Giving up on Chinese market this season
November 2,2018
Small-size fruit, retaliatory tariffs from China and more foreign competition add up to a squeeze play on Tulare County citrus growers this season, with orange picking just getting underway.
California Citrus Mutual president Joel Nelsen says those continuous 34 days of 100-degree temps this summer helped “shut down the trees” for a period and the results is a big crop of small fruit. Tulare County is the top citrus county in the state.
“We are just starting to pack this weekend and we hope to begin to displace those oranges from other countries still in the produce aisles at US supermarkets” Nelsen adds that offshore fruit continues to move into US market during the traditional California citrus growing months both in the beginning and end of our season. That competition will be moving into China too.
Besides the big crop and added competition famers feel they are facing “a real negative impact” from the Chinese retaliatory tariffs of over 50% says Nelsen.
“The reality is this will essentially keep our citrus from moving into that market for this entire season” he shrugs. Instead, “we will try to send some of that fruit to other countries.” He adds that Japan may open their market to reduced tariffs in coming months.
Nelsen says he has been working with the administration closely but believes there is “virtually no chance of negotiations happening soon enough to get our citrus into China this season“ through next Spring. China will have to celebrate Chinese New Year without us, probably with Spanish citrus.
Oranges get squeezed
December through May is historically the peak export months into China with major arrivals occurring in December after being loaded in November. “Finding a new home for that much tonnage or selling it for less to offset the 50% tariffs are not outcomes that generate the net revenue per acre for the grower” admits Nelsen.
The value of the fruit is approximately $250 million.
Some farmers say they have been increasing the percentage of fruit they send to China – up to about 20% of their crop in some cases. This year it could be zero.
Tulare County farmer Guy Wollenman told CNN a few days ago that trade war was hurting their long time family farm near Lindsay. The Wollenmans have grown citrus in California since 1919.
Figuring the tariffs on last year’s crop beginning in April ”We have two bad years with this trade war and I don’t know if we can weather that.” His brother Tom figures the tariffs are costing them $2000 an acre.
CCM’s president Joel Nelsen wonders when this trade dispute will be resolved suggesting right now that “supply exceeds demand” for our citrus and worries farmers “will end up with a red ink year.”