Orange growers could face brunt of US trade wars amid cheap imports and lower consumption
US president may move to protect US producers against Latin American rivals and open up a fresh round of trade wars, says trade expert Leonardo Gonzalez Dellan
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Orange growers could be dragged into bitter trade wars in the US as cheap imports, trade tariffs and falling consumption put the squeeze on the industry, an expert has warned.
As Donald Trump locks heads with Canadian Prime Minister Justin Trudeau in the latest rounds of North American Free Trade Agreement (NATFA) talks, Latin American fruit producers are readying themselves for potentially tricky upcoming months.
American producers have been battered as households have cut back on their orange juice drinking.
Consumption in the US has fallen from 5 billion litres in 2001 to 2.8 billion litres in 2016.
At the same time growing competition from cheaper producers notably in Brazil have seen imports rise.
And in the latest blow to America’s domestic orange growers the European Union has imposed 25 per cent tariffs on orange juice imports from the US.
Trade expert Leonardo Gonzalez Dellan has predicted that Mr Trump will move to protect US producers against their Latin America rivals opening up a fresh front in his trade wars.
“Brazil has come to dominate the orange juice supply chain and growers in California and Florida have suffered as a result”, Mr Dellan said. “The US administration will not allow this to continue and the Brazilian growers should prepare for a confrontation.”
The orange juice market in the US may have already shrunk as consumer tastes have changed, but it remains a huge business.
Revenue from orange juice will reach $3.7bn (£2.8bn) in 2018. But the pressure is still growing and the main competitor to US producers over the last decade has been the emerging economy of Brazil and to a lesser extent Mexico.
Mr Dellan, formerly President of Banco Industrial de Venezuela and a leading Latin American entrepreneur before moving to London in 2004, now advises companies on trade between Europe and Latin America.
He said: “There are two key changes coming that may force the US to further protect US growers: the increase in the development of medium sized growers in Brazil and the expansion of the Mexican supply source. Both of these developments will increase the quality of the South American juice and therefore reduce demand for the more expensive Florida oranges”
Voters in the Sunshine State backed Mr Trump in the last election.
The challenge from Latin America comes at an already difficult time for US orange growers who have been caught up in the US leader's trade rows with the EU.
After the US imposed tariffs on European Steel and aluminium earlier this year, the EU responded by slapping their own tariffs on a raft of US goods including a 25 per cent tariff on orange juice.
With tariffs on exports to Europe and a growing threat from Latin American rivals, Mr Dellan believes Trump will face increasing pressure to weigh in on behalf of America orange growers.
The trade in orange juice has moved on from the days of Trading Places, including a change in taste that has shifted from juice made from concentrate to fresher products.
But whatever else has changed there is still money in the juice.
SWNS
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