Retaliatory tariffs and a slowing world economy will continue to extract a heavy toll on U.S. growers.
That’s the perspective of the latest Quarterly Rural Economic Review from CoBank.
The 23-page report said trade tensions are continuing to increase at the same time the world economy slows.
The report said recent estimates put world economic growth at 2.9% this year, well off from 3.6% in 2018 and the weakest gain since 2009.
However, there is one silver lining, according to the report.
“The new trade deal struck between the U.S. and Japan is a bright spot and will bolster U.S. agriculture’s competitiveness into a key export destination,” Dan Kowalski, vice president of the Knowledge Exchange division at CoBank, said in the release.
The trade deal with Japan is expected to reduce or eliminate tariffs on $7.2 billion of U.S. agricultural commodities and is scheduled to become effective Jan. 1. The agreement eliminates Japanese tariffs on U.S. almonds, walnuts, blueberries, and other fruits and vegetables. Tariff reductions on other products like wine and oranges will be phased over time, according to the report.
On other hand, trade negotiation breakthroughs with China remain “elusive,” according to the report, and authors said ratification of the USMCA before the 2020 election is “increasingly unlikely” because Democratic lawmakers may want to change labor provisions of the agreement.
The report had several specialty crop observations:
- The U.S. Department of Agriculture estimates that California’s 2019-20 almond production will decline 3.5%;
- California valencia orange prices this year have struggled more than other regions and varieties because of size and quality issues;
- Despite production losses in the 2018 crop, prices for shelled and in-shell pecans continue to remain fairly low, with weak export demand linked to increased China exports;
- The U.S. has a 55% share of world pistachio production, and exports have been strong despite tariffs;
- The U.S. accounts for 30% in world walnut output and exports have been trending higher;
- U.S. importers are cautious that a new tomato suspension agreement with Mexico could result in delays.