President’s Message to Membership on Tariffs and Almonds

By Elaine Trevino, President, Almond Alliance of California

July 17, 2018 – -The Almond Alliance has been very busy contacting the highest levels of USDA, the White House Administration and Congress to express the California almond industry’s deep concern about the damage that is occurring from the retaliatory tariffs by our trading partners.  We have requested that our Congressional representatives work together and with the Administration to develop and execute a strategic policy to effectively address the long-standing trade problems in China and other countries, but not at the expense of hard working US families and businesses.

We want to make sure that our elected officials and the Administration understand the threat to the almond industry and the businesses and jobs that rely on their existence.  We expressed that almonds are one of California’s top three valued commodities and the leading agriculture export.  We reminded the nation’s leaders of the following:

* That the industry is composed of approximately 6,800 almond growers, all located in the Central Valley of California.  According to the latest Ag Census, 91% of almond farms are family owned and 74% are less than 100 acres.  Most of these are family farmers who have farmed almonds for a number of generations.

* Some fear that the increased tariffs in China which now are set at 50% will trigger broader price erosion in other markets – for some, this could mean having to go out of business.

* This risk is significant given the California almond industry generates about 104,000 jobs statewide, over 97,000 in the Central Valley, especially in areas that suffer from chronic unemployment. The industry also generates more than $21 billion in economic revenue and directly creates more than $11 billion to the size of the state’s total economy.

* California produces approximately 80% of the world’s supply of almonds. Approximately 70% are exported to over 100 countries worldwide.

* In 2017, total exports to China, India and Turkey combined exceeded $1 billion dollars.  As a percent of production exported, almonds rank third among all agricultural crops.

Below is a summary of the various international markets where retaliatory tariffs are being imposed on California almonds.

* China:   China is the third largest export destination for California almonds, with an approximate 2017 value of shipments to the region of more than $500 million. The tariff rate in China was 10% prior to the 15% retaliatory tariff announced by China on April 2, in response to the US tariffs on steel and aluminum. Their June 15th announcement, in response to the US section 301 investigation, is for an additional 25% tariff effective July 6.  California almonds could be as much as 50% more expensive if all retaliatory tariffs remain in place.  Australia, through an FTA with China, will enjoy 0% tariffs in 2019.  Exports to China, prior to the additional tariff, were anticipated to continue growing at about 6% per year.  Year-to-date, our shipments to the region are up about 20% compared to last year.

* India:  India is the second largest export destination for California almonds, with a 2017 value of $658 million. California almonds are also the United States number one agricultural export to the market, with shipments up more than 20% over last year. The majority of exports to India are in-shell almonds, which effective August 4 will be subject to a specific duty of 42 rupees per kilogram, while the duty for almond kernels will increase to 120 rupees per kilogram. Australia, the other major supplier to India, will retain a specific duty of 35 and 100 rupees, respectively.  For centuries, almonds have been part of India’s cultural tradition and the new additional tariffs could effectively put them out of reach for many consumers in the market.

* Turkey:  Turkey has very recently increased its retaliatory tariff on nuts, including almonds, from the notified 5% to 10%.  Thus, the effective rate is now 25% (the original 15% applied duty in addition to a 10% retaliatory tariff). In this market, the value of in-shell and shelled almonds in 2017 was approximately $147 million.

For all the reasons outlined above, the retaliatory tariffs will have a damaging impact on the almond industry.

I would like to strongly state that we at the Almond Alliance continue to send the strong message that the California almond industry is focused on trade and market growth.  No mitigation recommendations will begin to offset the financial impacts, the disruptions to our relationships with commercial partners, or the longer-term effect this could have on the considerable market development investments the almond industry has made over the past decades.

Please watch for important member alerts and email announcements regarding tariff updates.

Thank you,

Elaine Trevino, President

Almond Alliance of California