California Exported $20 Billion in Food Products in 2016
By Mikenzi Meyers, Associate Editor
It’s no secret that California’s agricultural exports are a huge part of the state’s economy—but to put it in perspective, over $20 billion worth of food and agricultural products were exported in 2016 alone (the latest figures). With numbers like these, people like Glen Roberts of the U.S. Department of Commerce and International Trade Administration are kept busy.
Roberts, who is part of the Global Markets sector and based in Fresno, not only works with what he calls “easy” exports like Mexico and Canada, but other places across the globe, shipping anything and everything from food to machinery.
When it comes to his role in California, Roberts explained, “Our office covers from the top of the Grapevine, Kern County, all the way up to Stanislaus County from San Louis Obispo over to Nevada.”
His sector, which handles more of the commercial side of things, acts as a gateway to other government programs that help out with international trade.
Although Roberts’ main focus is commercial, he’s still one of the go-to guys in agriculture exports.
“What happened when the almond prices dropped? I got the calls because Foreign Ag Service doesn’t handle contractual disputes,” he said.
Roberts further added, “I had to help out our local almond growers because the buyers didn’t want to pay the higher contracted price. They wanted to buy the new lower market price.”
Walnut Processors Maintain Optimism
By Patrick Cavanaugh, Editor
California Ag Today recently spoke with Paul Wenger, past president of the California Farm Bureau Federation. He farms 700 acres of almonds and walnuts in Stanislaus County. He said that California Farmers and other stakeholders of the industry need to be less negative about the current trade war with China.
“The more we talk negatively, the more that negative things are going to happen,” he said. “As I talked to walnut processors. They’re optimistic. That’s good news. I’ve talked to some walnut processors and said, ‘Well, what’s going to happen this year?’ We shouldn’t expect much as far as prices.”
“Marketing is always a self-fulfilling prophecy and it’s more psychology than it is anything,” Wenger said. “We are one of the largest producers now. Certainly, China is the largest producer. But China had a terrible crop and so they need walnuts, and so strange things can happen and the Chinese are always one that can bend the rules when they need.”
“We know that’s why President Trump has been going after China supposedly over some of these intellectual properties. Certainly, those aren’t the things that hurt agriculture, but we in agriculture are paying the price as we look at these countervailing tariffs that are coming on,” Wenger said.
Wenger explained that the Chinese know that, throughout the Midwest, it was the farm vote that helped and the rural states that helped bring home a victory for the president, so they’re going to go after President Trump.
A large amount of product was sold last season at a low price.
“We just go through the Affordable Care Act and then the port slowdown on the 2015 crop, which went into the 2016 crop, which was a little better We got a little bit better than 2017 crop was a good year for us,” Wenger said. ‘So you’re looking at a pretty good ’18 and now this happens.”
Long-Term Problems May Be Ahead
By Jessica Theisman, Associate Editor
If a market is lost, it takes time to get it back. California Ag Today recently spoke with Brian Kuehl, executive director of Farmers for Free Trade, about the topic. A concern is that competitors are entering the markets that we currently occupy.
“No farmers invest huge amounts of time and energy trying to open markets or trying to develop trade relationships, and they’re being torn up in a matter of months,” Kuehl said.
Tariffs will cause long-term problems. One major issue is that when tariffs are established, other countries will begin put to put tariffs on our food. Those countries then begin to plant more crops to adjust. Soon, those countries become their own producers instead of relying on the U.S. Those countries then look to other countries that are more dependable, which in turn becomes a competitor to the United States.
The renewal of NAFTA will help.
“If this is not resolved soon, we certainly are doing lasting damage to agriculture. It could trigger the next farm crisis,” Kuehl said.
It looks like the U.S. is moving toward a deal with Mexico on a renewal of NAFTA.
“Hopefully that would quickly lead to a deal with Canada,” Kuehl explained. “Mexico and Canada are our biggest trading partners.”
For many of our products, China is one our largest trading partners, and certainly one of the ones that is growing the fastest in terms of population.
“We do not want to squeeze ourselves out of the Chinese market for a decade to come; that that would be a colossal error,” Kuehl said.
The U.S. has routed products in the past. Some countries including Vietnam and Hong Kong route products into China.
“There might be a tariff on product going into China directly, but we know some of our growers are able to avoid the product that tariff by selling first to Vietnam and then Vietnam shifts into China,” Kuehl said. “That same tactic with Hong Kong is being shut down. China is getting much smarter at saying you can not circumvent our tariff, so we are going to hold you to these tariff rates.”
Forbes Chairman Has Suggestions to Help
By Jessica Theisman, Associate Editor
Water and labor are major agricultural issues in California. California Ag Today recently spoke with Steve Forbes, chairman and editor in chief of Forbes Media, about the topics.
“I think that the more people are realizing the enormous opportunities of technology in agriculture. They think that it is going to get better and better in the future,” Forbes said.“Everything from reservoirs to desalination plants should be modeled after Israel. They have been building desalination plants because Israel is in a desert where they have been getting rainfall.”
“This is a very sophisticated use of water in agriculture where they are a real global power,” Forbes said.
Today, Israel uses 10 percent less water as a whole, not per capita, than they did 70 years ago despite the economy being 60 times larger.
Forbes thinks labor is also an issue.
“We are hurting ourselves, our food production, not just in agriculture but construction as well,” he said.
Forbes said we should recycle the programs that we once had, programs where returning people come in for specific time periods for specific jobs. This would help prevent the illegal immigrant problem because workers know they can come back.
On another note, he discussed the current trade war that the U.S. is in with China.
“If you hear 10 percent tariff on aluminum, that’s a 10 percent sales tax; put it that way and people’s eyes go up and they get it right away,” Forbes said.
Putting sales taxes on American consumers, agriculture, farmers, and businesses is not the best way to resolve very real trade abuses.
“Everyone knows from the disaster and the depression of the 1930s what trade wars can lead to,” Forbes said.
Forbes also explained that GMOs greatly benefit producers and should not be attacked as harmful to consumers.
“GMOs have been studied fairly well, and they are making food more plentiful. It makes food a safer in terms that you don’t have to use as many pesticides,” he said. “GMOs make a better use of water, and there is a lot less loss to diseases and insects. We are using human ingenuity to make the human condition better.”
There is Fear China Could Turn to Other Countries For Ag Products
By Mikenzi Meyers, Associate Editor
The ongoing threat of Chinese tariffs on American agriculture has recently been the topic of conversation for agriculturalists. With China posing a possible 25 percent tariff on U.S. soybeans back in April, it seems this conversation is here to stay. The added tariff could drive Chinese buyers to choose other markets on many California commodities, including walnuts, tree fruit and beef.
Matt Lantz, vice president of global access for Bryant Christie Inc., deals with international trade, and these issues on a daily basis. Bryant Christie is an international affairs management firm that is based in Sacramento and Seattle, where they help U.S. commodity groups and agricultural companies with their international trade issues in order to export their products.
Lantz explained that this new threat is a major concern for California agriculture.
“China is an incredibly important market for California fruit and vegetable exploiters, and any tariff or increased inspection makes it more difficult to export,” he said.
Making matters worse, Lantz pointed out that buyers are going to turn to the countries without the tariff—which can be bad news for producers.
There Is Worry that Some Companies May Lose Ground on Exports to China
By Mikenzie Meyers, Associate Editor
California growers are on edge due to newly imposed tariffs that could cause the state’s agriculture to suffer. After China recently retaliated against the United States’s steel and aluminum tariff by pushing its own on U.S. imports, they have good reason to be worried. California Ag Today recently spoke to Shannon Douglass, first vice president of the California Farm Bureau Federation, who is heavily involved in this conversation.
“No matter what you’re growing, so much of our products are exported, and so it’s a really vital concern to many of our farmers,” Douglass said.
She explained that it isn’t just a concern for those involved with fresh produce—which might be the first affected—but also any farmer who depends on sales to foreign markets.
One of the biggest concerns is losing the progress made in growing the foreign market, but Douglass seemed hopeful as CFBF has continued working with those driving legislation,
“We certainly don’t want to lose that ground that we worked so hard to develop,” she said.
Agriculture has always been a winner in the trade arena, and although the climate of foreign markets may be uneasy, Douglass and the California Farm Bureau Federation are continuing the conversation to make progress toward a hopeful future for all farmers.
CCM President Issues Statement Regarding Chinese Tariff Announcement
News Release from California Citrus Mutual
While the proposed 15% Chinese tariff increase will affect all fruits, nuts and vegetables shipped to China, California Citrus Mutual (CCM) President Joel Nelsen issued the following statement regarding the tariff increase on California citrus as a retaliatory counter to President Donald Trump’s new tariffs on steel and aluminum:
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. Maintaining access to foreign markets and having the ability to compete in a global market place are critical to the success of the citrus industry.
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 While our Administration focuses on those business sectors requiring attention, the Chinese Administration has chosen to expand the discussion to include the agricultural industry. In fact, the Chinese indicated last week in a statement that constructive talks could alleviate the real issues, yet insufficient time was given to accomplish that objective. Now Chinese consumers and California citrus producers are innocent parties to a trade debate.
Nelsen, CCM Executive Vice President Casey Creamer, and Board Chairman Curt Holmes have traveled to Washington, D.C. recently for meetings with Congress and the Administration regarding trade and other important issues affecting the California citrus industry.
Ray Starling, Special Assistant to Trump, on Trade
By Patrick Cavanaugh, Editor
Ray Starling is Special Assistant to President Trump for Agriculture Trade and Food Assistance. He was the keynote speaker at the 2018 Citrus Showcase hosted by California Citrus Mutual.
He spoke about addressing imbalance in trade.
“The thing that the president wants to do is to address some of the imbalance that we have. We go out and negotiate these agreements,” Starling said. “We say that we’re all agreeing to the rules of the road and then all of a sudden in the middle of trading, when we will have almonds on a boat or we’ll have pork on a boat or have fruit on a boat and all of a sudden, we find out the rules have changed. That is not the kind of trade we’re talking about. We want to sort of fix those inequities, if you will.”
NAFTA also needs to be looked at closely.
“There are a number of chapters in the agreement and a lot of the things that we need to fix on agriculture, we have worked out,” Starling explained. “Some of those are things that are never going to make the news. They are agreements and understandings about maximum residue levels of pesticides. Their understanding about what is the tolerance of foreign matter in material that we may be shipping to Mexico or Canada.”
“But on the big issues for ag that we’ve still got to make progress on: One of those is with Canada, and it deals with the dairy issues,” Starling said. “They supposedly have a supply management system where they limit the amount that they produce in the country to get a higher price, but yet a lot of their products still ends up on the international market, so our point is if you’re going to have a supply management system, it’d be great if you actually manage your supply and then didn’t dump that product out on the world market to compete with American product out there.”
Enforcement is also a concern, noted Starling.
“I wouldn’t say that it has to be a sequential process like that. I mean, we’re always going to look for new agreements and new opportunities, but I think that often when we look at the way we’re resolving disagreements about trade, it’s a very long process,” he said.
“It takes years to go to the WTO and to get a successful outcome, and we’ve gotten many successful outcomes at the WTO, which some would argue is actually a sign that that system is not that successful because notwithstanding the fact that we keep winning there, we keep having to go there to get these solutions,” Starling explained.
Photo Credit: Port of Oakland
Joel Nelsen Comments on EU and Impact on Ag from Recent Washington D.C Trip
Yesterday, we were fortunate enough to meet up with Joel Nelsen of California Citrus Mutual at Fresno-Yosemite Airport. He filled us in about his recent trip to Washington, D.C.
Nelsen told us about the discussion he and his colleagues had with foreign trade leaders regarding imports into the United States, as well as how California Ag will be impacted by the United Kingdom exiting from the European Union.
Click below to check it out!