Indian American walnut and almond growers say they are facing a massively-negative economic impact from a trade policy announced June 16 by India’s Commerce Ministry, which slapped huge tariffs on their products.
Indian American farmers in the Sutter/Yuba County region grow about two-thirds of the nation’s walnuts and almonds. India is the biggest buyer of almonds from the U.S., purchasing 54 percent of the export supply in 2017.
Eighty-two percent of those almonds are grown in California, according to the U.S. Department of Agriculture.
India last year bought 650 million pounds of almonds from California growers. The country has imposed a 25 percent tariff on almonds and raised a 20 percent duty on walnuts. Previously the duty on walnuts was 100 percent; the total tariff now is 120 percent.
In the ongoing trade war between the two countries, India imposed tariffs on 28 products last month in retaliation to the U.S. government’s imposing of heavy tariffs on aluminum and steel from India. Earlier this year, the U.S. ended its generalized system of preferences for India, a program that allowed for duty-free exports of certain products. And in May, the U.S. ended waivers of sanctions for seven countries who purchase oil from Iran, including India.
President Donald Trump has called India “the tariff king,” saying in March: “When we send a motorcycle to India, it’s a 100 percent tariff. When India sends a motorcycle to us, we brilliantly charge them nothing.”
In a further blow, China also imposed a 50 percent tariff on almonds from the U.S.
The majority of Indian American growers in this region are Punjabi Americans, tilling the heritage soils of their forefathers who began arriving in the area in the late 1800s and were the first Indian migrants to the U.S. Farmers in this region formed the backbone of the Gadar Party movement, which sought India's independence from the British.
Indian American farmers in the Yuba/Sutter County area collectively own about 50,000 acres of land worth an estimated $1.3 billion.
“The tariffs have hit us really hard,” Karm Bains, a fourth-generation farmer, told India-West. “Commodity prices have really gone down. People’s livelihoods are on the line.”
Bains, the son of Didar Singh Bains, the “peach king” of California, said that most farmers take out loans each year from banks based on the projected value of their crop. The bank will pad its loan by about 25 percent, he explained.
Banks loaned money last year at $1.25 per pound for walnuts, expecting the price to be about $1.50 per pound. Instead, said Bains, with the increased duty, walnuts are expected to sell on the global commodities market for about 75 to 80 cents per pound; farmers are thus faced with losses upwards of 45 percent.
Using a hypothetical situation, Bains explained to India-West that a farmer with two million pounds of walnuts — who would generally take out a loan on his entire projected crop — will incur a $400,000 loss on his 2018 crop. Costs for 2019 are not yet known, as farmers have not yet harvested.
Almonds last year sold for $2.44 per pound, according to data from the USDA. This year’s prices are not yet known, but India’s tariffs will impose about 12 cents more per pound.
California walnuts and almonds always sell for top dollar, said Bains, because of the quality, which cannot be found anywhere else in the world, he said proudly. But India’s tariffs are forcing people out of the market, he said, adding ironically that India itself does not grow these products.
“I’m worried about future generations and sustainability,” said Bains. “Fertilizer, fuel, the costs of labor and equipment have all gone up, while our prices continue to drop.”
Rice, soybean and grain farmers receive subsidies from the federal government, but no such subsidies are available for growers of stone fruits and nuts. Furthermore, the value of such goods on the export market has been declining over the past decade, as area farmers attempt to compete with European farmers, whose products are subsidized, and not subjected to the strict quality controls imposed by the USDA on American agricultural products, noted Bains.
“India cannot continue its trade war on the backs of farmers,” he stated.
Puneet Kundal, Deputy Chief of Mission at the Indian Embassy in Washington, D.C., told India-West: “The retaliatory tariffs imposed by India on the U.S. are within the framework of the World Trade Organization.”
“India held back on the imposition of tariffs as a mark of good will, and in order to continue talks with the U.S., in view of the U.S.-India Strategic relationship,” said Kundal.
Jaswant Bains, president of Sacramento Packing, which takes nut and stone fruit products to the global market, told India-West: “We have a glut of walnuts with no markets.”
“Between the trade wars and the strength of the U.S. dollar, walnut growers are being hit pretty badly,” he said, noting — like his nephew Karm — that he expects to get about half the price for his nuts that he received the previous year.
Walnut shipping containers were stuck in the export process, because the cost of duty was so high, said Jaswant Bains, noting that many exporters started sending their product through Pakistan to avoid paying the duty. India then slapped a 200 percent duty on walnuts from Pakistan, he noted.
Jaswant Bains said that the local Walnut Commission and Board have been in discussions with members of the House and Senate to deal with trade issues. The U.S. government did purchase some nut products last year for the federal school lunch program, but it would have to buy at least 20 percent of the available supply to stabilize the market, he said.