The U.S government may now charge Turkish cherry producers and exporters between a 204.93 percent to 648.35 percent tariff to protect the Michigan dried cherry industry, the Department of Commerce (DOC) preliminarily ruled this week.
The DOC ruled that Turkish trade practices “had a significant adverse impact on the domestic industry” and will make a final decision in early 2020 whether to impose additional duties.
Turkey increased its U.S. cherry juice concentrate exports from about 24 million pounds in 2008 to more than 200 million pounds in 2016, according to the DeWitt-based Cherry Marketing Institute.
Turkey’s dried cherry exports tripled from 413,893 pounds in 2016 to 1.5 million pounds in 2018, uprooting Michigan’s $56.8 million market that formerly represented about 75 percent of the U.S.’s crop.
That means Turkish cherries sell at 89 cents per pound compared to Michigan cherries priced at $4.60 per pound.
Rep. Jack O’Malley, R-Lake Ann, told The Center Square that Monday’s preliminary ruling would “level the playing field” because the Turkish government subsidizes cherry production almost dollar-for-dollar.
O’Malley was one of eight state representatives who filed House Resolution 143 on Sept. 4 agreeing that Turkey engaged in “unfair” dried cherry dumping that, if continued, would crush Michigan farmers and thousands of jobs.
This year, the United States terminated Turkey’s qualification for Generalized System of Preferences, the taxpayer-funded program that had allowed Turkey to dump cherries into the country duty-free.
Michael DeRuiter, chairman of the Michigan Cherry Committee and a Cherry Marketing Institute board member, told The Center Square that Turkey dominated the cherry juice concentrate market, and is now taking the dried cherry market.
“We all agreed that if we didn’t stop Turkey on the dried cherry front, we might not have an industry in 5 to 10 years,” DeRuiter said.
Turkey gives their cherry growers a “laundry list of subsidy programs” including tax breaks and input costs, DeRuiter said.
“If I could summarize [competing against Turkish subsidies] in one word, it’s ‘frustrating,’” DeRuiter said. “When you put a tart cherry tree in the ground, you’re making about a 30-year commitment to tart cherries.”
The Oceana County grower said that poorly designed trade policies allowed Turkey to swoop in and capture market share from U.S. farmers, who had to pay $1.7 million for better trade protection, after two to three years of losses.
The range of tariffs on Turkish cherry products, depending on the exporter, could push prices over $5 per pound.
“In all reality, that’s how it should be if Turkey didn’t have the subsidy and competed on a level playing field with the U.S. cherry market,” DeRuiter said.
Alex Tokarev, an associate economics professor at Northwood University, told The Center Square in an email that these tariffs would help ”a few Michigan farmers gain additional income at the expense of many American consumers.”
Tokarev said government interventions have three features: declared good intentions, coercion by the state, and “redistribute[d] opportunities and income to those groups who are best positioned to abuse the government as their assault weapon.”
The DOC will announce their final decision around Dec. 5 regarding Turkey’s alleged dumping and countervailing duty trade practices, and will announce an injury calculation near Jan. 21, 2020 if it finds trade violations.