Speakers discuss impact of trade for citrus and beef

Speaking a few days before China imposed new tariffs on certain U.S. agricultural products and threatened tariffs on others, speakers at an annual outlook conference raised concern about the impact such a trade dispute could have.

The conference in Visalia, presented by the California Chapter of the American Society of Farm Managers and Rural Appraisers, closed with a presentation by Roy Pennebaker, senior vice president with the Farm Lands Department for Pearson Realty in Visalia, who talked about the recent successes of the citrus business.

Pennebaker identified the chief markets for exports of California citrus as including China, Korea and Japan. He said a trade war "could turn the market around on a dime."

Last week, China announced additional tariffs of 15 percent on U.S. citrus fruit entering the country, as part of an ongoing trade dispute with the United States (see story). As trade tensions escalated, China then threatened to impose additional 25 percent tariffs on other U.S. agricultural goods, including beef.

National Cattlemen's Beef Association President Kevin Kester, another speaker at the outlook conference, also expressed concern about the potential trade dispute. Kester, a fifth-generation California rancher, owns and operates his family's cattle and winegrape operation in Monterey County.

As with citrus, the nation's cattle business has considerable export trade with some of the same countries, Kester said.

"In 2017, we had a record $7.24 billion in beef exports across the world," he said. "That represents about 20 percent of our carcasses exported overseas. Japan is our biggest market, even with an 18.5 percent tariff. We exported $2 billion of beef to them last year. South Korea is second, with over $1 billion. Then there's Canada, Mexico and Hong Kong."

Kester said China opened its doors to U.S. beef last year, and the U.S. has been shipping beef valued at more than $6 million to China each month.

"That market will be huge in five to 10 years," he said. "China's middle class is bigger than the population of the United States. The economy in China is booming."

Along with the trade tension with China, he said, there is the prospect that the North American Free Trade Agreement could be renegotiated.

"We could get pulled out of NAFTA," Kester said. "My message is to pay attention when you read about negotiations. If we get into a trade war, it's going to cost all of us."

On another policy topic, Kester said the federal tax reform package included some favorable elements, such as reforms of the estate tax.

Kester said the beef organization is working to secure additional funding through the farm bill for updating vaccine banks.

He said there are some 250,000 producers in the association, which was incorporated in 1898, and that there are about 600,000 beef cows in California.

"That doesn't quite match our 1.7 million or so dairy cows," Kester said, "but California does have a good population of beef cows."

There are 32 million beef cows in the United States today.

Kester said prices haven't dropped since 2014 as many expected, despite an increase in the herd size.

He said poultry and pork are being sold at lower prices than beef. But beef prices have gone up less than 1 percent in the past year.

"There are pretty stable prices, and people have more disposable income," he said.

Kester said the beef business welcomes plans by McDonald's to switch to all fresh hamburger patties. He said the nation has to import lean beef from Australia and New Zealand because enough can't be produced in the United States.

"That allows us to have a value-added export market," he said. "We import cheaper cuts of lean beef and export steaks and other cuts across the world at a premium. It's a win-win for those in the cattle industry."

(Dennis Pollock is a reporter in Fresno. He may be contacted at agcompollock@yahoo.com.)