Original Story from Albany Democrat-Herald
It’s too early to tell how a potential tariff war between the United States and China would affect mid-valley farmers and agribusinesses, but many Linn and Benton county residents are paying close attention.
The Dow Jones Industrial Average dropped 700 points on Friday — 3 percent — as investors worried about the prospects of a trade war.
One of President Donald Trump’s campaign promises was that the United States would close the trade gaps with both China and Mexico. He said he would impose stiff tariffs to do so. He’s already imposed 25 percent tariffs on imported solar panels. The U.S. Commerce Department reported that in February the U.S. trade deficit rose to the highest level in more than nine years, almost $58 billion.
In response to Trump’s plans, China has said it may impose tariffs on more than 120 goods from the United States. Many of those will be agricultural products, especially corn, soybeans and hogs, which come primarily from the Midwest.
Oregon and the mid-valley may not escape the trade skirmishes, but it’s too early to pinpoint which sectors might be affected.
“Well, we’re waiting to see because at this point, from what I hear, grass seed is not included on the proposed tariff list,” said Mike Baker of Pennington Seed in Lebanon. “We hope we can keep our heads down, but we haven’t talked to our biggest customer over there yet. I plan to call him this weekend.”
Baker said the sale of grass seed from the mid-valley to China is significant and the market is expanding, “growing leaps and bounds over the last 10 years.”
“We have one really large customer in China to whom we ship many loads of seed,” he said. “I’m going to touch bases with him. He has some direct links to the government and represents one of the largest seed companies in China.”
Baker said China purchases grass seed from Oregon, Minnesota and Canada.
“They buy a lot of tall fescue and tetraploid annual ryegrass,” he said. “They also buy perennial ryegrass and some Kentucky bluegrass, which mostly comes from central Oregon.”
Baker said much of the grass seed is used for erosion control and the tetraploid annual ryegrass is used to feed fish.
“They plant the seed and when the grass is young and tender, they feed it to fish,” he said. “Most of their fish are herbavores.”
“Anything that increases costs is a real concern to us,” he said. “Our main competitors are in Europe and Canada, which are already more competitive than we are on many of these things. Canadians and Europeans don’t produce the tall fescue or tetraploid ryegrass, but a 20- to 30-percent tariff on our products could make their crops look more appealing.”
Baker also said tariffs could give a leg up to annual ryegrass growers in Uruguay and Argentina.
“I would hate to see tariffs give them an incentive to increase their infrastructure for seed production and cleaning,” Baker said.
Some of the items on which China may impose tariffs include soybeans, corn, cotton, brewing/distilling dregs, wheat, beef, some fruits, tobacco, SUVs, passenger cars, airplanes of certain sizes and a variety of chemicals.
According to Andrea Cantu-Schomus, director of communications for the Oregon Department of Agriculture, Oregon shipped more than $290 million in agricultural products to China in 2017. She warned that those numbers may be a bit skewed because they reflect products shipped from the state, so that may include commodities such as soybeans, which aren’t grown in Oregon, but pass through its ports.
Shelly Boshart-Davis of Boshart Trucking and Bossco Trading ships containerized straw to primarily Asian countries such as South Korea. She said a tariff war would affect her business if it starts to affect the flow of shipping containers worldwide.
“International shipping is a funny thing,” she said. “If there’s a drought in Australia, it might affect us. Currency exchange rates can also affect us. It’s all about the flow and availability of containers for us.”
Boshart-Davis said although some Oregon sectors may be affected, overall it appears the majority of the farm sector that will be affected by a tariff war will be in the Midwest, because China is such an importer of corn, soybeans and pork.
“There’s no doubt it will have some impact,” said Barry Bushue, president of the Oregon Farm Bureau. “China is a major trading partner with the Pacific Rim states, that’s why the Farm Bureau supports the Trans Pacific Partnership.”
Bushue said Oregon exports blueberries, cattle, straw and many other products to China.
Bushue said Oregon doesn’t directly export hazelnuts to China in large quantities, but does sell to other countries that then ship them to China, because there is a 25-percent tariff on hazelnuts shipped from the U.S. into China.
The issues at the Port of Portland in recent years, already greatly affected Oregon agriculture, Bushue said. “Anytime shipping costs or the cost of steel go up, all of those things affect us in agriculture.”
Bushue felt China’s expanding economy could be good news for Oregon farmers.
“They have such a huge population,” he said. “If just 10 percent see an increase in their disposable income, it’s a huge number.”