Bebedouro, Oct. 3 - The leader of an orange growers' group warned that Brazil's anti-trust watchdog Cade should not drop a probe against juice processors in return for a payment to the government and creation of a fund for growers.
Brazilian growers believe processors have underpaid them by billions of dollars over the years. Frustrated farmers have been switching to more profitable sugar cane, a move that threatens to undermine the juice industry in Brazil, the world's biggest orange juice exporter.
Associtrus President Flavio Viegas complained in an interview about a proposed deal under which Cade would drop its probe in exchange for payment of 100 million reais ($46 million) from Brazil's top orange juice processors.
"It's completely inadequate," Viegas told Reuters in an interview in Bebedouro, Sao Paulo state which accounts for 70 percent of Brazil's orange output and virtually all its juice exports.
Viegas, who represents militant orange growers, estimated that farmers suffered losses of nearly $3 billion over the past 15 years due to artificially low prices.
Following complaints by growers, government anti-trust officials launched an investigation in 1999.
Last January, federal police carried out "Operation Fanta," seizing computers and documents from the offices of juice processors Cutrale, Citrosuco, Citrovita, Coinbra and Montecitrus.
Viegas complained that since then, the computers had remained sealed and the documents unread.
A Cade spokeswoman said on Tuesday that no agreement had been signed with the juice industry and that the case was being analyzed.
The Sao Paulo Agriculture Federation (Faesp), which represents a majority of orange growers, has already accepted the proposed agreement as well as a price increase to up to $4.50 per 40.8 kg box this year, from $3.50.
PROFIT SHARING
But Associtrus' Viegas said he would not sign any agreement with the juice industry until it accepted fairer pricing and a new framework contract.
"We want an immediate increase to 15 reais ($7) per (40.8 kg) box of oranges and a new contract modeled on that used by the cane industry," Viegas said.
He said prices paid by processors did not cover costs, and added that growers wanted to share revenues after juice prices hit a 15-year high after hurricanes wrecked Florida's orange groves last year.
Viegas said the orange juice processors had used the profits to plant their own orange groves.
"There's a growing trend toward vertical integration," he said, estimating that the industry now owned 30 percent of Brazil's orange groves.
Viegas estimated that processors invested $2.7 billion in Brazil between 1990 and 2005, including $1.1 billion in purchase of land, planting and renovating orange groves. In addition, Cutrale and Citrosuco had bought juice plants in Florida from Coca-Cola Co. and PepsiCo Inc..
He said production costs have escalated due to the spread of orange diseases, and added that drought had become an increasing risk in the northern part of the state.
Viegas said the juice industry should accept a new framework accord linking prices paid to farmers to final prices and that they should pay harvesting and freight costs.