Central San Joaquin Valley farmers are hoping negotiations between the U.S. and China can head off the potential economic effects of new tariffs imposed by China on a wide range of agricultural products imported from California.
The import duties that took effect Monday are the latest salvo in an escalating trade dispute between the Trump administration and the Chinese government. China said it was responding to a U.S. increase in tariffs on steel and aluminum imports.
Some of Fresno County's biggest-value crops , including almonds, grapes, pistachios and citrus, are among the commodities targeted by China's tariffs. And while the Fresno County Agricultural Commissioner's Office says it doesn't track crop exports to specific overseas markets, Fresno County Farm Bureau President/CEO Ryan Jacobsen said there are worries among his membership.
"There's definitely concern in the industry because we're looking at our No. 2 market for exports," Jacobsen said Monday of China. "We don't want to see anything that jeopardizes our ability to send our products over there."
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"A great majority of the crops (subject to the tariffs) are central to California agriculture and Central Valley agriculture," he added. "While the impacts are still unknown, due to whether or not (Chinese) consumers will be willing to pay the additional tax on our goods, our assumption is that there will be some effect."
California exported more than $2 billion in agricultural products to China in 2016-17, according to the state Department of Food and Agriculture. Of that amount, the value of various fruit and nuts and wine exported to China in 2016-17 was about $1.6 billion. Of that, pistachios, almonds and walnuts collectively represented more than $1.1 billion. Those fruit, nut and wine exports would now be subject to the new tariff.
Wine exports from California to China were $161 million, while oranges, lemons and related citrus products accounted for $153 million. Raisins, grapes, fresh and dried plums, cherries, strawberries, blueberries and avocados rounded out exports to China from the state.
Madera almond farmer Jim Erickson, a former Madera County Farm Bureau president, said he's waiting for more information on how the tariff on nuts could affect him and other California almond growers. "At this point we won't have an answer until we read everything," he said. "But we're 80 percent of the world market for almonds, so if you want almonds, you're pretty much coming to California to get them."
Most growers have no idea where their almonds are going when they harvest their crops in the fall, Erickson said. The crop typically ships to handlers who then deal with brokers who actually make the sales. "We know the price, but not the destination," he said.
Monday's tariff increase will hit American farm states, many of which voted for President Trump in the 2016 election. American farm exports to China in 2017 totaled nearly $20 billion.
California Citrus Mutual, an Exeter-based organization that represents the state's citrus growers, denounced the Chinese tariffs in a statement issued Monday. "The decision by the Chinese government to levy exorbitant tariff increases on U.S. produce will surely have a direct impact on California citrus producers," said Joel Nelsen, the organization's president. "The retaliatory tariffs imposed by China hinders our ability to be competitive by increasing costs for Chinese consumers, an important market for California citrus."
"Family farmers in our industry will suffer from the economic fallout unless we can find alternative markets for California's navel and Valencia oranges and lemons."
Nelson is in Washington, D.C., to meet with federal trade officials on a variety of export issues, but said he expects the Chinese tariffs to dominate their discussions. The timing is critical because California citrus is already on ships bound for China and arriving on docks now. If the Chinese importers elect not to accept the crops because the tariffs reduce their profitability, exporters must scramble to find another Asian destination for the perishable products before they rot.
"We still have about 35 percent of the (orange) crop on the trees" awaiting harvest, Nelson said, and the lemon harvest will begin in the coming weeks as well, increasing growers' urgency for hopes that negotiations can reduce the potential trade barrier.
The Chinese government had indicated last week that it was considering the tariffs. In addition to a broad array of fruits and nuts and wine, the 15-percent tariffs also include steel products. Pork products will be subject to a 25 percent tariff, as will scrap aluminum. The website Quartz published the full list of 128 products covered by the tariffs.
Marcy Martin, director of trade for the California Fresh Fruit Association based in Fresno, said China is "a small market" for tree fruit shipped from the state. Most tree fruit such as peaches, nectarines, apricots have no market access in China, but Martin said about 8 percent of the plums grown in California are sold in China – between 500,000 and 600,000 boxes a year. She added that the new tariff is on top of an existing 10 percent import duty that China has in place, "so a tariff going from 10 to 25 percent will likely have an impact" on plum exports.
The farm organizations said they are not surprised that their industry is being targeted in the U.S.-China dispute.
"Something we've learned about these retaliatory tariffs is that they go in and target American agriculture because these are high-value products and they are perishable," Martin said. "Agriculture is familiar with being put in this position, and it's an unfortunate position."
Martin and Jacobsen said the industry is pinning its hopes on the Trump administration being able to negotiate to head off the increased tariffs before the harvest season gets into full swing on most crops. "Things such as cherries are just around the corner from harvest, so the ramifications of this decision are going to be seen very quickly," Jacobsen said. "We all understand and know there's going to be a lot of negotiations going on to see if these can be dropped before (harvest) happens."