Nov 8, 2019

Even in Iowa, apple growers feel trickle down impact of tariffs

This season’s apple crop is expected to be the ninth largest in history. And a bountiful harvest is often good news. But because of increasing tariffs this year, some smaller apple farmers are worried not only about overseas markets, but also about their domestic competitors as well.

Timeless Prairie Orchard sits on a dusty road in Winthrop, Iowa, and in each direction, it’s corn and soy as far as the eye can see. Apple farms are few and far between in these parts, but through this small, tree-lined property, owners Dave and Susie Differding have carved out an orchard.

According to a story by Iowa Public Radio, a summer hail storm left the Differdings with a smaller harvest than they had hoped for this year. But even then, they’re concerned about selling their apples. The roots of that concern started last season, when Dave Differding found himself struggling to sell to regional grocery chains, after years of solid sales.

“He said, I just don’t have room. I’ve got apples stacked up in my cooler, and it will take me more than a week to sell them,” Differding says.  “He said, I just don’t have room for your apples. I’m not able to buy them.”

The Differdings say without those grocery sales, they lost $40 thousand last season and expect to lose at least the same this year. Getting to the root of this issue requires zooming out, to look at not only the national apple market, but also at the relationships between the domestic fruit industry and buyers abroad.

As increased tariffs hit American products apple farmers are among those getting hurt. The tariffs come from countries including India and China in response to U.S. tariffs on steel, aluminum and other goods. Today, 60 percent and 70 percent tariffs are imposed on U.S. apples sold to China and India respectively.

According to the Iowa Public Radio story:

The Differdings have never exported their apples. And they don’t plan to. But Jim Bair, CEO and President of the U.S. Apple Association says that doesn’t necessarily preclude farmers from feeling the trickle down impact of tariffs.

“Even if you’re not someone who is directly involved in exporting, you’re still impacted by the prices because those apples that would have been destined for export markets stay in the United States,” Bair says. “They overhang the market and depress prices for everybody.”

A big harvest this year could mean more opportunities to export apples, but with large tariffs making that less appealing, it could also mean a flood of fruit onto the domestic market. That leads to lower prices and stiffer competition.

“It’s the combination of the size of the market because of a loss of a third of our exports and the larger crop. [They are] going to crash head first into each other,” Bair says.

Larger producers are also feeling the impact. Chuck Zeutenhorst heads First Fruits Marketing in Yakima, Washington. While his company sells lots of apples domestically, one of their top overseas markets is India, which has a 70 percent tariff on apples.

“It’s like pushing a rope,” Zeutenhorst says. “There’s just so much production that can end up in the country, so that’s why we also have very developed export markets. So significant changes in those export markets causes problems.”

Zeutenhorst says he’s confident the company will be able to expand its domestic market, but for the Differdings and other small producers with razor thin margins, increased competition could mean a tough road ahead.

“It’s significant for us,” Differding says. “It is equipment we thought we’d be able to afford, then that all adds up, and you’ve got to sit back and say, ‘I can’t do it.’ So it’s holding back progress on what we want to do. ”

While Harvest is winding down at Timeless Prairie, some of the nation’s largest orchards are still in the thick of it. And producers won’t know the full impacts of the latest tariffs until after the last apple is picked.

– Katelyn Harrop, Iowa Public Radio

Photo at top: Harvest is winding down at Timeless Prairie Orchard, but Dave and Susie Differding remain concerned about the secondary impact of retalitatory tariffs.