2019 was a very challenging time regarding all the issues coming up or underway. What you see are the small changes and how they will have a broader effect and conserquences. The strength of this industry is that we are pretty diversified. It is not the 60% tariff on almonds in China. China has been our third in line of export markets. So, a 60% tariff has a broader impact on the business we are doing there. Up to now you cant’s see a lot of effects on the consumers’ side. We are in a very dynamic and complex environment.
Jason Hafermeister, USDA Special Trade Advisor to Secretary Sonny Perdue, said “as we are going into this period of new thinking on trade” we have to bear in mind that US agriculture is surplus-based and dependant on exports and we should think about systems that help us keep these markets open. Since China has joined the World Trade Organisation (WTO) in 2001 it became a 20 billlion-dollar market from one billion before for the US-agriculture. What we want with China, Japan and India is a free and fair trade.
Brian Ezell, The Wonderful Company, about the trade with China:”Trade volume between Australia and China increased by 14%.That was when the retaliatory Chinese tariffs on US agricultural goods were in place. The market potential was and is there, fueled by our ongoing efforts on this very important market. The China per capita consumption of almonds just doubled in the last few years as Australia is replacing US shipments which are bearing a 60% duty. We hope that the actual situation will change as soon as possible.” China, Ezell said, is a very fast moving and evolving market presenting great opportunities.
“Good morning, how have you eaten?” This is the typical morning greeting in China, as Connie Cheung pointed out. And this brought her directly to the point: marketing of almonds in her country. She referred to the social media scene: There is no public relations effort in China without the social media.
A major shifting of volumes to other markets
Julie Adams summarized the current situation in international trade: Nothing is happening quickly and nothing will be resolved quickly.”The diversity of our shipments is our strength. The Asian-Pacific region has become the most important outlet for our products and essentially has been driven by China and India. With the problems with China in sight, we see a major shifting of volumes to other markets for the eighteen months we are in the middle of the trade disputes now. Traditionally you saw direct shipments going to China and also into Hong Kong and Vietnam. What has happened has to do with Australia bearing a zero-tariff agreement with China as we started from 10% up to 60% import duty. In turn that helped product moving and an uninterrupted customer supply. In the last report period China took 25% less, but India went up by 16% and shipments to Australia went up by 50%. Our task in the last period was to fill up the pipeline to India and Australia.
Despite the 25% drop in exports China continues to be our third-biggest destination. The trade dispute represents a certain damper to our export business but does not stop movements and realistically we see major increases longterm. Influencers, nutrition specialists as well as the trade is definitely committed to buy California almonds. That is what we are doing here in order to keep a flow of products into these markets and our partners on site in operation.
An eye on Europe
Emily Fleischman reiterated the fact that worldwide the ABC is maintaining eleven marketing programs. In Europe there are four programs. The activities on this market started more than twenty years ago. As in the past we had not enough money to drive separate programs in different countries, we had a pan-European approach, i.e. strategy, and changed languages according to the area we were dealing with. The countries at that time were the UK, France and Germany. The task is two-fold: we want to establish new outlets for our products and, on the other hand, protect existing markets. In the meantime, the marketing team decided to have individual programs for selected markets. Last year we shipped 507 million pounds, i.e. 25% of our total exports to Europe, 231 million pounds to India. Some twenty year ago Europe outpaced the US. That was less than one pound per capita. Nowadays eating habits have changed due to education of consumers and bakers. Europe is a standout regarding product introductions. Kath Martino, Consultant to the Almond Board in the UK, talked about consumption trends in the market and made out three “P’s as being important – plant, planet and personalization.
How does Brexit have an impact on our sales in Europe? What happens to the tariffs in force for almonds? “The biggest issue we have to face are pesticides”, said Julie Adams and pointed out that sustainability is very important in discussions and she recommends to continue “telling our story”. We have gone from grower self-assessments, correcting the unknowns or missing information and it is important to go through the whole supply chain by the key words ‘confidence’ and ‘trust’. There is a trend in regulatory circles because of trust in the source of food, verifying and how measure are implied on longer term basis.
As we look at India and see how dynamic this market is, we see tht many things happen at one time there. The regulatory issues, trade considerations. We went from 35 to 31 Rupees for inshell almonds and 100 to m 120 Rupees for shellednuts. It used to be 65 Rupees for almond kernels.