The trade war, quickly becoming the biggest in United States history, has come to affect the Pecans as well. This time on the blog we are focusing on the financial future and difficult position the industry is enduring. If you are in the business, bulk unshelled pecans prices are always in the front of your mind, but those who we work with, the purchasers looking for pecans for their snacks etc. might not be aware of what’s happening further up the chain. The United States Pecan industry is involved in the trade war with one of our biggest consumers. Here’s how.
As we’ve mentioned previously, and surely many of you know, the United States pecan industry is responsible for a majority of the world’s pecans. But now, following the tariffs placed on trade with China, China has followed suit putting tariffs on a wide number of United States agricultural products – including pecans. Unfortunately for us – and the US-China is one of our largest trading partners when it comes to bulk unshelled pecans.
Import Tariffs on the Raise
There has been an import tariff on unshelled pecans, but the rapid rise of it is staggering. Earlier this year, before April, the import tariff was at 7%. For ever dollar spent importing bulk pecans, an additional seven cents when to pay that tariff. This didn’t deter buyers overseas, that’s a fair tax and as China’s taste for pecans grew companies and businesses were happy to pay that. But then, following the round of tariffs placed by the President, China reacted in kind, raising the tariff on United States agricultural goods, and the pecan tariff went up an addition 15% to a total of 22%! For every dollar, an additional 22 cents had to be paid to that tariff! This is quickly adding up.
While 22% was high, that only lasted a mere 3 months! A new tariff was imposed, adding an additional 25%! In just over three months, the total tariff for bulk unshelled pecans has raised a total of 40%. With the cost of pecans increasing so volatility, will Chinese buyers still purchase unshelled pecans in bulk quantities?
One of the other pecan producing countries, South Africa, is seeing an effect on their own industry. While this trade war, and these tariffs, are specifically between China and the United States, the industries are not. Any price fluctuations in the pecan industry here will reverberate throughout the globe. And while South Africa’s production means are still small (a bit less than the number of pecans produced by Texas alone,) their prices will reflect the changes elsewhere. For a bit, the South African prices took a dive, though they’ve now stabilized.
We can hope that the Chinese market still exists for bulk unshelled pecans, that they are willing to pay the almost exorbitant rate of 47% on pecans, and that this continued trade will encourage the pecan industry throughout the globe but it is a big ask. To rely solely on our largest trading partner might be misguided, and so we make other efforts.
To combat these heavy tariffs and the possible downturn in bulk unshelled pecan sales to China, it is important for domestic businesses (like SNRA) to continue to make our bulk unshelled pecan purchases from our fellow Americans. By working together, keeping trade moving, we can weather the storm that this trade war has placed us all in. SNRA will keep shelling pecans and distribute to the businesses who need them, in turn, keep the demand for pecans growing. Once these tariffs have, hopefully, balanced back to normal, more agreeable rates, the pecan producers themselves will still be in business and ready to trade.
It’s not all bleak news out there! Tariffs, while they have in the past been an effective means of supporting domestic businesses and products, come and go just as the economy works in cycles and waves. A lot like pecans, growing from a small seed into a great tree and then producing that perfect drupe. Sometimes there are pecans on those trees ripe for the harvesting, and other times they’re just beginning to grow. All we can do is keep our eyes forward, keep working and trading and hope that just like next seasons pecans, the trade and businesses for bulk unshelled pecans will be there too.