Pecan and cotton farmers across Arizona have seen the prices for their crops fall across the past few months as a result of the U.S. trade war with China. With no end to the dispute in sight, farmers are bracing for the worst case scenario.
In June, cotton prices were averaging 95 cents per pound. That has dropped to 60 cents in a recent price survey. Before the trade dispute began, farmers exported more than 20 percent of their crops to China.
Pecan farmers have seen a similar drop in the price of their crops. Prior to the trade dispute, pecans were selling for $3 a pound. That is now just under $2.
“When the retaliatory tariffs were put in place in 2018, the net effect was an immediate drop in pecan prices of about 40 percent," Harold Payne, president of the Arizona Pecan Growers Association, said. "For a moderate size grower who produces about 2 million pound of pecans, the revenue losses could range from $860,000 to $1,600,000 or more, depending on when they sold the crop and if they incurred cold storage costs awaiting stronger prices.”
Chinese importers were importing more than 100 million pounds of pecans before the tariffs started to be levied. That number has plummeted to about 9 million.
“The US pecan industry has worked tirelessly for many years to introduce and develop a market for pecans with importers and the Chinese food industry, resulting in stronger pecan prices for U.S. pecan producers for the past 10 years," Payne said. "We are concerned that the market inroads we invested so much money and time in have been severely damaged, and there is a likelihood that that segment of the market may not come back as strong or at all.”
Payne said the industry assumed that when the tariffs were placed on U.S. pecans, Chinese buyers would instead purchase pecans from Mexico. But that hasn't happened in the numbers they had been purchasing.
"The Chinese pecan buyers simply purchased less pecans and/or substituted other nuts in the place of pecans,” he said.
The federal government is working to help farmers by providing what are known as “market facilitation” payments. These are intended to offset some of the losses incurred by the loss of revenue during the trade war.
In the past fiscal year, the Trump administration provided aid in the amount of $12 billion. That number is shared across the country, by farmers of all kinds and is divided by the types and amounts of crops affected.
In Arizona, according to the Associated Press, 440 farmers split $16 million of those funds. Farmers have said that they are thankful for the funds but would rather be in a market-driven environment where “support” of that nature isn’t needed.