With Chinese tariffs on cherry imports rising to 50%, the Pacific Northwest braces for the impact on the 2018 season. The Agricultural Marketing Resource Center (AgMRC) notes that US cherry exports were valued at $679 million in 2017.
Farms in the Pacific Northwest alone produce 80% of sweet cherries sold stateside, while a third of cherries grown in the US are shipped overseas. American Shipper estimates that 11% of the Pacific Northwest’s cherries went to China during the 2017 season.
“With the recent tariff actions our customers have canceled orders and redirected our program downwards by approximately 1 million boxes, thus forcing all of this orphaned fruit into the U.S. domestic market or potentially elsewhere in the world, pushing down prices with the extra volume,” Cass Gebbers, CEO of Gebbers Farms stated.
On Wednesday, July 18, Gebbers spoke before the House Ways and Means Committee’s trade subcommittee, explaining the severity of China’s import tariffs. According to Gebbers, Gebbers Farms grew an estimated 5 million boxes of cherries, setting 1.5 million boxes aside for the China market. This order has now been “trimmed by two-thirds” in response to the tariffs that China instituted on April 2, 2018 and July 2, 2018.
Throughout the 2017 cherry season, exporters paid a 10% tariff on cherries, but in April 2018—just ahead of the start of sweet cherry season—China announced their imposition of a 15% tariff on cherry shipments. Three months later, China tacked on an additional 25% tariff on cherries, bringing the tariff total to a staggering 50% on cherry imports alone.
In an effort to make up for tariff costs, Gebbers has attempted to raise prices on their cherries, as reported by American Shipper. “Prior to the imposition of China’s tariffs, [Gebbers] could sell his cherries in the Chinese market at about $8 per pound compared to just over $2 per pound in the U.S. market. When the farm attempted to raise its prices with its Chinese buyers to $10 per pound to make up for the newly imposed import tariffs, many canceled their orders,” Chris Gillis writes.
The US remains the second-largest producer of cherries globally, Turkey being the first, according to AgMRC. Gebbers expressed his concern that China will turn to other countries for the 2019 cherry season: ““We have worked decades to build these markets...Now we will be opening the door to all of our competitors who also grow cherries elsewhere in the world, who will snatch up these markets as soon as we stumble,” Gebbers stated.
“If removal of these tariffs does not happen in the short term, then I would encourage the U.S. government to leave on the table any and all mitigation options to assist the growers, packers, and shippers — as well as the people whose jobs they support — that are being impacted by these retaliatory tariffs,” Gebbers said on Wednesday, as quoted by The Packer.
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