US nut shipments to China: Will they recover?


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    The “phase one” trade deal with China is paying off substantially for commodities like soybeans, corn, wheat and sorghum, but it’s hit or miss for specialty crop farmers, many of whom are still trying to find replacement markets.

    U.S. walnut exports to China had been slowly declining as Chinese production rose before the trade war began in 2018, but that process accelerated quickly after China hit the nuts with multiple tariffs that added up to a total of 75% for inshell walnuts and 70% for shelled walnuts.The exclusion would shave some of those tariffs down, but not enough to boost sales, as has been the case for oranges.

    China imported 52,722 short tons of walnuts in the 2016-17 marketing year, according to commission data. That was cut roughly in half to 25,667 tons in 2017-18, and then dropped farther to 16,456 tons in 2018-19.“China does have other viable places to import from, so they can buy from Chile or Australia, which both have tariff-free agreements with China,” Graviet said. “At this time buyers are not likely to use the exclusion process unless they have specific customers that only want California products.”

    Adding to the problem is the fact that California farmers continue to produce more. The industry is diversifying its exports, but prices are declining. “For the most recent crop year ending Aug. 31, 2019, the industry saw a 7% increase in production, reaching 672,723 short tons from 350,000 bearing acres,” Graviet said. “Despite tariff and non-tariff barriers, the majority of the larger crop was sold, however at significantly reduced prices. Total value of the crop saw a 44% decline to an estimated $879 million — a loss in value of close to $700 million.”

    For U.S. almonds, exports had been growing before the trade war, but China’s tariffs — even after the exclusions began — are significantly holding back trade.Almond shipments to China fell by 25% last year and are down 20% so far this year, said Julie Adams, a vice president for the Almond Board of California. It’s unclear how many Chinese importers are taking advantage of the exclusion process, which would take the tariff level down from 55% to 25%, but it hasn’t pushed trade back up to anywhere near previous highs, she said.

    A major problem is that California farmers are competing with producers elsewhere that do not have to contend with any tariffs. “In the case of almonds, Australia has a free-trade agreement with China, so there is (no tariff),” Adams said. Before the trade war, China levied a base 10% tariff on U.S. almonds and they were still able to compete, but now that would be more than double even after an exclusion.

    “We understand some importers have been looking at (tariff exclusions), but obviously the numbers don’t bear out that it’s had a significant impact on shipments,” she said.

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