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  • Trade war could shake almond sales this year

    Jun 21st, 2019

    The good news for almond farmers is that for the second year in a row, it doesn’t appear that they have to worry about whether they’ll have enough water to produce a bumper crop.  But they do have international trade policy – and a new round of retaliatory tariffs – to contend with. This past week India announced retaliatory tariffs that will target 28 specified goods originating in the United States – including almonds, of which India is America’s largest importer. The announcement comes after local growers had to contend the fallout of an escalating trade war with China that affected the market, and the increased tariffs in India mark the second massive Asian market to shake things up in the global agricultural trade.

    While local growers and brokers like Dave Phippen – a partner in Travaille and Phippen and a private almond rancher himself – would prefer unfettered trade, some economists believe that the escalating trade tensions could ultimately lead to a better trade that would ultimately help growers.

    “For most farm sector folks, our products have never had favorable treatment in the global market,” Phippen said. “There has always been some impediment for us getting our product into foreign markets, and what this administration has done is basically what the growers have been asking for.

    “We would love unimpeded trade and it looks like there is going to be a little bit of pain for us before we get there, but hopefully that pain is a temporary thing as we work towards a ‘no barriers’ sort of arrangement.”

    According to Phippen, the recent India tariff increases will affect American exporters of almond kernels much more than the whole-shell exporters – primarily, Phippen said, because India still performs hand-shelling and prefers that shelled almonds be imported to provide steady work for people in the emerging country.

    And as the California almond industry continues to turn out a record crop every year, the need to penetrate foreign markets has become a priority for the industry – spending millions of dollars over the years to find a place where the nuts can land after the domestic demand has been satisfied.

    The announcement from India sparked fierce political backlash from California politicians who blamed the current administration for adversely affecting growers and the local communities that their efforts support. California Senator Diane Feinstein weighed in on the issue, as did local congressmen from areas where almond production comprises a large portion of the agricultural exports.

    “This trade war has to end. The president is shooting from the hip on this trade policy and it’s Central Valley almond farmers that are left holding the bag,” said Congressman Josh Harder, who represents the 10th District that encompasses Turlock, Modesto, Ripon, and most of Manteca. “India is our top export partner and we can’t just afford to take this hit.

    “I’m going to continue pushing the administration and the USDA to stop this cycle of retaliatory tariffs.

    “We need to eb supporting our farmers, not cutting off our markets and depressing our economy.”

    According to the United States Department of Agriculture, the United States exported over $650 million worth of almonds to India in 2018 – the majority of them grown in the Northern San Joaquin Valley.

    For growers like Phippen, however, the hope is that these temporary hurdles will ultimately benefit the growers in the long-run by leveling the playing field and creating a more equitable trade scenario for both cooperatives and individual growers who want to share the fruits of their labor with the growing markets on the other side of the globe.

    While it would have been nice for the growers to get a bit of a break after a particularly brutal drought that made water scarce and expensive for a water-hungry crop like almonds, Phippen said that rolling with the punches is all part of the job.

    “There is always going to be a new challenge – we’re used to that,” Phippen said. “When the sun comes up it’s always finding out what the challenge is and how fast we can react to that challenge.

    “We could argue about these things, but as growers we have to correct whatever the challenge is and be up for the challenge. What we want is a fair fight, and right now with taking almonds into the Chinese market, it’s not a fair fight – we keep getting beat up over something that doesn’t have anything to do with our product. But we’re spending even more money in the market this year, and we’re confident that things are going to get cleaned up and global trade will open up and we won’t have enough almonds to meet the demand.”