California almond industry braces for trade war under Trump
California almond industry braces for trade war under Trump
The largest almond convention in the country takes place every December in Sacramento, California.
Which makes sense. There’s really only five almond growing regions on the planet with hot enough summers and mild enough winters to grow the tree nut, and California’s Central Valley produces about 75% of the global crop.
Among the gigantic pruning machines and booths promoting the latest and greatest pollinator technology strewn around the expo hall, growers and processors talk industry shop — prices, pests, water regulations. And tariffs.
“We do not need tariffs,” said Mohnish Seth, owner of Farmers International, an almond grower and processor based in Chico, California. “I hope they go away. Because we have tariffs on California almonds in India, China, where Australian almonds do not have those tariffs.”
Australia is the second biggest almond grower in the world. And it’s got a big advantage: a free trade agreement with China.
“Our almonds, because we have a tariff situation, it almost costs them $1 a pound more,” said Seth, who exports his crop to more than 60 different countries. “So our product is about $3 a pound, so when you’re paying $1 more, that’s a pretty substantial disadvantage.”
The $4.7 billion California almond industry relies on exports — about 70% of its harvest is shipped overseas. Still dealing with retaliatory tariffs from Trump’s first term, almond growers are worried about becoming collateral damage to another trade war escalation in Trump’s second.
Back in 2018, President Trump levied tariffs on steel and aluminum imports to help U.S. steel and aluminum producers.
China then retaliated by raising tariffs on U.S. products, including hiking the tax on American almonds from 10% to 25%.
“China was our number one export market when the tariffs went into effect,” said Clarice Turner, chief executive of the Almond Board of California.
It’s now fallen to number four. Last fiscal year, China imported about 37% fewer California almonds than it did the year tariffs hit. India — now the number one almond export market — just recently allowed its Trump-era retaliatory tariffs to lapse.
Turner stresses that we don’t know exactly what Trump will do yet. And the Almond Board has spent the last decade trying to persuade foreign governments not to retaliate against them.
“We’ve dealt with tariffs before in the past in many different countries, and we adjust,” said Turner.
You’d think Australian almond grower Neale Bennett would be doing cartwheels over the prospect of another American almond trade war — especially since the average consumer couldn’t spot the difference between American and Australian almonds.
“An almond is an almond,” said Bennett.
Bennett said his country has maxed out its almond production, though. So when tariffs hit California almonds, Australia can’t make up the difference to meet demand. He worries if tariffs cause global almond prices to rise, big buyers will just switch to different nuts entirely.
“A candy bar or a cereal, the percentage of almonds might be dropped and some other nut may be substituted in there,” said Bennett.
Should a new tariff war break out, other players in the almond economy will also feel the fallout.
At the almond conference in Sacramento, Todd Gruber from Gruber Manufacturing is showing off a video of one of the elevators his family business sells to almond processing plants
While Gruber Manufacturing is American, the parts it needs to make its American almond elevators and other equipment often come from Europe, Asia and Mexico.
Some parts suppliers have a special tariff line item on the invoices Gruber receives, he said.
“Ballparking, I think one time we bought a hydraulic motor, just one motor, and the motor was about $1,000 and the separate tariff, I believe, was maybe in the $200 range,” said Gruber.
Gruber said his business has been able to pass on the costs of earlier tariffs to buyers. But if tariffs are raised again, that may be tougher.
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