WASHINGTON, D.C. - Fears that the U.S. might ban imports of orange juice from Brazil drove orange juice futures to an all-time high on Tuesday as health regulators began testing all incoming shipments for traces of an illegal fungicide called carbendazim.

 

According to the Food and Drug Administration, a U.S. juice producer had detected low levels of carbendazim in orange juice concentrate imported from Brazil, the top grower accounting for more than 10 percent of the U.S. supply.

 

The pesticide is banned in U.S. citrus but it is used on orange trees in Brazil to fight mold. The FDA said low levels of carbendazim were not dangerous and the agency had no plans for a recall, but it would stop any shipments of orange juice at the border that tested positive for the fungicide.

 

Orange juice futures jumped almost 11 percent to an all-time high on the news, which was announced by the FDA in a letter to the Juice Products Association on Monday.

 

The orange juice market is particularly prone to volatility because of its tiny size compared to oil and other major commodities.

 

It was not immediately clear whether there would be a related increase in orange juice prices for consumers, as that would depend on how long futures stay high and whether this results in a shortage of orange juice shipments into the United States.

 

Brands such as Tropicana, from PepsiCo Inc., and Minute Maid, from Coca-Cola Co, may use a mix of juices sourced from Brazil and the United States.

 

"Obviously food safety issues are probably going to play a bigger and bigger role in driving food or commodity prices in the future," said Ray Royce, executive director of the Highlands County Citrus Growers Association in central Florida.

 

He said the spike in orange juice futures was a double-edged sword for Florida growers, even as higher prices generally translate into richer profits for them.

 

"There might be concerns in some consumers' minds about there being chemicals within the juice. I think that could almost counter-balance the increase in futures prices and subsequent returns to Florida growers," said Royce.

 

Legal in Brazil

Carbendazim is legal in Brazil, where it has been used for more than two decades to fight blossom blight and black spot, a type of mold that grows on orange trees.

 

Christian Lohbauer, spokesman for CitrusBR, the association that represents Brazil's four main orange juice producers, said Brazilian orange juice is routinely tested for this fungicide, but has never been stopped by U.S. customs over this issue.

 

"Any shipment (of orange juice) will test positive," he said. "I don't know what is the level that they will decide is the maximum level. Our interest now is that juice keeps entering the United States."

 

The FDA could not immediately comment on what level of carbendazim would be acceptable, but said any levels below 10 parts per billion were not detectable and thus would be allowed. The agency is testing orange juice shipments from all countries, not just Brazil.

 

The Environmental Protection Agency, which regulates fungicides in the United States, conducted an initial risk assessment for the chemical and found it does not raise safety concerns.

 

"EPA's scientific analysis concludes that no adverse health effects will occur at the reported levels in orange juice, which are thousands of times below levels where adverse health effects may occur," an EPA spokesman said in an email.

 

The EPA considers 80 parts per billion to be a health risk. The levels of the fungicide reported two weeks ago by a juice company were below that level, the FDA said. It declined to identify the company.

 

The FDA said in an email to Reuters that much of the orange juice tested by the company did not have detectable levels of carbendazim. For those that did, the levels were between 10 and 35 parts per billion.

 

The U.S. allows trace amounts of the fungicide in 31 food types, including grains, nuts and some non-citrus fruits. Carbendazim was approved for citrus in Florida from 2002 to 2008, but other alternatives became available after that time.

 

Regulators in the dark?

Total frozen and fresh orange juice imports in 2010 came to nearly 1 billion liters, according to U.S. International Trade Commission data. Of that almost half, about 460 million liters, came from Brazil, with Mexico supplying about a third.

 

In the last year or two, when orange juice costs have gone up, major producers have passed the costs on to retailers and consumers, said John Sicher, editor and publisher of Beverage Digest. But he said it was not yet clear what impact higher futures prices will have on orange juice producers' costs.

 

Coca-Cola spokesman Dan Schafer referred queries to the Juice Products Association, which said it was cooperating with the FDA "to assure the continued safety and quality of juice products."

 

PepsiCo had no comment. Kroger Co, the biggest U.S. supermarket chain, said it was not removing orange juice from shelves, and added that it does not have any Brazilian juice under its brand.

 

Patty Lovera, assistant director of consumer group Food and Water Watch, said the FDA does not have a good system for tracking chemical residues in food, as it often focuses testing on common food-borne pathogens such as salmonella and E. coli.

 

Last year, the FDA investigated arsenic in apple juice after reports from other consumer groups, but said it found only low levels of the substance.

 

While fruit and vegetable imports into the United States have grown to almost half of the U.S. food supply, FDA has said.

But, Lovera and other consumer groups claim that FDA's staff of inspectors has shrunk, meaning the agency often only has enough time to test about 2 percent of products.

 

"We don't have a comprehensive system when it comes to imports. It's often reactive, it's not proactive," Lovera said. "We're kind of in the dark about what's happening."

 

Carbendazim is currently only approved in the United States as a fungicide to treat non-food items such as paints, textiles and ornamental trees. But another legal fungicide, thiophanate-methyl, can break down into carbendazim after it is applied.

 

Kathryn Gilje, co-director of the Pesticide Action Network, said the fungicide is a possible carcinogen and can disrupt human hormone systems even at low levels of exposure.

 

Michael Hansen, chief scientist at Consumers Union, said carbendazim was also an aneugen, meaning it interferes with cell division and can cause mutations. Australia banned the substance for most uses in 2010. The World Health Organization has said risks are high only if large doses are ingested.

 

(Reporting by Anna Yukhananov in Washington and Lisa Baertlein in Los Angeles; Additional reporting by Peter Murphy in Brasilia and Thomas Brown in Miami; Editing by Tim Dobbyn, Tiffany Wu; and Bob Burgdorfer)

 

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