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PMA virtual town hall

Tariffs, market access, and trade recovery: challenges and bright spots

This week’s PMA virtual town hall focused on fresh produce in the global trade market and the challenges caused by the unfamiliar waters of 2020. The panelists discussed the challenges for the produce industry beyond the pandemic, as well as some bright spots to look forward to in 2021.

Challenges: Tariffs and market access
While the pandemic has brought with it a lot of new and unprecedented challenges, the produce industry has also been dealing with challenges that pre-date the pandemic. Robert Kershaw, CEO of Domex Superfresh Growers, shares: “2020 is a continuation of trade difficulties that we’ve been seeing really since 2014, when Russia instated their embargo. Of course, the issues are very complex and even more so throughout the pandemic, but the main challenge we have had has been the tariffs. With apples being such a staple item, they’re always hit by tariffs and bear the brunt of all trade wars.”
In addition to the tariffs that have been an issue for the industry for the past years, this year brought a new challenge: the closure of markets across the world. “The discussion of food sovereignty has been growing because of the pandemic, and I think we’ll continue to see more of this in the future and this has been one of the drivers of market closures,” says Ron Lemaire, President and CEO of the Canadian Marketing Produce Association.
Kershaw explains that the closure of markets due to the pandemic has required everyone to learn how to adjust quickly to curveballs. “We really have to adjust on a daily basis. India, for example, is our biggest export market for apples and this year during the peak time of shipments, when we had probably about 100 containers on the sea, there’s rumors of the ports closing down. When you have disruptions like that, you have to quickly turn around and find a different destination for the product. With a product as pervasive as apples, which are supplied and demanded globally, this disrupts the entire global market,” says Kershaw.
Bright spots: Trade recovery
While a new wave of the pandemic is a possibility, the overarching trade patterns are projected to bounce back in 2021. Cassandra Kuball, VP of Michael Torrey Associates, shares: “The data shows that, especially compared with 2008’s financial crisis, trade will be recovering much more quickly. According to the USDA, agricultural trade exports are still maintaining a stronghold and seeing an upward trend, and trade is being maintained for both exports and imports in the US.”
“There are a lot of bright spots among the challenges that keep us going,” Kershaw says. “There’s growing markets that took on a lot of the product that was diverted from India – such as the Middle East. It’s also important to note that even with a 50% tariff, which has now actually been raised to 70%, on apples to India, it still remains the biggest export market. The opportunities we would have for our exports if we’d be able to reach higher levels of free trade across the world are boundless. The pandemic has also raised the consumption levels for fruits and vegetables, which has definitely been a positive outcome. We’ve already been seeing it with our new fall apple crop, and there have been record setting sales domestically already this season,” Kershaw shares.
For Lemaire, the bright spots in the pandemic has been the instatement of new practices that might last beyond the pandemic. “When the pandemic first hit, we were very concerned about what the borders might look like, but really we’ve had a great experience with this. There are a lot of new best practices put forth that we’re hoping will keep up post-pandemic. Additionally, we’ve seen a lot of quick government reactions, responses to the needs of our industry that I hope will continue post-pandemic.”
Richard Owen of PMA, who led the discussion, agrees, concluding: “Both the US and the Canadian government have moved very quickly to make adjustments to help the industry. Things that would usually take months were now done in days, or sometimes even hours, and feedback from the industry was incorporated into the decision making, that’s one of the lessons that can be learned from 2020.”
Next week, the PMA virtual town hall will be on pause as PMA’s Fresh Summit will take place virtually from October 13th-15th. To register to attend Fresh Summit, click here. PMA’s virtual town hall will resume on October 21st.