The ongoing international trade turmoil between the U.S. and other countries has prompted import tariffs on many U.S. agricultural commodities in important export markets, which could hurt U.S. farmers.
A new report released by the University of California Agriculture and Natural Resources' Agricultural Issues Center estimates the higher tariffs could cost major U.S. fruit and nut industries $2.64 billion per year in exports to countries imposing the higher tariffs, and as much as $3.34 billion by reducing prices in alternative markets.
“One way to mitigate the impact of the tariff impacts would be to offer assistance to shift the products to completely new markets where these displaced commodities could be delivered without causing price declines,” said co-author Daniel A. Sumner, director of the UC ANR Agricultural Issues Center and UC Davis professor in the Department of Agricultural and Resource Economics.
When nuts and fruits are diverted back into the remaining markets for their crops, Sumner and co-author Tristan M. Hanon, a UC Davis graduate student researcher, expect farmers to lose revenue from lower prices.
The agricultural economists foresee major losses for many commodities caused by diverting the produce from high tariff countries to sell in the remaining markets.
Almonds alone could lose about $1.58 billion and pistachios could lose about $384 million, according to Sumner and Hanon.
The authors looked at the impact of tariffs on almonds, pecans, pistachios, walnuts, apples, oranges, raisins, sour cherries, sweet cherries and table grapes. All 10 nuts and fruits are perennial crops, growing on trees or vines, so growers cannot easily change their production quantities or plant a different crop.
The U.S. exports 13 percent of its almonds, 14 percent of its pistachios and 22 percent of its pecans to countries imposing the new tariffs. China and Hong Kong are major export markets for U.S. fruits and nuts. In 2016 and 2017, China and Hong Kong spent over $500 million to buy 40 percent of all U.S. almond exports, and nearly $600 million for most of the exported pistachios. Some of the exports to Hong Kong are transshipped to other markets, but most of it stays in the China market.
The new tariffs apply to all ten crops that are exported to China. “We consider most of the exports to Hong Kong with China because we understand that most of the U.S. fruit and nut exports to Hong Kong are destined for China,” Sumner said.
To avoid paying tariffs, there are clues that Hong Kong's open market is the entry point for nuts ultimately shipped to China, in what Sumner calls “leakage.”
“The 7 million people in Hong Kong would have to eat 20 times the pistachios consumed by people in other countries if they aren't sending them on to China, the Philippines and other Asian countries,” Sumner said. “China turns its back on leakage, but those commodities may be vulnerable if China decides to crack down.”
After the Trump administration imposed tariffs on an additional $16 billion worth of Chinese goods, China announced duties on $16 billion of American goods. Another round of new tariffs has now been scheduled.
In India, Mexico and Turkey, new higher tariffs apply to selected fruit and nut products. India, which buys roughly half of all exported U.S. almonds, applies new tariffs to almonds, walnuts and apples. Turkey's new tariffs apply to almonds, pecans, pistachios and walnuts. Mexico's tariffs target apples, for which the country paid about $250 million last year.
U.S. Secretary of Agriculture Sonny Perdue announced up to $12 billion in federal aid to farmers to soften the impact of tariffs.
“The U.S. government could purchase the commodities that would have been exported,” Sumner said. “Of course, the produce must be diverted from remaining markets to new market channels to avoid driving down prices.”
The full report “Economic Impacts of Increased Tariffs that have Reduced Import Access for U.S. Fruit and Tree Nuts Exports to Important Markets,” along with details on data, sources and methods, can be downloaded for free at the UC Agricultural Issues Center website at http://aic.ucdavis.edu.
[This article was updated at 10 pm, Aug. 14, to update the dollar estimates in this sentence: "Almonds alone could lose about $1.58 billion and pistachios could lose about $384 million, according to Sumner and Hanon."]
A new study on the costs and returns of a beef cattle operation has been released by the University of California Agriculture and Natural Resources' Agricultural Issues Center. The estimated costs can help ranchers and land management agencies on California's Central Coast make business decisions.
“This cost study can be a valuable tool for someone who is thinking about going into the cattle business because it will help them think through the various categories of costs, and aid in developing a budget and business plan,” said Devii Rao, University of California Cooperative Extension livestock and natural resources advisor for San Benito, Monterey and Santa Cruz counties.
Based on the typical costs of a 300-head cow-calf operation, the study estimates costs of an owner-operated beef cattle operation located on leased rangeland in the Central Coast region of California. The cost calculations in this study are based on economic principles that include all cash costs and uses the rental cost per animal unit month (AUM) as a cost of pasture.
“The study can also be used by a seasoned rancher,” said Rao, a co-author of the study. The first cost table has an empty column titled, “Your Costs.” This is probably one of the most useful pages for the experienced rancher. Producers can use this column to enter their own costs and compare them to the costs in the study. It will help them think about where they can make changes in their operation to reduce costs.”
The analysis is based upon a hypothetical cow-calf operation, where the cattle producer leases all rangeland. The “typical” ranch in the Central Coast is an owner-operated cow-calf operation using multiple private and public leases. The practices described represent production practices and materials considered typical of a well-managed ranch in the region.
Input and reviews for this study were provided by ranch operators, UC ANR Cooperative Extension farm advisors and other agricultural associates. A narrative describes the assumptions used to identify current costs for the cow-calf herd, material inputs, cash and non-cash overhead. A ranging analysis table shows profits over a range of average market prices. Other tables show the costs and revenue for production, monthly summary of costs and revenue, and the annual equipment, investment and business overhead costs.
“This study will also be of value to land management agencies that lease their lands for cattle grazing,” she said. “Many agency staff are not familiar with the different aspects of cow/calf operations. For land management agency staff, the most useful portion of the study is likely to be the Operations Calendar, which summarizes the timeline for breeding, branding, vaccinating, calving, shipping, etc.”
“Sample Costs for Beef Cattle – Central Coast Region – 2018” can be downloaded for free from the UC Davis Department of Agricultural and Resource Economics website at https://coststudies.ucdavis.edu. Sample cost of production studies for many other commodities are also available at the website.
For additional information or an explanation of the calculations used in the studies, contact Donald Stewart at the Agricultural Issues Center at (530) 752-4651 or firstname.lastname@example.org.
For information about beef cattle production in the Central Coast region, contact Rao at email@example.com.
A new study on the costs and returns of producing processing tomatoes in Fresno County and the central San Joaquin Valley has been released by the UC ANR Agricultural Issues Center. Growers contemplating crops to grow may use the estimates to help decide whether to plant processing tomatoes.
The report estimates costs and returns and provides an overview of common production practices related to irrigation, fertility and pest management of processing tomatoes. In this report, some specifics are assigned and calculations are based on a hypothetical well-managed farming operation, which is described in detail.
The new study, “Sample Costs to Produce Processing Tomatoes in the San Joaquin Valley South, Fresno County – 2018,” can be downloaded for free from the UC Davis Department of Agricultural and Resource Economics website at http://coststudies.ucdavis.edu. Sample cost of production studies for many other commodities are also available.
For additional information or an explanation of the calculations used in the study, contact Jeremy Murdock at the Agricultural Issues Center at (530) 752-4651 or firstname.lastname@example.org, or Tom Turini, UCCE farm advisor for Fresno County, at email@example.com.
The UC Agriculture and Natural Resources' Agricultural Issues Center has released two new studies on the estimated costs and returns of producing garbanzo beans, also known as chick peas, in the Sacramento and San Joaquin Valleys.
“Although acreage is relatively small, garbanzos are an important crop because California growers produce the large, cream-colored seed that's used for the canning industry, often used for garnishes for salads,” said Rachael Long, UC Cooperative Extension farm advisor serving Sacramento, Solano and Yolo counties.
The studies estimate the cost of producing garbanzo beans on 200 acres as part of a row crop rotation, using subsurface drip irrigation. A three-row bed tillage implement shallowly chisels, tills and reshapes the beds, avoiding disturbance of the buried drip tape left in place. Planting of seed treated for fungal and seedling diseases, Ascochyta rabiei, Rhizoctonia and Pythium, into residual soil moisture occurs in December. Seeding rates for the garbanzo beans are 85 pounds per acre.
Input and reviews were provided by UC ANR Cooperative Extension farm advisors and other agricultural associates. Assumptions used to identify current costs for the garbanzo bean crop, material inputs, cash and non-cash overhead. A ranging analysis table shows profits over a range of prices and yields. Other tables show the monthly cash costs, the costs and returns per acre, hourly equipment costs, and the whole farm annual equipment, investment and business overhead costs.
“The importance of these studies right now is that they are currently being used to help secure USDA crop insurance for garbanzo production, expected in 2020,” Long said.
The new studies are titled “Sample Costs to Produce Garbanzo Beans (Chick Peas), in the Sacramento and Northern San Joaquin Valleys – 2018” and “Sample Costs to Produce Garbanzo Beans (Chick Peas), in the Southern San Joaquin Valley – 2018.”
Both studies can be downloaded from the UC Davis Department of Agricultural and Resource Economics website at http://coststudies.ucdavis.edu. Sample cost of production studies for many other commodities are also available at the website.
For additional information or an explanation of the calculations used in the studies, contact the Agricultural Issues Center at (530) 752-4651 or the local UCCE Farm Advisors; Sarah Light, firstname.lastname@example.org, Rachael Long, email@example.com, Michelle Leinfelder-Miles, firstname.lastname@example.org, or Nicholas E. Clark, email@example.com.
To help ranchers make business decisions, new cost studies for beef cattle production have been released by UC ANR Agricultural Issues Center and UC Cooperative Extension.
Sample costs and returns for beef cattle production in the northern Sacramento Valley are presented in these studies. The studies are titled “Sample Costs for Beef Cattle, Cow–Calf Production,” “Sample Costs for Beef Cattle, Yearling/Stocker Production” and “Sample Costs for Beef Cattle, Finished on Grass.”
"These studies are useful to new and experienced ranchers, lenders and other agribusiness companies, as well as government officials, researcher and students who want to know basics of ranch practices and the costs and returns that can be expected for a well-managed operation,” said Daniel Sumner, director of the UC Agricultural Issues Center. “The studies show ranges of net returns under alternative price scenarios to help indicate sensitivity of returns to cattle market conditions."
The analyses are based on a hypothetical well-managed ranching operation using practices common to the northern Sacramento Valley. The three studies are based on a herd of 300 cows and bred heifers, 60 yearling heifers and 15 bulls. An 11 percent cull rate is applied to the herd. An 89 percent calf crop with three percent mortality before weaning is assumed.
All rangeland and pasture is rented per animal unit month. Ranging analysis tables show net revenue over a range of prices. The costs, materials and operations shown in this study will not apply to all ranches. Ranchers, UC Cooperative Extension farm advisors, and other agricultural associates provided input and reviewed the methods and findings of the study.
Free copies of these studies and other sample cost of production studies for additional commodities are also available. To download the cost studies, visit the UC Davis Department of Agricultural and Resource Economics website at https://coststudies.ucdavis.edu.
The cost studies program is funded by the UC Agricultural Issues Center and UC Cooperative Extension, both of which are part of the UC Division of Agriculture and Natural Resources, and the UC Davis Department of Agricultural and Resource Economics.
For more information or an explanation of the calculations used in the studies, contact Donald Stewart at the Agricultural Issues Center at (530) 752-4651 or firstname.lastname@example.org; Larry Forero, UC Cooperative Extension farm advisor for Shasta and Trinity counties, at email@example.com, or Jeff Stackhouse, UC Cooperative Extension farm advisor for Humboldt and Del Norte counties, at firstname.lastname@example.org.
NOTE: Corrections were made on July 19, 2017, to “2017 Beef Cattle Yearling/Stocker Production in the Sacramento Valley” and “2017 Beef Cattle Finished on Grass in the Sacramento Valley” to show interest calculated for 6 months as stated in the narratives of both studies, instead of 12 months.