Cherry Exports: Avoiding tariff trouble

Cherries got caught in the trade dispute cross-fire in 2018, and grower-shippers fear a repeat in 2019.

To recap as simply as possible, trade disagreements cut U.S. cherry exports to China in half from 2017 to 2018.

In retaliation to tariffs imposed on Chinese products coming to the United States, China imposed a 15% tariff in April, which was on top of an existing 10% import duty and 13% value-added tax. Then in early July, China added another 25% tariff.

As a result, Northwest cherry shippers sent 1.6 million boxes to China in 2018, down from 3.2 million boxes in 2017, according to James Michael, vice president of marketing for North America for the Washington State Fruit Commission, Yakima. BB #:162666

Despite the rough year, exports remain a huge outlet for cherry growers. Since the 1990s, U.S. Department of Agriculture (USDA) figures show cherry exports have more than doubled.

In 2017, exports reached record volume and value at 246.6 million pounds and $643.9 million, respectively, nearly all of which is attributed to sweet cherries. Canada, South Korea, China, Hong Kong, and Taiwan, according to the USDA, are the top foreign markets for U.S. fresh cherries.

Cherry grower-shippers remain optimistic for the 2019 season but know the terms can change quickly and dramatically.

“Depending on changes with regard to tariffs in the export markets, the volume should remain consistent,” said Chuck Sinks, president of sales and marketing for Sage Fruit Co., Yakima, WA. 163180

“However, if [tariffs] increase too much, we’ll obviously see a dip in sales overseas because the average person won’t be able to afford them. We’ve noticed the largest difference with our exports to China.”

Mac Riggan, marketing director for Chelan Fresh Marketing, Chelan, WA, BB #:342363 said the Chinese tariffs hurt business. Still, he’s optimistic trade disputes will be settled by the start of the season.

“Exports should rise with the growing middle class around the world, like in China, Mexico, and India. If 20 percent [of the population] in these countries is middle class, that’s a market as big as America. I think there’s a lot of pressure on China because people love our fruit there.”

Mike Preacher, director of marketing and customer relations for Domex Superfresh Growers, LLC, Yakima, WA, BB #:113721 said strong exports are critical to cherry shippers: “We need to export 30, 40, 50 percent of the crop.”

But he echoes Riggan’s optimism: “There are emerging middle classes offshore,” he notes, but hopes trade concerns will be cleared up before the season begins.

“We’re in the same boat,” said Brianna Shales, communications manager, for Stemilt Growers, LLC, Wenatchee, WA, BB #:113654 “we just don’t know.” Though she notes that Stemilt doesn’t export as much as some other suppliers.

Whether growing for domestic sales or exports, facing uncertain weather or turbulent tariffs, one thing growers can count on in 2019 is consumer demand. So, when the market starts calling again for one of the last seasonal holdouts, cherry suppliers intend to answer.

This is an excerpt from the most recent Produce Blueprints quarterly journal. Click here to read the full version.

 

Greg Johnson is Director of Media Development for Blue Book Services