Friday, April 6, 2018

Chinese Tariffs Concern Idaho Farmers


By Sean Ellis
Idaho Farm Bureau Federation
BOISE –– China’s announcement that it will impose tariffs of 15 to 25 percent on a slew of U.S. farm products has caused varying levels of concern among Idaho farmers and ranchers. 

Among the U.S. farm products that China announced it will impose tariffs on are wheat, corn, and beef, which are produced around the state, as well as fruit and wine, which are produced mainly in southwestern Idaho.

Idaho’s beef cattle industry brought in $1.8 billion in farm-gate revenue last year, while the state’s wheat farmers received $415 million in total revenue for their 2017 harvest, according to University of Idaho estimates.

Grain corn in Idaho brings in about $70 million each year in farm-gate revenue.

Idaho’s fruit industry, which includes apples, peaches, pears, and cherries, brings in about $30 million per year.

An Idaho Wine Commission study showed the state’s wine industry has a $169 million annual direct and indirect impact on Idaho’s economy.

According to Idaho State Department of Agriculture data, $62 million worth of agricultural products were exported from Idaho to China last year. Most of that total was from dairy products, which aren’t subject to the Chinese tariffs.

Neither the tariffs announced by the U.S. or China have gone into effect yet and there isn’t a set date for that to happen.

However, the possibility that U.S. farm products could be faced with stiff Chinese tariffs has caused some real concern among Idaho and U.S. farmers.

“There is a lot of concern,” said “Genesee” Joe Anderson, a North Idaho grain farmer. “It’s not the kind of positive market news we were looking forward to.”

IWC Executive Director Moya Shatz-Dolsby said she hasn’t heard from anyone in Idaho’s wine industry who is overly concerned about the potential tariffs.

“I don’t think it will have a big direct impact on Idaho wine,” she said. 

That’s because only one Idaho winery currently exports wine to China. 

But while the tariffs, if they go into effect, likely won’t have a major direct impact on many Idaho farm products, many producers are concerned about the indirect impact.

Their concern is that if China stops purchasing U.S. farm products because the tariffs make them too expensive, those products will return to the domestic market and depress prices.

Following an announcement by the Trump administration that the U.S. would impose trade measures against China for what it says are intellectual property issues, Beijing announced it would impose tariffs on 128 U.S. products, including pork, wine, and fruit.

Following that news, the U.S. on April 3 announced duties on 1,300 products imported from China with a total value of around $50 billion. 

That was followed by another announcement from Beijing April 4 that China would impose a 25 percent tariff on 106 goods imported from the U.S., including a long list of farm products.

On April 5, Trump asked the U.S. trade representative to consider another $100 billion worth of tariffs on Chinese products. Beijing responded by saying that nation would “counterattack with great strength,” according to several news reports.

According to USDA, the U.S. exports about $20 billion worth of agricultural products to China each year, which amounts to about 15 percent of total U.S. farm product exports.

China is the United States’ second largest customer for ag exports, behind Canada.

The latest round of tariffs announced by China prompted statements from several farm groups concerned about the escalating trade battle.

Farmers and ranchers are patient and optimistic, by necessity, and know that markets ebb and flow, American Farm Bureau Federation President Zippy Duvall said.

“But China’s threatened retaliation against (the U.S.) tariff proposal is testing both the patience and optimism of families who are facing the worst agricultural economy in 16 years,” he said. “This has to stop.”

“We have bills to pay and debts we must settle, and cannot afford to lose any market, much less one as important as China’s,” Duvall said. “We urge the United States and China to return to negotiations and produce an agreement that serves the interests of the world’s two largest economies.”

U.S. Wheat Associates and the National Association of Wheat Growers released a statement pointing out that the U.S. exported 61 million bushels of wheat to China in the marketing year 2016-17, making that nation the fourth largest buyer of U.S. wheat.

“America’s wheat farmers are experiencing several hardships and adding a 25 percent tariff on exports to China for U.S. wheat is the last thing we need during some of the worst economic times in farm country,” stated NAWG President Jimmie Musick, an Oklahoma wheat farmer. “The administration can support rural Americans by working with Chinese officials to avoid these damaging tariffs.”

Mark Powers, president of the Northwest Horticultural Council, said the ultimate impact the tariffs could have on fruit crops such as apples and cherries, is hard to know at this point.

For one thing, the tariffs haven’t gone into effect yet and the two nations still have time to reach an agreement, he said.

Second, he added, even if the tariffs are realized, their impact will depend on the size of this year’s apple and cherry crops. 

Combined, Washington, Idaho, and Oregon shipped $127 million worth of cherries to China last year and about $50 million worth of apples, Powers said.

“Yes, there could be an impact,” he said. “But to what degree is very much open to the influence of what happens from now until the time we start to ship (those) products.”

WineAmerica, which represents 600 members of the U.S. wine industry in all 50 states, released a statement pointing out that the 15 percent tariff on U.S. wine announced by China would be on top of the existing 14 percent duty, which would create a 29 percent total tariff.

The U.S. exported almost $80 million worth of wine to China in 2017, WineAmerica said.

“A 29 percent total tariff … will decimate the market for American wine in mainland China,” the group said.

While almost all of the U.S. wine exports to China are from California, the tariff would cause a ripple effect that would be felt throughout the domestic industry, WineAmerica said.

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