California farmers fear tariff trade war losses in billions, uneven bailouts

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As a potential trade war looms, a coalition of California agricultural organizations is urging the state’s Congressional delegation to protect them from becoming another casualty in the battle over tariffs.

A letter from the group includes the names of nearly two dozen of the state’s most influential farming organizations, including the California Farm Bureau, Western Growers and American Pistachio Growers.

It says, in part, that the emerging trade measures could trigger retaliatory tariffs that will hurt California farmers, whose exports totaled $23.6 billion in 2022.

“While we recognize the intent behind some of these trade actions, we remained concerned that broad-based tariffs will disrupt agricultural markets both in the short term and long term,” stated the letter, dated March 3.

The letter reminds Congressional leaders that this isn’t the first time California farmers have lost billions of dollars in the export business. In 2018, during Donald J. Trump’s first term as president, the U.S. engaged in a trade war with China that dramatically reduced exports grown primarly in the central San Joaquin Valley.

To help U.S. farmers cope with the losses, the USDA implemented the Market Facilitation Program, or MFP. It was essentially a bailout program.

“Although MFP distributed over $14.5 billion in payments, the benefits were largely directed toward crops, such as soybeans, sorghum and corn. Specialty crops — a significant segment of California production — received less than 2.3% of those funds, leaving many producers at risk,” according to the letter.

The U.S. Department of Agriculture estimated that in 2018 U.S. farmers took a $27 billion hit from retaliatory tariffs. In California, tree nut growers suffered the biggest losses at $239 million.

This time around, Trump has threatened 25% tariffs against three of the U.S.’s biggest export markets, China, Mexico and Canada, in an attempt to wrangle assurances that they do more to curb the flow of fentanyl into the U.S. and stop the rise in illegal immigration.

Senator Adam Schiff on California ag

Sen. Adam Schiff said in an interview Thursday that he understands why California farmers are frustrated at the possibility of another trade war.

During the 2018 trade war, farmers lost billions of dollars in trade opportunities. And when relief did come in the form of payments to growers, a vast majority went to Midwest growers of commodity crops, including, wheat, corn, soybeans.

“So I want to make sure that if we go through another round of this, as appears likely, another round of tariffs and retaliatory tariffs and suffering, that there are funds made available to try to compensate farmers,” said Schiff, who sits on the Senate Committee on Agriculture, Nutrition and Forestry. “And that California farmers and specialty crop farmers are treated fairly and equitably, and have the same access as farmers in any other part of the country. So I’m working hard to make that a reality, but I’m skeptical.”

Tarrifs’ impact on San Joaquin nut industry

Although the proposed tariffs are currently on hold, the effect on U.S. consumers could be severe, especially for avocado lovers: Mexico supplies 90% of the avocados consumed in the U.S.

Also expected to hurt financially are San Joaquin Valley nut farmers, who depend heavily on exports. An estimated 70% of the state’s almonds are exported and nearly 80% of its pistachios.

The largest share of the state’s nut cops are grown in the San Joaquin Valley communities of Fresno, Kern, Stanislaus, Merced, and Madera counties.

Matthew Efrid, a fifth-generation diversified farmer in Fresno County, said he supports creating a balanced trade relationship with other countries, but he is concerned it may come with a heavy price for Valley farmers.

Efrid and his father farm about 1,300 acres of almonds, pistachios, walnuts, raisin grapes and peaches for the cannery.

He survived the last round of tariffs, thanks, in part, to his diversified crops and the government’s bailout funds. But he also knows there are no guarantees that will happen again.

“It was helpful, but did it make us whole, no it didn’t,” he said. “There are a lot of family farms that are really hurting right now.”

Efrid doesn’t want to lose any more export opportunities like in 2018. California was once the major exporter of walnuts to China, but when retaliatory tariffs took effect, other walnut-producing countries, including Chile and Australia, swept in and became the dominant suppliers.

Rick Kushman, a spokesperson for the Almond Board of California, said the organization has been closely monitoring the United States’ earlier announcements of tariffs and responses from Canada, Mexico and China, as well as the EU’s response to the recent March 12 announcement from the United States.

Trump has threatened to impose 25% tariffs on imports from the EU.

“Canada, China, Mexico and the EU continue to be important markets for our industry. California almonds are shipped to more than 100 destinations and maintaining a diverse export program is essential. We continue to support reducing barriers to trade, and smooth market access for California almonds,” Kushman said.

California wine grape growers reaction

California’s wine grape officials say there are already feeling the effects of a trade war and the tariffs haven’t even taken effect.

Natalie Collins, president at the California Association of Winegrape Growers, said that as soon Trump identified Canada as a target of tariffs, the mood among Canadian importers became icy.

“Many Canadian provinces have stopped accepting shipments from any American wineries. They have taken essentially all California wines off of their shelves at grocery store, restaurant menus, etc. And this was really before a tariff was even put in place,” Collins said “So just the mention of, you know, some of what Trump was wanting to do has sent a frenzy throughout Canada. It feels that the harm and the damage is already done for California and American wineries.”

Overall, the U.S only ships about 10% of its wines to various countries, but of that amount, 40% is exported to Canada.

Collins said it will be a challenge to get some of those customers back. It also doesn’t help relations between the two countries that Trump has talked openly about making Canada the 51st state.

“Yes, there is so much more that goes into all of this,” Collins said.

Collins and others talked about the frustration that California farmers are considered collateral damage in a trade war.

“Other countries recognize the value of agriculture, and I sometimes I wish our own government would see that same value, especially operating here in California and in the Fresno area,” Collins said. “It is getting harder and harder to be in ag.”

Will there be aid for California farmers available?

Colin A. Carter, a distinguished professor emeritus in the Department of Agricultural and Resource Economics at UC Davis, has studied the impact of tariffs on California agriculture and it has not been favorable.

In a paper titled “Further Trade Wars Will Harm California Agriculture,” Carter along with Sandro Steinbach, an associate professor, and Yasin Yildirim, a doctoral researcher, both with the Department of Agribusiness and Applied Economics at North Dakota State University, found that in the most extreme scenario California farmers could lose up to $6 billion in exports.

Carter also casts doubt on the likelihood another government bailout program, like the MFP, will reach Valley farmers.

Carter found that overall, California’s losses from the 2018 trade war far exceeded the government compensation payments.

The USDA doled out nearly $30 billion to farmers, in two allotments in 2018 and 2019. Finding that amount of money during the Trump Administration’s current cost-cutting mission raises questions about a future bail out program.

Trump appointed billionaire Elon Musk to head the so-called “Department of Government Efficiency,” or DOGE, to reduce government spending.

“I can’t see Elon Musk giving thumbs up to a huge bailout to farmers,” Carter said. “It also brings into question all these other farm programs. When are they going to realize, gee whiz, maybe we shouldn’t be spending money on all these other things, like crop insurance, subsidies and so on.”