Apr 7, 2007

No Relief Yet For U.S. Asparagus Producers

Asparagus producers who were hoping for relief got nothing – yet – in the new free trade agreement signed by the United States and Peru Dec. 7.

“We were disappointed but not surprised to learn that zero tariffs on asparagus would be imposed under the new agreement,” said John Bakker, executive director of the Michigan Asparagus Advisory Board.

“U.S. trade negotiators unofficially acknowledged that the U.S. asparagus industry has been unintentionally harmed by the Andean Trade Preferences Act and signaled a willingness to help our industry explore other means of relief,” Bakker said. “We will be following up on this in January in Washington, D.C.”

Bakker didn’t say what he expected to come out of the January discussions. He said that during the negotiation process, “the U.S. government clearly heard from the U.S. asparagus industry,” which “was able to elevate the status of asparagus in the talks to the very highest level.”

The asparagus industry spoke through the newly formed National Asparagus Council, which combines the efforts of the three big producer states: California, Washington and Michigan.

The new agreement between the United States and Peru is the first step in the Andean Free Trade Agreement, which will include Colombia, Ecuador and Bolivia. The new pact doesn’t cause any more damage than was already done by the Andean Trade Preferences Act passed by Congress in 1991.

That act, Bakker said, was an effort to induce South American countries to abandon cultivation of coca, the parent of the drug cocaine, and adopt cultivation of legal crops. It gave Peruvian asparagus duty-free access to the U.S. market. At the time, it was a small, fresh-market crop that fit into the U.S. off-season without doing much harm.

“They didn’t set out to destroy the American asparagus industry,” he said. “But the Peruvian industry just exploded, becoming a year-round fresh-market supplier and moving into the processed industry as well.”

Investors from around the world, including the United States and its government, saw huge potential in the 2,000-mile-long Peruvian desert, where rain rarely falls. The sands and climate, with irrigation water added, were ideal for year-round asparagus production.

The impact was dramatic. Peru’s production tripled to 190,000 tons per year, and exports rose, replacing coffee as the No. 1 source of ag export income.

The impact in the United States was dramatic, too. While consumption was growing, U.S. production declined slightly to 120,000 tons. Imports rose from 30,000 to 100,000 tons per year. Fresh-market acreage in California, the leading producer, fell significantly to about 40,000 acres, Bakker said. Washington was hurt the most, losing its large processing plants and watching its acreage fall from 32,000 to about 12,000.

Michigan dropped about 2,000 acres to about 14,000, but was hurt the least, Bakker said. In Michigan, asparagus is an early crop that attracts laborers who will stay on through the fruit and vegetable harvest.

Normally, when a free trade agreement is signed, there is a tariff phase-out period, during which countries can adjust. The U.S. asparagus industry had asked for the imposition of tariffs on Peruvian imports ¬– using 1991 import figures as a base from which to start.

That was not included. In fact, asparagus wasn’t even mentioned in the press release from the U.S. Trade Representative touting the merits of the new free trade agreement.

U.S. production is 2 percent of world output, and Peru, after its rapid growth, has 3 percent. China produces 87 percent of the world’s asparagus – something both Peruvian and U.S. producers can’t help but notice.