As summer approaches, Washington growers are preparing for a harvest marked by additional safety precautions due to the COVID-19 pandemic. Along with the extra costs to maintain worker health, farmers still face an uncertain future regarding trade – along with a recent global shift toward the U.S. dollar that could have long-term effects on foreign demand.
The state Department of Labor and Industries (L&I) last month approved an emergency rule regarding temporary worker housing, while Governor Jay Inslee last week issue an emergency proclamation regarding agricultural worker transportation.
Although L&I has received one complaint regarding the temporary worker housing standards, Washington Tree Fruit Association President Jon DeVaney told Lens that so far “I have not heard of any penalties or problems coming up as a result. Employers tell me that L&I is reasonable; they confirm that they’re following the rules.”
Manson Growers Co-Op General Manager Jared England said the new rules have been “overwhelming, to be honest.” The cooperative includes a warehouse currently processing last year’s apple harvest.
“The challenge for us is the social distancing, (but) our workers have been…patient and creative with us in implementing these changes.”
Like other growers, an ongoing concern for England is getting the necessary labor supply in the coming months when activity shifts from the warehouse to apple harvest, which can last until October. However, he said that the cherry and pear harvests that both occur beforehand are a strong indication of whether they’ll be able to get the pickers needed to get the job done.
“So far, surprisingly, we’ve been able to recruit as many workers as we’re looking for,” he said. “We’ve always told our workers if you don’t feel safe, we’re not forcing you to work. We’ll hold your position until the conditions change.”
Even if the upcoming harvest occurs relatively smoothly, growers like England could still face challenges with trade and the global economy. Much of the state’s agricultural product is exported, with 90 percent of Manson Growers’ apples shipped to foreign markets. In addition to retaliatory tariffs from major export countries like China, a recent report by the Washington Commission on International Trade (WCIT) warns many of Washington’s top export countries will likely experience a drop in national economic output, leading to lower export demand.
England said that in previous situations where foreign market demand decreased or tariffs were imposed, they could simply shift sales to one of the over 30 countries they export to. However, because it’s a global pandemic “every single country has an impact. Their ports are closed, their exchange rates are all out of whack.”
On top of that, DeVaney said that “whenever there’s economic instability there tends to be a flight to the U.S. dollar,” resulting in a higher value compared to other currencies.
This makes it more expensive for foreign purchasers to buy Washington exports, according to Community Attributes Senior Economist Spencer Cohen. “If you’re a foreign purchaser and you want to buy grain from the U.S., first you have to buy dollars. It’s hard to just isolate the price of the dollars from most products, but we know that it has an inverse impact if it goes up in value.”
Cohen added that the correlation between export demand and U.S. dollar value depends on a product’s price elasticity – meaning how sensitive consumers are to price fluctuations. Washington’s white wheat growers have a stronger position because “certain sugar properties and compounds make it appropriate for Chinese goods.” However, other produce with high demand from China such as cherries are more susceptible to increased prices. “Cherries are something people will pay a lot of money for, but if it’s a luxury (good), they’ll reduce demand. In the case of agriculture, a lot of products…. are generally more elastic.”
That’s proven to be the case with apples, England said. “When the dollar is weak…we do amazing,” he said. “We have great sales. They’re paying us more dollars for our product.”
As a result of the higher costs, England said that growers have lowered their prices to foreign purchasers to “share that impact. If over time the exchange rates start to normalize…the buyers can slowly increase their prices.”
Cohen noted that it’s hard to know what the long-term currency value trend will be, because “the dollar does fluctuate quite a bit.”