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July 2007

For its latest project, Rio-Oranges has chosen land in Saquarema in the scenic Lake District, 100 km north of Rio de Janeiro

This is an ideal location for orange plantations. The total area of around 500,000 sq mt has been zoned into several orchards. Adjacent areas of land of several hundred acres have been earmarked and reserved for further expansion.

The first orchards have been planted with 4000 orange trees each. Prospective investors in the cooperative can thus view for themselves what their orchard will look like and can follow the development of the project. New plantings of 4000 trees will be undertaken shortly.

December 2007

The world's second-largest oil and gas discovery of the past 20 years has recently been confirmed off the coast of south-east Brazil near South America's biggest port, Santos. This is deep-sea oil and Brazil is one of the few countries that have the technology to get at the oil cost-effectively. The Tupi oilfield will increase Brazil's present oil and gas capacity by 50 %. In a recent interview Al Gore mentioned that 75 % of new cars sold in Brazil can run on alcohol (which in Brazil at present sells at half the price of petrol) which is far more evironmentally friendly than gasoline.

Unemployment in Brazil is currently running at its lowest level for 20 years and new job creation is at its highest level ever.

The Brazilian Real has appreciated 18 % against the US$ over the past 18 months but it has also appreciated 10 % against the Euro and the £ Sterling during the same period.

Brazil is a "third world" country ...

At Rio-Oranges the news is also promising .... The "Ponderosa" plantation is now almost fully planted and many thousands of flourishing orange trees are taking advantage of the recent favourable weather which has oscillated between sunshine and rain over the past two months, ideal conditions for the growth of young trees. We now have investors from Belgium, England, Italy and Norway and positive enquiries from other countries. Rio-Oranges has now commenced work on a new phase adjacent to "Ponderosa" in readiness for new plantings early next year and we look forward to updating you on our progress in the New Year.

March 2009

It would be dishonest to say that the Brazilian economy has not been affected in many ways by the world financial crisis.  However, Brazil has been affected in a different way from, say, the US or the UK.

Firstly, there has been no "sub-prime" crisis in Brazil.  There was no artificialproperty boom and consequently no bust to follow.
Secondly, Brazil is almost a Continent in size with a land-area similar to the US and with a population of 180M.  The country is not exposed to world trade in the same way as European countries are.  Only approx. 15% - 17% of GDP is made up of exports ( for the UK, the figure is over 40%)  for example, and therefore the country is much more insulated than most from international  fluctuations in trade.
Thirdly, Brazil has vast reserves of natural resources and is self-sufficient in oil and the world leader in ethanol production.  It has a huge pool of low-cost labour and a burgeoning middle class which now embraces around 50% of the population.

What has been the effect on the general economy and the citrus market?  In industries exposed to exports there has been a reduction in activity estimated at around 5% in the past 6 months.  On the other hand, the internal market appears to be going through a mini-boom.  This was the result of a government stimulus package in December which, among other things, reduced income tax on the lowest-paid workers by 50% and with scaled reductions up to a maximum rate of 27.5% for the highest-paid workers; abolition of car-tax on vehicles up to 1000cc (and scaled reductions thereafter) and removal of stamp duties on commercial loans.  The result was a boom in demand for goods and services which is continuing unabated.
 
Brazil is the world's largest producer of Frozen Orange Juice for export.  The industry is based mainly in Sao Paulo and there has been a noticeable fall in demand as the world economic situation worsens.  Fortunately for us in Rio de Janeiro, we at Rio-Oranges are aiming at the local Rio market for fresh oranges and not the export market for frozen juice.  The Greater Rio area has a population of c.12M and there is a constant demand for oranges for juicing. (Brazilians do not eat oranges; they use them to make fresh orange juice).  In the past year the price of a box of oranges on the Rio General Fruit Market has risen to R$25  (from under R$20 a year before).  We see no falling-off in demand and are confident that this market is sound.

Real Estate:  The US/UK myth that real estate is a divine route to wealth without effort has never caught on in Brazil.  People buy houses to live in and nobody considers a house as a commodity to be traded for a quick profit.  The advantage of buying real estate in Brazil is the low cost of property.  On a like-for-like basis properties can be up to a fifth of the price of UK properties.  However, the real benefit in buying Brazilian properties now is in the exchange-rate advantage.  Because of the fall of the Brazilian Real vis-a-vis the US$ which has risen against most currencies by about 30% in the past year, a property which cost, say, R$100,000 a year ago - which was US$60,000 then - can now be purchased for US$45,000.

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