Five dried cherry processors – including the Payson Fruit Growers of Payson, Utah and four in Michigan – have filed a Countervailing Duty (CVD) and anti-dumping case against Turkey in hopes that it will help level the international trade field. The initial phase of the case was initiated last fall, but the recent petition was filed April 23 through the U.S. Department of Commerce and International Trade Commission.
The petition claims Turkey is flooding the U.S. market with dried tart cherries, which is lowering domestic product prices. Turkey accounts for more than 60 percent of the dried cherry imports coming into the U.S., and their imports have doubled each of the past three years.
According to the filings, the alleged dumping margin is based on a comparison of U.S. price and constructed value for imported of dried tart cherries from Turkey into the United States. Until recently, Turkey’s been able to dump cherries into the U.S. market because of duty-free trade access granted under the United States' Generalized System of Preferences, which is targeted toward helping developing nations.
“We support the action of these cherry processors and farmers as they seek a fair playing field. These farmers are the backbone of our economy and are only seeking a fair competition,” said Ron Gibson, President of the Utah Farm Bureau Federation. “Foreign competition entering our marketplace with artificially-low prices undercuts our local farmers. There comes a point where our farmers can’t continue to absorb these losses from unfair competition, and we welcome this investigation from the Department of Commerce. We’ll do whatever we can to help them.”
While an important niche industry to Utah and Michigan agriculture, the industry still operates on tight margins with little to spare on legal efforts. It is estimated the legal costs for their dumping case will be just shy of $2 million. For this reason, leaders had worked with government officials to highlight the issue in the hopes of having the government initiate the dumping case itself.
“We have worked with the Trump Administration to self-initiate this case and have made multiple trips to the U.S. Dept. of Commerce to meet with Secretary Ross and USDA Secretary Sonny Perdue. However, the government has not used self-initiation historically,” said Phil Korson, President of the Cherry Marketing Institute. “The dried cherry industry in the U.S. was built by local growers, and so every lost sale to imports has an impact on our Utah growers and processors. We will do everything we can to stop the cheap imports from stealing our markets.”
Because of this threat to the Utah Cherry Industry, growers have been watching the import numbers closely and recently met in Traverse City, Michigan with a trade attorney to review their case before the Commerce Department.
“We expect other markets to hold themselves to the same standards that we have in the U.S.,” said Miles Hansen, president and CEO of World Trade Center Utah. “The rules apply to everyone. This investigation is important in order to protect U.S. cherry farmers, as well as all U.S. companies, who participate in the global economy.”
Dried tart cherries are marketed for $4.50 to $5 per pound at wholesale domestically, yet Turkey marketed its product for 89 cents per pound in 2018. It has been reported that Turkey is able to market its cherries this low because growers’ losses are offset through unfair subsidies throughout the growing and processing cycle.
In 2018, Turkey exported 1.5 million pounds of dried cherry product into the U.S., up from 826,430 pounds in 2017 and just 413,893 pounds in 2016. As recently as five years ago, there were no dried tart cherries in the non-domestic market. If this pattern continues, a sizeable portion of the domestic market could be taken through what farmers are calling unfair practices.
“The amount of dried cherries being dumped in this country is growing exponentially over the last three years,” said Don Gregory, a tart cherry grower and chairman of Michigan’s dried cherry task force. “If we don’t stop it, we won’t have a dry cherry industry in the U.S.”
“They are selling below their cost of production and are putting no value on the cherry in order to grow their market share,” said a statement from the Utah Department of Agriculture & Food. “Because of the sinking grower prices in the U.S., Utah producers have had to store at least two seasons of harvest.”
It has also been reported that some growers in Michigan have begun ripping out cherry trees, but that hasn’t been confirmed to take place in Utah.
Until recently, Turkey has been able to dump cherries into the U.S. market because of duty-free trade access granted under the United States' Generalized System of Preferences, which is targeted toward helping developing nations.
U.S. cherry processors in the Dried Tart Cherry Trade Committee say a ruling in favor of its industry could result in up to a 628.9% tariff on Turkey’s imported dried cherry product.
“They are dumping into the states for less than a dollar a pound,” Gregory said. “They are selling it below their cost of production and are putting no value on the cherry in order to grow their product…We have to compete against that. We get a lot of lip service from the government, but we never get help.”
“We’re not afraid of competition, but this isn’t on a level playing field,” said Ray Rowley, a tart cherry grower in Santaquin, in a meeting in late 2018. “If everything is fair, and we can’t compete, then we’ll live with that. But this isn’t a fair competition.”
The dried cherry processors involved with the case are represented by the Washington, D.C.-based law firm Schagrin Associates.
According to the firm’s Elizabeth Drake, the International Trade Commission’s preliminary determination on the case is due in 45 days, with a vote currently scheduled for June 6. She noted that both the Department of Commerce and International Trade Commission must reach “affirmative preliminary determinations” before any duties are imposed.
Contributions to the article were also made by the Utah Department of Agriculture & Food and Michigan Farm Bureau.
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