Brazil Builds Big Citrus Industry

Source: USDA, 2000

Valor Online reports: Brazilian antitrust watchdogs are favorable to a deal that would consolidate the birthplace of samba as the home of Big Orange Juice — a topic of contention in recent trade talks with the U.S., I understand. This bit of news certainly ought to send shivers through the commodities markets.

SÃO PAULO – SEAE, the bureau of economic oversight of the Brazilian Treasury, today recommended to antitrust regulator CADE the approval, without restrictions, of the international merger between Fischer, owner of Citrosuco, and Votorantim, owner of Citrovita.

In its opinion, Seae found that the deal would not negatively impact competition in the markets for fresh juice or frozen concentrate.

The deal, announced a year ago, while result in the integration of production, storage, transport, distribution and markeitng of orange juice and derivatives of the two companies, as well as planting, cultivation and related activities.

The deal still awaits the imprimatur of the SDE, the competition watchdog of the Ministry of Justice, before Cade can consider it.

The merged Citrovita and Citrosuco will possesss some 25% of the world orange juice market. If approved, it will be the largest compan of its kind in the world, with annual gross of R$ 2 bllion.

The European Union has also been studying the deal and should produce an opinion by May. An initial investigation by the EU suggested the deal would lead to a significant overlap of the two firms’ operations in Europe. The inquiry also found that if combined, the companies would assume a dominan position in the derivatives market.