10 CapitalPress.com
September 21, 2018
Tariffs could cost the U.S. potato industry more than $70 million
TRADE from Page 1
Cherries
On July 6, midway through
Washington’s cherry season,
China slapped a 40 percent re-
taliatory tariff on top of the 10
percent tariff already in effect
and a 10 to 15 percent val-
ue-added tax for a total bite of
60 to 65 percent on U.S. ap-
ples, pears and cherries.
As tariffs drove the price
of fruit in China out of reach
for many consumers, Auvil
Fruit ended up diverting its
cherries to Taiwan and selling
more in the U.S. at lower pric-
es, Norwood said.
“China is a premium cher-
ry market. They pay more for
larger-sized fruit and quality
than other countries or U.S.
consumers are willing to pay,”
said Mark Powers, president
of the Northwest Horticultural
Council in Yakima. The coun-
cil represents the industry on
national and international is-
sues.
“So when that premium
fruit has to go elsewhere, the
value disappears,” Powers
said.
Auvil’s hit would have
been worse, Norwood said,
had he not begun pivoting
away from China after seeing
earlier California cherries ex-
periencing unusual inspection
delays.
The Northwest sold 1.7
million, 20-pound boxes of
cherries to China this season.
That’s down from 3 million
boxes a year ago, said B.J.
Thurlby, president of North-
west Cherry Growers in Yaki-
ma. The total crop this season
was about 25 million boxes,
so 3 million would have easily
gone to China had it not been
for the tariffs, he said.
Based on industry num-
bers, lost sales and lower re-
turns to growers due to the
tariffs amounted to $86 mil-
lion, Powers said.
In addition, reduced sales
in China depressed prices
elsewhere, Thurlby said.
Apples, pears
The Horticultural Coun-
cil estimates the loss in ap-
ple sales from this August
through next August at $129
million due to tariff increases
in Mexico, India and China.
Mexico — Washington’s
largest apple export market —
placed a 20 percent retaliatory
tariff on apples in April.
India, the third-largest ex-
port market, put a 25 percent
retaliatory tariff on U.S. ap-
ples, effective Sept. 18, on top
of a previous 50 percent tariff,
for a total of 75 percent.
China, the sixth-largest
market, has a total apple tariff
of 60 to 65 percent.
They are the only three na-
tions with retaliatory tariffs on
U.S. tree fruit, Powers said.
The impact on pears will
be relatively minor in China,
but its loss will be $1.5 mil-
lion annually, he said.
“We think the China mar-
ket for pears will essentially
be closed,” Powers said.
In apples, companies
California Almond Board
The California almond industry is anticipating up to $1.6 billion in losses due to retaliatory tariffs in China. But since California produces 80
percent of the world’s supply, competitors don’t have the volume to take too much advantage.
heavy in Red Delicious and
Gala will be hardest-hit since
those are the main varieties
exported to Mexico, India and
China, Powers said.
Growers of Honeycrisp
and newer proprietary variet-
ies will be more insulated, he
said, adding that export losses
will also depress the domestic
market.
Auvil Fruit Co. sells more
than 2 million boxes of apples
annually, exporting about 30
percent of them, which is the
industry average. That’s small
compared to larger companies
that sell five to 10 times as
many apples.
Nonetheless, Norwood is
concerned.
“You see a lot of talk in the
news, but nothing changes,”
he said. “So we expect slower
movement and lower prices.
China still wants our apples
but their movement will slow
down.”
Tree nuts
China is an important mar-
ket for U.S. hazelnuts, walnuts,
almonds and pistachios, all of
which face steep new tariffs.
Sales of last year’s crop were
mostly completed for the sea-
son when tariffs were imposed
in April, but this fall’s harvest
will be vulnerable during the
busy shipping season leading
up to the Chinese New Year on
Feb. 5. About 60 percent of Or-
egon hazelnuts are exported.
The Chinese tariffs are 65
percent for in-shell hazelnuts
and 50 percent for shelled nuts,
plus a 10 percent value-added
tax.
The University of Cali-
fornia-Davis estimates $315
million in losses for the U.S.
walnut industry from Chinese
tariffs of 65 percent for in-shell
nuts and 60 percent for shelled
nuts.
The Chinese pistachio mar-
ket is stronger because produc-
tion in Iran, the chief compet-
itor of U.S. growers, is down
two-thirds due to a crop freeze,
said Richard Mataoian, execu-
tive director of American Pista-
chio Growers in Fresno, Calif.
China’s tariffs for pistachios
have increased from 5 percent
to 45 percent and are expected
to cost $384 million in losses,
according to UC-Davis.
China increased its tariffs on
almonds from 10 to 50 percent,
and UC-Davis estimates nearly
$1.6 billion in losses.
The industry is helped by
the fact that California pro-
duces about 80 percent of
Impact of tariffs on select U.S.
ag exports (Estimated losses, millions of dollars)
Apples *
129
Alfalfa †
Wheat **
380
409
Dairy ††
Pork #
Almonds †
530
Tariffs imposed by China,
Mexico and India could have a major
financial impact on U.S. farmers in 2019.
*Aug. 2018 through Aug. 2019, Northwest Horticultural
Council. † Estimated annual loss, UC-Davis Cooperative
Extension. ** March-Aug. 2018, U.S. Wheat Associates.
†† July 2018 through all of 2019, U.S. Dairy Export Council.
# July 2018 through all of 2019, U.S. Meat Export Federation.
1,260
$1,600
Capital Press graphic
the world supply.
Competing countries, such
as Australia, “don’t have the
volume to supplant California
exports,” said Richard Way-
cott, president and CEO of the
Almond Board of California.
Almonds from the U.S. can
be diverted to other markets,
though reduced demand from
China is expected to hurt pric-
es, Waycott said.
Dairy
Tariffs will have any espe-
cially big impact on the dairy
sector since China and Mexico
account for 35 percent of an-
nual U.S. dairy exports, worth
$1.9 billion.
Mexico’s new tariffs range
from 20 to 25 percent after
many years of duty-free trade
under the North American Free
Trade Agreement.
China’s additional 25 per-
cent tariff raised its total tariffs
on U.S. dairy to as much as 45
percent.
Lost exports and trade un-
certainty are already taking a
toll. A study by Informa Agri-
business Consulting, com-
missioned by the U.S. Dairy
Export Council, predicts ex-
ports will fall by $115 million
this year and $415 million in
2019.
Those losses will also lead
to excess domestic supply and
lower milk prices, reducing
dairy farmer revenue by rough-
ly $1.5 billion in 2018 and $3
billion in 2019. If the tariffs
continue, they would reduce
farm-gate prices by a total of
$16.6 billion through 2023.
“The damage is real, and
it’s being felt by dairy farm-
ers, dairy businesses and dairy
exporters,” said Tom Vilsack,
USDEC president and CEO
and a former secretary of agri-
culture under President Barack
Obama.
Pork, beef
China has increased its tariff
on U.S. pork to 62 percent and
is importing 22 percent less this
year compared to 2017, down
from 309,284 metric tons, said
Joe Schuele, vice president of
communications for the U.S.
Meat Export Federation in
Denver. Full-year losses could
reach $1.14 billion, the federa-
tion said.
Mexican tariffs on U.S. pork
went from zero to 10 percent in
June and to 20 percent in July,
forcing U.S. suppliers to reduce
prices to keep volume moving,
Schuele said.
Beef is impacted less in Chi-
na only because the U.S. had
just resumed shipments there
after a 13-year ban stemming
from the discovery of a cow in-
fected with bovine spongiform
encephalopathy.
In July, China increased its
tariff on U.S. beef from 12 to
37 percent for an expected $30
million loss for the rest of this
year.
Before the trade war, the
industry expected exports to
China to grow from $70 mil-
lion this year to $430 million
by 2020.
“You’re losing out on a very
fast-growing market, not so
much losing existing business,”
Schuele said.
Potatoes
Washington exports about
70 percent of its production,
said Chris Voigt, executive di-
rector of the Washington Potato
Commission in Moses Lake.
China plans a 10 percent
tariff on frozen potatoes and 25
percent on dehydrated potatoes,
but both are yet to be imposed,
he said.
Mexico put a 20 percent
tariff on frozen potatoes in late
June and Washington’s volume
to Mexico was down 16.5 per-
cent this July compared to July
2017, Voigt said.
Tariffs could cost the U.S.
potato industry more than $70
million in the July 2018-June
2019 marketing year, depend-
ing on how issues unfold. Idaho
and Washington produce more
than half the country’s potatoes.
Potatoes USA Chief Mar-
keting Officer John Toaspern
said the trade group expects
a 30 to 40 percent reduction
in the dollar amount of U.S.
exports of frozen potato prod-
ucts to Mexico due to that
country’s tariff. The U.S. in
the July 2017-June 2018 mar-
keting year exported $161
million in frozen potatoes to
Mexico, he said.
A 40 percent loss in vol-
ume will reduce exports by
$64 million this year.
Toaspern would not esti-
mate how much export dollar
volume the U.S. potato indus-
try could lose in China, where
U.S. exports in the most re-
cent marketing year totaled
$91 million.
However, if exports to
China drop by 10 percent, the
full-year loss to the U.S. po-
tato industry would be $9.1
million.
“That market is much too
volatile and has too many
things going on,” he said, in-
cluding demand variables and
multiple countries supplying
China.
Resolving tariffs is im-
portant, in part because inter-
national demand has grown
in the past six to seven years
and played a role in J.R. Sim-
plot Co., Lamb Weston and
McCain Foods adding plants
in the Northwest, said Bill
Brewer, president and CEO
of the Oregon Potato Com-
mission in Portland. “We are
worried those plants may not
be fully utilized if the tariffs
stay in place.”
Hay
China is the only coun-
try with retaliatory tariffs on
hay — 25 percent on top of
the 8 percent it was already
charging, said Mark Ander-
son, president of Anderson
Hay & Grain Co., Ellensburg,
Wash., one of the largest U.S.
hay exporters.
So far, there’s been no ma-
jor impact. China doesn’t buy
a lot of hay in summer be-
cause of its own production,
Anderson said. Country pric-
es for alfalfa have remained
unchanged, and any impact
will be more evident when
September-December export
numbers are compiled, he
said.
Daniel Putnam, alfalfa and
forage specialist at UC-Davis
Cooperative Extension, said
seven Western states pro-
duced an annual average of
16.9 million metric tons of
alfalfa in 2016 and 2017 with
about 7 percent going to Chi-
na each year.
“The possible impacts are
uncertain, but if China is com-
pletely shut off and no other
market can absorb this quanti-
ty, we estimate the loss to al-
falfa producers could be about
$380 million a year,” Putnam
said.
“Hay, especially alfalfa, is
the third highest crop in eco-
nomic return to farmers in the
country, behind only corn and
soybeans, worth $18 billion
to $22 billion a year over the
past five years,” Putnam said.
Wheat
China purchased no U.S.
wheat between March and
August 2018, according to
U.S. Wheat Associates. That’s
down from 41.5 million bush-
els during the same period in
2017.
“Conservatively,
that
wheat was worth $262 mil-
lion, FOB at export,” said
Steve Mercer, vice president
of communications for U.S.
Wheat Associates.
Mexico has also reduced
its purchases of U.S. wheat
for that period by 672,300
metric tons — a drop of $147
million, Mercer said.
“We are less certain that
the Mexican shortfall is di-
rectly related to the trade
dispute, but we do believe it
is correlated because of Mexi-
co’s steady imports of close to
3 million metric tons of U.S.
wheat in the years before this
one,” he said.
In addition to the lost sales,
the organization estimates the
price of wheat will be depressed.
“We’ve estimated a 75-
cent per bushel loss if you
add lost sales to China and
decreased sales to Mexico to
ending stocks,” said Ben Con-
ner, vice president of policy
for U.S. Wheat Associates.
Trade relief
While the USDA says $12
billion will be forthcoming in
relief to commodity growers
damaged by the tariffs, lead-
ers in every sector say it won’t
be enough and is not intended
to make anyone whole.
The ultimate critical reso-
lution, they say, is for tariffs
to go away through new trade
agreements.
Vilsack, the USDEC lead-
er and former secretary of ag-
riculture, said exports “hold
tremendous potential for our
industry and the struggling
rural economy, but we must
address these tariffs immedi-
ately for that potential to be
realized.”
Capital Press reporters
Mateusz Perkowski, Carol
Ryan Dumas, Brad Carlson
and Matthew Weaver contrib-
uted to this story.
Ranch may lose 70 to 80 cattle this summer to wolves
ODF battling two strains of sudden oak death
WOLVES from Page 1
FUNDING from Page 1
For now, Fish and Wild-
life’s lethal-control protocol
stands. The department’s wolf
policy coordinator, Donny
Martorello, said the depart-
ment will move ahead with
the operation. He declined to
say whether the department
would remove more than one
wolf.
Environmental groups ar-
gued that Fish and Wildlife
shouldn’t resort to killing
wolves on the same Forest
Service allotment for a third
straight year. “There is no
sign this pattern is going to
end,” Center for Biologi-
cal Diversity attorney Claire
Loebs Davis said.
Without mentioning the
Diamond M ranch by name,
Fish and Wildlife attorney
Michael Grossmann said it
wasn’t surprising the ranch
was losing cattle in an area
saturated with wolves. “He’s
the biggest producer in the
state of Washington,” Gross-
mann said.
Grossmann defended the
ranch’s refusal to apply for
compensation from the state
for losses. He asked the judge
to consider the “social ethos
Wiese, who joined ODF
in 2010, said the problem
in Curry County is getting
worse every year. They are
now battling two strains of
sudden oak death, including
the North American strain
and an even more aggressive
European strain. The top two
areas for treatment he said,
are along the Winchuck and
Pistol rivers.
“The European strain
is our focus,” Wiese said.
“If we can, we’ll do a larg-
er treatment because of the
aggressiveness and the con-
cern.”
SOD is a hazard for land-
owners because dead trees
pose an increased fire and
safety risk, Wiese said. From
an economic perspective,
the quarantine has burdened
Curry County with restric-
tions severely limiting fire-
wood sales and other forest
products.
The state quarantine
prohibits harvesting tanoak
from known infested areas,
though producers can re-
quest a “pest-free production
site” permit within the quar-
antine from ODA and ODF.
Don Jenkins/Capital Press
Center for Biological Diversity West Coast wolf advocate Amaroq
Weiss speaks at a rally Sept. 14 in Olympia to protest the Wash-
ington Department of Fish and Wildlife’s plan to shoot one or two
wolves in a pack attacking cattle. A judge that day declined to block
Fish and Wildlife from culling the pack.
in this particular area.”
“They don’t want a hand-
out from the government. To
some of us, that might seem
irrational,” Grossmann said.
According to Fish and
Wildlife, there was little
sign of wolf activity when
the ranch put cattle on the
allotment in July. The wolf-
pack moved to the allotment
after cattle started grazing
there.
The ranch has tried to
adjust to wolves, including by
adding more range riders and
delaying putting cattle on the
range until calves are larger
and less vulnerable to wolves,
according to the department.
“We have seen an increase
in the non-lethal deterrence
tools this producer has used
over the years,” Martorello
said.
Diamond M rancher Len
McIrvin told the Capital Press
this week that the ranch may
lose 70 to 80 cattle this sum-
mer to wolves.
Oregon Department of Forestry
Forestland impacted by sudden oak death in Curry County, Ore.
Curry County is the
only location of sudden oak
death in Oregon forests,
though ODA has also found
the disease in a small num-
ber of nurseries since 2003.
More than 135 plants have
been proven to be hosts,
with the five most common
including camellia, pieris,
rhododendron, viburnum
and kalmia. If SOD is
found, a nursery must fol-
low a strict USDA protocol
that includes a quarantine,
destruction of infected
plants, tracing the source of
host plants and three years
of inspection and sampling
to assure SOD is no longer
present.
For more information, or
to apply for NRCS funding
to remove trees stricken with
sudden oak death, contact
district conservationist Eric
Moeggenberg at 541-824-
8091.