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Summary shows potential impact of tariffs on Idaho ag products

By: Sean Ellis
Published in Blog on  August 27, 2018

By Sean Ellis

Idaho Farm Bureau Federation

POCATELLO – The Idaho State Department of Agriculture has compiled a list of retaliatory tariffs on U.S. agricultural products that provides a look at how those tariffs could impact Idaho’s farming sector.

The summary shows what the previous tariff for certain U.S. agricultural products was in Canada, Mexico, China and the European Union, and what the new tariff is.

It also shows how much of that product Idaho exported to that nation in 2017.

The retaliatory tariffs are increased tariffs those nations recently imposed on certain U.S. farm products due to trade disputes with the United States.

For example, the list shows that Idaho’s dairy sector exported $36 million worth of whey products to China last year. It also shows that as part of its trade war with the U.S., China has increased its tariff on U.S. whey products from 2 percent to 25 percent.

China also increased its tariff on U.S. peas from 0 to 25 percent. Idaho exported $3.8 million worth of peas to China last year, according to ISDA data.

Due to the North American Free Trade Agreement, the U.S. enjoyed free trade with Canada and Mexico, the top two destinations for Idaho agricultural exports last year.

Canada recently placed a 10 percent tariff on a host of U.S. ag products, and Mexico has also placed tariffs ranging from 15-20 percent on a lot of U.S. farm products.

Idaho’s dairy industry sold $14 million worth of cheese in Mexico last year and Idaho’s potato processing industry sold $15 million worth of frozen potato products, mostly French fries, in that nation in 2017.

Mexico has imposed 20 percent tariffs on both of those products from the U.S.

It also imposed a 15 percent tariff on food preparations derived from dried milk, buttermilk or whey. According to ISDA, Idaho sold $2.4 million worth of those dairy products in Mexico last year.

According to ISDA, the European Union has imposed a 25 percent tariff on U.S. kidney beans, up from 0 percent. Idaho exported $8 million worth of kidney beans to EU nations last year.

In terms of Idaho’s overall production of those farm products, the amounts exported to those nations is small, said University of Idaho Agricultural Economist Garth Taylor.

For example, he said, while Idaho shipped $15 million worth of frozen potato products to Mexico last year, Idaho’s potato farmers fetched an estimated $955 million for their spuds last year and Idaho potato processors produce billions of dollars’ worth of frozen potato products each year.

And while Idaho’s dairy industry exported $36 million worth of whey products to China last year, dairy is a multi-billion-dollar industry in Idaho and the state’s dairy farmers fetched $2.5 billion in farm-gate receipts in 2017.

“In terms of our total production, this is a drop in the bucket,” Taylor said. “It’s a very small segment of our overall market.”

The bigger concern, he said, is the indirect impact the tariffs could have on Idaho farm products. For example, while Idaho may not ship a lot of certain farm products to these nations, the tariffs could make prices for those U.S. products more expensive and cause companies in those nations to look elsewhere.

That could result in depressed U.S. prices for those commodities and, “if it depresses prices, that is going to be felt in Idaho,” Taylor said.

A good example would be apples, said Laura Johnson, who manages ISDA’s marketing division. Idaho doesn’t ship apples to those nations but Washington, the nation’s No. 1 apple producing state, does.

“If Washington ships fewer apples as a result of the tariffs, that will have a ripple effect that could impact Idaho’s apple growers,” she said.

The reason is simple: fewer U.S. apple exports means more of those apples remain in the United States, depressing apple prices.

Leaders of Idaho’s dairy and potato industries said they are hopeful the trade negotiations the U.S. is having with these nations as a result of the tariffs could result in the elimination of unfair trade practices that hurt U.S. growers.

But they also said there is significant concern about the potential impact the tariffs could have on their commodity.

“This is an opportunity to raise awareness of some of those unfair trading practices in other countries,” said Idaho Dairymen’s Association Executive Director Rick Naerebout. “This administration is listening to that concern and we’re appreciative of that. We just think there was a better way to do that than being aggressive with tariffs.”

He said IDA has heard from some Idaho dairy companies that, in order to maintain market share, they have had to discount their product in those nations to offset the impact of the tariffs.

The impact the tariffs are having on Idaho’s potato industry can’t be known yet, “But I know it’s not helping,” said Idaho Potato Commission CEO Frank Muir, who pointed out the tariffs are on frozen potato products, not fresh potatoes.

As an example of the potential impact, he said, “Any time you put tariffs on U.S. potato products and not on European potatoes,

European pricing becomes much more competitive to customers who would normally be sourcing from the U.S.”

Muir said he hopes the trade negotiations result in a resolution of some of the unfair trade issues the U.S. potato industry has tried to address for many because “if the U.S. is given a level playing field, we compete very well.”

But so far, he added, the tariffs are only creating challenges for the potato industry.

“We would hope the administration works quickly to resolve these tariff issues,” he said.

 

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