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California is the largest producer of agricultural products and the top
exporting State. In 2008, the State’s cash farm receipts totaled $36.1 billion.
California ranked 1st among all 50 states in 2008 with agricultural exports
estimated at $13.6 billion. Agricultural exports help boost farm prices and
income, while supporting about 157,528 jobs both on and off the farm in food
processing, storage, and transportation. Exports are important to California's
agricultural and statewide economy. Measured as exports divided by farm cash
receipts, the State's reliance on agricultural exports was 38 percent in 2008.
California's top agricultural exports in 2007 were:
- tree nuts -- $3.1 billion
- fruits and preparations -- $3 billion
- vegetables and preparations -- $2 billion
- dairy products -- $838 million
World demand for these products is increasing, but so is competition among
suppliers. If California's farmers, ranchers, and food processors are to compete
successfully for the export opportunities of the 21st century, they need fair
trade and more open access to growing global markets.
How Trade Agreements Benefit California Agriculture
California benefits under NAFTA with new rules of origin that increase demand
for U.S. textiles in Canada and Mexico. Mexico’s 10-percent tariff on cotton has
been eliminated. This tariff reduction supports U.S. cotton exports to Mexico,
which rose from 558,000 bales to 2.2 million bales from marketing year 1995 to
2002. U.S. industry estimates that the Caribbean Basin Initiative and Africa
Growth and Opportunity Act will increase annual cotton sales by 100,000 bales.
Under the U.S.-Central America-Dominican Republic Free Trade Agreement (CAFTA-DR),
a two-track approach will be established for dairy products with the objective
of achieving free trade within 20 years. The first step is the establishment of
reciprocal duty-free tariff rate quotas (TRQs). The second and concurrent step
involves the immediate elimination of in-quota tariffs on dairy products. U.S.
dairy products shipped to Central America face a range of different TRQs and
import tariffs as high as 65 percent. From 2001 through 2003, U.S. suppliers
annually shipped on average 17,880 metric tons of dairy products valued at $44.1
million to all six countries combined.
As one of the nation’s largest tomato growing states, California benefits
from an agreement with Japan that lifted all remaining restrictions on fresh
U.S. tomatoes in 1999. As a direct result, U.S. fresh tomato exports to Japan
jumped from $31,000 in 1994 to $1.1 million in 2002. California benefited under
the Uruguay Round as Thailand cuts tariffs 50 percent on tomato juice and mixed
vegetable juices from 1995 to 2004.
California benefits from the Uruguay Round as Japan and Korea make
substantial tariff reductions on a wide range of fresh and processed fruits.
From 1995 to 2000, Japan lowered its tariffs on fresh oranges to 16 percent
(out-of-season) and 32 percent (in-season), and its tariffs on fresh grapefruit
to 10 percent. During the same period, Japan also lowered its tariffs to
19.1-21.3 percent on fruit juices containing not more than 10 percent sucrose by
South Korea established a tariff-rate quota for oranges, and reduced its
tariffs from 99 to 50 percent by 2004. As tariffs fall, U.S. orange exports have
increased almost ten times from $5.3 million in 1995 to $51.9 million in 2002.
Korea is also reducing its lemon tariffs to 30 percent, and its tariffs on fresh
grapefruit from 50 to 30 percent by 2004. Supported by lower tariffs, U.S. total
fresh citrus exports to Korea jumped 266 percent from $20.9 million in 1995 to
$76.6 million in 2002.
Under the 1999 U.S.-China Agricultural Cooperation Agreement, China lifted
its import ban on citrus from this state. This agreement cleared away a major
obstacle to trade with China. For the first time, U.S. exporters have direct
access to the large central and northern coastal cities, creating a more
efficient supply chain to meet China=s
demand for top-quality, fresh citrus.
Under the U.S. – Australian FTA, Australia’s 5-percent tariff would be
eliminated on a number of fruit and nut products, including almonds, grapes,
raisins, dried apricots, dried apples, dried plums, citrus juices, cranberry
juice, fruit jams and jellies, and frozen strawberries. Australia has also
committed to addressing outstanding phytosanitary issues, including those for
apples, California citrus, and stone fruits. From 2001 to 2003, U.S. suppliers
annually shipped on average $50 million worth of fruit and nut products to
Australia. Under the U.S. – Australian FTA, Australia has also agreed to
immediately eliminate a 5-percent duty on U.S. vegetable exports. From 2001
through 2003, U.S. suppliers annually shipped on average $21.5 million worth of
vegetable and vegetable products to Australia.
Under the Uruguay Round, the EU reduced tariffs on wine, and now the majority
of U.S. wine exported face EU tariffs at 13.1 ECUs per hectoliter or about 50
cents per gallon. By, April 2000, Japan implemented its final wine duty
reduction under the Uruguay Round agreement. The tariff rate on bottled wine was
lowered to 15 percent. Supported by lower tariffs, U.S. wine exports to the EU
more than doubled from its 1995-level reaching $542 million in 2002. Likewise,
U.S. wine exports to Japan increased from $32 million to $79 million. Under the
U.S. –Canada Free Trade agreement, Canada reduced its cost-of-service mark-up on
U.S. wines. U.S. exports of wine and products to Canada rose from $27 million in
1990 to $92 million in 2002.
Under the Uruguay Round, California benefited when Japan cut
tariffs on almonds and other nuts from 1995 to 2000, and Korea, Thailand and
Malaysia are doing likewise. Supported by these cuts, total U.S. walnut exports
to Japan rose 17 percent from 1995 to 2002 to $37.3 million, and U.S. walnut
sales to Korea increased 267 percent to $6.7 million during the same period.
U.S. almond sales to Thailand rose from $652,000 in 1995 to $1 million in 2002.
Export Success Stories
As a significant producer of U. S. almonds, the 6,000 California almond
growers have benefited from the joint export efforts of the Almond Board of
California, Blue Diamond, and USDA through the Market Access Program. California
almond shipments have surpassed past year records for the fifth consecutive year
with U.S. almond exports for crop year 2003/2004 valued at $900 million, up 32
percent compared to the same 12-month period a year ago. Overall, exports
accounted for 70 percent of the crop compared to 30 percent of the crop that
moves into the domestic market. Exports to nine of the top ten overseas markets
attained new record levels.