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U.S. citrus industry feuds with South Korea over frozen OJ

WASHINGTON — Florida citrus growers, alarmed that South Korea is squeezing their business, are pushing U.S. officials to settle a tariff dispute that they say is costing them millions of dollars in sales.

The fight, which began last year, centers on U.S. exports of frozen orange-juice concentrate to South Korea and comes while the industry is struggling with a devastating plant disease called citrus greening.

For years, South Korea levied a 54 percent tariff on the product, making sales prohibitively expensive and keeping U.S. exports low.

But under a trade agreement that took effect two years ago, the tariff disappeared, leading to an explosion in U.S. business. Exports of frozen orange-juice concentrate to South Korea jumped from $11 million in 2011 to $30 million in 2012, according to the U.S. Department of Agriculture.

It was a promising expansion for the $9 billion Florida citrus industry, which grows the majority of oranges used in U.S. juice, including concentrate.

The good times didn't last long, however.

Last spring, about a year after the free-trade agreement took effect, customs officials in South Korea began to scrutinize the concentrate coming into the country and questioned the source of oranges in the frozen-juice mix.

Under the agreement, only concentrate made exclusively from U.S. oranges is allowed to skirt the tariff, and South Korean officials suspected that some of the oranges blended into the concentrate were from another country.

One possible reason for the concern, said industry officials, is the link between citrus companies in Brazil and Florida. At least three companies in the state are tied to Brazil, and U.S. industry officials said it's not uncommon to have juice that's a blend of oranges from different countries.

Mike Sparks, CEO of Florida Citrus Mutual, a trade group, said American citrus companies have provided proof that the concentrate going to South Korea is solely of U.S. origin, but to little avail.

What's worse, he said, is that South Korea has threatened to retroactively seek tariffs on past sales if customs officials find evidence that foreign oranges were used in the concentrate.

The tough tactics have made U.S. exporters reluctant to ship concentrate to South Korea. Overseas sales have fallen by millions of dollars since last spring, said Sparks.

The feud with South Korea comes during a tough stretch for Florida's orange industry. Production is falling because citrus greening has ravaged the state's groves. A January report from the USDA forecast that U.S. production of orange juice would fall 12 percent, to 550,000 tons, in the 2013-14 season, largely because of the disease.

An attorney for Florida Citrus Mutual said U.S. officials must help resolve the trade dispute with South Korea as quickly as possible.

"This new market is extremely important for the growers and processors of Florida," said attorney Matt McGrath. "Especially under the current circumstances."

U.S. citrus industry feuds with South Korea over frozen OJ 02/28/14 [Last modified: Friday, February 28, 2014 8:58pm]
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