Original post in Capital Press
By MATEUSZ PERKOWSKI
Hazelnuts are harvested in an orchard near Salem, Ore. The specific impacts of a trade deal between the U.S. and China remain unclear for Oregon’s hazelnut industry, though the outlook is positive. Mateusz Perkowski: Capital Press
CORVALLIS, Ore. — While Oregon’s hazelnut industry stands to gain from the first phase of the Trump administration’s trade deal with China, the specifics remain shrouded in mystery.
China’s agreement to buy more agricultural goods from the U.S. amounts to a “purchase agreement” but it’s unclear exactly how that increase will be achieved, said Larry George, president of the George Packing Co., a major packer.
“We have to figure out how to talk to the Chinese government about how to get them to waive tariffs or do some kind of direct purchase,” George said. “We’re not sure exactly how it will work.”
Under “phase one” of the two-stage agreement, China has committed to increasing its purchases of U.S. farm products by $12.5 billion in 2020 and $19.5 billion in 2021 above a baseline amount established in 2017.
According to USDA, the U.S. shipped nearly $19.5 billion worth of agricultural products to China that year. In the wake of the trade dispute between the two countries, U.S. farm exports to China dropped by more than $10 billion in 2018.
For the hazelnut industry, tariffs rose from 25% on in-shell nuts and 10% for shelled nuts to 65% and 50%, respectively.
While the trade deal has established minimum purchase amounts, it doesn’t actually state that tariffs on U.S. hazelnuts or any other farm products will be reduced, George said at the Jan. 16 Nut Growers Society winter meeting in Corvallis, Ore. “None of the big commodity groups got their tariffs lowered by the Chinese.”
It’s possible that hazelnuts and other agricultural commodities will have to apply for tariff waivers or that purchases of these crops will be subsidized by direct purchases from the Chinese government, he said.
At the moment, it’s unknown whether the process will last a couple months or a couple years, George said. “The question is how we get the attention of the Chinese government.”
Even so, the USDA, the U.S. Trade Representative and the U.S. State Department have all been highly supportive of the hazelnut industry in recent trade negotiations, George said.
An upside of the trade tensions is that Oregon’s hazelnut producers have opened the door for shipping their crops directly to China, rather than first funneling them through Hong Kong or Vietnam as part of a “gray market” to avoid tariffs, he said.
Aside from progress in China, the hazelnut industry will see tariffs drop to zero under a recent trade deal with Japan, and U.S. government agencies expect to negotiate with India’s government to eliminate its tariffs on the crop as well, George said. “We need to engage them on a regular basis and we’re seeing real progress.”
Despite the recent trade turbulence, prices for Oregon hazelnuts have improved after taking a steep plunge in 2018.
The initial field price set at the end of summer in 2019 rose to 83 cents per pound, up from 62 cents the previous year. Since then, the field prices have risen by 7 to 35 cents per pound, depending on the variety of hazelnut.
The market was particularly tough in 2018 because the value of Turkish currency had plunged against the U.S. dollar, allowing hazelnut producers in that country to outcompete Oregon growers, said Terry Ross, executive director of the Hazelnut Growers Bargaining Association.
“This by itself was enough to devastate our market,” he said.
Before the 2019 harvest, however, the global inventory of leftover hazelnuts was low, which has contributed to healthier prices, he said.
Turkey’s crop also doesn’t appear to be as large as expected and sales have been brisk thanks to growing demand, Ross said. “The price kept ticking up.”
Mateusz Perkowski
I’ve been working at Capital Press since 2006 and I primarily cover legislative, regulatory and legal issues.
