Washington’s agricultural exports held

steady in 2018, demonstrating both strength and missed opportunity, as some

industries suffered under new trade policies while others made gains during the

year.

Exports of Washington-produced agricultural goods totaled $6.7

billion in 2018, the same amount exported in 2017. The flat growth followed a

roughly 10 percent increase in exports of Washington-produced agricultural

goods from 2016-17.

“The overall message of the year was lost opportunity because

typically we are expanding exports and exports are growing,” said Rianne Perry,

international marketing program manager for the Washington State Department of

Agriculture.

But 2018 was different due to retaliatory tariffs imposed by China

in the ongoing trade war, the United States’ lack of trade agreements with

countries that formed the Comprehensive and Progressive Trans-Pacific

Partnership, or CPTPP, and ongoing negotiations for a new trade deal in North

America, each of which took their tolls on various industries.

China remained the third largest export market for Washington-produced

agricultural goods in 2018, but the dairy, wheat, apple and cherry industries

were among those that took significant hits in the Chinese market.

Dairy exports to China dropped by 72 percent from the prior

calendar year, while wheat exports to China dropped by 81 percent, according to

the state Department of Agriculture. No wheat has been exported to China since

May 2018.

“(China) was a growing market so we were excited about that, and

it was going to be something we could look forward to,” said Scott Yates,

director of communications and producer relations for the Washington Grain

Commission. “At the same time, I do believe there will be an agreement, but the

timing is crucial because it can’t go on forever.”

About $66 million in soft white wheat was exported to China from

Washington in the year since China stopped buying U.S. wheat.

For the cherry industry, which reported a 32 percent decline in

exports to China in calendar year 2018, the drop followed significant growth in

the prior year. China was the top export market for Washington cherries in

2017, purchasing $99.7 million during that calendar year, as the buying power

of its middle class continued to expand. Cherry exports were up by 75 percent

in 2017 over 2016.

“Overall, the sectors that were on the tariff list did decrease

their exports to China, some of them pretty substantially,” Perry said.

However, there were exceptions. Washington seafood, hops and

frozen french fries all increased their exports to China in 2018, despite being

targets of Chinese tariffs, Perry said. One possible explanation is that such

niche products aren’t available in the same quantity and quality from other

markets, she said.

Chris Voigt, executive director of the Washington State Potato

Commission, said the growth of U.S.-based quick-serve restaurants such as

McDonald’s and KFC helped keep market demand for frozen french fries strong

both domestically and in China during 2018, despite tariffs being imposed

during the year.

Washington exported $798 million of frozen french fries to China

in 2018, up from $756 million in 2017.

But like many of the other industries that rely on the export

market for their agricultural goods, the retaliatory tariffs being imposed by

China are merely one among a number of trade concerns, Voigt said.

For potato growers, the bigger concern is that the United States

gets a trade agreement in place with Japan, which always has been a top market,

not just for potatoes but for Washington’s agricultural products as a whole.

Japan is now part of the CPTPP, a trade agreement that will gradually lessen

tariffs for the 11 countries that signed the deal, which the United States did

not sign. Washington exported $1.1 billion of agricultural goods to Japan in

2018 but is likely to see its market share erode in some sectors as the tariff

reductions included in the CPTPP move forward.

Japan also is a top market for Washington wheat, and that industry

is hopeful that a bilateral agreement with the country will be in place soon,

Yates said. The wheat industry was able to maintain exports of soft white wheat

to Japan in 2018 because of the specialty nature of the crop, but another year

without an agreement would likely hurt, he said.

“U.S. negotiations for a bilateral trade agreement with Japan have

begun to take place, and seeing an agreement there is of the utmost

importance,” Perry said.

For the Washington apple industry, which exports a third of its

fresh apple crop, ongoing trade negotiations in North America have been the

primary concern in the past year, said Todd Fryhover, president of the

Washington Apple Commission.

U.S. apple exports to its top market Mexico were hit with a 20

percent tariff in June 2018 after the United States imposed tariffs on imports

of Mexican steel and aluminum. The U.S. and Mexico reached an agreement in

mid-May to eliminate them, but threats of more retaliatory tariffs loom. Apple

exports still face a 50 percent tariff in China, and India is threatening to

implement new tariffs, as well.

The Washington Apple Commission has responded by focusing on trade

promotions and by diverting some volume to new markets such as Indonesia,

Thailand and Vietnam.

 “As an industry, we’re

always looking at these different alternatives to maximize revenue for growers

and trying to stay away from those markets that have the least return, whether

they are impacted with a tariff or not,” Fryhover said.

Despite the current challenges, Washington continues to build on

its strengths and invest in its export market.

The Northwest Seaport Alliance, which manages the marine cargo

business and facilities for the ports of Seattle and Tacoma, is preparing to

begin a $500 million modernization project that will allow Terminal 5 at the

port of Seattle to more quickly and efficiently handle the largest marine cargo

vessels being deployed on the Asia-Pacific trade route.

Eight of the top 10 markets for Washington’s agricultural exports

in 2018 were in Asia.

“The exporter community in Washington state relies on The

Northwest Seaport Alliance to get our goods to foreign markets,” said Mark

Anderson, CEO and president of Ellensburg-based Anderson Hay & Grain Co.

Inc., in a statement. “Without a robust import trade, our export trade becomes

much more difficult. Investments like the Terminal 5 modernization end up

supporting well-paying jobs all across the state.”

Construction on Terminal 5 will begin this summer and will be

carried out in two phases, with the first phase expected to be complete in the

spring of 2021 and the second in 2023, said Katie Whittier, spokeswoman for

Port of Tacoma and The Northwest Seaport Alliance.

The U.S. Small Business Administration’s Seattle District Office

also continues to support and invest in Washington’s export market across all

industries. The agency is the coordinating member of the 12-agency Washington

Export Outreach Team, or WEOT, an active consortium of organizations working to

assist Washington businesses with expanding into international markets or

further growing their presence in them.

WEOT, which hosted a half-day, “Grow Your

Business Internationally” export workshop at the Tri-City Development Council

in May, provides resources including technical assistance and potential funding

for small businesses to enter or further expand into foreign markets, said Kerrie

Hurd, district director for the U.S. Small Business Administration, Seattle

district, which covers most of Washington and a part of Idaho.

More information about WEOT is available by contacting the U.S.

Small Business Administration’s Seattle district offices or any other agencies

involved with WEOT.

“I do feel like this is an environment where there is opportunity. It’s

just that people have to know the resources to go to and be able to take

advantage of those opportunities,” Hurd said.