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U.S. farmers fearful for bottom lines as trade spat escalates
With measures threatening to close export markets, growers worry they'll be stuck with excess produce

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Monday, July 16, 2018 – Page B2

As U.S. President Donald Trump's trade battles heat up on multiple fronts, American farmers are fretting about the war at home.

Fruits and vegetables from the United States have been hit with tariffs from around the world in recent months in response to escalating trade hostilities.

Canada has levied duties on U.S. soybeans and cucumbers. China has targeted soy farmers as well, while also taking aim at apples and oranges. Mexico has placed tariffs on apples and potatoes.

If these destinations become a less desirable export option for producers big and small, farmers are worried an increasing amount of American produce could be destined for sale in the United States, raising the threat of falling prices in local markets that are crucial to the livelihoods of many growers, from California to Wisconsin.

At lush citrus ranches in Riverside and Kern County, Calif., John Gless and his family have been growing oranges, lemons and grapefruits for nearly a century. The tariffs levied on citrus fruits and citrus products, particularly by China, have made him nervous about oversupply.

"We've got more than we can handle here," Mr. Gless said. "There's going to be just a lot of extra fruit, which is not good if we have too much and it impacts the price."

More than 2,500 kilometres to the northeast, in Friesland, Wis., potato farmer Larry Alsum has similar concerns. With three decades' experience in the business, Mr. Alsum has a small export market in Canada, but said his customer base is predominantly in the Eastern United States. As trade relations teeter, he's starting to get nervous.

"Farming, and agriculture in general, is on really tight margins and [is] really high risk," he said. "This is going to escalate our risk a lot."

Wisconsin farmers are worried that any restrictions on potato exports by major players in Idaho, Washington and Oregon could lead to an increase in domestic supply, and falling prices as a result.

"Wisconsin is a big player on the domestic market, but we need those three big states to be able to export to keep the pressure off," said Tamas Houlihan, executive director of the Wisconsin Potato and Vegetable Growers Association.

Last month, Mexico imposed a 20per-cent tariff on frozen potato products coming from the United States, and Mr. Alsum worries Canada could adopt a similar position if trade negotiations continue to deteriorate.

A growing "buy local" sentiment in Canada may already be lowering Canadian purchases of American food products, even without tariffs having been imposed on them, according to Dalhousie University food distribution and policy professor Sylvain Charlebois.

"Food patriotism seems to be a card that a lot of grocers are playing with right now," he said. "It's in pamphlets, it's in stores. There are actually announcements - I was, actually, in Montreal and there was an announcement encouraging people to buy Canadian because of the Trump administration."

While the United States hasn't levied tariffs on Canadian produce, growers here are worried, too.

"The threat is that some of that extra fruit that the Chinese market won't take, or the Mexican market or the Indian market, will come to Canada," said Tom O'Neill, general manager for the Norfolk Fruit Growers' Association, which packs, stores and markets apples grown by member farmers in Ontario. "Produce is always a supply-and-demand situation. You put more supply, and then likely we could see a reduction in price."

It's an echo of a warning made by Jeff Colombini, an apple grower in California and secretary of the U.S. Apple Association, back in April.

"If the apples meant for export don't find homes overseas, they come here to California and they go to the East Coast," he said at the time. "This leads to supply issues and impacts everyone's bottom line."

Some U.S. products saw a tangible drop in prices before tariffs were even levied, but the full effect of tariffs has yet to be seen. Both China and Canada have put tariffs on American soybean products, with the American Soybean Association reporting a price drop of more than US$2 a bushel between the start of tariff talks in March and their implementation.

Tom Slunecka from the Minnesota Soybean Growers Association said it was "a wait and see" situation for them, since harvests wouldn't begin until the late summer in the south, and later in the north.

As with soybeans, the full effects of trade disputes are still to come for many farmers.

Joel Nelson, chief executive of California Citrus Mutual, an advocacy group representing citrus growers in the state, said the industry is in its "quiet season" until October. Still, he said, farmers got a small taste of trade repercussions in the spring.

"We witnessed a significant slowdown in April and May, which resulted in more product being unloaded in the domestic market or given away in Canada," Mr. Nelson said.

Importers didn't want to acquire product they couldn't sell domestically, with higher-than-anticipated prices, so international orders were being cancelled.

"It wasn't a lot, but it happened," Mr. Nelson said.

If the domestic market is flooded when the season starts again, he said, customers won't be sympathetic to growers' plights.

"The customer base knows the situation we're in. There's no pity out here," he said, adding that buyers can be reluctant to pay their usual price if they know volume in local markets will be higher than usual - as will be the case if export markets shrink in response to international tariffs.

"It becomes a negotiation," Mr. Nelson said. "And growers end up suffering the consequences."

Associated Graphic

Corn and soybean crops blanket small rolling hills near Tipton, Iowa, on Friday. Some U.S. produce saw a noticeable drop in prices before tariffs were levied, but the full effect remains to be seen.


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