however orange juice has been losing market share. One of the major factors is

Evolution of the global beverage market billions of liters

51

Global consumption

With a 34% of juice market share, orange juice and orange-

the entry of new beverages such as multivitamin drinks and the expansion of grape and apple flavors.

1,428 1,366

In China, whose sizeable population always stands out

1,310

1,270

curbed the growth of orange juice. This reality implies a major challenge for orange juice producers, who can

8.4%

8.2%

8.1%

7.1% Others Hot coffee

20.6%

Beer

Another challenge is to get around the Chinese competition. A major producer of apples, China has supplied raw material for manufacturing various types of juice from this fruit, whose flavor is also among the

15.3%

15.0%

Water Carbonated beverages Non-carbonated

13.8%

14.0%

11.4%

14.6%

15.3%

13.7%

13.2%

12.8%

11.5%

11.4%

11.1%

11.1%

11.2%

Hot tea Wine

11.2%

world market.

Milk-based beverages

8.2%

20.6%

20.6%

20.6%

already see the need to reposition their product on the

13.5%

13.3%

13.1%

12.9%

12.5%

2.5% 2.7%

2.6% 2.7%

2.7% 2.6%

13.3%

13.8%

2.2% 2.8%

2.2% 2.8%

2.3% 2.8%

2.2% 2.8%

14.8%

14.5%

14.1%

13.7%

soft drinks Juices and nectars Flavored milk

favorites among European consumers and offers tough competition with the orange.

7.1%

20.9%

20.5%

20.4%

3.9%

7.0%

8.6%

8.8%

9.0%

4.0%

3.9%

6.9%

6.8%

6.8%

6.7%

as a potential market, certain consumer habits have

3.5%

3.5%

3.3%

3.7%

1,567

1,524

1,488

2003

2004

2005

2006

2007

2008

12.8%

White milk

2009

Source: “O Retrato da Citricultura Brasileira”, 2010. Prepared by Markestrat based on Euromonitor data.

fruit beverages, 20.4 billion were orange flavor and 7.5

exporter of industrialized orange juice, producing over 50% of

billion were apple flavor. However, in the period from

the worldwide volume and exporting 98% of its production.

2003 to 2009, in the juice category, there was a greater diversification of flavors consumed, with a reduction in annual demand for orange and apple flavors of 1.6%

Roughly 85% of the orange juice exported worldwide comes from Brazil. In no other sector does Brazil have such an isolated leadership position.

and 2.3%, respectively, and an increase in demand for tomato and multifruit flavors of 2.6% and 1.3%,

Both frozen concentrate orange juice (FCOJ) and not-from-

respectively. In the case of nectars and non-carbonated

concentrate juice (NFC) are exported. In order to develop

soft drinks, the volume of orange flavor increased, but

technologies that would allow exportation of large bulk

to a lesser extent when compared to peach, grape,

quantities over thousands of miles without losing quality, it took

mango and multifruit flavors.

years of research and investments in infrastructure and logistics.

World beverage consumption 1,567 bio liters (2009) 2.7% Fruit-based beverages

This diversification in flavors consumed and the orange flavor’s consequent loss of market share has contributed

8.2% Hot coffee

0.9% Flavored milk

1.8% Wine

2.6% Juices and nectars

to the reduction in worldwide demand for orange juice, which has experienced a decline of 1.6% a year. The situation is even worse in the major orange juice markets

20.9% Hot tea

11.2% Beer

— U.S. and Germany — which between 2003 and 2009 registered a decreased of 15% and 26% (respectively) in

share of consumption

12.8% Milk 12.5% Carbonated beverages

The main consumer markets of concentrate juice are: Europe,

7.1% Others*

* Other: Liqueur, Tea, coffee-based drinks, energy drinks, concentrate or powdered fruit-flavored drinks.

Source: O Retrato da Citricultura Brasileira.

Elaborated by Markestrat based on data from Euromonitor.

other countries, most notably Japan and China. Among the

74% Europe

26% North America

factors that limit greater diversification of imports are per-capita income, logistics and, primarily, consumer habits. In some countries the preference is for nectars and non-carbonated soft drinks, both products with low amounts of juice.

Despite its global leadership, Brazilian orange juice faces

analyzing the main demographic data from the 40 4.0% Milk-based beverages

States, which imports about 13%. The rest is divided among

the consumption of orange juice (in FCOJ equivalent).

Such behavior is not what one would expect when

15.3% Water

which imports around 70% of Brazilian juice, and the United

Destinations of brazilian NFC in the 2000s

various trade barriers that reduce its competitiveness on the international market.

countries that together represent 99% of the world’s

Moreover, Brazilian juice must meet a series of technical

demand for orange flavor. Unlike the consumption of

requirements involving phytosanitary issues, packaging,

orange juice, which fell 6% in the period, the demographic

consistency in product quality, regularity of delivery, compliance

indices showed growth: the population increased by 5%,

with the Codex Alimentarius, and compliance with general and

total GDP by 51%, per capita GDP by 43%, and per capita

local laws for marketing food products, among others.

net income by 40%.

Sources: Elaborated by Markestrat based on data from Cacex, Banco do Brasil, Siscomex & SECEX/MIDC.

53

Since the 1980s, Brazil has been the largest producer and

foreign trade

that the 63.5 billion liters consumed of ready-to-drink

Evolution of the quantity and financial value of orange juice exports NFC equivalent to 66 o Brix

Value Exported (US$ millions)

Quantity in metric tons x 1000

2,500

2,500

2,252

1,997

2,000

51

1,500

845

1,041

1,277

1,348

1,189

2001

2002

169

171

2,000 1,500 1,000

1,111

1,058

1,208

1,271

1,122

1,130 2009

1,320

2008

1,254

2006

1,312

2007

500

2005

0

1,619

145 103

2004

500

1,193

2003

1,034

1,469

60

25

2000

1,000

83

0

Value exported in US$ millions

FCOJ

Sources: Elaborated by Markestrat based on data from Cacex, Siscomex & SECEX/MIDC.

Destination of Brazilian fcoj by decade and in 2009 North America

Europe

Asia

2%

100%

3%

3%

2% 9%

2%

90%

Other continents

4%

11%

13%

80% 70%

43%

60%

64%

50%

63%

70%

40%

71%

30% 20% 10%

53%

33%

0% 1970s

1980s

26% 1990s

13%

16% 2000s

2009

Sources: Elaborated by Markestrat based on data from Cacex, Siscomex & SECEX/MIDC.

Import tariff rates for Brazilian orange juice 2009

Country/Region

Import tariff rate

Europe

FCOJ 15,20% NFC 12,20% FCOJ US$ 415/ton NFC US$ 42/ton 25.50% 54% 7.5% for juice below-18째C and 30% for juice at temperatures above -18째C 5% Exempt

United States Japan Mexico has an exemption in tariffs until it reaches the volume of 30 thousand tons per year. However, the current Mexican exports to Europe do not reach that amount, being, therefore, exempt from taxation.

South Korea China Australia Other destinations

Source: Elaborated by Markestrat based on Secex data

55

The lifetime of a citrus tree is up to 100 years.

Sustainability

The name of the Island of Curaçao comes from the word curação (the art of healing or curing), the name given by Portuguese sailors who found on that southern Caribbean island the cure for patients stricken scurvy, who were saved by the vitamins from the fruit that they ate on the island: oranges.

57

North America and Europe account for 88% of all processed orange juice consumed in the world.

With the European market as the main importer, Brazilian

Still being defined around the world, there is no single concept of

straight from the present

industries are signers of the code of conduct and are part

‘sustainability’ that is totally accepted, and there is no single formula

of the voluntary control system of SGF (Sure Global Fair),

to determine what will become of this concept in the future.

an international organization founded in 1974 and based

However, a concept that is widely used and accepted is the one

How a 40-year old exporting sector

in Germany, with a mission to promote safety and quality

formulated by the Brundtland Commission in 1987, which states

reinvents itself and becomes the

of fruit-based products as well as to assure fair trade. SGF

that “sustainable development is the development that meets the

has over 600 members in 60 countries, and periodically

needs of the present without compromising the ability of future

conducts inspections of industrial facilities to assess

generations to meet their own needs.” The field of sustainable

aspects of hygiene and environmental sustainability, as well

development is divided into three pillars: environmental, economic

as social and economic aspects.

and socio-political. For a product to be sustainable, there must be no

beverages the world has ever known

imbalance among these three pillars, i.e., production must be socially The code of conduct followed by its members establishes

just, environmentally sound, and economically viable. If any one of

standards to be observed with respect to labor aspects,

these concepts is missing, sustainability does not apply.

in accordance with the provisions established by the International Labor Organization. In terms of environmental

Brazil is a signer of the foremost treaties on the environment, such

sustainability, it stipulates that any negative impacts of the

as the Kyoto Protocol, and its environmental legislation is widely

supply chain on the environment must be identified and

recognized as one of the strictest in the world.

59

producer of one of the most sustainable

Sustainability

The juice of the future,

minimum possible use of agrochemicals.

In the case of orange juice, one can say that this popular juice is the In the scope of SGF, the Brazilian orange juice industry

drink of the future. This is because it can add a series of values from

pioneered the creation of a project called Quality Initiative

its production that culminate in the creation of a tasty and nutritious

South and East European Countries (QUISEE), in 2001

food product that helps preserve the world we live in.

to promote fair trade and growth of the market for juices and nectars in the Expanded European Market.

In the manufacturing process of Brazilian orange juice, the water removed for the concentration of the juice is reused in the system, incorporating major environmental benefits

Orange juice production has been extremely sustainable

Moreover, the factories have wastewater treatment

over the past years. In all, the orange groves that supply

plants and there is no solid waste generated, since

fruit to the orange juice industry occupy an area of only

every part of the fruit are utilized.

600,000 hectares. This corresponds to 10% of total area occupied by sugarcane and 0,86% of all cropland in Brazil.

Another important point is the measurement of carbon emissions, something demanded by

and 2008 as a result of research and investments. The main citrus production is in the state of São Paulo, which meets strict environmental laws that require preservation of native woodlands and mandatory areas of permanent preservation, among others. The citrus industry does not practice deforestation and does not promote direct or indirect changes in land use.

From a social standpoint, municipalities with orange groves have somewhat higher human development

SGF

indexes (HDI) than municipalities that produce other

SGF - SURE, GLOBAL, FAIR.

commodities. In all, more than 10,000 producers derive

Every two years, the industries are visited to check for

their livelihoods from the land, selling oranges to the juice

compliance with the code of conduct. In the last visit

industry; but what is most striking in the production of

consumers concerned about the fate of our planet.

In 2010, the Brazilian industry conducted a study whereby practically the entire citrus juice exporting sector was mapped out. Everything from growing the fruit, to agricultural and industrial processes, ground transport, and sea transport to European terminals was calculated. However, according to specialists, it’s impossible to measure the carbon footprint based on only one year’s harvest, and new calculations 61

Productivity in the orchards increased 39% between 1995

will be done in the coming years in order to make it possible to identify a figure for the entire chain of citrus production.

CARBON FOOTPRINT: CitrusBR has a sustainability subcommittee consisting

Around the world, various segments of the economy

of representatives from member companies, whose

orange juice is the industry’s relationship with one of the

have been seeking to measure their emissions, but

objective is to discuss, with national and international

collaborate with the communities in which they

major sources of life: water. In the factories, juice producers

Brazilian orange juice is the first case in which an

operate, sponsoring cultural events, supporting social

try to use as little water as possible from the public

entire sector will be measured. This is an important

and sustainable agricultural practices, among others.

water system or from rivers and streams. On average, an

step to show the concern of Brazilian producers

The concept of carbon footprint is an important tool

orange juice processing plant obtains only 25% of the

not only for the health of their business, but for the

greenhouse gases (GHGs) in the sector that produces

total amount of the water required from the public water

health of the planet we live on.

orange juice.

(2009/10), SGF reported that it found no child labor or forced labor, and that Brazilian juice industries

projects, and employing workers from the region.

supply or rivers/streams, while the remainder comes from the very process of juice concentration, which requires

For human health, orange juice is a great ally. In

water to be evaporated. Rather than simply throwing

addition to the known benefits of vitamin C, it is a

away this precious asset, the evaporated water is reused

drink that has no fat, sodium or refined sugar, in the

for different functions within the industrial structure itself,

case of 100% juice. Good for those who drink it, good

such as washing fruit and cleaning equipment.

for those who produce it, and good for the Earth.

players, important issues related to sustainability such as carbon footprint, usage of water, utilization of waste,

for identifying opportunities for reducing emissions of

A modern, humane and sustainable industry

The Orange Juice Industry acts on two fronts: raising awareness and acting in line with the best practices for sustainable production.

The goal is to raise awareness among employees, contractors and partners who, upon performing these tasks built into day-to-day activities, are helping themselves, their children, and especially future generations.

Recycling of waste

All of the industries maintain

The waste products

nurseries that produce seedlings

generated in industrial

of around 30 different species,

production of juice are

destined exclusively to replace

utilized in the manufac-

native trees that have died in areas

ture of citrus pulp bran.

of preservation or permanent

Thus it avoids the emis-

conservation on the farms them-

sion of solid waste.

Sustainable Practices Brazilian industries adopt a series of economic,

Education and Citizenship Support for children and teenagers regularly enrolled in public schools, through donations, provision of school materials,

selves. These actions are complemented by ongoing educational

Reuse of water

processes geared toward industry

Waste from the orange

employees and their families.

juice concentration process, also called “condensate�, is used for fertirrigation, washing fruits, and other industrial processes. The system

Recycling of garbage The industrial units, through selective garbage collection, collect the following items and send them for recycling: paper, plastic, glass, metal

benefits the environment because it reduces the need for catchment of water from rivers/ streams or the public water supply.

uniforms and toys, among others, both

Control of pollution and rational use of energy The control of air pollution

individually and through partnerships with institutions involved in protecting the rights

associated with city governments, generating income and employment and performing important social work in municipalities within the citrus belt.

and conduct that reduce or avoid the emission of polluting solids, liquids and gases into the environment. These are preventive actions that avoid the generation of pollutants or create alternatives for such substances to be reused or recycled.

of children. Additionally, educational and vocational projects are developed.

and noise pollution, as well as minimizing environmental

Terminals

impacts, are also observed by the enterprises.

ISO 14001 certification

Research is conducted and

Social Projects

investments are made in

The industries support and implement

modification of the process in order to minimize emissions of pollutants, odors and noise.

various projects in the areas of Education, Health and the Environment in the municipalities where they are located.

of port terminals certifies that the companies have a globally recognized environmental management system, more comprehensive than required by Brazilian law.

cans, etc. All of the material is donated to cooperatives

environmental and technical strategies, practices

63

Reforestation

Health Support for prevention projects, educational campaigns, free medical care, eyecare and dental treatment, including mobile hospitals.

and Extraction 3 Washing 4 selection

How the Brazilian orange juice industry works

Before extraction, the oranges undergo a water and sanitizer washing process to eliminate impurities. Then, they are manually selected by professionals to make the juice. Discarded oranges are used in animal feed production.

During the orange juice production process there is no solid waste.

All parts of the fruit are utilized, and water and energy are used in a sustainable way

1 Harvest

Most of Brazil’s orange production is concentrated in the country side of the São Paulo state. In the groves, the fruit is handpicked so as not to damage the fruit.

2 Receiving

The industries are strategically located so that the oranges arrive without losing its quality between harvesting and extraction.

The trucks are elevated by inclined ramps to speed up unloading.

2a Inspection

Samples are taken from each truck for quality analysis in the laboratory before being processed.

The results from this analysis help to identify particularities of each harvest.

2b Bins

The oranges are brought by conveyor belts to the bins, large storage silos.

The extractors are adjusted to receive different sized oranges. Therefore, each fruit receives pressure to extract the maximum amount of juice without removing undesirable components that should not be mixed in. The leftovers, like the pulp and the seeds, are used to make by-products.

5 Finishing

Everything is used

Up to nine by-products can be extracted from an orange

Alcohol

Comminuted Citrus Base

Peel essential oil

Citrus Pulp Pellets

D-limonene Essences

Pulp wash Pulp

The finishers separate any residues that may have remained in the juice after extraction, like seeds and pulp. Next, the juice passes through a centrifuge to standardize the final product. From this point on the process is divided into the production of concentrate and not-from-concentrate orange juice.

6 NFC

All techniques used, at every step of the way, from the grove to the refrigerated storage tanks in foreign ports, are technology developed in Brazil.

The juice that is going to become a not-from-concentrate is pasteurized, which means it is heated and cooled to deactivate enzymes that could affect appearance and taste, in addition to microorganisms harmful to our health.

3 out of every 5 glasses of orange juice consumed in the world are Brazilian.

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Pectin

Brazil exports more than 1 million tons of orange juice per year.

2b 2

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1

9

2a

Every 10 minutes an orange juice tank truck descends “Serra do Mar” highways towards the Port of Santos, on the coast of São Paulo.

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5 protective eyewear

veil

13

3 10

apron with sleeves

11

bag

6

4

gloves

gaiters boots

A ship carries up to 43 thousand tons of FCOJ, or the equivalent to more than 32 million 1 liter bottles.

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7

PPE Personal Protective Equipment

Sustainability n Using only 1.2% of its croplands, Brazil produces more than 80% of

the total exported orange juice worldwide. n Since 2003, grove productivity has grown by 20%, without an

increase in land use. n More than half of the water used in the factories comes from the fruit

itself, obtained during the concentration process of the juice.

n All parts of the orange not used for juice are utilized for the

fabrication of various by-products, leaving no solid waste in the environment. n The energy used in the factories comes from renewable sources,

such as hydroeletric power plants and burn of sugarcane bagasse. n Apart of the industry’s light fleet uses ethanol. In Brazil, even gasoline

contains 25% ethanol and national diesel uses 5% biodiesel.

7 Deaeration

Because it contains more water, the NFC passes through a process of deaeration in a vacuum chamber, so that the dissolved oxygen in the liquid can be removed. In so doing it prevents the vitamin C from oxidizing throughout the process.

8

FCOJ

Degree Brix is a standard measure to determinate the soluble solids or total sugars in the juice

Most of the juice, which is used in the production of FCOJ (Frozen Concentrate Orange Juice), goes to the evaporators to reach 66 Degress Brix, removing a part of the water and volatile components. The juice is pasteurized in the same equipment.

9

Tank-blenders

The FCOJ then passes through a mixing and homogenization process to give it the ideal taste and appearance for exportation.

In this step, some components dissipated during evaporation – like the aromas – are added back in.

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Ideal condictions

The FCOJ and the NFC are stored in refrigerated tanks and from this point on the product does not have contact with the air. They are then pumped into special trucks that transport them to the terminals at the Port of Santos.

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Refrigerator tanks

At the port the products are pumped again into large special tanks. The juice is kept at the ideal temperature until the arrival of the ship, also with refrigerated tanks, which will transport the FCOJ and NFC abroad safely.

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Maritime transport

The ships can carry up to 43 thousand tons of juice and take the product to main foreign ports, particulary Rotterdam (Holland), Gent and Antwerp (Belgium), Florida (USA), Newcastle (Australia) and Toyahashi (Japan).

13 Consumption

The NFC and the FCOJ are delivered to clients, juice and drink bottlers, who are then going to package the products with their own brand in accordance with the particular tastes of their countries. The FCOJ will have water and sugar etc. added.

The NFC is delivered ready to consume and the clientes is responsible for packaging and distribution. Only then the product is made available for the end consumer.

14 Leadership

Brazilian orange juice is the leader in the international market, and it is present in more than 90 countries, especially in North America and Europe.

Glossary

The Orange Juice Industry acts on two fronts: raising awareness and acting in line with the best practices for sustainable production.

A

or excessive acidity, among others.

Flavedo – The colored and

The goal is to raise awareness among employees, contractors and partners who, upon performing these tasks

Acidity – The acid content of a

D-Limonene – The main component

outermost part of the orange peel. The

built into day-to-day activities, are helping themselves, their children, and especially future generations.

particular juice.

of the oil found in orange peels,

Albedo – The white spongy layer that

representing more than 90% of the

lies just beneath the colored part of the

orange peel oil. Belongs to a group of

orange rind (the flavedo). The albedo is

hydrocarbons called terpenes.

E

Aroma – A particular smell with positive

Endocarp – The inside of the orange

connotation. In the case of orange juice,

fruit.

the word is also used to refer to the flavor (essence aroma).

Essence – The volatile components that are recovered during the evaporation

Ascorbic acid – A vitamin found

process. The essence is separated into an

in plants, especially fruits and green

aqueous stage (essence aroma) and an

vegetables. Forms white crystals when purified and dehydrated. Also called vitamin C. B Box – For oranges, a measurement equivalent to 40.8 kilograms of fresh fruit.

Brix (degree) – Unit used to express the quantity of total dissolved solids in

the presence of carotenes.

Flavedo also has vesicles

Sustainable Practices

containing orange peel oil.

Brazilian industries adopt a series of economic,

J

Education and Citizenship Support for children and teenagers

Juice sacs – Another name for the

regularly enrolled in public schools, through

“buds” that contain the orange juice.

donations, provision of school materials, uniforms and toys, among others, both

N

individually and through partnerships with

oily stage (essence oil).

NFC – Acronym for not-from-

institutions involved in protecting the rights

Essence Aroma – The aqueous phase

concentrate, i.e., juice that has not

of children. Additionally, educational and

obtained in the evaporation process. It is

undergone the process of concentration

transparent and contributes to the flavor of fruit.

Essence Oil – The oily phase obtained in the evaporation process. It has a

of polluting solids, liquids and gases into the environment. These are preventive actions that avoid the generation of pollutants or create alternatives for such substances to be reused or recycled.

or dilution after being extracted from the orange.

Terminals O

yellowish color and is the source of

ISO 14001 certification

Organoleptic - Relating to the

Social Projects

Essential oils – A general term to

properties of fruits or juices that can be

The industries support and implement

C

describe the volatile oils extracted

perceived through the five senses.

various projects in the areas of Education,

Corrected Brix – The Brix measurement

from plants, fruits and flowers, with

obtained after correcting the acid

characteristic odors.

P

municipalities where they are located.

content of the juice. Represents the

Evaporation – The process of removing

Pectin – A type of polysaccharide

concentration of sugars in the juice.

water from the juice using a heat source.

found mainly in the albedo, but also in

Carotenes – The class of red, yellow and

Extraction – The process of extracting

orange pigments that occur naturally in

the juice from the orange, either from

fruits and vegetables.

whole or halved fruits, by means of

other parts of the fruit. It gives the juice viscosity and texture.

Health and the Environment in the

of port terminals certifies that the companies have a globally recognized environmental management system, more comprehensive than required by Brazilian law.

Health Support for prevention projects, educational campaigns, free

mechanical pressure.

Pulp – Solid particles in orange juice.

medical care, eyecare and dental

Degasification – The process whereby

F

Also the commercial name of the product

treatment, including mobile

air is removed from the juice. Dispersed

FCOJ – Acronym for Frozen Concentrate

that consists of chunks of bagasse and

hospitals.

air and free bubbles are easily removed,

Orange Juice. It is the most common

sacs containing orange juice, re-added to

but the air dissolved in the juice requires

product sold and shipped. Commercially,

the final juice.

a degasification process for removal.

it is produced in order to obtain 66

Defects – The term is used to indicate

degrees Brix.

Pulp wash – Juice obtained through a

factors harmful to the quality of the juice,

Finisher – Equipment used to separate

process whereby solids are recovered

for example the presence of small seeds

the pulp from the juice.

from the pulp through washing.

D

and conduct that reduce or avoid the emission

vocational projects are developed.

certain flavor notes.

the juice.

environmental and technical strategies, practices

63

rich in pectin.

characteristic color is due to

Credits Book References The Orange Book

Reforestation

Recycling of waste

All of the industries maintain

The waste products

nurseries that produce seedlings

generated in industrial

Caminhos para Citricultura

of around 30 different species,

production of juice are

Markestrat ( coord.), 2007

destined exclusively to replace

utilized in the manufac-

native trees that have died in areas

ture of citrus pulp bran.

of preservation or permanent

Thus it avoids the emis-

conservation on the farms them-

sion of solid waste.

Tetra Pak, 2004

O retrato da citricultura brasileira Fava Neves, Marcos (coord.), 2010 P+L Cítricos Series

selves. These actions are complemented by ongoing educational processes geared toward industry employees and their families.

Cetesb, 2005

Reuse of water Waste from the orange juice concentration process, also called “condensate”, is used for fertirrigation, washing fruits, and other industrial processes. The system

Recycling of garbage The industrial units, through selective garbage collection, collect the following items and send them for recycling: paper, plastic, glass, metal

benefits the environment because it reduces the need for catchment of water from rivers/ streams or the public water supply.

Control of pollution and rational use of energy The control of air pollution

Websites accessed in November, 2010: FDOC – Florida Department of Citrus (EUA) For growers and processors

and noise pollution, as well

www.fdocgrower.com

as minimizing environmental

Florida Citrus (EUA) Website elaborated by

impacts, are also observed by the enterprises.

Research is conducted and investments are made in modification of the process

FDOC to consumers www.floridajuice.com Ultimate Citrus (USA) www.ultimatecitrus.com

in order to minimize emis-

JPA - Juice Products Association (USA)

sions of pollutants, odors

www.juiceproducts.org

and noise.

IFU – The International Federation of Fruit

cans, etc. All of the material

Juice Producers

is donated to cooperatives

www.ifu-fruitjuice.com

associated with city governments, generating income and employment and perfor-

AIJN – European Fruit Juice Association www.aijn.org

ming important social work

SGF International

in municipalities within the

www.sgf.org

citrus belt.

Fruit Juice Facts www.fruitjuicefacts.org

Institucional Publication CitrusBr – Brazilian Association of Citrus Exporters Executive President Christian Lohbauer General Coordination Larissa Popp Abrahão Marta Martins DeVito Editorial Coordination Ibiapaba Netto Translation BTS Research and Support Larissa Popp Abrahão Letícia de Sena Caritá Debora Garcia Dezan Planning and Design Marta Martins DeVito Art Edition TypoDesign Photography Lau Polinésio Bob Toledo Douglas Aptekmann Dreamstime Istock Photo Infographic Duo Dinâmico Printing Pancrom Print run 3.000 copies

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A modern, humane and sustainable industry

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