US apple growers fight for slice of own market

Here in the Hudson River Valley, the heart of East Coast apple country, untimely weather and brutal bouts of hail have destroyed more than half of the region's apple crop. Nationwide, the battered autumn harvest will yield the smallest crop in 16 years, experts say.

When asked about long-term threats to their trade, however, farmers here dismiss the blighting force of frost and hail with casual resignation. The most serious danger to their livelihoods, one more ominous than any storm, will not come from the sky, they say, but from the East.

A massive influx of apples from China into the world market over the past five years, say apple growers, has turned their industry on its head. The Asian superpower now grows more than five times as many apples as the US, and sells them at a much lower price.

The impact has been softened by a tariff imposed by the Clinton administration on Chinese apple concentrate, which is used to make apple juice. But a likely decision by the federal government next month to lift the tariff will inevitably cause farmers' profits to fall.

The plight of the American apple farmer is emblematic of an economic squeeze occurring across American agriculture. In an effort to promote free trade, the US has opened itself up to a huge surge of food imports in the past decade, giving American shoppers a wider selection of products to choose from at lower prices.

One result: Farmers working in trades that are American as, well, apple pie, are struggling to get their products stocked in US grocery stores.

"The US continues to have more and more competitors on the global market that can sell their products for less than what it costs us to produce," says to Steven Blank, author of "The End of American Agriculture in the American Portfolio".

With eight orchards spread across the cool, sloping lower valley of the Hudson, Walden apple farmer Jeffrey Crist finds that his fortunes have historically hinged on the graces of nature.

Now, the fourth-generation farmer charts his future according to international treaties and trade. Mr. Crist sees little reason to be optimistic.

"If you're talking pure economics, there's no reason for agriculture to continue in the US," says Crist.

He offers personal experience as evidence. Under regular trade conditions between 1995 and 1998, China lowered its price on a gallon of concentrate by 53 percent to $3.50. US farmers' juice-apple profits fell 64 percent as a result.

Apple farmers received some relief when the Clinton tariff was approved two years ago. But the Commerce Department now says it intends to lift the duty because there is no proof the country sells its product for less than the cost of production.

That may be true, US farmers say. Many, however, are exasperated that a grower as far away a China can legally grow, harvest, process, package, and ship his product across the ocean and sell it for so little.

"China is such a huge country that when industries go into markets in such a massive way, they swamp other producers and cause commodity prices to collapse," says Jim Cranney, vice president of the United States Apple Association.

China is currently developing similar levels of production of garlic, potatoes, walnuts, and several fruits and vegetables. But China is not US farmers' only competitor.

A boom in grape, pear, and raspberry imports from Chile, as well as orange juice concentrate from Brazil, has recast the pricing structure of American produce.

When it comes to agricultural trade, less-developed countries have this advantage: They can produce their product at much lower costs.

China spends 70 percent less than American farmers to produce walnuts that are virtually identical, according to Mr. Blank, primarily because of low labor and land costs. Able to enter markets at such low prices, they find America's open-door approach to trade difficult to pass up.

Foreign nations levy an average tariff of 62 percent on US exports; agricultural imports into the US face an average tariff of only 12 percent, according to the Agriculture Department.

"What we have in the US is not a lot higher than some state sales taxes," says John Skorberg, senior economist with the American Farm Bureau.

By cutting its own tariffs, the US hopes to jumpstart freer trade across the globe and open foreign markets for its products. Trade officials are negotiating to lower average global tariffs to 15 percent by 2006. But many farmers wonder if that is soon enough for their family businesses to remain solvent.

So far, US consumers have shown little sensitivity toward supporting American farmers. "When we do surveys of customers, where the product comes from usually ranks seventh or eighth in importance to them,"says John Motley, vice president of government relations for the Food Marketing Institute.

Farmers hope a new federal law that calls for grocers to voluntarily label the country of origin of all fruits and vegetables, among other products, will encourage consumers to buy American.

In response to predictions of the demise of American farming, many experts point to US dominance of vital grain industries like corn, soybeans, and wheat, products which nations like China import largely from the US. Others emphasize the fact that the nation has subsidized industries some see as vital to the national character, like dairy farming, and will continue to do so.

Apple farmers are currently debating whether they want to start accepting government subsidies, which corn and wheat farmers have relied on for decades. Many are loath to do so. Jeff Crist believes the debate would be unnecessary on a level playing field.

"Do we have free trade or don't we? The answer to that question in my mind is, no we don't."