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Gulf Qtrus Growers Association 



Presently, over 50% of plantings in the Gulf Citrus region is immature and 

 non-bearing. Therefore, much of Gulf Citrus growers' significant upfront investment 

 will not begin generating income for 5 to 7 years; indeed, this investment represents 

 negative cash flow until that time. Furthermore, growers are unable to modify land 

 use once the grove is planted without losing the value of the investment. Gulf 

 Citrus' growers estimate that 14 to 21 years is currently required to recoup overall 

 initial investment and realize a modest return. 



With a tariff in place, a grove planted without financing in southwest Florida 

 would require 14 to 15 years to recover investment. If a grower borrowed to finance 

 planting, which is typically the case, another 2 to 3 years would be required to 

 recover initial investment. If a 10% return on investment is to be realized, 3 to 4 

 additional years is required. The outer range of these estimates is more likely since 

 this model does not include the potential cost of freeze, hurricane, disease or other 

 pest damage, or factor in the cost of such past disasters. 



The 15 year tariff elimination contained in NAFTA does not provide adequate 

 opportunity for the southwest Florida grower to effectively recoup initial investment. 

 Proposed tariff elimination, and the accompanying depressed effect on prices, will 

 effectively eliminate the margin of difference our growers need to recover costs, make 

 a profit and continue generating economic activity. 



The negative effect of the agreement's provisions will be felt immediately 

 because NAFTA will increase Mexico's ability to export. The Florida Department of 

 Citrus estimates that NAFTA's reduced import tariff on orange juice products could 

 result in perhaps as much as a doubling of Mexican orange juice exports to the U.S. 



Mexico, like Florida, has a significant amount of non-bearing trees. Much of 

 this production is becoming available, which will make NAFTA's negative impact felt 

 upon implementation. Any benefit U.S. negotiators thought might be obtained by 

 staging tariff reduction over 15 years is eliminated by permitting immediate access of 

 40 million gallons (SSE) of frozen concentrate orange juice at 50% of the MFN rate. 

 This represents an approximate $7 million available now to Mexican citrus producers 

 to plow back into grove expansion and improvements, greatly enhancing Mexico's 

 ability to take advantage of the tariff reductions over the 15 year transition period. 



Mexico is already a major citrus producer of citrus juice products. In 1991, the 

 value of Mexico's citrus product exports to the U.S. totaled $71.6 million, increasing 

 fourfold since 1978 WITH A TARIFF IN PLACE. Mexico's ability to export citrus 

 products is growing in the absence of tariff reductions. Growth in citrus production 

 continues to be assisted by cheap labor, subsidized inputs and less stringent (or 

 unenforced) environmental and labor regulations. In addition, given Mexico's 

 substantial commitment to liberalize its grain sector, Mexico will be seeking transition 

 to more profitable export production, particularly citrus. Mexico already exports over 

 80% of its expanding juice production to the U.S. Also, Mexico's recent historic land 

 tenure and agricultural investment reform and substantial efforts to strengthen 



