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U.S. farmers fret over bottom lines as trade war threatens to close export markets

As U.S. President Donald Trump’s trade war heats up on multiple fronts, American farmers are fretting about the impact of those battles at home.

Fruits and vegetables from the United States have been hit with tariffs from other countries in response to escalating trade hostilities. Canada has levied duties on U.S. soybeans and cucumbers. China has targeted soy farmers as well, while also taking aim at apples and oranges. Mexico has placed tariffs on apples and potatoes.

The United States sent more than US$21-billion in agricultural exports to China last year, along with US$20-billion worth of agricultural products to Canada and US$18-billion to Mexico.

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Those figures included more than US$12-billion in soybeans and US$378-million in fruit and juice to China and US$156-million in soybeans and US$3-billion in vegetables to Canada. But the tariffs are disrupting trade flows and prices.

U.S. soybean prices, for instance, have plunged to near the lowest point in a decade, hurting farmers across the United States and Canada. American producers of other foodstuffs are worried that, as their export prospects shrink, an increasing amount of U.S. produce could be destined for local sale, dragging down prices in markets that are crucial to the livelihoods of many growers, from California to Wisconsin.

At lush citrus ranches in Riverside and Kern County, Calif., John Gless and his family have been growing oranges, lemons and grapefruits for nearly a century. The tariffs levied on citrus fruits and citrus products, particularly by China, have made him nervous about oversupply.

“We’ve got more than we can handle here,” Mr. Gless said. “There’s going to be just a lot of extra fruit, which is not good if we have too much and it impacts the price.”

More than 2,500 kilometres to the northeast, in Friesland, Wis., potato farmer Larry Alsum has similar concerns. With three decades experience in the business, Mr. Alsum has a small export market in Canada, but said his customer base is predominantly in the Eastern United States.

As trade relations teeter, he’s starting to get nervous. “Farming, and agriculture in general, is on really tight margins and [is] really high risk,” he said. “This is going to escalate our risk a lot.”

Wisconsin farmers are worried that any restrictions on potato exports by major players in Idaho, Washington State and Oregon could lead to an increase in domestic supply, and falling prices as result. In 2017, Washington State exported US$753-million in prepared, frozen potatoes. Oregon exported US$201-million, and Idaho, US$30-million – leaving the domestic market relatively clear for Wisconsin producers to serve.

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“Wisconsin is a big player on the domestic market, but we need those three big states to be able to export to keep the pressure off,” said Tamas Houlihan, executive director of the Wisconsin Potato and Vegetable Growers Association.

Last month, Mexico imposed a 20-per-cent tariff on frozen potato products coming from the United States, and Mr. Alsum worries that Canada could adopt a similar position if trade negotiations continue to deteriorate.

A growing “buy local” sentiment in Canada may already be lowering Canadian purchases of American food products, even without tariffs having been imposed on them, according to Sylvain Charlebois, a Dalhousie University professor who specializes in food distribution and policy.

“Food patriotism seems to be a card that a lot of grocers are playing with right now,” he said. “It’s in pamphlets, it’s in stores. There are actually announcements – I was, actually, in Montreal and there was an announcement encouraging people to buy Canadian because of the Trump administration.”

While the United States hasn’t levied tariffs on Canadian produce, growers here are worried, too.

“The threat is that some of that extra fruit that the Chinese market won’t take, or the Mexican market or the Indian market, will come to Canada,” said Tom O’Neill, general manager for the Norfolk Fruit Growers’ Association, which packs, stores and markets apples grown by member farmers in Ontario.

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“Produce is always a supply-and-demand situation. You put more supply, and then likely we could see a reduction in price.”

It’s an echo of a warning made by Jeff Colombini, an apple grower in California and secretary of the U.S. Apple Association, back in April. The association says one in every four fresh apples grown in the United States is exported. In 2016-17, more than US$958-million worth of fresh apples were exported from U.S. states, according to government data.

“If the apples meant for export don’t find homes overseas, they come here to California and they go to the East Coast,” he said at the time. “This leads to supply issues and impacts everyone’s bottom line.”

The full effects of trade disputes are still to come for many farmers.

Joel Nelson, chief executive of California Citrus Mutual, an advocacy group representing citrus growers in the state, said the industry is in its “quiet season” until October. Still, he said, farmers got a small taste of trade repercussions in the spring.

“We witnessed a significant slowdown in April and May, which resulted in more product being unloaded in the domestic market or given away in Canada,” Mr. Nelson said. Importers didn’t want to acquire product they couldn’t sell domestically, with higher-than-anticipated prices, so international orders were being cancelled. “It wasn’t a lot, but it happened,” Mr. Nelson said.

If the domestic market is flooded when the season starts again, he said, customers won’t be sympathetic to growers’ plights.

“The customer base knows the situation we’re in. There’s no pity out here,” he said, adding that buyers can be reluctant to pay their usual price if they know volume in local markets will be higher than usual.

“It becomes a negotiation,” Mr. Nelson said. “And growers end up suffering the consequences.”

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