[WENATCHEE, WASHINGTON, JULY 19] – On July 18, 2018 Cass Gebbers, President and CEO of Gebbers Farms, provided testimony before the House Ways and Means subcommittee regarding the effect of tariffs on “U.S Agriculture and Rural Communities”. Gebbers is a Board Member of the Washington Apple Commission. He has served on the board since 2009.
Gebbers addressed the subcommittee on the effect of recent tariff increases from China and India on apple, cherry and pear imports from the United States. The tariff increases are a response from China and India to the U.S Section 301 tariff concerning intellectual property and the U.S. Section 232 tariffs on steel and aluminum.
He summarized the U.S. Section 301 duty increase, “On July 6, an additional 25 percent tariff was imposed on cherries, apples, and pears in retaliation for the U.S. Section 301 tariffs imposed on Chinese products due to concerns regarding intellectual property. This increases the total tariff rate to 50 percent.”
Gebbers stated, “Our growers also lead the nation in exports, with approximately one-third of the apples, cherries, and pears grown in the region sold to customers outside the United States.”
Gebbers explained how the tariffs effect the market, noting that, “With the recent tariff actions our customers have cancelled orders and re-directed our program downwards by approximately one million boxes, thus forcing all of this orphaned fruit into the U.S. domestic market or potentially elsewhere in the world, pushing down prices with the extra volume.” He also expressed concern for the recovery of the market, “These customers and accounts have been developed through years of hard work and relationship-building, and will be difficult to simply start up again if or when the tariff situation is ever resolved. “
Gebbers addressed the situation in India, “India – which jumped from the fourth largest market last year to the second largest market so far this season for apples – has announced its plan to impose an additional 25 percent tariff on apples, effective August 4, in retaliation for U.S. Section 232 tariffs on steel and aluminum. This is on top of the already high tariff of 50 percent, raising the total tariff to a staggering 75 percent to ship to this important market that was valued at almost $64 million last season – a number that has nearly doubled to $123.5 million so far this season.”
Gebbers provided a glimpse into how the trade disagreements will affect fruit growers in Washington. “The effects of these retaliatory trade tariffs are directly hitting the growers who produce this fruit. With little to no ability to simply ‘pass on’ the increased costs of tariffs, there is less revenue to operate the farm, which is already in a razor thin margin environment, so we are looking at how else to lower costs, and that will be done by getting rid of some employees where possible, cancelling some scheduled capital expenditures such as construction and equipment updates in the packing and storage facilities, as well as stopping any future new planting of orchards.”
He explained how specific varieties, such as Red Delicious, will bear against the tariff increase. Gebbers stated, “Nearly 90 percent of apples exported to India are Red Delicious, making it the top export destination for this variety. Mexico is the second biggest market for Washington State Red Delicious apples – combined, more than 60 percent of Red Delicious exports go to one of these two countries.”
The testimony concluded with Cass Gebbers thanking the subcommittee for the opportunity to testify on the impact of tariffs on fruit growers and the industry.
The testimony in its entirety can be accessed here: