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Tax squabbles, lawsuits, trade fights put citrus in a squeeze
ORLANDO, Fla. -- Pity the poor orange.
The juicy sphere and its citrus relatives are the subject of squabbles over taxes, lawsuits and international trade that could have long-term consequences for Florida's $9 billion citrus industry.
For starters, a tax revolt against the Florida Department of Citrus is brewing among some Florida growers. Meanwhile, a state judge ruled Florida can't impose a tax on juice from Brazil without also imposing the tax on juice from California and other states. And another judge threw out a law meant to protect Florida's groves against citrus canker.
The orange's political problems don't stop at the U.S. border. The European Union is threatening trade sanctions against Florida citrus and other U.S. products in retaliation for the Bush administration raising steel tariffs.
And the U.S. Department of Agriculture is considering lifting a ban on Spanish clementines which were banned from the United States last year after Medfly larvae were found in ones in Maryland and North Carolina. Florida growers fear their groves will become infested.
Florida is the United States' largest citrus producer and No. 2 in the world behind Brazil.
"The complexity, intensity and number of issues that the industry is facing has never been greater than it is today," said Ron Hamel, general manager of Gulf Citrus Growers, a growers group.
The tax revolt among some growers centers on a tax-per-box that the Department of Citrus imposes on growers to pay for generic advertising. Some critics say the ads, which promote fruit for the entire state, are ineffective and too costly for growers who aren't making money.
Growers have threatened to file a lawsuit challenging the tax, and the Florida Citrus Commission is so concerned about the discontent that chairman Dan Richey appointed a committee to study the ads' effectiveness.
Some growers said advertising should be left up to individual companies and brands, such as Tropicana or Minute Maid.
"A lot of these programs that have been developed over the years have been total flops," said Bill Mixon, a Bradenton grower and shipper. "Look at Coke and Pepsi. How many ads do you have for just generic soft drinks?"
Citrus is facing trouble in the courts too.
In March, Polk County Circuit Judge Dennis Maloney ruled the Department of Citrus can't tax juice imports from Brazil and other countries unless it also taxes juice from California and other states.
Hoping to appease California growers and processors whose products might now be taxed in Florida, department executive director Bob Crawford is proposing to run generic advertisements in Western states that could benefit California growers.
A court decision with even more far-ranging consequences gutted a law that allowed agriculture officials to destroy trees found within 1,900 feet of a tree infected with citrus canker. The state Department of Agriculture plans to appeal the decision; it was supported by South Florida homeowners who opposed trees being cut in their yards.
Canker is a bacteria that doesn't harm humans but causes unsightly blemishes on fruit and can cause it to drop prematurely from trees.
"It's like we were watching a forest fire burn and we were fighting it with a little hose and now we have the hose taken away," said Richey, the citrus commission chairman.
Meanwhile, the European Union is expected to impose new tariffs on Florida juice in retaliation for steel tariffs the United States has implemented. The United States is urging a delay until there can be a hearing before the World Trade Organization.
Selling to Europe
About $300 million worth of Florida citrus is sold in Europe, Florida's largest international market, and the tariffs would give Brazil a competitive advantage in that market, Crawford said.
And then there are concerns about Medflies. Spain, which ships about 6 percent of its clementines to the United States, wants the U.S. market opened to the country's fruit by October. The U.S. Department of Agriculture is studying how to proceed.
Florida, Medfly-free since 1998, and is concerned the Spanish fruit will be infested. The Mediterrean fruit fly is considered one of the most destructive pests in the world, laying eggs that grow into maggots in a wide variety of produce.
"Spain is putting on the pressure," said Connie Riherd, assistant director of the Florida Division of Plant Industry. "I think certainly, Spanish exporters have been clamoring to get the market open again and I'm sure they're availing themselves of everything to get it open again."
Meanwhile, growers are waiting for all the issues to be resolved -- and sound beleaguered.
"It's like every day when you come into work, you wonder 'Where is the next floodgate going to open?"' Hamel said.