The cargo pileup at West Coast ports may have had a greater impact on farm exports from California than the Sino-U.S. trade war did, said three economists on Wednesday. They estimated losses of $2.1 billion in foreign sales during a five-month period because of port congestion, comparing that to economic losses of about $500 million for California agriculture during the first year of the trade war.
“Due to exporters’ difficulty obtaining empty shipping containers, the value of California’s containerized agricultural exports fell by an estimated $2.1 billion, about 17 percent, from May to September 2021,” wrote the economists in a University of California magazine.
“The lost farm exports mirror the fact that California ports are among the least efficient in the world,” they wrote. “As a result, some importers now view California as an unreliable supplier of agricultural products due to inferior port infrastructure.”
California is the largest ag exporting state in the nation, with more than 40 percent of its production going to foreign buyers. Dairy, almonds, and grapes were the leading exports in 2020, according to state agriculture officials.
President Biden said Wednesday that there has been “striking progress” since November in reducing congestion at ports. “The Ports of Los Angeles and Long Beach have nearly cut in half the number of those great big containers you see sitting on a dock for more than eight days,” he said during a meeting of his supply chain disruptions task force. The Department of Transportation was scheduled to announce more than $200 million in grants to ports nationwide on Thursday, said the president.
Ag exports suffered during the summer because shipping lines determined it was more profitable to carry empty containers overseas than to wait for them to be filled at West Coast ports. There was high demand in Asia for the containers, and the freight lines could charge as much as $12,000 to haul a 40-foot container to Los Angeles from Shanghai.
At the peak of the disruptions, in September, nearly 80 percent of containers leaving California ports were empty, wrote economists Colin Carter of UC-Davis and Sandro Steinbach and Xiting Zhuang of the University of Connecticut. They said that shipments of ag products fell by 97,000 container loads during the five months they studied.
Based on prices in April, the economists estimated that the state’s nut producers lost $520 million in foreign sales, its wine producers lost more than $250 million, and its rice growers lost more than $120 million. Nut exports continue to lag substantially behind normal, “which points towards very significant export losses for this sector of California agriculture,” they wrote.
U.S. farm exports were a record $172.2 billion in fiscal 2021, which ended on Sept. 30. The USDA forecasts a new record, $175.5 billion, in the current fiscal year.
The article in ARE Update, ” ‘Containergeddon’ and California agriculture,” is available here.