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CapitalPress.com
July 13, 2018
Tariffs kick in, dampening agriculture outlook
By CAROL RYAN DUMAS
Learn more
Capital Press
With retaliatory tariffs on U.S.
agricultural exports by China and
Mexico now in effect, the shift from
trade war rhetoric to reality is tem-
pering optimism in farm country.
The U.S. imposition of tariffs on
steel and aluminum imports has elic-
ited responses from other countries
and is impacting negotiations in the
North American Free Trade Agree-
ment, analysts with CoBank said in
their latest quarterly economic out-
look report.
Trade concerns are high for U.S.
agriculture, which is increasingly de-
pendent on exports. Nearly 70 per-
The report is available at
www.cobank.com
cent of those exports are destined for
China, Mexico, Europe, Japan and
South Korea, and trade negotiations
or trade disputes are underway with
virtually all of those customers, the
analysts said.
“Equally important, our competi-
tors for these markets are aggressive-
ly seeking new trade relationships
that may challenge our historical sup-
ply-chain commitments,” they said.
Uncertainty around trade presents
an escalating concern to U.S. agri-
culture, they said.
“With large global supplies in
most crops, animal protein and dairy
sectors, competition for market share
is significant and will impact the en-
tire food, fiber and agriculture sup-
ply chain including prices received
by U.S. producers,” they said.
The strong world economy is
boosting export markets, but compe-
tition for market share is significant
and trade negotiations will have an
influence on price direction, they
said.
The analysts offered the follow-
ing key findings for U.S. agricultural
markets in their 21-page report.
U.S. corn and soybean crops are
in great condition, but prices are
under pressure from both favorable
growing conditions and impending
Chinese tariffs.
U.S. red meat production is ex-
pected to rise 3 to 4 percent this year
and poultry production is expected to
increase 1 percent. The pork sector
is at greatest risk of trade impacts as
the industry expands and tariffs are
set to increase in Mexico and China.
The dairy industry has stabilized
and shown some recent strength,
with production gains slowing and
exports rising. The EU, howev-
er, has signed free-trade deals that
could limit U.S. export growth. The
EU-Mexico deal and Mexico’s im-
pending tariff increase on U.S. dairy
products both pose considerable risk.
Drought conditions have ex-
panded across the Southwest, with
more than half of California now in
moderate to severe drought. Most
specialty crops also face rising trade
barriers in China and Mexico, which
threaten future sales growth.
Net cash income in agriculture
has declined over the past few years,
and the erosion in working capital
has increased the need for debt in an
environment of rising interest rates.
Current market conditions would
indicate very little improvement
in net farm income in 2018. Rising
interest rates, higher fuel costs, rela-
tively high land rental rates and little
price relief from other inputs will
continue to put downward pressure
on profit margins.
USDA files administrative complaint
against former Boise produce business
By BRAD CARLSON
Capital Press
The USDA has filed an
administrative
complaint
under the Perishable Agri-
cultural Commodities Act
against Northwest Produce
LLC claiming the defunct
company owes farmers tens
of thousands of dollars.
The Idaho company al-
legedly failed to pay 11
produce growers a com-
bined $85,054 from July
2015 through June 2017, the
USDA Agricultural Market-
ing Service said in a July 3
news release.
Henry Michael Grasmick
owned the former Northwest
Produce LLC, which he said
went out of business in Sep-
tember 2017.
A filing with the Ida-
ho Secretary of State said
Grasmick was the regis-
tered agent for Boise-based
Northwest, which originated
in November 2014 and for-
mally dissolved on Jan. 2,
2018.
“We just got the complaint
last week and are discussing
it,” Grasmick said July 3.
“There’s nothing I can say or
comment about it. We don’t
know where they are at. We
are going to try to get to the
bottom of it, and we will
see where it goes from
there.”
He would not comment
further.
USDA said Northwest
will have an opportunity to
request a hearing. If USDA
finds the company commit-
ted repeated and flagrant vi-
olations, it would be banned
from the produce industry
for two years.
USDA said that in the
past three years it resolved
about 3,400 PACA claims in-
volving more than $58 mil-
lion and had PACA staff as-
sist more than 8,500 callers
with issues valued at about
$151 million combined.
Dan Wheat/Capital Press
Angel Manuel Reyes, an H-2A-visa guestworker from Mexico, picks Orondo Ruby cherries in Griggs
Orchard near Orondo, Wash., on June 19. It’s a limited-volume, proprietary sweet-tart cherry.
Northwest cherry shipments
set daily record on June 25
By DAN WHEAT
Capital Press
YAKIMA, Wash. —
Northwest cherry growers
surpassed 700,000 boxes
shipped in one day for the first
time and have enjoyed an ex-
cellent first half of the season.
A daily shipment peak of
712,486, 20-pound boxes was
reached on June 25, and the
week averaged 604,000 boxes
per day before accelerating to
708,000 boxes June 29, said
B.J. Thurlby, president of
Northwest Cherry Growers in
Yakima, the industry promo-
tional organization.
It was a strong week need-
ed for heavy Fourth of July
holiday sales.
“To everyone’s benefit, the
relatively stable weather has
kept our cherries in the sweet
zone. The dessert quality of a
bag of Northwest cherries is
unparalleled right now,” he
said.
“There’s great fruit size.
Bings are eating well. We may
have a 90-day harvest spread,
which allows controlled sales.
The front third to half of this
crop will do really well,” said
Bruce Grim, manager of the
Northwest Cherry Marketing
Association in Wenatchee.
The preliminary June total
is 11.3 million boxes, making
it the third-highest behind the
record 12.3 million in June of
2016, Thurlby said.
The industry has crossed
600,000 boxes a day several
times per year in the last sev-
eral years and set a record 36
days of shipping over 500,000
boxes per day last season.
So far this year, daily ship-
ments have exceeded 500,000
boxes for 17 days but that
likely is ending now with a
lull between the front and
back half of the crop, Thurlby
said.
A second peak of more
than 600,000 boxes is ex-
pected about July 15, he said.
The front end of the crop was
slightly early and the back
half is slightly late, he said.
Of the 11.3 million box-
es shipped so far, 1.5 million
are Rainier. Thurlby expects
Rainier to finish at 2 million.
Rainier is delicate and has had
some wind damage, he said.
Skeena was picking in
Mattawa on July 3 and Bing
in Naches Heights, upriver
from Yakima, and Malaga
south of Wenatchee.
“Sales managers are say-
ing no orders are being reject-
ed to speak of and retailers
are saying cherries are selling
well with repeat sales, which
is everything,” Thurlby said.
Warmer weather in the
Midwest and on the East
Coast are helping sales be-
cause it leads to more picnics
and barbecues for which peo-
ple tend to buy cherries, he
said.
“Overall prices have been
strong,” he said. “I like the
feel of it, looking into the
back half and I didn’t say that
at this time last year.”
A July glut sank prices
a year ago. It was a record
26.4-million-box crop. This
year’s crop is expected to fin-
ish at 23 million boxes.
The industry had sold
341,499 boxes to China as
of June 26 compared with
249,432 at the same point a
year ago, Thurlby said.
That is expected to slow
because of China’s retaliatory
tariffs against the U.S. that as
of July 6 brings the total Chi-
na tariff and entry tax on U.S.
cherries, apples and pears to
50 percent.
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