July 10, 2018
Mark Boyer, a partner of Ridgetop Orchards in Fishertown, PA is worried.
The orchard, founded in 1980 by his father, Dan, and mother, Lois, has since grown from 140 acres to over 500 acres, partially on the back of robust international demand for his apples. And now that orchard, dotted with perfect lines of fruit trees, finds itself at the center of the budding global trade war – a war he says the apple industry can’t win.
“Our apple industry is built heavily on the export industry,” Boyer said. The tariff war “makes you think, should I even be growing these apples, is it even worth it? Cause this could get real ugly, real quick.”
Boyer’s family business, and more than $4.1 billion in Pennsylvania exports are vulnerable due to the emerging trade war. Many of the nearly 1.6 million Pennsylvania residents whose jobs depend on international trade could be impacted. They are the collateral damage. And the potential harm to America’s industrial and agricultural heartland is about to get much worse.
The news of retaliatory tariffs has already begun to take effect on industries around the country. From manufacturing to agriculture, business owners are coping with the changes to come. For small businesses, there are no winners. For many, the international blustering, posturing and gamesmanship means rising costs and eventually layoffs. Here are three industries already hurting in Pennsylvania.
1. Apple growers
It takes an entire year to grow a crop of apples and bring them to market. That’s a year of planning, planting, research, quality control, and close attention to detail. Now, apple planters are dealing with uncertainty from tariffs – time they can’t afford to lose.
“That’s not something that you can switch up quickly,” said Brenda Briggs, a spokeswoman for the family-run Rice Fruit Company in Biglerville, PA. “When we have a disruption in trade in the key market for the industry, it has a huge impact on the domestic market.”
The news that Mexico, the top importer of U.S. apples in the world, slapped the U.S. with a 20% tax on fruit in retaliation to the administration’s tariffs was “devastating to the industry,” said Briggs.
How big of an impact? Fewer buyers overseas mean fruit that would normally be directed to offshore markets will have to stay in the U.S. That means more domestic supply which naturally pushes down the price. Before the tariffs went into effect about 25% of all fresh apples sold in America went overseas, the U.S. Apple Association says.
To Rice Fruit, the small business which is more than 100 years old, and other apple producers like them, losing international business can be devastating.
Boyer, part-owner of Ridgetop Orchards, shares these concerns for his orchard as well. The potential for lower prices is a weigh on the industry, he says.
“We are job creators,” he said “If we’re not exporting, then that means that we’re not paying tractor and trailer drivers and truck drivers. We’re not buying cardboard to put our product in. We’re not investing.”
“The stakes are high,” declares an advertisement for the U.S. Apple Association. “People will lose their jobs."
2. Dairy farmers
Lolly Lesher knows milk “keeps my family employed.”
Lesher, a partner at Way-Har Farm Market in Bernville, PA, is a third generation owner of her family’s country store where they milk their own cows, raise their feed and sell the milk and ice-cream to the community.
They are one of many dairy farmers in a state that has more dairy farms than every other state except one, said David Smith, Executive Director of the Pennsylvania Dairymen's Association. And those dairy farms generate almost $15 billion of revenue.
The total economic impact of dairy products produced and sold specifically in Pennsylvania accounts for more than $28 billion, directly supporting more than 45,000 jobs, and indirectly supporting 92,624 jobs through suppliers and expenditures, according to a report by the International Dairy Foods Association.
The U.S. has become Mexico’s biggest dairy supplier, with cheese purchases last year totaling nearly $400 million, about a quarter of all U.S. dairy exports, according to Feedstuffs. Until the tariffs were imposed, all U.S. dairy products enjoyed duty-free access into the Mexican market.
The tariffs are “sending shockwaves across the agricultural community,” said Smith. The duties “take off the table markets that we cannot lose.”
3. Pork producers
You don’t have to be an exporter to feel the pain or the tariffs, a lesson Dave Reinecker, of Reinecker Ag, LLC, is learning the hard way.
He and his son Andrew are not strangers to hard work, routinely putting in 70 to 80 hours a week raising on of Pennsylvania’s largest pig herds in York Springs.
A seventh-generation farmer on the same land his dad bought in 1962, all their pork is sold domestically. But that hasn’t saved him. The news of China’s retaliatory 25% tax on pork hit pig farmers hard, with Reinecker feeling the pain immediately.
The budding trade war has put pressure on pork prices, a trend that Reinecker fears may continue.
“If China turns to another supplier, it will cause an over-supply of pork domestically, driving prices downward,” he said.
“Their people still eat three meals a day, they’re still going to need meals,” he said. “They’re going to go to another supplier.”
Pig farmers in the state sell $67 million a year in pork abroad annually, including $3.5 million to China, according to the Pennsylvania Farm Bureau. Any downturn in pork demand could impact 1,600 jobs in pork-related industries in Pennsylvania, according to the Pennsylvania Pork Producers Council.
It also threatens the growth of pig farming, one of the state’s highest growth industries over the past two decades. The industry has nearly doubled in output to 558 million pounds of pork, according to the United States Department of Agriculture.
The longer the tariffs go on the lower paychecks will be for the state’s pig farmers said Pennsylvania Farm Bureau spokesman Mark O'Neill.
To bargain with “people’s daily food intake,” he said. “I just think that’s wrong.”
To learn more, visit www.thewrongapproach.com to see a map showing how states are affected by tariffs from China, the European Union (EU), Mexico, and Canada.