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Trade wars affect grape shippers as much as anyone

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There can be no discussion of grape trade without mention of the dissolution of NAFTA and its replacement, the United States-Mexico-Canada Agreement (USMCA).

Probably because it was more about lumber and auto parts than produce, growers were not especially concerned about its implementation.

Ian LeMay of the California Fresh Fruit Association (CFFA), based in Fresno, said, “We already had strong relationships with Canada and Mexico, and it looks like they will be maintained. With robust trading back and forth, we feel we’re walking away with a net positive.”

John Rast, president of Visalia-based Rast Produce Company, Inc., BB #:156829 Visalia, CA, said “I’m not sure how the new agreement will affect us. We have a big customer in Canada, and we’ll buy whatever is needed. Tariffs have been around a long time.”

Of course, tariffs aren’t the same as a full border shutdown, which was threatened in this spring.

Luckily, this did not come to pass. So while table grape trade between the United States and Mexico seems pretty much business as usual, many shippers and exporters are frustrated by high tariffs on grapes and other fruits imposed by China.

“China’s tariffs went from 13 percent to 53 percent,” said Jeff Olsen, president of the Chuck Olsen Company, Inc. BB #:151376 in Visalia, CA, but there was a silver lining. “Movement to China was down, but our sales to Korea were up.”

Jared Lane, vice president of sales and marketing at Grapeman Farms, LP, BB #:274451 headquartered in Los Angeles, echoes the trade challenges with China.

“There are many countries competing on the world market with the San Joaquin Valley during our season, where their production costs are lower and our labor costs continue to rise. These countries supply a lot of our export customers.”

Kathleen Nave of the California Table Grape Commission, said, “Canada and Mexico are the top export markets for grapes, and there are no changes in USMCA that will impact exports to those markets. China is typically the number-three export market, but the 53-percent tariff had a negative impact on volumes shipped. Through November, volumes were down 40 percent.

“The need to find new customers for the grapes that would have gone to China, and the increased competition in export markets from competing U.S. fruits that also had tariffs imposed, created an unexpected spillover effect,” she said.

“This impacted both export markets and the domestic market as more volumes of competitive fruits—apples, stone fruit, cherries, and berries—were available at home. The Commission took a number of actions including adding promotion dollars to the U.S. market and redirecting marketing funds out of China into other export markets.”

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