Supply chain mess cost California farms $2.1 billion in stalled exports, study shows

Already staggered by the drought, California’s farmers are losing overseas sales as the COVID-19 pandemic has produced a devastating shortage in shipping containers.

A study led by UC Davis agricultural economist Colin Carter said California’s farm belt lost $2.1 billion in exports during a five-month stretch this year because of what he called “containergeddon.”

In a study released Wednesday by UC’s Giannini Foundation of Agricultural Economics, Carter and two researchers from the University of Connecticut said the supply-chain mess snarling world commerce cost the state’s growers 17% of their export sales from May to September.

They said California nut-tree farmers lost the most business, about $520 million, followed by the wine industry at $250 million and rice growers at $120 million.

Carter said in an interview that the export sales are gone, not merely delayed. “The tree nut market — that’s very seasonal,” he said. “There’s a big demand at Christmastime, and we’ve lost that.”

He said the losses exceed the financial harm done to the farm economy during the 2018 U.S.-China trade war.

Exports matter a lot to California farmers. Of the $49 billion they were paid for their crops in 2019, nearly $22 billion came from exports, according to the Department of Food & Agriculture.

The lost exports come as farmers struggle through a drought that has choked off water supplies to many growers. The California Rice Commission estimated that rice farmers fallowed about 20% of their fields this year — leaving thousands of acres idle across the Sacramento Valley.

“I know they’re having trouble exporting,” said Fritz Durst, a Yolo County rice farmer who idled half of his land this year.

Much of the Valley’s rice crop is normally shipped to Japan.

Durst said one saving grace has been a sharp increase in the price paid for rice. “Somebody’s willing to pay for it,” he said.

Much of the rice crop is exported through the Port of West Sacramento, although that port doesn’t handle containerized cargo and hasn’t been affected by the container shortage, said port general manager Rick Toft. Instead, the rice going through West Sacramento is shipped in one-ton sacks.

However, a good deal of the rice is shipped through the Port of Oakland, where the container bottleneck is considerable. The number of agricultural containers leaving Oakland fell 34% from May to September, the UC study said.

The pandemic has sparked a surge in U.S. imports from Asia. That’s put a strain on the availability of container ships. In many cases, demand for Asian goods is so high that containers sitting at U.S. ports are shipped back empty to Asia, so they can be quickly refilled with goods bound for the U.S., according to Carter.

This story was originally published December 22, 2021 at 2:57 PM with the headline "Supply chain mess cost California farms $2.1 billion in stalled exports, study shows."