After 40 years of growing citrus in Bebedouro, a town nicknamed Brazil's orange capital, farmer Laerte de Souza Barbaro last year pulled out his 80,000 trees and replanted his entire 200 hectares with sugar cane.

Thousands of other farmers have done the same. Bogged down in debt, toiling to produce about half the world's concentrated orange juice, farmers in Brazil allege a juice industry cartel has been driving down prices and driving them out of business.

"I've left it now thank God. I should have gotten out of it a long time ago," Barbaro said. The biggest customers in Brazil's $2 billion juice industry include the Coca-Cola Co's Minute Maid brand and PepsiCo Inc's Tropicana.

Plans to merge by Citrosuco and Citrovita, two of the four remaining local juice firms, would leave 80 percent of the world's global concentrated orange juice supply in the hands of three companies. Brazil's growers fear this could squeeze them further still.

"There used to be dozens of (juice processors). The orange growers have little choice about whom they sell their produce to and that's where the problem starts," said Marcos Conforto, a lawyer representing the aggrieved growers.

Associtrus, the orange producers' representative, estimates more than 20,000 farmers have abandoned citrus due to lack of profit. The industry, which crushes the fruit and concentrates the juice, has been boosting its own production.

Four companies dominate the $2 billion industry: family-owned Cutrale, the largest; Votorantim's Citrovita, Fischer Group's Citrosuco and France's Louis Dreyfus Citrus.

Citrovita and Citrosuco announced in May they would merge, a deal that needs the approval of competition regulator Cade.

The same authority will judge a criminal investigation into alleged price-fixing through an industry cartel. The outcome could deter regulators from approving the merger if they find evidence of collusion beforehand.

The industry denies that a cartel or price fixing exist.

"We're saying there is no cartel. It's easy to go saying there is since it's a sector with just a few companies, just four," said Carlos Viacava, corporate director of Cutrale, the world's single largest orange juice producer.

He said a more varied, competitive beverage market needed more efficiency to survive, something only farmers with large plantations could achieve, and it was this streamlining that was squeezing out the small grower.

"There is fierce competition between the (four) firms," Viacava told Reuters, adding the activity was still lucrative for larger, more efficient growers.

The industry exports about 1.3 million tonnes of frozen concentrated orange juice, FCOJ, per year for a variable revenue of around $2 billion. Europe buys around 80 percent of Brazil's FCOJ exports.

The industry last month presented an elaborate study, "A Snapshot of Brazilian Citrus" produced by a group of academics from the University of Sao Paulo. The study details industry costs, export prices and prices paid at the farm gate.

It showed that farms with more than 400,000 trees now accounted for nearly 40 percent of total trees in the orange belt in 2009, versus only 16 percent in 2001. The number of producers with fewer than 50,000 trees was declining.

The efficiency drive is not making orange juice any cheaper but the industry says the shift to larger plantations has helped keep costs in check and prevented orange juice from pricing itself out of the market.

"It's a question of survival. The industry faces a big challenge making its production costs lower. It's an existential dilemma," said Christian Lohbauer, spokesman for CitrusBR, the association representing the companies.

Producers Peeled?
Growers, whose cause is led by their representative association, Associtrus, point to accounts by two former industry executives who came forward and admitted to taking part in secret meetings between companies to rig the market.

The cartel "brought about a rapid