The Brazilian Industry of Orange Juice
Institutional Catalog of the Brazilian Association of Citrus Exporters - CitrusBR
BrAzIlIAn Industry oF orAnGe juIce 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 widely-consumed juice is produced. Three out of every five glasses of OJ consumed on the planet come from Brazilian fields. 1 BRAzIlIAN INduSTRy Of ORANgE juICE message from the President history 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 ConsumPtion 48 CitrusBR Brazilian Association of Citrus Exporters Rua Iguatemi 448 sl 701 01451-000 S�o Paulo SP Brasil T +55 11 2769.1205 www.citrusbr.com firstname.lastname@example.org sustainaBility 56 58 Orange Juice and Sustainability 62 A Modern, Humane and Sustainable Industry 64 Infographic on the Integrated Citrus Production Chain glossary 68 Credits 69 CONTENTS 5 6 50 World Consumption 53 Foreign Trade 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 the image of Brazilian orange juice. ORANgE. THE WORld'S fAVORITE juICE Brazil produces more than 50% of the world's orange juice, exports 98% of its production, and accounts for 85% of worldwide orange juice exports. 5 Brazil is already a world leader in food production -- the On the following pages, readers can understand the complexity of the citrus production chain, from the orchard to the worldwide consumer market. Christian Lohbauer Executive President email@example.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 a "poster girl" for the fight against scurvy, a disease affecting sailors lacking sufficient vitamin C in their diet. According to researchers, the orange's fame as a source of good health dates back to this time. History of the orange in Brazil 12 2006 Price of orange juice on the international market reaches record levels. 13 2010 More than 50% of all orange juice consumed in the world comes from Brazil. Although oranges had been present in Brazil for four centuries, the great transformation began in 1920, when the `citrus belt' began being structured in the hinterlands of S�o Paulo state. At that time This material is about an industry whose history began more than 40 years ago and today is responsible for producing one of the tastiest, sustainable and widely- consumed fruit juices ever known. This is the world of Brazilian oranges. 11 2003 Innovation in the juice market with the development of NFC (Not-From-Concentrate) juice and exportation of this product. appeared the first outlines for a juice processing industry in the environs of the city of Limeira. The first shipments of orange juice were destined for Argentina, England and other European countries. Gradually the region was consolidated as a major producer of oranges in Brazil. 9 1981 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. 10 1984 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 Born in Asia and currently found in diverse regions around the world, the orange became one of the most globalized fruits centuries ago. Originally from China, the orange made its way westward across Asia to Turkey, and continued on to Spain and Portugal. From the Iberian peninsula it was brought to the Americas, arriving in Brazil over 400 years ago. most widely�consumed juice is exported from the Americas to destinations around the globe. Three out of every five glasses of OJ consumed worldwide are produced in Brazil and -- just like those ancient caravels who braved the sea -- modern vessels carry up to 1.2 million metric tons of juice to the most remote parts of the world (in FCOJ Equivalent). 7 1963 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. 8 1970 Expansion of orchards in S�o Paulo state, driven by the juice industry and export incentives, leads Brazil to occupy a prominent position on the international market. 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. 6 1961 The citrus industry expands to the regions of Araraquara and Bebedouro, in the state of S�o Paulo. 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. 4 1927 The S�o 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 S�o Paulo. 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. 2 1873 Seedlings of Ba�a orange trees are shipped to California (USA), from where this variety spreads throughout the world. Ba�a oranges originated in Brazil, most likely from a mutation of a select variety. 7 years ago; instead of being brought to the Americas, the world's THE ORANgE IN BRAzIl The assertion that the orange found in Brazil the ideal place to develop can be proven by the amplitude of the harvest period. Between the months of May and January, the fruit can be found being harvested in some region of the nation. However, this does not mean that production is homogeneous throughout the year; to the contrary: between September and November there is a major concentration of the fruit being delivered to juice industries. The preference of citrus growers for late varieties -- in virtue of their higher productivity -- has occurred to the detriment of the mid-season varieties that are well accepted on the market for fresh fruit, leading to a shortfall of the fruit, mainly in September, and consequently greater competition between the industry and fresh fruit market during this period. 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 oranges around the world, eight species are predominant in Brazil. In this regard, there are oranges picked earlier in the year and those picked later in the year. Hamlin, Pera, Val�ncia and Pera-Natal are the most common juice varieties, whereas the Ba�a and Lima varieties are typically destined for fresh consumption. are simply the sugars that comprise the raw material for juice concentrate. These two factors, coupled with the production deficit just at the time that Pera oranges are producing, cause this variety to bring higher prices than the other varieties destined to the juice industry. Aiming to reduce the period of shortfall, growers are changing the profile of their orchards by increasing early-harvest trees 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 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 S�o Paulo state are Natal, Val�ncia and other late-harvest varieties; 23% are Hamlin and other early-harvest varieties; and 22% are Pera as well as other mid-season varieties. 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. Harvesting period by orange variety and % of production Early-season (hamlin, westin, rubi, pineapple) Mid-season (pera) Late season (val�ncia and natal) 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 improvement techniques. 23% 22% In the citrus belt -- an area covering 300 counties between S�o 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 improving the quality of the fruit. Source: Prepared by Markestrat based on CitrusBR 9 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�o Paulo the most important citrus-producing region in Brazil: 11 CITRuS BElT T ruck loaded with fruit on a farm in S�o Paulo. T otal 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. Brazil's Citrus Belt is located amidst the well-maintained highways in the state of S�o 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 orange production. Within the state, the strength in relative terms is even greater; of all the oranges produced in S�o Paulo, 93% BRAzIl come from the citrus belt. This geographic distribution of production revolves around a structured industrial complex, with four major industries that have 14 factories in 11 cities, in addition to other smaller factories. 13 S�O PAulO Historically, Northern S�o 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. The Citrus Belt is an area covering over 300 counties in Southeastern Brazil -- the largest concentration of orange groves in the world. such as Mat�o and Bebedouro. However, due to diseases such as greening and significant changes in rainfall patterns, the citrus industry in the southern part of S�o Paulo state has grown exponentially. Number of trees in regions of the Brazilian Citrus Belt NORTHWEST 30,35 million trees NORTH CENTRAl 76,28 million trees SOuTH CASTElO 41,57 million trees 30,66 million trees 25,81 million trees The citrus belt is divided into five macro-regions: Central, South, North, Northwest, and Castelo. Even so, the climate has great influence on the vigor and longevity of citrus trees, as well as the quality and quantity of fruit. Orange trees (as other citrus plants) are best adapted to climates with temperatures ranging from 23�C to 32�C with high relative humidity. 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 Orange production in the citrus belt, as well as its destinations, have been changing over time. Production has fallen around 11% over the last 15 years. When analyzing the behavior of production distribution over the same period, there has been a clear increase in production destined to industry and, consequently, a reduction in production destined to the market for fresh fruit. Major producers of orange 2009-2010 season 25,0% Other 25,2% Brazil 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 Today there are about 165 million orange trees that produce nearly 400 million boxes of oranges a year. 4,9% Spain 5,1% Egypt 6,0% Mexico 8,7% China 12,1% united States of 10%, unlike the case with the fruit destined for fresh consumption, which accounted 24% in 1995 and fell to 14% in 2009, a reduction of 10%. 6,4% India Hectares x 1000 Hectares x 1000 Brazil - Total area Overall croplands Orange crops Sugarcane crops Coffee crops Soy crops 851,487 67,660 837 8,140 2,170 21,057 % of total 7.9% 0.1% 1.0% 0.3% 2.5% % of overall cropland 1.2% 12.0% 3.2% 31.1% 2,500 Sources: USDA, FAO, IBGE, CONAB, CitrusBR Evolution of world production of orange juice S�o Paulo and Tri�ngulo Mineiro production Florida production World production 3,000 2,781 2,814 2,664 2,422 2,441 854 2,433 1.024 644 653 2,225 577 2,441 783 732 2,019 563 2,626 2,282 2,328 2,000 2,421 982 1.051 2,332 817 1.006 960 2,236 1.001 858 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 1,369 1,363 1,133 1,065 0 1995/96 1996/97 1997/98 1998/99 1999/10 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 Source: "O Retrato da Citricultura Brasileira, 2010" 15 land use in Brazil florida and s�o Paulo account for 81% of orange juice production worldwide. the state of s�o Paulo alone accounts for 53% of the total. More than plants and fruits, this sector is a genuine machine for producing new technologies to attain the highest standards of quality PlANTINg ANd HARVESTINg 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 17 AN ORCHARd IS BORN T echnology developed in Brazilian orange chain helps boost the income of growers and industry 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 business opportunity, especially because the return on investment 19 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. Seeds are handled to farms, where they will be planted to start producing 3 years later 2. Greenhouses are used so the seedlings receive the best care while they're still young 3. Worker caring for the plant before it reaches the point of being taken to an orchard, when its productive life will begin 4. Adults orchards form huge oranges mazes, where millions of boxes will be harvested 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 1 2 3 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. PlANTINg TECHNOlOgy RESEARCH ANd dEVElOPMENT In 1980, a grower could produce 500 boxes per hectare. Today, these figures can reach over 1,600 boxes per hectare. Many advances in worldwide citrus production were born in Brazilian orchards. Control of citrus canker, for example, is the result of Brazilian research that helped the world to rid its orange Brazil has a long tradition of solving problems and finding new technologies 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, there is an increase of 233% just by raising the number of trees per hectare. 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. The Citrus Defense Fund (Fundecitrus), the Sylvio Moreira APTA Citrus Center, the Luis de Irrigation is another technology that has been 1. Plant nurseries specializing in seedlings are an important part of the business Queiroz College of Agriculture, associated with the University of S�o Paulo, and the Campinas Agronomic Institute, of the S�o Paulo state government, are references in research and gaining ground in Brazilian orchards, particularly in the drier areas of S�o Paulo state. 1. The work force to tend the plants receives specialized training In citrus farming, there is the possibility of 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. Proper plant treatment is important to lead the plant smoothly into adulthood, when it is transplanted in an orchard development for new technologies. 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 been defined. Among them, fighting the most relevant diseases, increasing productivity of the orchards, and bringing income to orange growers, key partners of the industry. Maintaining citrus farming as one of the most profitable agricultural 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 2. After reaching the adult phase, the plant blooms vigorously, producing spectacular fruits 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 S�o Paulo orchards are irrigated. However, the need for water compared to other crops such as soybeans, corn and coffee, make orange a low water consumption crop, basically using what is known as "rescue irrigation." 3. The life of an orange tree begins in small trays, with specially planted substrates 21 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 manpower is strictly regulated by law. There is no child labor or any type of exploitation whatsoever, and the sector is constantly watched by the competent authorities, such as the Public Prosecutors, assuring compliance with the law. The other 65% of production is in the hands of small-scale, medium-sale and, primarily, large- HARVESTINg THE fRuIT In Brazil, due to climatic and soil conditions, there are Harvesting and processing May to February Harvest year July to June JUN M M AY AY JUL JUL JUN AU G AU G AP MAR MAR R APR B FE S�O PAULO BRAzIL V NO Brazilian authorities, whose fight against distortions in labor relations has contributed to significant advances in the entire productive chain. The orange harvest is a combination of manual and mechanical work, and the pickers play a key role in the process Harvesting and processing October to May JUN M M AY AY In light of all these facts, consumers of Brazilian orange juice can rest assured that this is a food product made within the strictest technological and social standards, generating and distributing wealth both within and outside Brazil. JUL JUL JUN AP MAR MAR R APR B FE F EB V NO FLORIDA USA DEC JAN V NO DEC DEC JAN relationship with employees is constantly overseen by Harvest year October to September AU G AU G V NO B FE DEC JAN scale producers. In these orchards, the company's 23 O O SEP SEPCT CT O O SEP SEPCT CT JAN 25 lABOR RElATIONS between labor laws applied in cities and in rural areas. But not in Brazil, which in 2005 implemented what is known as Normative Instruction 31 (NI 31), ushering in a series of new rules so that workers in the countryside would receive the same treatment as workers in cities and industries. major adjustments in recent years. The clothing, designed for comfort even in the warmest tropical regions of Brazil, protects from the effects of sunlight. Sunglasses are also part of the equipment, as well 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 taxes and social contributions that will guarantee retirement benefits for the workers, but strict standards of health and safety and the innumerous rules established in NI 31 travel the world together with the beverage. The regulations governing farm work were developed by a tripartite committee with the presence of the National Confederation of Rural Workers, the National Confederation of Agriculture, and the Ministry of Labor and Employment. The standards developed consensually between employers and employees For Brazil's orange juice processing and exporting industry, nothing is more important than assuring that this beloved beverage is produced in accordance with the strictest ethical standards, such a relevant issue to increasingly demanding consumers. were ratified by the Labor Ministry. However, the content of those standards for which no consensus could be reached was arbitrated, which in a certain way transferred to the countryside many of the standards required in urban work. With a total of more than 200,000 workers directly or indirectly involved with the orange juice processing and exporting industry, If on one hand this represented an advance for the sector, on the other hand there was an increase in the cost of operations, which decreases margins 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. AN ORCHARd Of lAWS In the 2009/10 harvest, Brazilian production totaled 397 million 40.8-Kg boxes Labor relations in Brazil comply with strict criteria, assuring the best labor practices on the market In many countries around the planet, there are severe differences Personal protective equipment has undergone Citrus farming generates a contingent of more than 200,000 jobs directly and indirectly there is always a weakest link that must be protected. The orange pickers currently enjoy advanced working conditions compared to many countries, even in sectors unrelated to farming. Workers are required by law to wear safety equipment, provided by the employer. 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. 27 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. 29 THE ORANgES MARKET processing is a ritual that takes place between April and December. However, there is a heavy concentration from September to November, when the majority of the crop reaches ripeness. The sale of fruit occurs at the factory gate and growers can choose not only the company they want to sell their fruit to, but also the type of contract that best meets their needs. Among the most commonly used types of contract, there are two major groups: sale on the spot market, whereby growers 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 types of bargaining: they lock their costs with medium- and long-term contracts and use the spot market as a way to wager on the market. Each type of contract offers risks and rewards. In the harvests of 2007/2008 and 2008/2009, producers with long-term contracts were benefitted more than those who chose the spot market. However, in the 2009/2010 harvest, those who opted to sell oranges in the spot market earned more money. There is no perfect model, and each farmer must study the pros and cons of each model and choose the strategy that will bring in the most income. demand. However, it's not only consumption that determines the pricing, since there have been no major changes in volumes exported by Brazil in nearly a decade. The main factor that determines the price of a box of oranges (and consequently orange juice) is the supply of fruit, influenced by the world's two major citrus-growing regions: S�o Paulo (Brazil) and Florida (USA). As shown in the graph below, the ups and downs both in oranges by the box and orange juice quotes in New York are directly tied to climatic effects that impact the supply of the fruit. 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. Another factor to be considered in competitiveness is the import tariffs paid in the United States and Europe for entry of Brazilian orange juice, plus the logistics and port costs incurred on the Brazilian product to be shipped to these destinations. Example of Contract Types: 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; n Long-term contracts with or n Orange purchase contracts during the harvest at the price of the day, known as the spot market; n Long-term lease or sharecropping contracts. Comparative analysis of production and consumption of orange juice at 66� brix equivalent and the price of fCOj on the New york Stock Exchange Production Production and Consumption of Orange Juice in thousands of metric tons in values equivalent to 66� brix 2.700 2003/04 Very high inventories of juice due to good harvests in Brazil and Florida keep prices low on the New York Stock Exchange. demand $ 180.83 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. $ 190 2.600 $ 170 2.500 $ 150 destination of orange production in the brazilian citrus belt 14% Fresh fruit for consumption 86% Available for industry from the total volume available to industry 15% Used for NFC 85% Used for FCOJ 2.400 2004/05 e 2005/06 Successive hurricanes in Florida decrease the juice production in the region raising NYSE quotes to record highs. $ 127.92 $ 124.30 $ 122.55 $ 130 2.300 $ 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 2.200 2.100 $ 90 $ 83.91 2.000 $ 85.74 $ 70 $ 66.95 1.900 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 $ 50 Source: "O Retrato da Citricultura Brasileira", 2010. Prepared by Markestrat based on CitrusBR data. 31 without guaranteed minimum price directly linked to daily quotes and annual averages of the price of the commodity on the New York Stock Exchange; PRICINg The coming and going of fruit: The delivery of oranges for As in other commodities, the orange market is influenced by supply and 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. 33 PROCESSINg On the following pages, you can learn a little about the Brazilian industry, responsible for producing the most widely-consumed 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. 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. 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. On average, only 25% of the water used by industries comes from outside sources; the rest comes from the process of concentrating the juice. 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. 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. 35 reason for the success of this beverage around the world. Much of the water is removed from the product within the evaporators. This process inactivates the microorganisms that are responsible for degradation of the liquid. port terminals. A kind of orange juice with characteristics somewhat different from traditional concentrate juice, namely: not-from-concentrate (NFC) -- or simply ready-to-drink juice. Instead of having the water extracted during processing and After the separation process, the juice goes to an evaporator, specially developed for the citrus industry, where the volatile components are separated and then recovered. then reconstituted after being purchased by the bottlers, this drink is pasteurized with the water from the orange itself. 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 of 66 or 65 Brix -- the standard for FCOJ. The final product is stored for up to one year, frozen or chilled. 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 in which the essences are found. is high. Therefore, its storage and distribution chain is aseptic. The recovered components are the essences, in aqueous and oily phases, which are sold to companies that produce aromas and fragrances. In some cases, the juice goes through a process of homogenization, reducing its viscosity in order to optimize evaporation. becomes solid when frozen, preventing the juice from being pumped. Therefore, for small amounts exported, not-fromconcentrate juice is packaged in drums, which means a higher cost compared to bulk sales. For large amounts of NFC juice, 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 of quality. Then it goes to storage tanks refrigerated to freezing temperature, where it can be stored for a period of up to two years. The juice must be stirred periodically to prevent the separation of the juice and dissolved solids and to maintain uniformity of Brix. In Brazil, where most of the juice is destined for export, 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. In these tanks, the juice is stored until transported by tank trucks to the port. technologies were developed to allow transport in ships specially designed for this purpose. 37 Another difference of NFC compared to FCOJ is that it NOT-fROM-CONCENTRATE juICE CONCENTRATE juICE The major star of this market, concentrate juice is the main In the mid-2000s, something new began to arrive at European Orange and Orange juice By-Products 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 essence oil 0,1 kg 1000 kg 553 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. Pulp 30 kg essence aroma 1,1 kg Peel oil 3 kg 65� Brix Concentrate 100 kg After separation of the juice and the pulp, the latter still goes through a process where unwanted components are removed, such as the Peel, bagasse and seeds 413 kg evaporated water 452 kg Fonte: The Orange Book, T etrapak bagasse and the seeds. The "clean" pulp is sent to equipment where there is a new process of pasteurization, or heat treatment, and then frozen before being sent to storage. ONE fRuIT, MANy PROduCTS utilization of the Orange 0.5% aqueous phase 0.1% oil phase The business involving oranges goes beyond concentrate and Orange juice can be sold to the end consumer in three different ways: integral no added sugar and at its natural concentration. Concentrate partially dehydrated, from which part of the natural water was removed. reconstituted made from juice concentrate, with water added. Must meet the same quality parameters as the integral juice. If the pulp remaining after juice extraction is not used for commercial purposes, it can be washed to extract substances dissolved in the juice. This product is called pulp wash, and can (if legislation permits) be mixed with juice on the production line, prior to the concentration process. 2.7% sacs 0.9% d-limonene 1.8% essential oils 44.8% orange juice 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 removing the other substances and losing as little oil as possible in this process, which occurs through two stages of centrifugation. Parts of the orange seed juice segment segment wall central core oil segment albedo flavedo nectar 25% to 99% of juice, depending on the specific legislation It's economically advisable to include a system of pressing and drying of the orange peel and solid residues in large juice processing plants. The fruits rejected upon receipt, the peel and bagasse resulting from 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. non-carbonated soft drink less than 25% of juice; in many countries, only 3 to 5% juice 39 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 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 environment. 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. 41 lOgISTICS juice concentrate, leaving from the Port of Santos in S�o 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 jOuRNEy Of A glOBAl juICE A ship can carry up to 40,000 metric tons of orange 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 conditions. The problem of transporting NFC frozen 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. The capacity of an orange juice ship is up to 40,000 metric tons 43 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 T ruck in its way to the Port of Santos Vessel loading without contact with external environment Refrigerated vessel transporting orange juice 45 lOgISTICS ANd dISTRIBuTION The expansion of NFC juice production in Brazil in late 1990s led to the development of bulk maritime shipping of chilled juice. The most common method is to use one-ton bags, transported in recipients placed inside refrigerated containers. From the tanker vessel, the product is pumped into receiving lines that feed tanks located on the mainland. From these tanks, the product is sent to blending stations, where different types 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 new technologies developed by the major juice producers. Nowadays, the use of company-owned vessels for shipping juice reduces costs and assures that the quality of the juice is maintained until reaching its destination. In the case of not-from-concentrate juice, there are also specific 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 as well as Ghent and Antwerp in Belgium, there are exclusive terminals for receiving bulk orange juice concentrate. This type of terminal is also found in Florida and New Jersey, United States, the port of Toyohashi, Japan, and the port of Newcastle, Australia. to confirm that the juice is microbiologically acceptable. The pipping system is sterilized and the juice is transferred from the vessels to storage tanks at the port. Pasteurization equipment is located in the juice receiving area, if required. 47 frozen terminal frozen tank truck Blending house frozen terminal frozen/chilled tank truck BEVERAgE PROduCERS In this stage, other ingredients may be added, and then the juice is pumped into tanker trucks that will distribute it. Transportation of orange juice from the factory to the bottlers fCOj INduSTRIAl PROCESSINg frozen tank truck frozen terminal Tank ship fCOj/NfC Chilled tank truck frozen/chilled terminal Tank ship frozen/chilled terminal Chilled tank truck NfC frozen/chilled tank truck frozen terminal Tank ship BOTTlERS glOBAl CONSuMPTION Brazilian orange juice is one of the most 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 With a 34% of juice market share, orange juice and orangeflavored drinks are the most widely consumed beverages in the world. Among all the options on the market, these drinks account for 0.91% of the global market. This is a leadership achieved through a variety of factors ranging from a universally accepted flavor to the possibility of supplying different markets in the world frequently. But the latest news is not so good. In the last decade, consumption has been falling at a rate of 1.6% a year. In the U.S. -- responsible for the consumption of 38% of all juice in the world -- the demand for orange juice has fallen nearly 25% in the last decade. The reasons for this 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 the entry of new beverages such as multivitamin drinks and the expansion of grape and apple flavors. Another important point is the cultural habits of developing countries located in the Middle East and Asia. These populations do not have the habit of consuming 100% pure juice. Non-carbonated soft drinks and nectars are more common, which impacts sales because they contain only a certain percentage of juice. The solution, therefore, is to make Europeans and Americans drink or resume drinking more orange juice -- a difficult task, but doable. Taking into account the 40 countries that are the top buyers of orange juice from Brazil, representing 99% of world consumption of orange flavor, a detailed analysis shows Evolution of the global beverage market billions of liters 1,524 3.9% 3.7% 3.5% 6.8% 8.6% 20.9% 20.6% 20.6% 20.6% 6.9% 8.4% 8.2% 8.1% 7.0% 3.9% 7.1% 8.2% Hot coffee Hot tea Wine Beer 11.2% 11.5% 11.4% Water Carbonated beverages Non-carbonated 13.3% 2.2% 2.8% 13.7% 2006 2007 13.1% 2.5% 2.7% 12.9% 2.6% 2.7% 12.5% 2.7% 2.6% soft drinks juices and nectars flavored milk 14.8% 2003 2004 14.5% 2005 14.1% 13.3% 2008 13.8% 2009 12.8% White milk 1,567 4.0% 7.1% Others Milk-based beverages 1,428 1,366 1,310 3.3% 6.7% 9.0% 3.5% 6.8% 1,488 In China, whose sizeable population always stands out as a potential market, certain consumer habits have curbed the growth of orange juice. This reality implies a major challenge for orange juice producers, who can already see the need to reposition their product on the world market. 1,270 8.8% 20.4% 20.5% 20.6% 11.2% 12.8% 11.1% 11.1% 11.4% 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 favorites among European consumers and offers tough competition with the orange. 13.2% 13.7% 15.3% 14.6% 15.0% 15.3% 14.0% 2.2% 2.8% 13.8% 2.2% 2.8% 13.5% 2.3% 2.8% Source: "O Retrato da Citricultura Brasileira", 2010. Prepared by Markestrat based on Euromonitor data. 51 fruit beverages, 20.4 billion were orange flavor and 7.5 billion were apple flavor. However, in the period from 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% and 2.3%, respectively, and an increase in demand for tomato and multifruit flavors of 2.6% and 1.3%, respectively. In the case of nectars and non-carbonated soft drinks, the volume of orange flavor increased, but to a lesser extent when compared to peach, grape, mango and multifruit flavors. exporter of industrialized orange juice, producing over 50% of the worldwide volume and exporting 98% of its production. Roughly 85% of the orange juice exported worldwide comes from Brazil. In no other sector does Brazil have such an isolated leadership position. Both frozen concentrate orange juice (FCOJ) and not-fromconcentrate juice (NFC) are exported. In order to develop technologies that would allow exportation of large bulk quantities over thousands of miles without losing quality, it took years of research and investments in infrastructure and logistics. The main consumer markets of concentrate juice are: Europe, World beverage consumption 1,567 bio liters (2009) 2.7% Fruit-based beverages 2.6% Juices and nectars 8.2% Hot coffee 1.8% Wine This diversification in flavors consumed and the orange flavor's consequent loss of market share has contributed 0.9% Flavored milk which imports around 70% of Brazilian juice, and the United States, which imports about 13%. The rest is divided among other countries, most notably Japan and China. Among the 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 fOREIgN TRAdE destinations of brazilian NfC in the 2000s 74% Europe 26% North America 53 Sources: Elaborated by Markestrat based on data from Cacex, Banco do Brasil, Siscomex & SECEX/MIDC. that the 63.5 billion liters consumed of ready-to-drink Since the 1980s, Brazil has been the largest producer and 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 11.2% Beer 20.9% Hot tea -- U.S. and Germany -- which between 2003 and 2009 registered a decreased of 15% and 26% (respectively) in ShArE OF CONSUMpTiON 7.1% Others* the consumption of orange juice (in FCOJ equivalent). various trade barriers that reduce its competitiveness on the international market. Moreover, Brazilian juice must meet a series of technical requirements involving phytosanitary issues, packaging, consistency in product quality, regularity of delivery, compliance with the Codex Alimentarius, and compliance with general and local laws for marketing food products, among others. 12.8% Milk 12.5% Carbonated beverages 15.3% Water 4.0% Milk-based beverages Such behavior is not what one would expect when analyzing the main demographic data from the 40 countries that together represent 99% of the world's demand for orange flavor. Unlike the consumption of * Other: Liqueur, T coffee-based drinks, energy ea, drinks, concentrate or powdered fruit-flavored drinks. Source: O Retrato da Citricultura Brasileira. Elaborated by Markestrat based on data from Euromonitor. orange juice, which fell 6% in the period, the demographic indices showed growth: the population increased by 5%, total GDP by 51%, per capita GDP by 43%, and per capita net income by 40%. Evolution of the quantity and financial value of orange juice exports FCOJ Quantity in metric tons x 1000 2,500 2,000 1,500 1,000 500 0 NFC equivalent to 66 o Brix Value Exported (US$ millions) Value exported in US$ millions 2,252 2,500 1,997 1,619 169 171 2,000 1,500 1,000 500 51 25 1,034 845 1,348 2001 83 60 1,469 103 145 1,041 1,189 2002 1,193 1,058 1,111 1,277 2000 1,312 2003 1,254 2004 1,320 2005 1,208 2006 1,271 2007 1,122 2008 1,130 2009 0 Sources: Elaborated by Markestrat based on data from Cacex, Siscomex & SECEX/MIDC. destination of Brazilian fCOj by decade and in 2009 North America Europe 2% 3% 2% Asia 3% 11% Other continents 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1970s 2% 9% 13% 43% 64% 63% 70% 71% 33% 1980s 53% 1990s 26% 2000s 16% 2009 13% Sources: Elaborated by Markestrat based on data from Cacex, Siscomex & SECEX/MIDC. Import tariff rates for Brazilian orange juice 2009 Country/Region Europe united States japan Import tariff rate fCOj 15,20% NfC 12,20% fCOj uS$ 415/ton NfC uS$ 42/ton 25.50% 54% 7.5% for juice below-18�C and 30% for juice at temperatures above -18�C 5% Exempt Source: Elaborated by Markestrat based on Secex data 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 55 4% The lifetime of a citrus tree is up to 100 years. North America and Europe account for 88% of all processed orange juice consumed in the world. SuSTAINABIlITy The name of the island of Cura�ao comes from the word cura��o (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 straight from the present industries are signers of the code of conduct and are part of the voluntary control system of SGF (Sure Global Fair), an international organization founded in 1974 and based `sustainability' that is totally accepted, and there is no single formula to determine what will become of this concept in the future. However, a concept that is widely used and accepted is the one formulated by the Brundtland Commission in 1987, which states that "sustainable development is the development that meets the needs of the present without compromising the ability of future generations to meet their own needs." The field of sustainable development is divided into three pillars: environmental, economic and socio-political. For a product to be sustainable, there must be no imbalance among these three pillars, i.e., production must be socially How a 40-year old exporting sector reinvents itself and becomes the producer of one of the most sustainable beverages the world has ever known in Germany, with a mission to promote safety and quality of fruit-based products as well as to assure fair trade. SGF has over 600 members in 60 countries, and periodically conducts inspections of industrial facilities to assess aspects of hygiene and environmental sustainability, as well as social and economic aspects. The code of conduct followed by its members establishes standards to be observed with respect to labor aspects, in accordance with the provisions established by the International Labor Organization. In terms of environmental sustainability, it stipulates that any negative impacts of the supply chain on the environment must be identified and minimum possible use of agrochemicals. just, environmentally sound, and economically viable. If any one of these concepts is missing, sustainability does not apply. Brazil is a signer of the foremost treaties on the environment, such as the Kyoto Protocol, and its environmental legislation is widely 59 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 recognized as one of the strictest in the world. 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 pioneered the creation of a project called Quality Initiative South and East European Countries (QUISEE), in 2001 to promote fair trade and growth of the market for juices and nectars in the Expanded European Market. drink of the future. This is because it can add a series of values from its production that culminate in the creation of a tasty and nutritious food product that helps preserve the world we live in. SuSTAINABIlITy The juice of the future, With the European market as the main importer, Brazilian Still being defined around the world, there is no single concept of Orange juice production has been extremely sustainable over the past years. In all, the orange groves that supply fruit to the orange juice industry occupy an area of only 600,000 hectares. This corresponds to 10% of total area occupied by sugarcane and 0,86% of all cropland in Brazil. Moreover, the factories have wastewater treatment plants and there is no solid waste generated, since every part of the fruit are utilized. Another important point is the measurement of carbon emissions, something demanded by Productivity in the orchards increased 39% between 1995 and 2008 as a result of research and investments. The main citrus production is in the state of S�o 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. 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 will be done in the coming years in order to make it possible to identify a figure for the entire chain of citrus production. 61 From a social standpoint, municipalities with orange groves have somewhat higher human development SGF SGF - SURE, GLOBAL, FAIR. Every two years, the industries are visited to check for compliance with the code of conduct. In the last visit (2009/10), SGF reported that it found no child labor or forced labor, and that Brazilian juice industries collaborate with the communities in which they operate, sponsoring cultural events, supporting social projects, and employing workers from the region. indexes (HDI) than municipalities that produce other commodities. In all, more than 10,000 producers derive their livelihoods from the land, selling oranges to the juice industry; but what is most striking in the production of orange juice is the industry's relationship with one of the major sources of life: water. In the factories, juice producers try to use as little water as possible from the public water system or from rivers and streams. On average, an orange juice processing plant obtains only 25% of the total amount of the water required from the public water supply or rivers/streams, while the remainder comes from the very process of juice concentration, which requires water to be evaporated. Rather than simply throwing away this precious asset, the evaporated water is reused for different functions within the industrial structure itself, such as washing fruit and cleaning equipment. CARBON FOOTPRINT: CitrusBR has a sustainability subcommittee consisting of representatives from member companies, whose objective is to discuss, with national and international players, important issues related to sustainability such as carbon footprint, usage of water, utilization of waste, and sustainable agricultural practices, among others. The concept of carbon footprint is an important tool for identifying opportunities for reducing emissions of greenhouse gases (GHGs) in the sector that produces orange juice. Around the world, various segments of the economy have been seeking to measure their emissions, but Brazilian orange juice is the first case in which an entire sector will be measured. This is an important step to show the concern of Brazilian producers not only for the health of their business, but for the health of the planet we live on. For human health, orange juice is a great ally. In addition to the known benefits of vitamin C, it is a drink that has no fat, sodium or refined sugar, in the case of 100% juice. Good for those who drink it, good for those who produce it, and good for the Earth. 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. Reforestation All of the industries maintain nurseries that produce seedlings of around 30 different species, destined exclusively to replace native trees that have died in areas of preservation or permanent conservation on the farms themselves. These actions are complemented by ongoing educational processes geared toward industry employees and their families. Recycling of waste The waste products generated in industrial production of juice are utilized in the manufacture of citrus pulp bran. Thus it avoids the emission 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, uniforms and toys, among others, both individually and through partnerships with institutions involved in protecting the rights of children. Additionally, educational and vocational projects are developed. environmental and technical strategies, practices 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. 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 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 and noise pollution, as well impacts, are also observed by the enterprises. Research is conducted and investments are made in modification of the process in order to minimize emissions of pollutants, odors and noise. as minimizing environmental Terminals ISO 14001 certification Recycling of garbage The industrial units, through selective garbage collection, collect the following items and send them for recycling: paper, plastic, glass, metal cans, etc. All of the material is donated to cooperatives associated with city governments, generating income and employment and performing important social work in municipalities within the citrus belt. Social Projects The industries support and implement 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. Health Support for prevention projects, educational campaigns, free medical care, eyecare and dental treatment, including mobile hospitals. 63 How the Brazilian orange juice industry works 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 3 Washing and 4 Extraction selection 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. 1 Harvest Most of Brazil's orange production is concentrated in the country side of the S�o 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. Everything is used Comminuted Citrus Base Citrus Pulp Pellets Up to nine by-products can be extracted from an orange 5 Finishing Alcohol Peel essential oil D-limonene Essences Pulp wash Pulp Pectin 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 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. 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. 3 out of every 5 glasses of orange juice consumed in the world are Brazilian. 14 Brazil exports more than 1 million tons of orange juice per year. 2b 2 1 2a 8 9 Every 10 minutes an orange juice tank truck descends "Serra do Mar" highways towards the Port of Santos, on the coast of S�o Paulo. 5 veil protective eyewear apron with sleeves gloves bag 12 13 3 10 11 4 6 gaiters boots PPE Personal Protective Equipment Degree Brix is a standard measure to determinate the soluble solids or total sugars in the juice 7 10 A ship carries up to 43 thousand tons of FCOJ, or the equivalent to more than 32 million 1 liter bottles. Sustainability n Using only 1.2% of its croplands, Brazil produces more than 80% of n All parts of the orange not used for juice are utilized for the the total exported orange juice worldwide. n Since 2003, grove productivity has grown by 20%, without an fabrication of various by-products, leaving no solid waste in the environment. n The energy used in the factories comes from renewable sources, 7 Deaeration increase in land use. n More than half of the water used in the factories comes from the fruit such as hydroeletric power plants and burn of sugarcane bagasse. n Apart of the industry's light fleet uses ethanol. In Brazil, even gasoline itself, obtained during the concentration process of the juice. contains 25% ethanol and national diesel uses 5% biodiesel. 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 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. 10 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. 11 Refrigerator tanks 12 Maritime transport 13 Consumption 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. 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). 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 A Acidity � The acid content of a particular juice. Albedo � The white spongy layer that lies just beneath the colored part of the orange rind (the flavedo). The albedo is rich in pectin. Aroma � A particular smell with positive connotation. In the case of orange juice, the word is also used to refer to the flavor (essence aroma). Ascorbic acid � A vitamin found in plants, especially fruits and green 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 juice. C Corrected Brix � The Brix measurement obtained after correcting the acid content of the juice. Represents the concentration of sugars in the juice. Carotenes � The class of red, yellow and orange pigments that occur naturally in fruits and vegetables. D Degasification � The process whereby air is removed from the juice. Dispersed air and free bubbles are easily removed, but the air dissolved in the juice requires a degasification process for removal. Defects � The term is used to indicate factors harmful to the quality of the juice, for example the presence of small seeds or excessive acidity, among others. D-Limonene � The main component of the oil found in orange peels, representing more than 90% of the orange peel oil. Belongs to a group of hydrocarbons called terpenes. E Endocarp � The inside of the orange fruit. Essence � The volatile components that are recovered during the evaporation process. The essence is separated into an aqueous stage (essence aroma) and an oily stage (essence oil). Essence Aroma � The aqueous phase obtained in the evaporation process. It is transparent and contributes to the flavor of fruit. Essence Oil � The oily phase obtained in the evaporation process. It has a yellowish color and is the source of certain flavor notes. Essential oils � A general term to describe the volatile oils extracted from plants, fruits and flowers, with characteristic odors. Evaporation � The process of removing water from the juice using a heat source. Extraction � The process of extracting the juice from the orange, either from whole or halved fruits, by means of mechanical pressure. F FCOJ � Acronym for Frozen Concentrate Orange Juice. It is the most common product sold and shipped. Commercially, it is produced in order to obtain 66 degrees Brix. Finisher � Equipment used to separate the pulp from the juice. Pulp wash � Juice obtained through a process whereby solids are recovered from the pulp through washing. P Pectin � A type of polysaccharide found mainly in the albedo, but also in other parts of the fruit. It gives the juice viscosity and texture. Pulp � Solid particles in orange juice. Also the commercial name of the product that consists of chunks of bagasse and sacs containing orange juice, re-added to the final juice. Organoleptic - Relating to the properties of fruits or juices that can be perceived through the five senses. Flavedo � The colored and outermost part of the orange peel. The characteristic color is due to the presence of carotenes. Flavedo also has vesicles containing orange peel oil. J Juice sacs � Another name for the "buds" that contain the orange juice. N NFC � Acronym for not-fromconcentrate, i.e., juice that has not undergone the process of concentration or dilution after being extracted from the orange. O CREDITS book RefeRences The Orange Book T etra Pak, 2004 Caminhos para Citricultura Markestrat ( coord.), 2007 O retrato da citricultura brasileira Fava Neves, Marcos (coord.), 2010 P+L C�tricos Series Cetesb, 2005 Websites accessed in November, 2010: FDOC � Florida Department of Citrus (EUA) For growers and processors www.fdocgrower.com Florida Citrus (EUA) Website elaborated by FDOC to consumers www.floridajuice.com Ultimate Citrus (USA) www.ultimatecitrus.com JPA - Juice Products Association (USA) www.juiceproducts.org IFU � The International Federation of Fruit Juice Producers www.ifu-fruitjuice.com AIJN � European Fruit Juice Association www.aijn.org SGF International www.sgf.org Fruit Juice Facts www.fruitjuicefacts.org InstItucIonal PublIcatIon CitrusBR � Brazilian Association of Citrus Exporters Executive President Christian Lohbauer General Coordination Larissa Popp Abrah�o Marta Martins DeVito Editorial Coordination Ibiapaba Netto Translation BTS Research and Support Larissa Popp Abrah�o Let�cia de Sena Carit� Debora Garcia Dezan Planning and Design Marta Martins DeVito Art Edition TypoDesign Photography Lau Polin�sio Bob Toledo Douglas Aptekmann Dreamstime Istock Photo Infographic Duo Din�mico Printing Pancrom Print run 3.000 copies 69 SUPPORT: Ifeelora nge.com Orange. The world�s favourite juice with an attitude. In an innovative action, the Brazilian orange juice producers and exporters, represented by CitrusBR, launched in 2011 the I feel orange project. The project, developed in partnership with the Brazilian Trade and Investment Promotion Agency (Apex-Brasil) will promote the world�s favourite juice and constantly research the global community connected through the social networks, which already totals more than 700 million people. Based on this research, the I feel orange project will offer customized information about the orange juice and content about the "orange attitude", an inspiring and vibrant trend discovered on the web. Want to know more? Visit us at ifeelorange.com I feel healthy. I feel positive. I feel connected. I feel inspired.