Friday, November 1, 2019
CapitalPress.com
3
NORPAC’s assets may be
split up among any new buyers
Farm entrepreneur Tiegs alleges
multiple problems at processor
By MATEUSZ PERKOWSKI
Capital Press
Dan Wheat/Capital Press File
Workers sort Red Delicious apples at McDougall & Sons Inc., in Wenatchee, Wash. Japan
will reduce its tariffs on some tree fruit but phytosanitary rules remain a concern.
Japan reduces tariffs on
apples, almonds, cherries
By DAN WHEAT
Capital Press
YAKIMA, Wash. — The
U.S.-Japan Trade Agree-
ment reduces tariffs on U.S.
apples, almonds and cherries
but does not address phy-
tosanitary restrictions.
The agreement, signed
Oct. 7, cuts a 17% tariff on
apples to 11.4% on Jan. 1
and to 10.2% on April 1. It
then drops the rate further
over the following eight
years until it expires.
“It’s a large amount so
getting rid of it is a positive
but it doesn’t mean the mar-
ket is wide open,” said Mark
Powers, president of North-
west Horticultural Council
in Yakima.
Phytosanitary
barriers
must be addressed in the
next phase to make the deal
meaningful, he said. Phy-
tosanitary barriers prohibit
U.S. pears and a 5% tariff
does not change, he said.
Stemilt Growers, in
Wenatchee, is the only com-
pany shipping small amounts
of apples to Japan. It does it
at a loss because of the cost
of phytosanitary protocols,
including cold storage and
fumigation, but is banking
on it building Japanese con-
sumer demand for Washing-
ton apples.
The agreement eliminates
a 2.4% tariff on in-shell and
kernel almonds, eliminates
a tariff on roasted almonds
and could lead to similar
help for almond meal, flour
and paste, according to Julie
Adams, vice president of the
Almond Board of California
in Modesto.
“Over the last few years,
we’ve seen an average ship-
ment growth of 5%. With
our ongoing promotional
efforts combined with tariff
reduction, we would expect
to see that or greater ship-
ment increase,” Adams said.
Japan is the fifth largest
export market for California
almonds, buying 81 million
pounds in 2018-19, up 3%
from the previous year and
valued at $255 million.
Japan’s 8.5% tariff on
cherries will be reduced to
3.4% on Jan. 1 and 2.5%
on April 1, 2020. On April
1 over the subsequent three
years it goes to 1.7%, 0.8%
and then zero.
“Any decrease in the tar-
iff is good. It minimizes
our landed cost but doesn’t
change the commercial sit-
uation significantly. Unfor-
tunately, China has been a
declining market for cher-
ries as they increase their
own production,” Powers
said.
B.J. Thurlby, president
of Northwest Cherry Grow-
ers in Yakima, has said Jap-
anese domestic production
has quadrupled over the
past decade while imports of
U.S. cherries have declined.
Northwest cherry exports
to Japan average about
180,000, 20-pound boxes
worth $7 million to $9 mil-
lion annually, he said.
That’s just 2.1% of North-
west cherry exports, far
behind exports to Canada,
China, South Korea and
Taiwan.
Washington justice paints bleak
picture of life for farmworkers
By DON JENKINS
Capital Press
OLYMPIA — A Washington Supreme
Court judge depicted farmworkers as
exploited as he challenged a lawyer Oct.
24 to justify exempting farmers from pay-
ing employees time-and-a-half for overtime
hours.
Glancing at notes, Justice Steven Gonza-
lez prefaced his question with a minute-long,
wide-ranging indictment of how farmworkers
are treated.
He said they were likely to be people of
color and unlikely to “have lobbyists” or
“make campaign contributions to elected
officials.”
“Would you still suggest it’s a coincidence
labor laws have consistently excluded them
from protections afforded other workers?”
Gonzalez asked Timothy O’Connell, attor-
ney for the Washington State Dairy Federa-
tion and Washington Farm Bureau.
O’Connell disputed the premise that farm-
workers are neglected and politically weak.
“I believe that is belied by the facts,” he
said. “There has been extensive action by
the state of Washington regulating safety,
regulating other provisions of farmworker
livelihoods.”
The exchange came during a hearing
on whether exempting agriculture from
the state’s overtime law violates the state
constitution.
The case stems from a lawsuit brought
by two former milkers at DeRuyter Broth-
ers Dairy in Yakima County. A ruling by the
Supreme Court would apply to all agriculture.
Washington lawmakers in 1959 adopted
the federal act that exempts
agriculture from paying a
premium for hours worked
beyond 40 in a week.
Farm groups argue the
exemption reflects the sea-
sonal nature of agriculture
Steven
and the fact that farmers
Gonzalez
can’t pass on higher labor
costs.
Farmworkers argue that state lawmakers
failed to follow the state constitution.
The state constitution directs legislators to
pass “necessary laws” to protect miners, fac-
tory workers and workers in other dangerous
jobs. The constitution doesn’t specify what
other jobs are dangerous, and the two sides
dispute how hazardous farm work is.
Attorneys also are arguing over whether
the state constitution’s prohibition on grant-
ing special privileges to some people but not
others applies. In this case, the privilege is
overtime pay.
Race has become part of the case. In
amicus briefs, farmworker activists argue the
decades-old exemption is rooted in discrimi-
nation — first against blacks in the South and
now against Latinos.
Washington farmers were exempted from
paying overtime when most of their workers
were white, O’Connell said.
Gonzalez said farmworkers are exposed to
toxins, vulnerable to sexual assault and finan-
cial exploitation, and expected to labor in the
“heat and cold” and in “geographic isolation.”
“They’re less likely to be voters, less likely
to speak English as a first language. Aren’t
wealthy, in fact, are among the poorest work-
ers in the nation,” he said.
An attorney for NORPAC Foods
believes the bankrupt processor’s assets
may be divided among several buyers if
farm entrepreneur Frank Tiegs refuses to
buy most of them.
Tiegs had planned to buy the farm coop-
erative’s Oregon facilities in Brooks, Salem
and Stayton, as well as its plant in Quincy,
Wash., for $155 million as part of the com-
pany’s debt restructuring in Chapter 11
bankruptcy.
However, shortly before competing bids
were due for the assets on Oct. 18, Tiegs
said he was terminating the “asset pur-
chase agreement,” citing concerns about
environmental and regulatory problems at
NORPAC.
During an Oct. 28 bankruptcy court hear-
ing in Portland, Ore., NORPAC’s attorney,
Albert Kennedy, said the company’s been
approached by other “potential purchasers”
who’d each be willing to buy a portion of
the assets that Tiegs had intended to buy.
At this point, though, NORPAC Foods
and a committee representing its creditors
don’t believe the termination of the “asset
purchase agreement” is legally effective
and want U.S. Bankruptcy Judge Peter
McKittrick to approve the sale, Kennedy
said.
If the dispute ends up in litigation, NOR-
PAC doesn’t want Tiegs to present the
defense that there was no contract, Ken-
nedy said.
The company believes the “grounds for
termination are baseless” and has told Tiegs
the “termination notice was given in bad
faith,” Kennedy said during a previous Oct.
21 court hearing.
Scott Cargill, an attorney for unsecured
creditors, echoed that sentiment, character-
izing those reasons as a “pretext” to “rene-
gotiate the acquisition in light of there
being no other bidders coming to the table.”
Tiegs told the Capital Press that NOR-
PAC had problems with soil and water
contamination while company executives
didn’t supply him with requested docu-
ments and had deleted an internal email
system.
It was a “lack of information on due dil-
igence” that prompted the deal’s termina-
tion, Tiegs said. “If you got a turd in the
skillet, you want to avoid anyone seeing it.”
An attorney for Tiegs’ Oregon Potato
Eric Mortenson/Capital Press
Frozen peas head to the bagging
machines at NORPAC Foods in Salem.
Co., Joseph VanLeuven, opposed the
approval of the asset sale, alleging that
NORPAC wanted such an order to file a
lawsuit arguing the contract was binding.
While questioning Winston Mar, NOR-
PAC’s chief restructuring officer, VanLeu-
ven said the company hadn’t developed a
federally mandated “project safety man-
agement plan” and had instead “misappro-
priated” one from National Frozen Foods,
another processor owned by Tiegs.
“They were literally verbatim copies,”
VanLeuven said of the plans, which iden-
tify ways to mitigate hazards to workers.
VanLeuven also said an environmental
review had detected arsenic contamination
of a well at the Quincy, Wash., facility and
that NORPAC had sold off corn ahead of
schedule that Tiegs had expected to buy at
a discount.
McKittrick, the judge, ultimately said
the court hearing wasn’t the appropriate
time and place to determine whether Tiegs
could validly terminate the agreement, say-
ing that discussion was “for a different day
and potentially different court.”
McKittrick said he’s also prepared to
authorize the sale of NORPAC’s assets
without reaching a conclusion as to whether
Tiegs had legitimately terminated the deal.
NORPAC Foods has more than 1,125
full-time employees and 1,000 seasonal
employees. The company’s most recent
monthly operating report for August dis-
closed nearly $2 million in labor expenses.
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