Image via the Almond Board of California

published on July 25, 2018 - 1:26 PM
Written by David Castellon
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The White House’s announcement of plans to offer $12 billion in assistance to farmers hurt by the nation’s trade disputes with China and other countries seemed welcome news to representatives of California’s agricultural industries.

But that enthusiasm is tempered by questions of how much of this financial assistance will come their way.

President Donald Trump has floated the plan intended to help farmers who have lost foreign sales as a result of tariffs imposed on U.S. agricultural goods, primarily by Canada, China, Mexico and other countries currently engaged in trade disputes stemming from the president imposing tariffs on their goods coming into the U.S.

The assistance plan doesn’t address steel, aluminum and other non-ag goods also affected by the recent tariffs.

“This is a short-term solution that will give President Trump and his administration the time to work on long-term trade deals,” U.S. Department of Agriculture Secretary Sonny Perdue said earlier this week.

His department said the proposal would include assistance paid directly to U.S. farmers, along with the government purchasing some commodities sitting in storage because of declining foreign purchases due to the tariffs and the promotions intended to open and expand markets for U.S. ag products.

Government officials have said the plan would not require congressional approval and would be funded through the Commodity Credit Corp., a wing of the USDA.

Officials said a large chunk of the direct payments — though they didn’t say how much — would go to producers of soybeans in the Midwest, who have been hit hard by the foreign tariffs, along with producers of sorghum, corn, wheat, cotton, dairy and pork.

As for the food that would be purchased from farmers through the assistance plan — some of which might end up going to schools and community food banks, that likely would include some types of fruit, nuts, rice, legumes, dairy, beef and pork, U.S. officials said.

As for how that may affect farmers and dairies in the Valley and the rest of California is unclear, in part, because even though it’s widely agreed the foreign tariffs are hurting ag sales, California has so many small specialty crops that its hard to get a handle on the overall effect, said Dave Kranz, a spokesman for the California Farm Bureau Federation.

“It’s really hard to tell,” he said. “There’s a lot of uncertainty. We know there have been some shipments that have been canceled and put on hold, but all in all people are being cautious on the buyer’s side and the seller’s side.”

Ryan Jacobsen, CEO and executive director of the Fresno County Farm Bureau agreed, stating, “We’re obviously in the very early stages of the consequences of that.”

In California’s almond industry — which produces virtually all U.S commercial almonds and 82 percent of the global supply — the nuts are being shipped to foreign markets, and there’s not much talk about orders being cancelled, despite new tariffs on almonds by China and Turkey in effect and one from India taking effect Aug. 4, said Julie Adams, vice president of global, technical and regulatory affairs for the Almond Board of California, a nonprofit representing growers and processors.

What she has heard is some almond order contracts that normally would occur by now — the start of the almond-harvest season, which can run through October — not being finalized yet.

“What I think we see right now is an uncertainty effect,” she said.

Over the next couple of months, most of the fruits and nuts affected by tariffs will be harvested, and after that the prices paid for those crops and the orders for them should tell the tale of the trade disputes’ effects here, Jacobsen said.

But the effects of the tariffs appear already evident in the dairy industry.

Mexico’s imposed tariffs on U.S. cheese about four weeks ago in response to tariffs on its goods, and as the top foreign buyer of U.S. cheese, that’s being felt by dairies here, said Anja Raudabaugh, CEO of Western United Draymen, a Modesto-based nonprofit trade association representing California dairy families.

The North American Free Trade Agreement resulted in no tariffs on U.S. cheese, and the newly-imposed tariffs are reducing demand for that cheese in Mexico, which comes at a time when dairies across the U.S. already are struggling to stay financially afloat, she said.

“It’s pretty bad. This is going to be the nail in the coffin for hundreds of dairies across the United States and dozens in California,” Raudabaugh said.

“We always had been nervous about the president saying he was going to renegotiate NAFTA,” and many in the dairy industry became downright jittery when the May deadline Trump imposed to complete a new NAFTA deal passed without an agreement, she recounted.

As for the president’s proposal to help farms hurt by the tariffs, Raudabaugh said, “There is quite a bit of excitement over the relief package announced. But the White House hasn’t said how the $12 billion might be divided between the various ag commodities, and traditionally dairy production support payments tend to be relatively small for medium-sized and large dairies, which primarily are the dairy sizes in California, so the news may be better for small dairy operations in other states, she said.

Still, Raudabaugh said, as financially tenuous the dairy business is these days, California dairies likely would welcome any assistance, even if it were small.

As such, WUD issued a statement praising USDA Secretary Perdue’s actions “to try to mitigate the impact international trade disputes are having on California’s dairy farm families.

California Farm Bureau President Jamie Johansson also issued a statement: “Because our state leads the nation in agricultural exports, California has a lot at stake in assuring fair trade of farm products. We appreciate how USDA has worked to assemble this package quickly at a time of market uncertainty for farmers and ranchers.”

But Johansson noted that the assistance is just a short-term solution, and what the ag industry wants and needs are quick resolutions to the trade disputes that triggered the tariffs.

Adams agreed, noting that besides the significant losses resulting from the tariffs, farmers also worry about how long the tariffs will last, as consumers in foreign markets could find alternative foods or alternative suppliers for U.S. almonds.

“It certainly is not an insignificant situation.”

Former dairyman turned Rep. David Valadao, R-Hanford, also chimed in with a press release stating, “There is no doubt farmers are struggling as a result of recently implemented tariffs, and while emergency aid is needed to help farmers withstand the downturn, what the agriculture industry really needs is access to foreign markets so our farmers can continue to feed the world while creating more jobs here at home.”

As for the likelihood of quick resolutions, that’s far from clear, as the president has shown no signs of backing down.

The Trump administration has slapped tariffs on $34 billion in Chinese goods in a dispute over Beijing’s high-tech industrial policies. China has retaliated with duties on several U.S. products, and Trump has threatened to place penalty taxes on up to $500 billion in products imported from China, a move that would dramatically ratchet up the stakes in the trade dispute involving the globe’s biggest economies.

In addition, Jacobsen said Tuesday that farmers here were concerned that the European Union could impose retaliatory tariffs, too, which could further hurt their bottom lines.

But today, Trump and EU leaders announced they had agreed to work toward “zero tariffs” and “zero subsidies” on non-automobile goods and would work to resolve U.S. tariffs on steel and aluminum imports that have roiled European markets.

Though light on specifics, the president and European Commission President Jean-Claude Juncker, said the EU had agreed to buy “a lot of soybeans” and increase its imports of liquefied natural gas from the U.S.

Juncker added the EU “can import more soybeans from the U.S., and it will be done,” and that the two sides had agreed to hold off on further tariffs while they continue talks aimed at averting a crippling trade dispute in which European nations had threatened to retaliate if the U.S. imposed tariffs on European auto imports.

On Tuesday, Trump told a veterans’ convention in Kansas City that he was trying to renegotiate trade agreements that he said have hurt American workers, and he asked for patience ahead of key talks.

Before departing for Kansas City, Trump tweeted that any U.S. trade partner needs to either negotiate a “fair deal, or it gets hit with tariffs. It’s as simple as that.”


The Associated Press contributed to this report.


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