Cherry growers bear brunt of tariffs

Cherries for sale
Pacific Northwest cherry producers were forced to find other export markets halfway through their harvest season due to China’s second wave of retaliatory tariffs that effectively closed that market. Photo: Ian Sane.

Cherry growers in the Pacific Northwest were hit hard this harvest after a second wave of Chinese tariffs placed on their products, forcing farmers to redistribute their crops in the middle of harvest – or face heavy losses.

The crop is an important one for the state’s economy. Washington exported $304 million in cherries in 2016 – a 10.9 percent increase from 2015.

The success of the crop depends on a fast turnaround from picking to shipment, which became a significant problem during this year’s harvest. The Northwest Horticultural Council (NHC) estimates the strain caused by the trade war with China will result in the region’s cherry growers losing between $60 million and $86 million in revenue.

In April, President Donald Trump placed tariffs on steel and aluminum imports. The escalating trade war resulted in two waves of Chinese retaliatory tariffs being placed on U.S. goods on April 6 and July 6, respectively.

Although the Trump Administration announced its $12 billion farm aid plan in July which some said would assist farmers directly affected by trade negotiations, cherries were not included. Several Washington growers and agricultural stakeholders asked the administration to continue negotiating and remove the tariffs outright.

At the end of August, U.S. Senators Maria Cantwell (D-Washington) and Patty Murray (D-Washington) joined U.S. Representatives Dan Newhouse (R-Washington) and Dave Reichert (R-Washington) in asking U.S. Secretary of Agriculture Sonny Purdue to ensure that Washington’s 2,500 sweet cherry producers receive the same relief as other growers in the Department of Agriculture’s (USDA) farm aid package.

That package would offer assistance for growers facing hardships stemming from retaliatory tariffs through payments for those producers affected by the trade war, a food purchase and distribution program for buying extra crops and a trade promotion program that would help identify and build new markets for agricultural products.

“Because sweet cherries are highly perishable, the season is over and damages from increased tariffs and prices are hitting growers, we urge you to implement the support our cherry growers are requesting,” the lawmakers wrote.

Mark Powers, NHC President, told Lens that the retaliatory tariffs have affected cherry growers throughout the entire season.

At the outset of August harvest, China had already instituted a 15-percent tariff on U.S. fruit including cherries, however since the country’s consumers pay a premium for the crop many growers continued shipping into the market.

On July 6, China placed an additional 25 percent tariff on U.S. fruit, with a reference price of 8.90 cents a kilo for cherries, he added. “That was the final measure that basically closed that market,” Powers said. “The impacts will be known. The final numbers aren’t in, but the effects are here and now.”

China was the number one export for U.S. cherries in 2017, importing 12 percent of the crop for that year. For many producers, it was too late into the season to stop shipping to China.

“You had some growers that had ocean shipments and air contracts that they were still bound to…at least initially until contracts were finished and then they stopped shipping to China.”

Powers said he received reports that those under contract to ship to China did not make any money or ended up owing money to the airline or other transportation entities. In some cases, the cherries were transported to China and the growers ended up with the bill.

Those with enough advanced notice and without products on the water or in the air stopped shipping and diverted the fruit into other markets, including South Korea, Japan, Australia, while some remained within the U.S. market.

“What some people don’t understand is China is a premium market, meaning the Chinese consumer pays more money for cherries than pretty much any other in the world. They like really big cherries and will pay a premium for that big, quality cherry that other markets won’t pay,” Powers explained.

Once the fruit is diverted elsewhere, it doesn’t return that premium value back to the grower. Some cherries might end up purchased by U.S. consumers who end up getting a larger cherry than they are used to, but they didn’t have to pay extra for it.

“It’s the lost revenue that is really unfortunate because cherry growers need to make money when they can … Some years, they can’t due to crop failure or market events.”

One complication with tariffs being placed while the harvest is underway is the aspect of the fruit’s perishability. Cherries cannot be stored for longer than 10 days ideally, and most of the time growers want their crop picked, packaged and sent to a retail store or overseas market within 48 hours.

“If they have to be held in storage here in the Pacific Northwest for longer time frames, that ultimately backs up the system,” said Powers.

Although things were looking grim, he said the U.S. domestic market picked up most of the slack with several repeat purchasers who appreciated the quality of the fruit.

“As the season went on, the China problem got worse and there was more inventory that needed to move, but the situation went probably as good as it could have been to deal with the backup that resulted from China’s actions,” he concluded.

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