Agriculture and Environment: Orange Juice

Better Management Practices: Information & Incentives to Producers

In the global market, Costa Rica is a small producer of orange juice.

The country experimented with organic orange juice, but it was not an overwhelming success.

In the past, the strategy of the main orange juice company and the farmers producing for it had been to focus on processing and marketing their product rather than to work to improve the production base - the trees.

Over time production declined, increasing numbers of trees became diseased and died, and the cost of production increased while overall production declined. Many producers were forced to abandon the businesses altogether.

Lessons from Tico Fruit
Tico Fruit, the most successful juice processor in Costa Rica, has taken a slightly different path. The lessons that can be drawn from its experiences could be significant for producers in other parts of the world. Costa Rica has 14,000 hectares of oranges planted on more than 1,000 farms.

Tico Fruit accounts for 75% of all orange juice produced in the country. While it owns only 25% of all land planted to oranges, it produces 50% of the country's juice from its own production. It buys oranges from other producers to produce an additional 25% of all production in the country.

Help suppliers, help yourself!
Tico Fruit has come to two important realisations. First, it cannot produce all the fruit that it can process. And, second, healthy trees require very few chemical inputs. As a result of these realisations, the company has begun outreach programs with the farmers that sell to it. The company knows that the best way to increase its output of juice is to help all of its suppliers increase their production of oranges as well as their net profits from orange juice production.

Technical assistance to each farmer
Toward this end, the company has its buyers provide technical assistance to each farmer in order to help them improve production. This assistance takes three forms-plantation diagnostics, recommendations of specific technical packages or plans of action to address the problems, and support during implementation. The company's assistance is undertaken on a farm-by-farm basis.

Tico Fruit buys all the materials required by all farmers in bulk and then extends them in the form of credit to local producers. In this way, the company is assured an increasing supply of fruit, and producers benefit from the lower prices that result from buying in bulk. As a result of the company's efforts, Tico Fruit producers have increased their net income of $1.01 for other producers, as shown in the table given below.


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	Tico Fruit Producers	Other Producers
Cost per tree to establish plantation	3.00	1.00
Production (boxes/tree)	4	1.3
Average weight per box (kilograms)	2.3	2
Solid weight per tree (kilograms)	9.1	2.7
Price per solid weight	.50	.50
Gross revenues per tree	10.00	3.00
Harvesting cost per tree	.70	.70
Total net income per tree	4.20	1.01

Right mix of nutrients to soil
In general terms, the health of trees is achieved by making nutrients available to them. For this reason, the company's approach is to feed and maintain the soils in such a way that the nutrients are released for the trees to use. The main inputs are lime and chicken manure. These inputs, when applied correctly, encourage soil microorganisms that are important to healthy soil and trees.

Company employees/extension workers explain to the farmers that the more synthetic fertilisers they use, the more they will have to use over time as they reduce both the nutrients created in the soil as well as their trees ability to absorb them. Use of highly concentrated, synthetic fertilisers causes imbalances in nutrients, overall nutrient availability, and microbes in the soil.

To be corrected quickly, the imbalances are treated with other fertilisers and producers lurch from one application to another. A better long-term strategy is for producers to find a better balance between tree needs and soil dynamics so that the soil and the tree can work together to meet the tree's needs.

Not converting fully to organic production yet
Tico Fruit wants the producers to supply the company with increasing amounts of fruit. For this reason the company is cautious about converting to organic production methods. Company officials are not convinced that organic production is sustainable either environmentally or financially.

A recent study supported by the FAO comparing organic and conventional orange production in Spain suggests that net returns from organic production are considerably lower for producers because many costs are higher and overall production declines over time from organic orange production systems (Igual and Izquierdo 2001).

As it is, the company claims that it has helped its suppliers reduce their overall use of agrochemicals by 75% or more, which contributes to the overall increase in their in their profits. The timely application of limited amounts of agrochemicals appears to essential to this success.

Sound partnerships, excellent results
The Tico Fruit program to reduce the use of agrochemicals and their impacts within the orange juice industry is an excellent example of how a buyer can work with its producers to improve their production practices. Such partnerships can result in reduced environmental impacts, and both producers and buyers can increase their profits. Other companies, large or small, should travel to Costa Rica to see this program and adapt the lessons learned to their own circumstances.

Such industry-to-industry exchanges are often the most effective way to explain how and why a program works as well as the financial implications.