How tariffs are hurting the produce industry

Tariffs imposed by China and Mexico are damaging produce farmers’ sales, both locally and nationally. Consequently, this creates a domino effect and harms other players involved in the industry.

In the United States, China has imposed tariffs on cherries, apples, grapes, and more, while Mexico has imposed tariffs on apples, cranberries, and potatoes. According to The Packer, cherry farmers will take the biggest hit, as cherry exports to China value at roughly $123 million. However, in Arizona, apples pose the biggest concern.

Lance Jungmeyer, President of the Fresh Produce Association of the Americas (FPAA), gave insight about this shift for the produce industry. Although Jungmeyer did not have the specific number of Arizona apple exports, he stated, “Apple exports traveling down from Nogales have dropped precipitously, and so have potatoes.”

He explains that because produce is a globally competitive market, countries can import from various places for lower prices. Although producers may face higher transportation costs, these are small losses compared to the massive tariffs imposed by China and Mexico.

Because farming is a long, thought-out process, the main problem for farmers is uncertainty, according to Jungmeyer. Because of the tit-for-tat tariff war with China, farmers don’t know which crops will be affected next. Moreover, since many of these crops have to be planted six to nine months in advance, this hinders planning for these farmers.

Furthermore, these tariffs are sending a shockwave through other industries. For example, Jungmeyer has noticed a significant reduction in the amount of trucks that come through Nogales to pick up apples and potatoes, meaning these transportation companies are sending less trucks and must increase their premiums to compensate for that.

But the chain reaction extends far past trucking. Jungmeyer explains that the uncertainty of produce sales “can cause a contraction in the business that slows down sales of U.S. seeds to Mexico, reduces employment in Nogales, causes restaurant chains to choose to put two tomato slices on a sub sandwich instead of three, and so on.”

Because produce farmers are moving fewer goods across national borders, they are making less revenue. To keep their profit margins at normal levels, producers will have to charge domestic consumers higher prices on their goods to make up for the fall of trade.

At the end of the day, farmers will have to wait and see whether tariff negotiations escalate or deescalate. If this tit-for-tat strategy continues, uncertainty among Arizona farmers will only increase, causing sales to plummet and consumer prices to jump.