Most U. S. Exporters Eat Up Japanese Trade Agreement : But Sunkist Says It Expects High Tariffs to Hinder Its Sales
Sunkist Growers, the world’s leading marketer of citrus fruit, expressed disappointment over a key part of Japan’s agreement to lift limits on U.S. beef and citrus sales, complaining that high Japanese tariffs on oranges will continue to limit exports just as surely as quotas have.
“Our No. 1 concern was bringing down the duty to make oranges more affordable to the Japanese consumer,” said Curt Anderson, spokesman for the Sherman Oaks-based cooperative of California and Arizona citrus farmers. Japan collected $37 million in orange duties last year, Anderson said, and this added about $6 to the price of a 40-pound carton of oranges.
But from other quarters--from California cattlemen to Florida citrus producers--the response to the accord was one of relief that a major dispute had been resolved by the United States and a major customer of agricultural products. California now counts on exports for about 20% of annual farm income of about $15 billion.
“This is very good news for California agriculture,” said Henry J. Voss, president of the California Farm Bureau Federation, the state’s largest association of family farmers and ranchers. “The agreement also sends a signal to other nations on the Pacific Rim. South Korea basically mimics Japanese trade policy, so this could improve access to that market also.”
Cattle producers, Florida citrus growers and some of Sunkist’s California competitors hailed the accord. Even Sunkist welcomed other aspects of the agreement, particularly a liberalization of restrictions on foreign-produced orange juice.
Frank Limacher, an agricultural economist with the California Department of Food and Agriculture, viewed Sunkist’s negative response as an expression of the cooperative’s concern that it will face more competitors in the Japanese citrus market.
“This is what Sunkist is concerned about,” Limacher suggested. “Sunkist really doesn’t like competition in the marketplace.”
Moreover, a California competitor of Sunkist, publicly traded Riverbend International, disputed Anderson’s contention that continued high tariffs would nullify the removal of quotas. If new players enter the unrestricted market, said Larry Beston, vice president of marketing for the Sanger firm, California will continue to compete well in terms of quality.
Phasing Out Quotas
“Florida will have some opportunities, as well as Australia and Israel,” acknowledged Beston, “but the California orange is superior and we’ll still have an opportunity in this state to get greater volumes ultimately.
“We would have preferred that the quotas be opened up in less than three years of time, and certainly we would have liked to see the tariffs come down,” Beston added, “but our effort is to get our product into the Japanese household. One way to do that is to allow more product in.”
Under the trade agreement, which replaces one that expired in April, Japan agreed to increase its annual quota on fresh oranges by 22,000 metric tons a year in each of the next three years and then remove all volume limits. Of the 123,000 tons of fresh oranges allowed into Japan last year, said Anderson of Sunkist, more than 90% came from California and Arizona.
California’s Florida competitors, who dominate the nation’s citrus juice industry, supported the attack on Japanese quotas as a means of increasing their sales of fresh fruit in Japan. They also welcomed lower juice tariffs.
“Florida citrus growers wanted immediate liberalization of all orange and orange juice quotas in Japan, but this was a negotiated settlement and we are pleased with the outcome,” Bobby McKown, executive vice president of Florida Citrus Mutual, told United Press International.
According to U.S. trade officials in Tokyo, the agreement will expand orange exports by $25 million. It will also boost beef sales, currently $600 million a year, to at least $1 billion.
Made Some Concessions
“It’s good news for us,” said John Ross, staff director of the California Cattlemen’s Assn. “We were looking for liberalization more quickly, but we think Ambassador (Clayton K.) Yeutter reached a pretty good agreement.”
As with fresh-orange shipments, beef duties will remain at 96% of the meat’s value for the next three years. Unlike the orange levies, however, these are scheduled then to begin a three-year reduction to 50%.
But in exchange for U.S. concessions on beef tariffs, the Japanese agreed to trim duties on grapefruit to 15% from 25%, and also will reduce levies on frozen peaches and pears, macadamia nuts, walnuts, pecans, beef jerky, sausage and pork and beans. Ended entirely will be tariffs on lemons, pistachios and pet food.
“Improvement of access to Japan for our nut crops is a pleasant result of all this,” said Voss of the California Farm Bureau. “Japan is a big market for nuts already and demand for them is increasing there. They already are a significant market for oranges, and this should improve our grapefruit and lemon exports, too.”
