Food Service & Agriculture and Government

Apple tariffs bite Michigan

Trickle-down effect could leave state with an abundance of fruit.

June 15, 2018
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(As seen on WZZM TV 13) Michigan might be caught in the midst of an international tariff battle.

According to Reuters, Mexico has placed a 20 percent tariff on U.S. apples, among other things, in the wake of President Donald Trump’s tariffs on Mexico’s imported steel and aluminum, undercutting the longstanding North American Free Trade Agreement (NAFTA) reached between the two countries.

Mexico is the largest export market for U.S. apples, and Washington state is the largest producer of apples in the country. The Evergreen State exports much of its apple crop to Mexico, so the Mexican tariffs may leave Michigan, the third-largest producer of apples, at risk of having a potential influx of apples domestically.

Michigan does not export to Mexico, but it grows more than 11.3 million apple trees covering 35,500 acres on 825 family-run farms, according to the Michigan Apple Committee. Much of the state’s apples are grown on the west side and are sold to 27 states and exported to 18 countries in Central America, the Caribbean and Asia, according to Diane Smith, executive director of the Michigan Apple Committee.

Smith said depending on the crop year, the value of the export of Michigan apples is anywhere between $4 million and $10 million, depending on the crop size. In recent years, Smith said Michigan has exported between 300,000 and 750,000 bushels of apples.

The concern Smith expressed is Washington’s potential intrusion into the domestic and international market that Michigan relies on for business if it decides to limit the number of apples it exports to Mexico.

“If Washington is able to pick up more sales in the (market) areas we depend on, that can definitely harm our growers because there is a trickle-down effect,” Smith said.

Phil Schwallier is a grower and the owner of Schwallier’s Country Basket in Sparta. He has a farm that grows 100 acres of apples, and he ships 80,000 bushels per year to retailers and wholesalers. Half of those bushels are shipped to Jack Brown Produce in Sparta, where they are sold to local supermarkets, states and other countries.

“I am afraid that prices will be depressed and then we will have an overproduction of apples,” Schwallier said. “When we can’t sell them to other places and we have a backup at home, we’ll have an oversupply and lower prices. As a result, we will have apples that are diverted into sauce or the apples get dumped.”

Schwallier said when the apples are spoiled, they are usually dumped into gullies at the back end of fields.

With the potential decline in sales, the Michigan economy will be at risk of suffering indirectly from the tariffs because agriculture is a large contributor to the state’s economy.

According to the Michigan Department of Agriculture and Rural Development, the food and agriculture industry contributes $101.2 billion annually to the state’s economy.

Elizabeth Wittenbach, member of the U.S. Apple Association, said the effect of the tariffs likely won’t be felt this year when the apple season begins this fall, but it could be felt in the near future.

“Long term, if we cannot sell at a (satisfactory) rate, some farmers will either decrease (the size of) their farms or go out of business, and seasonal and annual workers will lose their jobs,” Wittenbach said.  “Also, the (companies) that store and package our fruits will be impacted, which will affect the community.”

Schwallier added, “The more apples we sell, the better it is for apple growers.”

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