February, 1999
by Matt McCallum
The U.S. apple industry is about to embark on an antidumping petition against
foreign suppliers of below-cost imports of apple juice concentrate. And
while the $1 million it will cost the industry to take the action is a substantial
amount of money, two agricultural commodity groups who brought similar suits
and were successful say its well worth it.
The mushroom industry won its antidumping suit in July of 1998 against canned
mushroom exports to the U.S. from China, Chile and Indonesia. It spent nearly
$750,000 on the action.
The honey industry filed an antidumping suit in 1994 against China alleging
the country was selling honey 170% below the cost of production. The U.S.
government initially ruled that they would slap tariffs averaging 144% on
Chinese honey exports. In March 1995 the Chinese decided to negotiate a
settlement and agreed to quotas and floor prices. The ruling ends in 2000
and the industry is weighing if it will ask the Department of Commerce to
look into the matter once again. So far the honey industry has spent $600,000.
In both cases the industry groups who filed the antidumping suits want other
commodities to remember that the ruling lasts for five years and legal fees
continue throughout that time to ensure the country’s slapped with
the tariffs are complying with the ruling.
Mushroom industry
The mushroom industry was devastated by dumped imports in the 1990s with
several canners being put out of business, said Laura Phelps, president
of the American Mushroom Institute.
“The exports were coming in so far below the cost of production that
it wasn’t funny - it wasn’t nickels and dimes below, but dollars,”
she said.
The mushroom industry filed the petition in January of 1998 and had a favorable
ruling six months later when the U.S. Department of Commerce imposed high
antidumping duties on processed mushrooms from the four largest mushroom
exporting countries which include China, Chile, Indonesia and India. In
1997 those four countries exported 118 million pounds of processed mushrooms
into the U.S., accounting for more than 91% of all U.S. imports. The price
in 1997 was 55 cents a pound - the lowest price in a quarter century.
China had the biggest affect on the market when its exports of cheap mushrooms
to the U.S. doubled from 1994 to 1995. The Food and Drug Administration
had banned imports from China in the late 1980s and early 1990s because
of staph infections found in the processing plants. The FDA went over to
the Communist country and showed them how to clean up their plants and started
a certification program. With the U.S. government’s help, China was
back in the export business in 1992. By 1995 China was dumping product into
the U.S. and taking nearly 50% of the export market, Phelps said.
“The cheap foreign mushrooms had a negative effect on the entire mushroom
industry - fresh and processed.
“The problem wasn’t just effecting the canneries, because if you
are a mushroom farmer and there is no way you can make profit selling to
the cannery because there is no demand, then you have to sell it to the
fresh market and that depresses those prices too,” Phelps said.
The Department of Commerce investigated each firm in the countries the American
Mushroom Institute alleged were dumping. If it found the companies were
dumping, it came up with a duty for each company based on how low they were
selling below the cost of production.
Duty rates for Chinese canned mushroom range from 168% to 198%, Chile 148.51%
and Indonesia exporters from 7.94% to 22.84%.
Honey industry stings back
Chinese honey was flooding the U.S. market in the early 1980s and accounted
for more than 60% of all imports, said Troy Fore, executive secretary of
the American Beekeeping Federation.
Imports of honey from China rose from 45 million pounds in 1991 to 77 million
pounds in 1993, an increase of 71%. The Chinese share of the U.S. market
rose from 14.8% to 25.2% during the same time. The Chinese were selling
the honey at 30 cents per pound and it cost them over 80 cents to produce
- 170% lower than the cost of production, according to Fore. American honey
producers have to pay a 55% duty if they want to export their product to
China.
The Chinese were able to flood the U.S. market because of subsidies and
for the sole purpose of capturing market share and earning hard currency,
Fore said.
In January 1994 the honey industry asked the ITC to determine if China was
dumping honey into the U.S. market. It found the rising volume of low-price
Chinese honey imports were disrupting the U.S. honey market and threatening
the industry. Five of the six ITC commissioners recommended that President
Clinton impose a combination of higher duties and quotas on Chinese honey
imports. In April, Clinton declined the recommendation and did nothing.
In October the American Beekeeping Federation and American Honey Producers,
which together have 2,000 members representing 75% of the commercial U.S.
honey production, decided to take matters into their own hands and filed
an antidumping complaint.
The investigation came up with a preliminary average assessment of 144%
in the summer of 1995. When the Chinese found this out they decided to settle
the matter if the government dropped its investigation. Under the agreement
the Chinese agreed to limit honey exports to 43.9 million pounds per year,
a significant reduction from the 77 and 65 million pounds exports in 1993
and 1994 respectively. They also agreed to a floor price for each of the
five different tariff classifications of honey, that meant a substantial
increase for its exports.
Within 18 months of the settlement, honey prices doubled. A world honey
shortage helped to boost prices, but the quota and floor prices also helped,
Fore said.
The five-year agreement runs out in 2000 and the honey industry has to decided
if it wants to go through the process again to keep the agreement in place
or have the ITC investigate again to see if the government would slap tariffs
on the Chinese for five years.
David Hackenberg, president of the American Honey Producers said the industry
has to take a look at what the agreement has done to the world honey market
over the last four years. China shifted its exports to Germany, which in
turn shut out the Argentines. And it has raised the price of honey, which
encouraged more production, so now the price is going down again.
“We can’t produce enough honey for our own market so we will always
be an importing country,” Hackenberg said. “Beekeepers must understand
that we are dealing with a world market and we are going to have to learn
to live with it. We’ve signed these trade agreements and that is the
way it has to be.”
The honey industry may still file for an extension, but is also taking a
different approach to honey imports. It is trying to address the issue of
adulteration, which is a big problem in the Chinese product, Hackenberg
said. The honey industry is looking to raising money for a quality assurance
program and added research into the issue by increasing assessments on honey
packers. The industry is holding public hearings and may vote on the issue
this year sometime.
The Fruit Growers
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