The Brazilian Orange Story

Background

The tenacity of ancient Arab traders and Medieval Portuguese merchants ensured that the sweet East Asian orange fruit would not be confined to that part of the world for long. The orange won quick, enthusiastic favor with Europeans and became a luxury commodity coveted by the region’s richest. The fruit was so revered that by the 17th century, wealthy Europeans went so far as to build orangeries on their compounds—which were essentially ornate greenhouses dedicated to raising oranges and keeping them safe from harsh winters.

Iberian conquistadores introduced oranges to the Americas soon after sailing to the continents. They enthusiastically planted trees throughout the new colonies so they could enjoy the fruit, and also so they would have access to scurvy-preventing vitamin C. The Portuguese, who were experimenting with the fruit tree in modern-day Brazil, found particular success in the São Paulo region which has ideal conditions for citrus cultivation. Oranges thrive in temperatures between 23-30℃, and both extreme heat and cold can do extensive damage to the fruit. When trees are damaged, it can take a long time for them to recover. Orange trees, although capable of bearing fruit for 30 years, only begin producing fruit in the third year, and are almost never profitable before year five.

While the explorers found easy success with oranges in Brazil, they also found comparable success with a number of other crops in the country’s fertile soils including sugar, coffee, and cotton. The relative perishability of oranges compared with other exportable cash crops prevented oranges from being in the spotlight.

Brazil began exporting oranges on a small, yet significant scale in the early 20th century when it brought the fruit to regional, mainly Argentine, consumers. Within a few years, Brazil began to export oranges to Europe. But just as these transatlantic relations began to build, World War II broke out, severely disrupting trade. But fortunately, out of these new challenges came innovations.

Modern Citrus Consumption

At the turn of the 20th century juice was only consumed if it was freshly made at home, and only in-season. But by the 1920s, scientists developed “hot-pack” or canned juice. Juice was first extracted from oranges; next, it was heated, killing microorganisms, and finally it was packaged and marketed in metal or glass containers. Thanks to aggressive marketing campaigns by orange producers, canned orange juice became a staple beverage in American homes by the 1920s.

The next era of orange juice was shaped by necessity. World War II-era researchers, striving to create a nutritious and tasty drink for troops, created frozen concentrated orange juice (FCOJ). The first step in creating FCOJ is extracting juice from ripe, clean oranges. Then, the water is evaporated from the juice, leaving a concentrate that is then frozen. Typically, it was up to consumers to add water to the concentrate themselves before they drank the juice, although some companies performed the re-integration of water themselves.

In order to ensure a level of consistency in orange juices, they are evaluated according to their Brix contents (Bx), or the weight of soluble solids present in the liquid. For FCOJ, the standard is somewhere between 62° and 66°Bx, which is used as a level of standardization for juices from concentrate.

FCOJ production methods have evolved over the past several decades, and technological advancements have helped create orange juices that are able to achieve a taste closer to that of natural orange juice. Today, frozen concentrated juice remains the most popular type of orange juice in the world.

Perhaps one of the biggest and most significant steps in the race towards “authenticity” of juice was the development of not-from-concentrate (NFC) juices in the 1980s. Although this kind of juice was produced before the 1980s, the advent of more effective and sterile technology allowed for NFCs to be easily and widely produced.

Despite the aggressive marketing campaigns spearheaded in the 1980s by Tropicana that would suggest otherwise, NFC juice still undergoes processing. This is necessary if orange juice will not be consumed within a few days of its extraction, and if companies want to be able to sell juice year-round.

In the NFC process, orange juice is pasteurized in order to kill microorganisms. In order to prevent oxidation, the juice then undergoes a process called ‘deaeration’ in which oxygen is removed from the juice. While its removal allows for juice to be kept longer without spoiling, it also results in flavor loss. And so this juice, which can be stored in its oxygen-less form for about a year, is also given a “flavor boost” prior to its sale to consumers. Each juice company has its own team of flavor experts that use the oils, byproducts, and other naturally derived components of oranges in order to develop their own particular “flavor pack” for orange juice. The variations in taste of the major orange juice companies can be attributed to differences in the components of their selected flavor packs.

While NFC juices typically demand a price premium, it is not because they are necessarily a more “natural” product than a concentrated juice. Rather, some of the difference in prices can be attributed to differences in storage costs associated with storing a concentrate versus storing an equivalent volume of non-concentrate.

Brazil’s story

For much of the 20th century, the southern US state of Florida was the epicenter of all things orange. But in the 1960s that began to change and after 1979 Florida would never again be the top producer.

Following the end of World War II demand for canned juice, as well as FCOJ and related orange products, grew. And, unfortunately, so did the volatility of Florida’s orange crop.

Although the state is known for its warm and sunny climate, Florida suffered through several freezes in the mid-late 20th century that proved devastating for the cold-sensitive orange trees. When Florida production slipped in the early 1960s, producers in Brazil stepped up their efforts to help fill the gap. Both those regions continued on that trajectory—Florida’s inconsistent production dragged into the subsequent decades, as the state was hit with repeated freezes in 1977, 1981, 1983, 1985, and 1989. Brazil, on the other hand, never stopped increasing its production. In 1979 Brazil overtook the United States (US) as the world’s top orange producer, and the South American giant hasn’t looked back.

In 2014/15 Brazil produced 16 million tonnes of oranges and 1 million tonnes of orange juice. That same year, the US produced just 6 million tonnes of oranges, and 481,000 tonnes of juice. However, Florida is not an insignificant player in the orange juice market. The US, which has the largest market for orange juice, ensures that Floridian oranges will always have a strong consumer base. But in terms of production and export size, Brazil is, and will likely continue to be, difficult to beat.

About 70 percent of Brazilian oranges are processed into juice, and nearly one-third of all oranges produced in the country are consumed domestically. Most of what is processed into juice is exported in the form of FCOJ and in bulk, meaning that it is the importing company that adds water, branding, and a bottle to the product.

The infrastructure for orange juice production is robust. Road and transport networks are good, and agricultural research and development receives a high level of support from the government. Seed banks are also plentiful, and help to ensure consistency in orange trees which is important in helping fight disease. Furthermore, orange production in Brazil is highly concentrated. The vast majority occurs in São Paulo and surrounding areas, which means that processing facilities are never inaccessible to orange growers.

Despite the numerous strengths of Brazil’s orange industry, it still faces problems that cannot necessarily be addressed through having a strong infrastructure network or a concentration of growers.

Disease and drought

Around 1990 Brazilian orange farmers started to notice something disconcerting about their trees- they were beginning to wilt. Branches were not getting the water they needed, and farmers were forced to severely prune them in an attempt to salvage the whole tree. The disease, dubbed Citrus Variegated Chlorosis (CVC), is caused by the Xylella fastidiosa bacteria. Scientists have still not found a way to kill this bacteria completely. As a result, farmers have been left to deal with and manage the symptoms of the disease as best they can by pruning trees, producing seedlings in greenhouses, and killing off known carriers of the disease—flying insects known as sharpshooters.

And while these mechanisms have been somewhat successful, they are only dealing with the symptoms rather than the root cause. The economic costs of not eliminating the disease are vast—yields drop as farmers are forced to prune trees, expenses go up as they spend more on insecticides to eliminate sharpshooters. Farmers are also raising seedlings in greenhouses, which is another expensive undertaking. The ultimate cost of these challenges is substantial. The most recent estimate from 2007 implies that the yield losses alone amount to about $120 million.

Unfortunately, CVC is not the only natural problem that plagues Brazil’s farmers, as an ongoing drought is sucking the country’s farmland dry. The drought has already proven damaging to global coffee supply, pushing up prices of that commodity, and now the lack of rainfall is stunting the growth of orange trees. Because of the slow-growing nature of orange trees, the bad weather may have lasting effects.

The drought might not be an isolated incident. Some scientists contend that it is the result of climate change and decades of reckless deforestation in the Amazon Rainforest, a practice that is accused of shifting regional rainfall patterns. If these scientists are correct, then this drought, which is Brazil’s worst in almost a century, may be just the tip of the iceberg.

There are, however, a few things to be optimistic about. When ranked against emerging and frontier economies, Brazil consistently scores at the top in spending on agricultural research. Its agricultural research agency, Embrapa (which is part of the Ministry of Agriculture), has received ever-growing funding from the government which has in turn facilitated creation of hundreds of crop cultivars and international patents. Although Brazil’s orange industry faces some of the most severe problems in its history, the country at least has at its disposal some of the most highly-qualified and well-funded researchers capable of finding potential solutions.

And while the issue of orange species diversification is presently a challenge, once resolved it will be an advantage for Brazilian producers. Currently, there is a high level of varietal homogeneity of the fruit cultivated in Brazil. Most oranges cultivated in the country belong to just a handful of varieties: Pêra, Natal, Bahia, Valencia, Hamlin, and Westin. Each has a distinct growth timeline and harvesting season, and so the simultaneous production of several varieties helps support the possibility of year-round harvests. While all of these varieties already exist in Brazil, further diversification would be hugely beneficial to the country’s orange industry, as the over-cultivation of one particular variety can result in susceptibility to disease. Diversification over time would be a powerful, effective, and relatively accessible solution for Brazil as it attempts to more effectively and sustainably ward off disease.

OJ’s Popularity Falling

Supply and demand of oranges is currently dwindling. Overall demand in the traditional top-consuming markets has been falling in recent years. In top consumer US, demand has fallen by 27 percent since 2000; and in runner-up Germany by 34 percent. While demand in these markets has dropped, it is not all bad news. Non-traditional consumers like China (+161 percent), Brazil (+35 percent), and Russia (+32 percent) are all developing a stronger taste for orange juice. And while companies are hoping to sustain and expand emerging market demand, so far, such demand has not come close to displacing the drop in demand from top consumers.

There are several reasons why analysts believe that consumers in wealthier countries are drinking less orange juice: prices of the beverage have gone up, breakfast is diminishing culturally, and consumers are growing aware of the high sugar content of juices and drinking less of it due to health reasons.

Other than price, these are variables that are largely out of the control of the juice industry. But a change in available products, and perhaps a renewed emphasis on the consumption of fresh oranges, might help keep demand from slipping more.

Conclusion

For almost a century now, orange juice has been a staple of breakfast in the Americas. Production of the fruit had been strong and growing to meet demand. But recent trends show that demand is decreasing, and orange producers will have to get even more innovative. The advent of not-from-concentrate juice in the 1980s provided a much needed shake-up to the juice industry. Now it might need a similar period of innovation, one that emphasizes lower sugar content and increased “natural-ness.”