“Shipping carriers rejected U.S. agricultural export containers worth hundreds of millions of dollars during October and November, instead sending empty containers to China to be filled with more profitable Chinese exports,” a 2021 CNBC investigation found.
American farmers, ranchers and growers don’t have a shipping container shortage, as has been reported. Foreign shipping carriers are refusing to take American and California-made products, and instead, the shipping carriers take empty containers back to China.
China pays shipping carriers so much money to export Chinese-made goods, they are then paid a premium to carry the empty containers from America back to China. As a result, hundreds of thousands of containers with American products are delayed or remain sitting rotting on American docks in American ports while foreign customers wait.
In the past year, members of congress, the U.S. Secretary of Transportation, the U.S. Secretary of Agriculture, the California State Transportation Agency Secretary, and the California Department of Food and Agriculture sent letters to the shipping council, leading ocean carriers, and Federal Maritime Commissioners. But the export situation has only gotten worse.
What does this mean for California?
California walnut, almond and citrus growers, and meat and dairy producers are facing not only the loss of their food products because so much of the 2021 crop is still sitting in storage in the U.S., but is already sold, and they aren’t getting paid for what was ordered and committed – payments will not be received until the product is delivered.
“California’s walnut industry exported 47% fewer nuts in the shell and 16% fewer shelled nuts during September and October of 2021 than it did in the previous year,” the California Walnut Board reported to Reuters.
“The 2021 crop we now know has not shipped to the level that we thought,” President and CEO of the Almond Alliance of California, Aubrey Bettencourt told AgNetWest. “The cash flow was not received by our handlers, processors, hullers, and shellers, so they have little to no leeway to afford the pool payments to our farmers for the 2022 year. This is getting to be a scary situation. I’m not speaking for everybody, but it is a concern, and we are starting to see letters about it that we just don’t have the cash flow available to our farmers.”
The product was grown, processed and prepared for shipping, but growers and suppliers haven’t been paid, while the food products sit abandoned, rotting in shipping containers. Growers are now facing the 2022 crops. How do they pay for the new crops when they haven’t been paid for 2021? How perishable are walnuts, almonds, citrus, meat and dairy?
California State Transportation Agency Secretary David S. Kim and California Department of Food and Agriculture Secretary Karen Ross sent a letter in early January 2021 to leading ocean carriers “requesting they take full advantage of underutilized California ports, including the Port of Oakland, to increase capacity for agricultural exports and help relieve supply chain congestion in the San Pedro Bay.” To no avail.
The CNBC investigation found:
“Shipping carriers rejected U.S. agricultural export containers worth hundreds of millions of dollars during October and November, instead sending empty containers to China to be filled with more profitable Chinese exports.”
“Carriers rejected an estimated 177,938 containers known as TEUs (20-foot equivalent units) in October and November, according to the analysis of data compiled from the Census Bureau and the ports of Los Angeles, Long Beach, California, and New York and New Jersey.”
“According to port trade data, the total export container deficit for the ports of Long Beach and Los Angeles was 136,392 TEUs. An estimated 41,546 TEUs were denied out of the Port of New York and New Jersey. The total value lost export trade from those ports is $632 million.”
The Globe spoke with Aubrey Bettencourt of the Almond Alliance, who joined the alliance December 2021 in the middle of the crisis. “The 2020 almond crop ran long, so the pain of not having the 2021 crop hasn’t been felt yet,” she said. “But the global demand of almonds is huge.”
Bettencourt explained that for the retail side – the middle purveyor – they don’t care. “They will replace almonds on the store shelves with another snack.” So unless almonds are a part of a product, like Almond Milk, or almond flour, not everyone will experience the loss.
There are two other regions which grow almonds – Spain and Australia, Bettencourt said. And Australia is a major supplier to markets in the Asia-Pacific region, and has a free-trade agreement with China. Bettencourt said our second largest almond market is Germany, but Spain as a grower could supply the Germans.
California’s Congressional Delegation is working on this, especially after realizing the $2.1 billion loss of agriculture revenue in California because of this shipping crisis, Bettencourt said. And that means no tax revenue to the state on the $2.1 billion. The shipping and port crisis “has been almost one year to date. Last February/March 2021 was the last normal period at our ports,” Bettencourt added.
U.S. Senator John Thune (R-ND) and Rep. John Garamendi (D-CA) have bipartisan legislation addressing this crisis, but do California growers and ranchers have the time it takes to get legislation passed and into practice, even if Congress is moving fast?
And what happens if almond, walnut, citrus growers, and meat and dairy producers don’t deliver the contracted products? Everyone involved wants to know this answer.
Ironically, next week, trans-Pacific and global container shipping and logistics companies gather at a conference in Long Beach, California, billed as “The must-attend conference for the trans-Pacific and global container shipping and logistics community.” The cost to attend the conference varies between $895 up to $3,345, which does not include golf at Pelican Hill Newport Beach.