Casualties of a Trade War

You’ve probably heard by now that our Tweeter-in-Chief started a trade war with China last week by raising tariffs especially on steel and aluminum imports.  China returned fire this week by announcing tariffs primarily on agricultural goods including pork and wine.  They are also expected to target soybeans.
Farm products are among the handful of American exports that have a trade surplus.  As such, they are an easy target for any country that we attempt to punish for unfair trade practices.
Unfortunately, the overall farm economy is in a massive recession right now, in as bad or worse shape than the domestic industries the administration is claiming to protect.  Farm lenders across the country are expecting up to 10% of farms to fail or go bankrupt this year, and suicide rates among farmers in the Midwest have shot up.  Many farmers there will end up as collateral damage in the trade war, despite likely having voted for the guy who started it.
Closer to home in California, immigration policies begun under the last President and ratcheted up under the current one have dried up the pool of immigrants who make up 99% of our state’s farm workforce.  Meanwhile, the low unemployment rate has drawn even more people away from agriculture and into other industries.  Low commodity prices for almost every crop grown in the state mean that few farmers can afford to offer higher wages.
Between the rock (trade wars) and the hard place (immigration, etc) lies a single crop:  Almonds.
California is one of the only places in the world where almonds are grown, and the only place with the volume of nuts to supply China.  Almonds are far and away the most popular nut in the world, and the Chinese love them as much as everyone else.  Of all the commodities grown in the U.S., they will likely be the last to get slapped with a tariff.
Almonds are not just popular with consumers.  Because they are one of the least-labor intensive crops to grow, farmers love them too.  It takes just one employee for every twenty acres of trees. Compare that to most vegetables and fruit, which require closer to 1 person for every 2 acres.
Other than the ideal climate that exists primarily in California, growing almonds requires only four things:  land, water, lots of money, and bees.  Farmers with enough of the first two are tripping over themselves right now planting as many almonds as possible, thanks to banks and other lenders who are happy to provide the capital.
As with any tree crop, almonds have a time-lag between when they are planted and when the crops come to fruition.  At some point, there will be too many almonds.  No one knows exactly when the almond bubble will burst, but it’s unlikely to be in 2018 .  The hard freeze back in late February took a large bite out of this year’s crop while the nuts were still tiny.  In the short term that could actually create a price spike due to limited supply, which will in term fuel even more planting.  Climate change could cause more supply disruptions in the future, but it could also have the opposite effect.
Trump’s trade war with China will give farmers even more reasons to keep planting almonds.  But very few of those new orchards will be organic.  Why? For all of their appeal, almonds are extraordinarily difficult and risky to grow organically.  They are vulnerable to both diseases and pests that while relatively easy to control with synthetic chemicals, are almost impossible to control organically.  That’s especially true in higher-rainfall areas like our farm.  Almost all of the organic almonds in the state come from areas in the Southern San Joaquin Valley that get just a few inches a year of rain — places where they have less and less water available to actually grow the crop.
If you ask the average Californian which crop they think farmers in our state should grow more of, it’s a safe bet that “almonds” might be the last thing they say.  Most people think that our state’s limited water should be used to grow the fruits and vegetables that experts say we need to be eating more of.  But that’s exactly the opposite of what is happening.
Thanks,
Pablito

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