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Ag Monthly | Tree fruit industry braces for tariff impacts

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Tree fruit industry braces for tariff impacts

WENATCHEE — Apple, cherry and pear growers and shippers here are in wait-and-see mode following China’s decision to implement new tariffs on 128 U.S. export products, including tree fruit crops.

The tariffs — a 15 percent increase — started April 2. They were promised March 23 in response to a U.S. move to address perceived unfair trade practices by imposing taxes on imported Chinese products including aluminum, steel, clothing and technology.

Anytime there’s a tariff increase, it affects us to a certain degree,” said Steve Reinholt, Oneonta Starr Ranch Growers exports manager. “It’s early to tell what that will be. We don’t have any feedback yet from our customers in China. That should come through in the next couple of days.”

One possibility is the 15 percent tariff hike on tree fruit will result in higher prices for customers who would then seek product elsewhere, leading to fewer boxes sold and, in turn, reduced profit for growers and shippers.

I was in China two weeks ago, when the list came out,” Reinholt said. “Customers were concerned, but it was all still speculation then. We don’t expect a huge difference, but a small reduction in volume could be meaningful to us.”

The first test will be cherries, which start shipping in early June, though that crop might not be an accurate guide for what’s in store for apples and pears, he said.

The Chinese market enjoy cherries, so the tariffs might have less of an impact. It’s hard to say,” he said. “It worries us that if we have a large volume of cherries and a major portion has to be redirected to a different market, it could hurt. It’s all speculation at this point.”

Keith Hu, the international program director for Northwest Cherries, reached a similar conclusion.

I spoke to business partners in China, the large retail chains, some of the biggest importers. They all agree that if we can provide good, quality cherries to China, we could minimize the impact. If the quality is not up to par, it will hurt,” he said.

Cherries in China sell for between $7 and $10 a pound now.

It’s seen as a luxury item,” Hu said.

The crop already has a 10 percent import duty, plus a 13 percent value added tax. Adding another 15 percent tariff would put the price at $11 or $12 a pound.

That’s a lot money,” he said. “If mother nature is on our side, and we can produce good quality cherries, we should be OK. If weather is not on our side, then it’s a bigger issue. We hope in the next two-and-a-half months that the two countries can work out something.”

The impact on pear exports is tough to pin down as well, said Jeff Correa, international marketing director for Pear Bureau Northwest.

Pears are relatively new exports to the Chinese market.

We do face some pretty tough competition from Europe. The tariffs won’t shut down the market completely, but it will make it more difficult,” he said. “We can make adjustments.”

He sees no sense in worrying.

It’s not good to overreact,” he said. “We will wait and see. It’s highly possible the governments will reach an agreement.”

Kate Woods agreed. She is the vice president at the Northwest Horticultural Council, which takes the lead on all federal and international trade issues for the tree fruit industry in Washington, Oregon and Idaho.

It’s not an issue about apples, pears and cherries,” she said. “It’s about aluminum and steel, related to national security. The hope is the two countries will reach a resolution before cherry season,” which takes off in early June.

Last year, China was the top importer of Washington cherries, buying 2.9 million cases for $127 million. The country is the state’s fifth largest apple customer, accounting for 1.8 million boxes, which is about 1 percent of the crop.

Any tariff, any additional barriers, is not something we want to see,” she said. “It’s a wait-and-see position, primarily because of the broader debate. There’s not a lot we can do to come up with a resolution. We are letting everyone know the impact. We’re hopeful the U.S. and China can come to a solution,” she said.

In the meantime, the horticultural council continues to be actively involved in the North American Free Trade Agreement negotiations, which include the U.S., Canada and Mexico.

Our number one priority has been to make sure it remains in place and that we can ship at a zero tariff level to Mexico and Canada,” she said.

Woods admits it’s been busy.

It’s been a volatile year on the trade front,” she said. “There’s a lot going on. The new administration has had a lot of areas they want to address. Volatile is a good word,” she said.

Migrant housing with wasps, rats leads to fine

CHELAN — A live wasp’s nest and rat droppings were among the problems found in a Chelan orchardist’s migrant housing facility in 2017 that led to the company paying $19,297 in penalties to the U.S. Department of Labor.

The DOL’s Labor Wage and Hour Division investigators noted the violations of the Migrant and Seasonal Agricultural Worker Protection Act in a Rivera Orchards’ facility that housed 15 migrant workers, according to a March 28 press release. In addition, the investigation during the 2017 harvest found the company did not disclose work and housing conditions to employees or keep required records.

The owners, listed in state documents as Jose and Rosa Rivera, corrected the violations as soon as conditions were discovered, according to the DOL statement.

They could not be reached for comment.

Employers must understand their obligations and responsibilities under the law,” said Jeanette Aranda, Wage and Hour Division district director in Seattle. “Employees’ health and safety is of the utmost importance. We encourage all employers to make use of the many tools we provide to help them understand and comply with the law, and to call us for assistance.”

To operate legally as farm labor contractors, individuals and companies must register with the U.S. Department of Labor. Farm labor contractors that intend to house, transport or drive a migrant or seasonal agricultural worker must meet special requirements. Application materials and instructions can be found online at https://www.dol.gov/whd/forms/fts_wh530.htm

Watch those weeds

WENATCHEE — The Chelan County Noxious Weed Control Board is reminding land owners that the noxious weed survey season has arrived.

Noxious weeds can be highly destructive, competitive and difficult to control, invading croplands, rangeland, forests, parks, rivers and lakes, causing both ecological and economic damage.

The weeds on the Class A list include milk thistle, knapweed, giant hogweed and dyer’s woad.

Landowners are obligated, by state law, to eradicate Class A noxious weeds and control and prevent the spread of all Class B and C noxious weeds listed on the Chelan County Noxious Weed List, which is available at http://www.co.chelan.wa.us/noxious-weed.

Hemp program gets another year

OLYMPIA — The state’s industrial hemp industry is getting a $100,000 boost to fund a second season of the pilot program.

The funds will help the state Department of Agriculture pay for an administrator to oversee the program, according to a report in the Capital Press (https://wwrld.us/2Em7fur), a move necessary to make sure licensed growers can obtain hemp plants and seeds, which are illegal under federal law unless growers are under state supervision.

Last year, the state issued seven licenses for the hemp growing season, with two to Native American tribes and two to Washington State University researchers. About 180 acres of hemp were planted. The fees collected from the licenses were not enough to support the pilot project, which was put on hold until it received funds.

Applications are now being accepted.

The industry faces several challenges, including the lack of an in-state market for the harvest, and crossing state lines with seeds, plants and products under the current federal rules.

2018 crop protection guide available

WENATCHEE — The 2018 Crop Protection Guide for Tree Fruits in Washington (EB0419) is now available online and at Washington State University Extension offices. 

The publication contains examples of what pesticides to use and when to control orchard insects, disease and weed pests, pesticide safety and regulatory information, growth and nutrient sprays, chemical and cultural control methods and bee toxicity warnings. Guides cost $12.