Middle Georgia pecan growers are caught in the crossfire of a trade war between the U.S. and China.
After President Donald Trump placed tariffs on imported Chinese products, the Chinese retaliated by raising tariffs on U.S. exports to China. That includes an increase of the tariff on pecans from 7 percent to 47 percent. On Tuesday, the White House announced $12 billion in aid to farmers impacted by the trade war.
The tariff increase has little immediate impact because pecans aren’t being exported this time of year, but it could mean a lot once the harvest begins in the fall and growers are looking to sell their pecans.
China is especially important to local growers because the Chinese love Georgia’s big, meaty pecans. Pearson Farm in Fort Valley has about 3,000 acres of pecan trees, and about 60 percent of the crop is exported to China, said Lawton Pearson, a partner in the business.
Ideally, he said, growers would like to see some resolution to the trade war and have the tariff return to 7 percent. But if it doesn’t, no one is sure what that could mean for the crop, prices or growers’ bottom line, and that uncertainty is the worst part, he said.
“If a tariff is what needs to happen for our country, then that’s what needs to happen, and we will deal with it. But what’s disturbing is that we just don’t know where to go at this point,” he said.
The Chinese could continue to buy Georgia pecans and pay a higher price, or they could turn to competitors, primarily Mexico and South Africa. If that happens, U.S. pecans might then be sold to the markets that Mexico and South Africa are currently supplying, in what Pearson called a global “musical chairs” of pecan sales. If alternative markets don’t pick up the loss of sales to China, it could mean a big glut of pecans in the U.S. and lower prices at stores here, he said.
Around this time of year pecan growers would normally be signing contracts with brokers for the upcoming year, with guaranteed prices for the crop. But with the market uncertainties, brokers might not want to sign contracts, leaving growers forced to sell at whatever the going rate might be at the moment, which might be low.
Will Easterlin, general manager of Easterlin Pecans in Montezuma and Fort Valley, buys pecans from growers then exports the pecans to China and elsewhere.
“We just don’t know what the impact is going to be,” he said. “I’m very concerned because at the end of the day we do have a good product.”
Georgia is the nation’s top pecan producer with 160,000 acres of trees and a value of about $315 million in 2016, according to the Georgia Extension Service.
Pearson Farm is also a large peach grower. Pearson said he is accustomed to dealing with uncertainty with peaches because that crop is especially vulnerable to weather conditions. Pecans have traditionally been more predictable, but the trade war has changed that.
Currently pecans are the only crop in the state significantly impacted by the trade war, said Julie McPeake, communications director for the Georgia Department of Agriculture.
China also put a 25 percent tariff on soybeans, a big Georgia crop, but McPeake said that shouldn’t impact Georgia farmers. Although China is a big buyer of U.S. soybeans, McPeake said most of Georgia’s soybeans go toward making feed for the state’s large poultry industry.
Pearson said all he knows about Trump’s tariff relief is from the news, so he isn’t sure yet how much it might help. He was glad to hear about the relief, but he also thinks that could mean the trade war won’t end soon.
“To me, that means he’s not going to back down,” Pearson said. “He’s not bluffing.”