Northern Michigan's cherry industry could be a casualty of international trade war
In the midst of tension between the U.S. and global trade partners like Turkey, northern Michigan’s iconic cherry industry is stuck in the middle.
Tart cherry farmers have been undercut by foreign competitors for years. Many farmers thought tariffs implemented by the Trump administration would help, but they haven’t.
Chopping down cherry trees
Fifth-generation Cherry Farmer Jim Bardenhagen has grown tart cherries on his family farm for decades.
But on a crisp fall morning in early October, a tractor pulled tart cherry trees from his orchard in Suttons Bay. Bardenhagen is sad to see these trees go but says he has no other choice.
"We're not making (back) our costs on them right now, so it's hard to spend money to raise them," he says.
Tart cherries are the signature industry of northern Michigan — they're found just about anywhere, including roadside stands and in the aisles of convenience stores. The region is so synonymous with the crop that Traverse City's airport is called Cherry Capital Airport.
Statistics show that Michigan farmers produce around 75 percent of the tart cherries made in the U.S., but Bardenhagen says the price has plummeted in the past few years.
"We love cherries, we've always grown cherries on this farm," Bardenhagen says. "We just figured right now is a time to take these (cherry trees) out, the market's not there."
Cheaper foreign cherries
For years cheap tart cherries from Poland, Hungary and especially Turkey have taken over the U.S. market. Domestic tart cherries sell for an average of $4.60 per pound, while Turkish cherries sell for 89 cents per pound on average.
Cherry grower Nels Veliquette says farmers like himself aren't afraid of foreign competition.
"If we have the fair option to compete, the U.S. product will win," Veliquette says. "We're not afraid of competition as long as it's fair."
Veliquette is part of the Dried Tart Cherry Trade Committee, a group made up of farmers, growers and processors that lobbies on behalf of the industry. The committee spent nearly $2 million to file a trade dispute case against Turkey, which they claim was illegally subsidizing their farms. After years of research and lobbying, the International Trade Commission picked up the case in June.
The preliminary result was huge tariffs on Turkish exporters, some as high as 700 percent. That was a big win for Michigan cherry farmers and could mean the end of Turkey as a global competitor.
But Veliquette isn't celebrating. Since that win, cherry exports from Turkey have declined, but have skyrocketed in several other countries.
According to trade data from July of this year, Brazil has increased their tart cherry juice exports to the U.S. by more than 930,000 litres, while Hungary has also increased their juice exports to the U.S. by more than 1 million litres.
"It is like whack-a-mole," Veliquette says. "It started in Turkey and now it's migrated to Brazil, and where will it go next?"
It's more complicated than tariffs
Jon Slangerup, CEO of import/export firm American Global Logistics, says countries and manufacturers can find creative ways to get around tariffs.
"If one country wants to avoid a tariff placed on it's finished goods, it may send a partially assembled product or good to another country, finish them there, and then move those goods ... to the consuming country," he says. "It happens all the time."
While it's not clear if Turkish cherry exporters are doing that, Slangerup says that practice is common.
"Is that fair? Is that right? Well it happens all the time," he says.
Overall, Slangerup says getting fair trade takes more than tariffs.
The trade war hits tart cherries
Many cherry farmers looked to the Trump administration to help with foreign competitors. Some thought aggressive stances on foreign exporters would mean more competitive prices.
But Nels Veliquette says Trump isn't fighting for tart cherry farmers. Unlike bigger U.S. agriculture industries, cherry farmers don't get much of the federal government's attention.
"These things are being pushed forward ... by a very small group of people," Veliquette says. "We don't have a lobby like the steel lobby, we don't have a lobby like the soybean lobby."
The tart cherry industry is also dealing with the fallout of the trade war between the U.S. and China. Chinese retaliatory tariffs on U.S. agriculture products have essentially cut domestic cherry growers out of that market, and other industries like blueberries have eaten away at the already diminishing market for cherries.
All that amounts to $10.8 million in lost profit for the industry, according to a University of California, Davis study. The U.S. Department of Agriculture has subsidies for farmers hurt by Chinese tariffs through the Market Facilitation Program (MFP). However, tart cherry farmers aren't eligible for them.
The USDA declined an interview request, but argued that tart cherry farmers weren't directly impacted by Chinese tariffs.
"USDA expanded the scope of eligible commodities from the assistance provided in 2018 to include all of the Farm Bill commodity title-eligible commodities, in addition to several others that were directly affected by unjustified retaliatory tariffs," the USDA said via email.
Nels Veliquette says tart cherry farmers' exclusion from the program is a technical oversight that could be easily fixed. The industry has lobbied to be included in the MFP to no avail.
"There isn't a benevolant bureaucracy awaiting the oppourtunity to help these small industries," he says.
An uncertain future
Last month the Dried Tart Cherry Trade Committee spent $30,000 to launch an investigation into a new competitor: Brazil. They hope the International Trade Commission will pick up the case after more money and a few years of paperwork.
In the meantime, Veliquette says the industry is stuck in a cycle: cheap foreign tart cherries are imported to the U.S., domestic growers raise the alarm but they can't do much about it.
A bill was introduced in the U.S. Senate last year to make the U.S. Commerce Department investigate trade disputes on behalf of small industries, but it's currently stuck in committee. The commerce department did not respond to multiple requests for comment.