Farmers Caught in Cross Fire of Trade War : State’s Growers Must Cope With High Tariffs but Not Alienate Japan
As the United States retaliates against foreign trade restrictions--aiming most particularly at the Common Market and Japan--California agriculture is finding itself faced with the possibility of alienating its best overseas customers: Japan accounted for 31% of the state’s agricultural exports last year and the Common Market 21%.
“It’s a fine line we have to walk,” conceded Henry J. Voss, a San Joaquin Valley rancher and the president of the state’s leading agriculture organization. Voss, who opposes protectionism as a trade doctrine, says U.S. security concerns have so dominated the country’s postwar foreign trade policies that its overseas trading partners have yet to take seriously its complaints over trade barriers.
And the stake for California agriculture is significant. Despite the fact that agriculture exports have dropped from a high of $4.2 billion in 1981 to less than $3 billion last year, the state Department of Food and Agriculture thinks the importance of exports to California’s No. 1 industry is growing. The state accounted for 7.7% of all U.S. agricultural exports last year and contributed more than 95% of 15 of the nation’s export crops. One-fifth of the state’s cultivated cropland is growing food to be exported.
Forced to Raise Prices
Voss, whose crops include walnuts, finds himself forced to charge more this month to sell nuts to European customers after the European Economic Community boosted the tariff on U.S. walnuts and lemons in retaliation against a tariff slapped on pasta products from Europe by the United States to protest “unfair” Common Market trade practices.
“If walnuts didn’t have to pay a price this year,” he reasoned, “they’d have to pay a price later. We have been picked off (by trade barriers), product by product, for the last several years without any response at all (by the U.S. government).”
Voss and the California Farm Bureau Federation, which he heads, opposes restrictive tariffs in favor of free trade. But free , he insists, must be equated with fair .
According to the state agriculture department’s annual report, “Trade barriers are an explanation for slow growth in some markets and products. The Japanese tax of $4 per gallon on wine, 25% on the value of beef and 40% on oranges between December and May, together with quotas, a ban on rice imports and a costly distribution system, make sales of some of California’s leading products difficult in our best market.”
A pound of California tenderloin beef can cost the Japanese consumer more than $16, it said.
Nonetheless, the state awakened to the importance of exporting only in the recessionary 1980s, as a strong dollar and increased competition abroad sliced sharply into markets formerly dominated by U.S. goods. Though this situation is not unique to agriculture, it has focused on the need to produce more economically, market abroad more effectively and make farm policies responsive to world market forces. Rigid price-support programs have virtually priced some commodities out of world markets, making the U.S. government many farmers’ chief customer.
Over the last year, the state agriculture department, the 2-year-old State World Trade Commission, the farm bureau federation and other groups have sponsored seminars to improve the overseas marketing of California goods. And just last week, the state for the first time invested in an export-oriented trade show by leasing 8,000 square feet at the United States International Food Show at the Los Angeles Convention Center. The state then subleased space in its “pavilion” to more than 60 California companies, many of whom are new to foreign markets.
Some U.S. traders are learning the hard way that selling abroad requires different marketing techniques and sales approaches. Ancil Scull, manager of Safeway Stores’ 6-year-old export division, told an export seminar at the show that his company had had to redesign the packaging and labeling of a wide range of products that it manufactures in order to be acceptable in foreign markets.
State and federal officials at the show said much information exists to encourage exports. The State World Trade Commission, which is based in Sacramento, recently opened a Los Angeles office. And the U.S. Department of Agriculture’s Foreign Agriculture Service can provide leads and advice, they said.
“People aren’t using all the services that are now available to them in this country,” said one official. “They’re too often just fumbling. We’ve got to educate ourselves. There’s a big market out there, and American business is ignorant about how to pursue it properly.”
The show’s organizer, Mill Valley-based Andry Montgomery of California, moved its third show from New York City to the West Coast, where it will remain, in recognition of the fact that more international trade flows across the Pacific now than across the Atlantic, according to President Gerard V. Parker.
It took some convincing of the firm’s London-based parent to go along with the transcontinental shift, however. “We had to convince them that we’re not the original 13 colonies, that there’s a beehive of activity out here,” Parker said. “In fact, we are in effect a Pacific nation.”
