Far East Replacing Europe as Key Market : State Moves to Boost Farm Exports
Four 16-ton cranes hoisted pallets of California oranges into the hold of the freighter Spring Breeze last week at the rate of 2,200 cases an hour until all 248,190 were loaded for the 12-day voyage from the Port of Long Beach to Japan.
Every week, a similar Stockholm-based Cool Carriers refrigerated ship, laden with California citrus, makes the transpacific crossing under charter to Sunkist Growers, evidence of the growing role of export sales. Exports last year accounted for $2.66 billion of California’s $13.5-billion in gross agricultural receipts, according to federal figures released Monday.
As a result, growers are faced with new opportunities--and an increasing dependency on foreign markets and vulnerability to international competition and trade practices.
For example, said Russell Hanlin, president of Sherman Oaks-based Sunkist, the strong dollar and restrictive trade practices have shrunk the Western European market for California citrus to a bare 1 million cases last year from about 6 million in 1980.
“Fortunately for the growers, we’ve had commensurate growth in the Far East, which now dominates our export picture,” Hanlin said.
Still, overall, the state’s agricultural exports have plunged from 1981’s record $4.2 billion and remain slightly below 1978’s total of $2.8 billion. “The down trend in agricultural exports has severely depressed California agriculture because of the industry’s increased dependency on exports,” Security Pacific National Bank reported in its 1985 review of California agriculture.
Current federal farm programs that support U.S. prices at levels above world prices have fed this down trend, particularly hurting California’s exports of cotton and rice, according to the California Farm Bureau Federation, the state’s largest organization of farmers and ranchers.
(Congress is considering legislation to replace current farm policy, which expires Sept. 30. The House began drafting its bill last week, and the Senate is expected to begin this week, but a consensus is not expected to come easily.)
The California federation, generally among the most ardent champions of a market-oriented farm program geared to improve the ability of farmers to compete internationally, has co-sponsored with the state a series of trade seminars--including one at Monterey last week--to encourage growers and shippers to get involved in exporting. California’s stake is not small: It already ranks third, behind the major grain-growing states of Iowa and Illinois, in volume of exports, accounts for $1 in every $12 of the nation’s export sales and provides more than 95% of 14 major export commodities. Cotton, almonds, citrus, grapes and rice account for 56% of its agricultural exports. And 60% of the state’s cotton crop is earmarked for export.
Nationally, agricultural trade generated a $19.1-billion surplus last year, while the nation’s total trade ran a $120-billion trade deficit, Mike Dwyer of the U.S. Department of Agriculture’s Foreign Agricultural Service told the Monterey gathering.
“If you’re waiting for the dollar to weaken,” Dwyer said, “I think you’re making a mistake. Quality is what is selling American products, not price.”
The potential for growth in agricultural exports is large, he said, especially in so-called high-valued and value-added products, which include fresh produce, meat and processed foods, in contrast to such bulk commodities as grains.
Richard Nutter, agricultural commissioner of Monterey County, the nation’s largest producer of vegetables and the state’s second-biggest agricultural county after Fresno, said that only $60 million of Monterey’s $1 billion in agricultural revenue last year came from exports.
“There’s plenty of product looking for new markets to go into,” Nutter said.
The California government is only beginning to develop overseas markets. By contrast, New York has maintained a foreign-trade office abroad for more than a decade. But the California Department of Food and Agriculture and the 2-year-old California World Trade Commission, which shared seminar sponsorship with the farm group and the University of California Cooperative Extension, intend to make the state’s agriculture much more visible abroad.
In March, for example, they sponsored a trade visit to Japan and Korea in an effort to improve awareness of California products and reduce restrictions on their importation, said Jean-Mari Peltier, the commission’s agricultural-trade specialist. International food shows offer growers an opportunity to link up with foreign buyers, but, so far, the U.S. presence at these has been “austere” at best, she said, compared to such competitors as the United Kingdom and France.
“One advantage we have in Japan,” Peltier said, “is that California holds a great deal of mystique.”
Rod Ballard, president of the family-run San Benito Orchards & Winery in Hollister, said he found that to be true in introducing dried fruits and wine among Pacific Rim nations generally. “California does have a super image,” Ballard said. “It’s something we should take advantage of.”
California plans to make its flag better known abroad by buying blocks of space at international trade shows and subletting shares of exhibit space on favorable terms to individual firms that otherwise could not afford to participate, according to Janece Long. She is leaving the California World Trade Commission in June to run her own export consulting firm.
“California is a nation-state,” said Sam Farr, a Democrat who represents Monterey County in the Assembly, “and it should be acting like a nation-state.”
Farr said legislators have grown increasingly aware of the importance of international trade. Studies are under way, he said, to explore the practicality of opening overseas trade offices and to find a way to modify the state’s so-called unitary system of taxing multinational firms on the basis of their worldwide operations--a practice that few other states follow and many foreign businesses find onerous.
Farr has sponsored legislation that would offer an alternative taxation scheme in exchange for a one-time fee that would finance state trade-expansion programs.
State and federal officials have a lot of negotiating to do to remove current import restrictions abroad. For example, said Monterey County Agricultural Commissioner Nutter, while fear of importing exotic agricultural pests can be real, it often is more politically motivated than biological. For example, he asserted, political considerations underlie Japan’s refusal to admit cabbage and Australia’s ban on celery imports.
“They all have rationales,” said shipper Derrell Fulmer of trade barriers. “They all make sense to one side and don’t make sense to the other.”
However, Americans have a lot to learn about international trade from their foreign competitors, added Fulmer, who represents Pandol Bros., a Delano shipper. “We Americans have a tendency to believe that we do everything better than anyone else,” he said. “Well, that’s not quite true.”
For example, he explained, quality is a prime consideration in selling abroad, and packing techniques that work domestically may not protect exported goods until they reach distant retail outlets abroad. Importers who receive damaged produce or immature fruit from one California shipper will hesitate before placing another order with any California shippers, Fulmer warned.
“Many California shippers are continuously shipping the wrong quality, and it hurts the whole industry,” he said.
CALIFORNIA FARM EXPORTS
Exports Percent of (billions of dollars) Total Harvest 1979 2.80 1979 21.7% 1980 4.01 1980 28.6 1981 4.20 1981 29.6 1982 3.31 1982 23.0 1983 3.05 1983 22.6
CALIFORNIA CUSTOMERS for 1983
Indonesia 5% Taiwan 3% China 2% Other 5% Japan 30% Hong Kong 5% Canada 16% South Korea 16% Common Market countries 18%
Source: California Department of Food and Agriculture
