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PMA Research: Impact of Chinese Tariffs applied to US Fresh Fruit Exports

Overview of Chinese Tariffs


The People’s Republic of China’s Ministry of Commerce (MOFCOM) on March 23, 2018 announced a proposal to levy retaliatory tariffs impacting approximately $2.0 billion in U.S. food and agricultural exports to China in response to the recent U.S. 232 Trade Action on steel and aluminum.

Additional tariffs of 15 percent would be applied to exports of fruits, dried fruits and nuts (among other products) from the U.S. in retaliation for tariffs introduced by the United States. Chinese customs began levying these additional tariffs April 2, 2018.

 

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Australia's citrus industry set for another record year but nurseries run short of tree stock

Citrus growers across Australia have good reason to celebrate, with prices and global demand predicted to hit new records.

Chairman for Citrus Australia Ben Cant said the industry was booming, with growers getting twice or three times as much for their fruit than they were five years ago, and exports were steadily increasing.

"We've seen returns in the vicinity of $700–900 a tonne on navel oranges this season," Mr Cant said.

"In 2012/2013 we were looking at $200–300 a tonne, which is about our cost of production … so now we see fantastic returns for growers."

Sunlands citrus grower Mark Doecke said it had been an exceptional season for growers as weather conditions, fruit quality, and crop quantity had been great.

"Citrus has to be picked when it is dry and above 12 to 13 degrees, so this year with harvest we had no drizzle and no rain," he said.

"I feel for my brothers in the dryland farming but, as far as citrus picking goes, it's been excellent for us."

Sunlands citrus grower Mark Doecke says they've had great season with good fruit quality, weather conditions, and fruit quantity. 

And as demand is outstripping supply, Australian exports are predicted to have increased by 10 per cent this year.

Mr Cant said last year's official figures for citrus exports were around $480 million and they were confident to be a bit over $500 million in exports this year.

"And we could see $550–600 million in export next year," Mr Cant said.

"We've seen positive improvements in all markets, Japan has been about the same but China and the USA are up and pretty much everything across the board.

"Certainly, the demand for navel oranges continues to rise across key export markets like China and Japan."

Chairman for Citrus Australia Ben Cant says citrus exports are predicted to have increased by 10 per cent this season. 


Growers benefit with first harvest under new import rules to China. After years of negotiations the Chinese Government recognised the Riverland region as a pest-free area for all horticulture commodities late last year, and the benefits were being felt by citrus growers this harvest.

The fruit-fly free recognition for exports to China means growers do not have to cold-treat their produce, which results in faster and direct shipment and cost savings for growers.

The Riverland's fruit-fly-free recognition for exports to China gives growers a competitive advantage. 

Chair of Citrus Australia SA Region Steve Burdette said it was their biggest competitive advantage where additional cost for cold treatment would not have to be paid anymore.

"The fruit is a lot fresher when you ship it and eating quality is a lot more superior," Mr Burdette said.

"It created a lot more demand for our fruit into China."

Mr Cant said reasons for the high demand from China was their rising middle class prepared to pay for quality and the recognition of Australia's citrus as a premium product.

Citrus Australia market access manager David Daniels said there was a 50–60 per cent increase of exports to China from South Australia compared to last season, but this number was based on a low tonnage figure.

"China is the number-one market across the country, but that trade is primarily captured by the Victorian exporters. For South Australia, Japan is still a very strong market," Mr Daniels said.

"Returns to growers are better than ever."

Ben Cant says demand for navel oranges is certainly increasing. (ABC Rural: Jessica Schremmer)
"I would have to say everywhere we go, growers are very happy, with some saying prices are better than they have ever experienced in their lifetime."

Mr Daniels said the global demand for citrus was high due to an undersupply from competitor nations, where growers struggled with pest and disease hitting their produce.

Citrus plantings boom but many nurseries are sold out of trees. As global demand for citrus is expected to be strong, thousands of new citrus tree plantings are going into the ground across the country. But many nurseries are sold out of stock and do not have trees available until early 2020.

Mr Cant said there was a two to three-year wait for nursery stocks.

"We are on a massive growth trajectory, people are putting in trees of the preferred varieties as fast as they can right now," he said.

Chislett Farms nursery manager Jonathan Chislett from the Mallee region in Victoria said demand for trees was very high.

"We're sold out for this year and next but have capacity for 2020," Mr Chislett said.

"I don't have the exact numbers but it might be a couple of hundred thousand trees."

Mr Chislett said it was the highest demand he had ever seen and, as demand increased, nurseries were increasing their capacity to accommodate for it.

Engelhardt Citrus nursery owner John Engelhardt, located in the Orara Valley in New South Wales said he sold out of stock in July this year and would not be able to supply growers until January 2020.

"There is a lot of demand for citrus trees as the growers are getting reasonable prices for the fruit and also the export markets seem to be lucrative," Mr Engelhardt said.

"We are increasing production but at a reasonable pace."

Mr Cant said they were concerned about the volumes of trees coming on board but would work hard on opening more export markets.


ABC Rural
By Jessica Schremmer and Nadia Isa

Source: https://www.abc.net.au/news/rural/2018-10-19/another-record-year-for-citrus-industry/10388240 

Record volumes of California grapes

The industry has set a new five-week record for shipments worldwide despite trade tensions
rom 8 September to 12 October the California table grape industry exported over 23m cartons, marking the most boxes shipped in this window on record.

“This year, unfortunately, there was a period of nearly three months when shipments to USDA were under-reported compared to prior years,” said Kathleen Nave, president of the California Table Grape commission.

“This caused confusion as it appeared that with excellent quality and a large crop, the volume wasn’t moving. Once the reports were updated, two things became clear: volume was moving all along, and the last five weeks set a volume record.”

Due to the voluntary nature of USDA daily reporting, data collected is typically lower than the actual reported volume.

“It is pretty easy to add 22 percent to the last five weeks of USDA data and see why the expectation is that the shipments will have blown away industry actuals,” Nave said.

Grapes shipping into traditional export markets were down only eight per cent in total despite some trade tension, while Nave reported volumes increased to other markets including Australia, Japan, Malaysia, Mexico, New Zealand, South Korea, and the Netherlands.

From September through to January, the industry typically ships around 60-65 per cent of its volume, according to Naver. Because of this, aggressive autumn promotions will be planned, and additional funding allocated to late-season product.

Major California grower, Sunworld, also reported a record crop for the season.

Source: http://www.fruitnet.com/asiafruit Author:  Camellia Aebischer

 

U.S. - Larger California citrus crop expected but smaller Navel sizing

The 2018-19 California citrus crop looks like it will be larger than last year, but there will likely be some issues with sizing, according to an industry body.

California Citrus Commission president Joel Nelsen told Fresh Fruit Portal that it seems Navel oranges would be most heavily affected by a higher proportion of smaller sizes in the wake of the heat wave this summer.

But overall he said the season was shaping up well, with good fruit flavor and exterior quality expected across the board.

The first harvests will likely start this week, and initial volumes to be available in the market for Halloween in late October.

“The big issue for us this year is there seems to be more smaller-sized fruit,” he said.

“So that fruit 88s and smaller are going to be more difficult to market – we’re going to have plenty of 56s, 72s … but everything is shaping up well. The external quality looks good, and all the summer heat should bring us good flavored fruit, so there’s room for optimism.”

He said the smaller sizing could be across all citrus types this season, but as yet it was unclear.

“I know up in the San Joaquin Valley we’ve got an excellent crop of lemons, I know the mandarin fruit looks pretty good right now from a size perspective … So I think it’s mainly been the Navel oranges that’s been affected.”

He also pointed out that there has been plenty of surface water growers could access this year.

Timing-wise the season is running a little bit later than last year, with a lack of cold nights slowing color development.

“You can’t be picking green fruit when it comes to citrus. We haven’t had that many cold nights, so it’s all up to Mother Nature now,” he said.

The mandarin harvests should start around the same time as the Navel harvests, beginning with Satsumas, then moving onto Clementines and Murcotts.

While the U.S. Navel market is reported to be relatively healthy at the moment, a recent market report by Capespan North America noted the easy peeler market was much slower, with an abundance of Chilean mandarins available.

“We’ve seen an explosion of offshore imports into our domestic market and the pricing is chaotic. One could almost argue there has been some dumping in terms of price,” Nelsen said.

“There is an oversupply situation, and it’s difficult for the domestic producer to push back on that because our costs are generally more expensive than what the offshore producer has in terms of cost.

“But we think that with our consistent quality, meaning both flavor and exterior quality our fruit will knock that stuff off the store shelves.”

Source: www.freshfruitportal.com

Trump's trade tariffs push Egyptian oranges to Shanghai fruit shops

The trade war between the United States and China is presenting opportunities for fruit distributor Sunmoon Food Co., as the company is now shipping navel oranges from Egypt, kiwis from Italy and apples from Poland into China for the first time ever. The produce is to fill the gap created when the Asian nation retaliated by slapping tariffs on U.S. fruit.

Sunmoon is not by any means a big company if one compares them to Fresh Del Monte Produce, for instance. Where the latter had a revenue of $4.1 billion last year, Sunmoon only had a turnover of $45 million. But the new business it’s doing in China underscores how the tariff tit-for-tat between the world’s two biggest economies is reshaping global trade flows. China imported $6.2 billion worth of fresh and dried fruit and nuts last year, up nearly ten-fold from 2015, according to customs data.

“As with any trade war or political upheaval, there will always be a certain re-balancing along the markets,” Gary Loh, Sunmoon’s chief executive officer, said in an interview. “Companies like ours can take advantage of this and introduce new products into new markets.”

Sunmoon counts China as its largest sales market, where it can reach 900 million mouths through its partnership with Shanghai Yiguo E-commerce Co., an Alibaba Group Holding Ltd. affiliate that owns more than half of the company.

When China raised tariffs on U.S. goods, Sunmoon responded by shipping navel oranges from a packaging house in the suburbs of Cairo to its warehouses in Shanghai. Other countries' oranges are being tested, like the ones from Israel, Morocco and Spain. These oranges are put out in the Chinese market with the chance of increasing shipments next year if the tariffs have not been removed.

Source: Bloomberg via: www.freshplaza.com


Publication date : 9/17/2018

 

Bumper California navel deal predicted

Fruit set is up 22 per cent on the five-year average meaning high volumes expected despite no increase in total hectares planted
Starting from a lower plantation base this season the California navel deal is looking to be the most fruitful in volume since the 2005-2006 season. The news comes with significance as total land volume this season is down 8,700 planted hectares from ten years prior.

Survey data from the California navel Orange Objective Measurement Report indicated a fruit set per tree of 426, above the five-year average of 333 (up 22 per cent).

The survey predicts the initial 2018-2019 navel orange forecast is 80m cartons, up 11 percent from the previous year. Of the total navel orange forecast, 77m cartons are estimated to be in the Central Valley.

Bearing orchards are at the same number of hectares as the year prior, but with the higher fruit set (up 426 per tree from 273 last season) the hope is that forecast volumes will be bumper.

However, total tonnage might not be as high due to fruit diameter at a lower September 1 average. The five-year average as of September 1 was at 6.8cm, now down to 5.3cm.

 

Source: http://www.fruitnet.com Author: Camellia Aebischer

USDA to purchase US$500M of produce as part of trade war assistance

The U.S. Department of Agriculture (USDA) says it will purchase more than US$200 million of apples and cherries as part of its assistance programs to growers impacted by tariffs implemented by countries like China.

A total of a little more than US$500 million will be spent on fruits, vegetables and tree nuts under the Agricultural Marketing Service’s (AMS) Food Purchase and Distribution Program, which has a total budget of US$1.2 billion.

The Food Purchase and Distribution Program is one of three programs – along with the Market Facilitation Program (MFP) and the Agricultural Trade Promotion Program (ATP) – with a total value of US$12 billion recently announced for farmers affected by “unjustified retaliation by foreign nations.”

China has implemented heavy tariffs on all U.S. agricultural exports, while Mexico has set duties for imports of some fruits including apples.

The amounts of commodities to be purchased through the AMS program are based on “an economic analysis of the damage caused by unjustified tariffs imposed on the crops listed below,” the USDA said.

“Their damages will be adjusted based on several factors and spread over several months in response to orders placed by states participating in the FNS nutrition assistance programs,” it said.

The USDA has set aside US$111.5 million for sweet cherries, US$93.4 million for apples, US$85.2 million for pistachios, US$63.3 million for almonds US$55.6 for fresh oranges, US$48.2 million for grapes, US$44.5 million for potatoes, US$34.6 million for walnuts and US$32.8 million for cranberries.

For cherries and almonds, the USDA said the program details are yet to be defined, and these two commodities were not included in the program’s US$1.2 billion budget.

For fruits, vegetables and tree nuts, assistance was also announced for apricots, blueberries, figs, grapefruit, hazelnuts, kidney beans, lemons/limes, Macadamia nuts, Navy beans, orange juice, pears, peas, pecans, plums/prunes, strawberries and sweetcorn.

“Early on, the President instructed me, as Secretary of Agriculture, to make sure our farmers did not bear the brunt of unfair retaliatory tariffs,” said Perdue.

Perdue said that after careful analysis, this strategy has been formulated to mitigate the trade damages sustained by farmers.

“President Trump has been standing up to China and other nations, sending the clear message that the United States will no longer tolerate their unfair trade practices, which include non-tariff trade barriers and the theft of intellectual property,” he said.

“In short, the President has taken action to benefit all sectors of the American economy – including agriculture – in the long run.

“It’s important to note all of this could go away tomorrow, if China and the other nations simply correct their behavior. But in the meantime, the programs we are announcing today buys time for the President to strike long-lasting trade deals to benefit our entire economy.”

Click here to view the USDA press release.

 

Source: www.freshfruitportal.com 

U.S. has launched “biggest trade war in economic history”, says China

The U.S. Government has followed through on its threat to implement tariffs on US$34 billion worth of Chinese goods, in a major escalation of a trade dispute that will likely hit consumers and companies in both countries.

The 25% duties, which went into effect at 12:01 am EST, prompted quick retaliation by Beijing, which said it immediately put its own similarly sized tariffs on U.S. goods, including fruits and vegetables.

China’s Ministry of Commerce said in a statement the U.S. “has violated World Trade Organization rules and launched the biggest trade war in economic history to date.”

It accused the U.S. of bullying and said the move would jeopardize global supply chains and hinder the pace of global economic recovery. It added this would trigger “global market turmoil and will affect more innocent multinational corporations, general enterprises and ordinary consumers.”

“The Chinese side promised not to fire the first shot, but in order to defend the core interests of the country and the interests of the people, we had to be forced to make the necessary counterattacks,” the ministry said.

“We will promptly inform the WTO about the situation and work with countries around the world to jointly safeguard free trade and the multilateral system. At the same time, we reiterate that we will unswervingly deepen reform, expand opening up (of markets), protect entrepreneurship, strengthen IP rights protection, and create a good business environment for Chinese companies in the world.”

The first wave of US$34 billion of tariffs is expected to be followed by a further US$16 billion, with both countries having threatened a total of US$50 billion worth of duties.

With no official talks scheduled between the two countries, and disagreements within the Trump administration about how best to proceed, a quick resolution seems increasingly unlikely, the New York Times reported.

“At the moment, I don’t see how this ends,” Edward Alden, a senior fellow at the Council on Foreign Relations, told the publication.

“This is very much in the president’s hands because he’s got advisers that seem divided, some substantively, some tactically. I just don’t think we’ve had any clear signs of the resolution he wants.”

In terms of U.S. fruit exports, cherries, apples and citrus are likely to be the most affected. However, Produce Marketing Association vice president of global membership and engagement Richard Owen last month said he expected the Chinese market to more easily absorb the higher prices for cherries.


Source: www.freshfruitportal.com