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Nut industry ‘incredibly resilient’ amid trade turmoil

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Daniel Sumner, director of the University of California’s Agricultural Issues Center, said California’s tree nut industry has been “incredibly resilient” amid the trade uncertainty of the last several years.
Slowing exports with higher tariffs has had a negative impact on the market.

There are lots of adjectives when it comes to California and its capability to grow things. The Department of Agriculture reports: “California farms and ranches now receive more than $50 billion in cash receipts for their output among 400 commodities.”

Among the state’s Top 10 valued agricultural export commodities are three tree nuts that represent nearly 20% of that economic input — almonds ($6.09 billion); pistachios ($1.94 billion), and walnuts ($1.29 billion).

All were discussed in a recent University of California agricultural webinar on “The Economic Impacts of Trade Turmoil in the California Tree Nut Industry.”

“Most California agricultural industries have been impacted by trade uncertainty and retaliatory tariffs have altered export markets with trade impact exacerbated when the COVID-19 pandemic shut down ports and delayed shipments,” said UC Davis seminar coordinator Brittney Goodrich.

“The word ‘turmoil’ is appropriate to describe the last few years of international trade,” said Daniel Sumner, Director of the University of California Agricultural Issues Center. “It’s government-induced turmoil impacted by coronavirus and, although it wasn’t easy, the agricultural and food sector has been incredibly resilient.”

Acknowledging that the tree nut industry was heavily impacted across its portfolio of export markets, Sumner said: “We keep about a third of those nuts in the U.S. and depending on year-to-year, a lot goes to Asia (China, Korean, Japan) with India as a growing market. The California almond industry now ships a lot of almonds to Spain where they are repackaged and repositioned around the rest of Europe.”

So have exports decreased in recent years/months? “It takes a lot of teasing of data to answer that one and I can give several answers based on alternative explanations, but there’s no question that slowing down exports through trade turmoil and higher tariffs has a negative effect on the market," he said.

“Normally when an industry, like almonds and walnuts, has had a five-time increase over two decades, you’d say that’s remarkable growth,” he said. “But a 22-times expansion of the pistachio industry almost dwarfs those numbers.”

What does it mean?

So, what does it all mean going forward? “We’re watching what might happen to tariffs following the transition of administrations,” he said. “There have been presidential advisors in the past who have not been huge supporters of such trade agreements. The Obama Administration was not a great trade supporter although the new administration may be more supportive than the one they are replacing. Following labor union pressure, Democrats in Congress have mostly been supportive of trade barriers.  As the new administration removes former executive actions and reimposes regulations, they could leave those iconic trade barriers in place.

“Public policy involving general international issues is really up in the air on whether or not these tariffs will go away,” he said. “They were issued by executive order, so it wouldn’t be too difficult to change them. It’s just a matter of the incoming president saying, I want to reverse a bunch of stuff. It’s not going to take much, but we don’t know if that’s going to happen."

Then, to add insult to injury, the Western Agricultural Processors Association reports that the tree nut industry is being hard hit “with rolled or cancelled bookings, including reports that at least two major carriers have cancelled all export bookings until March 2021.

“At a time when the tree nut industry can least afford it, our members have been hit with multiple rolled or cancelled bookings and an inability to get any kind of containers to ship their products,” said WAPA President/CEO Roger Isom. “A huge influx of imports from Asia are causing a demand to get empty containers back to Asia as soon as possible, bringing our industry to its knees at the absolute most inopportune time.”

For more news on tree nuts as reported by growers and farm advisors, subscribe to the Tree Nut Farm Press e-newsletter.

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