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California agricultural exporters and marketers assess the impact retaliatory tariffs have had on key foreign markets

California agricultural exporters and marketers assess the impact retaliatory tariffs have had on key foreign markets

By Ching Lee Calif. Farm Bureau

SACRAMENTO– As the U.S. Department of Agriculture begins making payments on the second round of trade-aid funding to farmers hurt by ongoing trade disputes, California agricultural exporters and marketers assess the impact retaliatory tariffs have had on key foreign markets.

China, Canada, Mexico and other nations placed tariffs on U.S. agricultural products early in 2017, in retaliation for U.S. tariffs on steel and aluminum imports. With no resolution to the trade conflicts, USDA will now implement the second and final round of payments under its Market Facilitation Program to eligible producers of almonds, cotton, corn, dairy, pork, soybeans, sorghum, sweet cherries and wheat.

Producer payments make up the largest portion of the $12 billion aid package, including nearly $4.9 billion in this current round and $4.7 billion in the first round. Another one-time payment of $1.2 billion is being used to make government purchases of specialty crops, beef, pork and dairy products, and $200 million has been allocated to help expand export markets for U.S. farm products.

Aubrey Bettencourt, California executive director of the USDA Farm Service Agency, which administers the MFP program, said the office expects 2,000 to 3,000 California farmers to apply, with more than 1,500 applications already received. Producers have until Jan. 15 to sign up, but they have until May 1 to certify their 2018 production. Those who have already applied for the first round of payments will not need to do anything else.

The largest bulk of California MFP applications will come from almond farmers, with some 1,500 to 2,000 expected to sign up, said Elaine Trevino, president and CEO of the Almond Alliance of California. Out of approximately 6,800 almond farms in the state, those that produce larger volumes won’t qualify, she said, due to program eligibility requirements.

MFP payments to dairy farmers have been made “almost instantly,” Bettencourt said, because they are based on a three-year production average, unlike crops that had to wait for harvest to be complete. She noted her office so far has received more than 700 dairy applications. At last count, the state had 1,331 dairies in 2017, according to the California Department of Food and Agriculture.

Bettencourt described the MFP application process as “straightforward,” noting the application form is “literally one piece of paper front and back,” available on farmers.gov.

For companies such as Meridian Growers in Fresno, which exports pistachios, almonds, walnuts and pecans, managing partner Jim Zion said the biggest benefit from the aid package will come from the Agricultural Trade Promotion program. USDA said it has received requests for more than $600 million in activities from more than 70 organizations, and plans to announce funding awards in early January.

Though the U.S. and China called a temporary truce on raising more tariffs, Zion said Chinese importers remain “cautious” and are doing only short-term buying at this point.

“I’m also being a little cautious,” he said. “We’re not sure what’s going to happen. The last thing I want to do is ship a lot of product to China, and then the tariff takes hold, and suddenly I’ve got containers stuck in China that I need to remove.”

Richard Matoian, executive director of American Pistachio Growers, said his organization had applied for $15 million to $20 million in funding from the ATP program. If awarded, he said, the group plans to use the money to promote pistachios in newer markets such as India, Vietnam and South Korea, as well as boost marketing activities in the European Union.

Bob Carroll, vice president of business development for the California Milk Advisory Board, said the U.S. Dairy Export Council has applied for ATP funding. Should that be awarded, Carroll said he hopes the group will be able to expand marketing programs in China, South Korea and Mexico that focus on culinary uses of dairy products, particularly getting “young chefs engaged with California and U.S. cheeses.”

Julie Adams, vice president of global technical, regulatory and government affairs for the Almond Board of California, which also applied for ATP funding, said the group wants to boost existing investment in markets such as India while expanding new markets in Mexico and Italy (see story).

Matoian said pistachio suppliers also are participating in the federal food-purchasing program, which has committed $85.2 million to the crop. USDA is scheduled to make its first pistachio purchase in January, with a second round in April.

USDA has already bought more than $10 million worth of California table grapes, according to the California Table Grape Commission. Commission President Kathleen Nave described the 2018 season as “a tough one” for growers, with shipments to China down 41.2 percent in value compared to 2017.

“The tariffs on table grapes have been painful, but the real harm has been caused by the fact that tariffs on multiple competing commodities, such as cherries, stone fruits and apples, caused more fruit of all kinds to be sold in the domestic market,” she said.

California Citrus Mutual President Joel Nelsen said the government buying program, which concluded its first round of orange purchases this month and will begin soliciting more bids in January, will help move some small fruit off the market.

“But nothing is going to supplant the tonnage that we lost so far this year in exports to China,” he said, noting that in December, exports to China have been off about 80 percent.

California’s orange season typically runs until April or May, so there’s still time to do business, Nelsen said, but he noted California exporters have already missed out on the Chinese New Year buying period, “a significant marketing opportunity,” due to higher tariffs.

-Ching Lee is an assistant editor of Ag Alert. She may be contacted at clee@cfbf.com.

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