Child Labor and the

Citrus Industry in Brazil

 Presentation Roadmap

• The Citrus Industry in

Brazil

• Child Labor and

Cargill’s Challenges

• Responsible Supply
Chain Management
Citrus Industry in Brazil
• Two main players in global citrus fruit
production:
– São Paulo, Brazil (#1)
– Florida, U.S.A. (#2)
• These two regions produce 85% of
world orange juice supply
• Brazil exports 99% of its production
• Harvest period is from June to
February
• Primary products:
– Fresh fruit
– Frozen concentrated orange juice
– Not-from-concentrate orange juice
 Orange Juice Supply Chain
Orange Producers
(Growers) • Processor/Packers:
• Supply of fruit to major
juice producers in Brazil:
• 80% - Long-term
contracts with medium
• Bulk Juice Processors:
and large scale farmers
• 20% - From farmland
owned by the juice
producer
• Small independent
growers sell to fruit
merchants or co-ops
Juice Processors
• Sell juice packaged under
their own brands
• Retail distribution and
consumer marketing
• Largest are in Florida
• Sell in large quantities to juice
packers
• Requires efficient logistics
infrastructure
• Distribution and marketing of
agricultural commodities
• Processors in Brazil are
primarily in this category
Transportation
• Bulk products are shipped
in tanker vessels, tanker
trucks, or individual
containers
• Efficient shipping is
essential for citrus
products
• Largest Brazilian producers
have port terminals in
Brazil, Europe, Japan, and
the USA
• Terminals are specialized
to handle frozen
concentrated juice using
tanks
 Cargill
• Privately held international producer and marketer based in the
United States
• Business Segments:
– Agriculture Services
– Food Ingredients & Applications
– Origination & Processing
– Industrial
– Risk Management & Financial
• 131,000 employees in 66 countries
• $107.9 billion revenue, $2.6 billion net earnings in FY 2010
• Parent company of Brazilian subsidiary Cargill Agrícola S.A.
 Cargill Agrícola S.A.
• Formed in Brazil in 1965
• Began operating in the citrus sector in 1976 attracted by low
costs and high profit margins
• In 1980 Cargill was the only multinational company in the citrus
sector in Brazil
• At this time orange production increased by 57%.
• In 2002 Cargill was still one of largest companies in the citrus 
industries in Brazil.
• Sold to competitors Citrosuco and Cutrale in 2004
• Cargill benefited from lower production costs due to child labor
used by its suppliers
 Cargill’s Competitors

Juice processor,
Brazilian based citrus
subsidiary of Brazilian
grower and juice
processor, privately based Fischer Group
owned

Bascitrus (Brazilian) Citropectina (Brazilian)

Dreyfuss (French) Coinbra-Frutesp (Brazilian)
 Industry Organizations
Abecitrus
• Brazilian association for citrus
exporters formed in 1988
• Goals:
– Lobby and influence legislation in Brazil
– Manage international reputation of
Brazilian products.
• Members, including Cargill &
Citrosuco, were dissatisfied with
governmental interference in the
industry
• Members signed the Pact of
Araraquara in 1996 which pledged
to eliminate child labor
• Replaced by new organization
CitrusBR in 2009
Procitrus / Fundecitrus
• Procitrus was aimed to
develop research for the
citrus sector (formed in 1992)
• Absorbed by Fundecitrus in
1995, a research-oriented
scientific institution
• Fundecitrus was one of the
first institutions to cooperate
in the eradication of child
labor in the citrus sector and
conducted research in this
area.
• Founded by Cargill, Cutrale,
and Citrosuco
Cargill’s CSR Policy
• Cargill’s current Corporate Responsibility
policy, as stated on their website:
– Work with industry, governmental, NGO, and local
community partners
– Identify and encourage adoption of responsible
and sustainable supply chain practices
– Committed to:
• Conducting business with integrity and responsibility
• Treating people with dignity and respect
• Helping to protect and conserve the environment
– Cargill is a signatory to the Brazilian National Pact
for the Eradication of Slave Labor which monitors
suppliers
– They will not do business with suppliers who
appear on the list
  Overview of Child Labor
 
• Closely related to level of education, economic development, employment and general
development of a country.
• Child labor is a concern when the work conditions harm a child's physical, mental,
educational, social, emotional and cultural development.
• Biggest dangers include working long hours under the sun or in cold weather, using
unsafe tools and machines, carrying heavy loads and even dangerous animals in the
area.
• In 2008 215 million children working illegally, 115 million under age 18 engaged in
"hazardous work.“
• The international minimum age of legal employment is 15.
• Basic factors that cause child labor
o Migration
o Imbalanced income distribution
o Insufficient education
o Population growth
o Unemployment
o Poverty
o Ineffective law enforcement
o Unpaid family labor
Child Labor Around the World
 Child Labor in Brazil Today
• Still a problem in Northeast Brazil, where child
labor is justified to survive
• Although has decreased, still 4m Brazilian
children (aged 5-17) working
• Generational cycle: Brazilians who grew up
working don’t see a problem with it
• President Lula’s Bolsa Família program provides
financial incentives to poor families
“To force a child to
work is to steal the
future of that child”
 Cargill’s Challenge with Child Labor
• Company’s priority had to shift from lowering
costs to instead, working to eliminate child labor
in their supply chain
• Pressure on keeping costs low was
concentrated on worsening labor conditions
• Reputation was damaged from involvement
with child labor in the production chain
 The Double Effect Dilemma
Positive Objectives Negative Side-Effects
and Results

No child labor at immediate end Children working on farms where citrus

of production chain fruit trees grew

Producing a good product, Most of these farmers were Cargill’s

creating jobs, and paying taxes suppliers

Supporting existing citrus fruit Cargill’s low cost of production partly

demand with profitable margins due to child labor

Legitimate and legal means: Children’s education jeopardized while

breaking no laws not in school, against Brazilian laws
Responsible Supply Chain Management

Company Objectives

Minimiz Contro Identify

Competitive
e Costs l Risks Advantages

“The company that wants to control its risks related to

corporate reputation and protect its value, begins by ensuring
an adequate management of the supply chain.”
–The Business & Its Supply Chain: A Management Alternative
Assessing Risk in Supply Chains
Management Protocol
 Recommendations
• Conduct supply chain risk assessments on
a regular basis
• Perform adequate supply chain
management based on risks
• Continue the success of Cargill’s
educational initiatives, perhaps expanding
to supplier regions
• Work with government and other
stakeholders to update laws and raise
public awareness about child labor
Thank You!

Questions?
 References
Nestle, ADM and Cargill go to court over cocoa child labour
http://www.foodnavigator.com/Financial-Industry/Nestle-ADM-and-Cargill-go-to-court-over-cocoa-child-labour

U.S. Department of Labor: Child Labor in Brazil

http://www.dol.gov/ilab/media/reports/iclp/Advancing1/html/brazil.htm

Cargill:  Responsible Supply Chains

http://www.cargill.com/corporate-responsibility/responsible-supply-chains/index.jsp

United States Department of Labor, 2008 Findings on the Worst Forms of Child Labor - Brazil, 10 September 2009.
http://www.unhcr.org/refworld/docid/4aba3eed8.html

Child Labor of the worst conditions: child laborers cotton produciton in Turkey by Bulent Gulcubuk, 2010 Academic Journals
http://www.academicjournals.org/ajar/PDF/pdf%202010/18%20Jun/Gulcubuk.pdf

Whats going on?  Child Labor in Brazil

http://www.un.org/works/goingon/labor/goingon_labor.html

Brazilian Child Labor

http://www.hamline.edu/cla/academics/global_studies/Slavery/Brazilian.htm

Child Labor Laws in Brazil by Jack Rella, December 1, 2009

http://www.ehow.com/about_5218293_child-labor-laws-brazil.html

Child Labor Went Down in Brazil, But 5 Million Underage Workers Are Still Way Too Many, Nov. 2009
http://www.brazzil.com/component/content/article/210-november-2009/10299-child-labor-went-down-in-brazil-but-5-million-underage-workers-are-still-way-too-many.html

Guide for Responsible Management of Supply Chain (UN Global Compact)

http://www.pactomundial.org/recursos/doc/Publicaciones/ASEPAM/23526_3133132009182520.pdf

International Labour Organization (ILO):  International Programme on the Elimnation of Child Labour (IPEC)
http://www.ilo.org/ipec/lang--en/index.htm

How Brazil Became the Saudi Arabia of Orange Juice, John Freivalds, Brazilmax.com, 2/6/2007.
http://www.brazilmax.com/news.cfm/tborigem/fe_business/id/7

Rat Droppings, Lawsuits Don't Faze Brazil's OJ Leader Cutrale, Michael Smith, Bloomberg, 2/27/2006.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=atNBtl.rLou0&refer=latin_america

CitrusBR (replaced Abecitrus in 2009)

http://www.citrusbr.com/en/

Brazil Expands Program to End Child Labor by Joelle Diderich, Febuary 6, 1998
http://www.pangaea.org/street_children/latin/brazilabor.htm

Child Labour Guide, November 20, 2010

http://uk.oneworld.net/guides/childlabour

Statistics on Child Labor

http://filipspagnoli.wordpress.com/stats-on-human-rights/statistics-on-labor-conditions/statistics-on-child-labor/

Child Labor in Brazil: The Government Commitment

http://www.america.gov/st/democracyhr-english/2005/May/20080818095109SrenoD0.6863672.html

Made in Brazil: Confronting Child Labor (11/16/10)

http://www.truth-out.org/made-brazil-confronting-child-labor65223