Asian and Latin American customers are clamoring for Mid-Columbia apples, french fries and spuds and other Washington agricultural products.
But while both the demand and supply exist, Washington farmers, processors and exporters are hostages in a labor dispute between the International Longshore and Warehouse Union and the Pacific Maritime Association.
Both the association and the union are pointing fingers, alleging that the other is responsible for slowing exports from Washington ports.
The timing is horrific, hitting during what should be a peak shipping season. Washington exporters are trying to move the state’s largest-ever apple crop. American consumption has been static and exports are even more critical this year.
Never miss a local story.
Companies like Pasco’s Allied Potato are trucking potatoes between Seattle, Tacoma and Portland to try to get their products through the ports and onto a vessel.
“We are able to get a few containers out right now,” said Jason Davenport, president of Allied Potato.
But that isn’t enough for Allied Potato to fill its contracts, he said. And they don’t know how soon they will be able to return to normal shipping levels.
Trucks loaded with apples from Price Cold Storage & Packing Co. of Yakima have gone to the ports, gotten inspected, and then have returned because they couldn’t get through the ports, said owner Bob Price. The delays are costing his business and others statewide.
“It creates havoc,” he said.
After three weeks, agricultural exporters fear they will miss out on the demand in Latin America around Christmas and in Asia with Chinese New Year. It’s also threatening Washington’s ability to get return business next year.
“It’s crippling our economy in Washington state,” said Matt Harris, director of government affairs for the Washington State Potato Commission.
Local senators and members of Congress have sent letters to both parties in the negotiations.
The association claims most of the union’s negotiators are taking a break through the end of the Thanksgiving weekend, which means a low chance of any resolution in the near future.
Many are calling for federal mediators to step in. Industry groups including the Washington State Tree Fruit Association and the potato commission have sent letters to President Barack Obama asking him to step in and prevent what could become a national economic disaster.
Davenport would like the state or federal governments to send an independent group to do an on-site assessment of what is causing the delays at the ports. He’s concerned that some are missing the sense of urgency.
“We need someone to come in with some action,” he said.
The crisis is much bigger than just Washington state and agriculture, since the cut in exports is happening at ports along the West Coast, said Mark Streuli, Washington State Department of Agriculture deputy director.
Washington exported $19.3 billion of agricultural goods through its ports last year, with $8.9 billion of those products from Washington. Exports of potatoes from Washington ports last year were worth $927.1 million.
“I don’t know how much longer we can last,” Harris said. “We can’t afford to lose business, and that is what happening.”
On a roll
Before the slowdown hit in the beginning of November, Washington shippers were ahead. They had exported about 8.7 million boxes of apples, 33 percent more than during the same time last year, said Jon DeVaney, president of the tree fruit association. That was promising, as exporters needed to grow the level of shipments.
The deceleration of exports started at the Seattle and Tacoma ports — from which most Washington apples are shipped — and spread to the other West Coast ports.
Now, exports have dropped from about 3.1 million boxes of apples a week to 2.6 million, DeVaney said. Exactly how much would have been shipped without the current holdup isn’t something officials know.
“We could be shipping quite a bit more and we want to be shipping quite a bit more,” DeVaney said.
Washington growers anticipated harvesting 154.9 million 40-pound boxes of apples before the export and temperature freezes.
The crop is nearly 40 million more boxes than what farmers picked last year and is 21 percent larger than the state’s previous record apple crop picked in 2012.
Officials have estimated Washington needs to export at least 60 million boxes of the state’s top crop this year, 20 million more boxes than the state record.
Usually, about ⅓ of Washington’s apple crop is exported. Half those exports head to Canada and Mexico, with the remainder going to Asia and Latin America.
Clogging the pipeline
There has been a lot of investment in storage for the larger crop. But warehouses are running out of room for packed apples, DeVaney said. Some workers have been laid off, and others are seeing their hours cut.
Potato packers, including Tri-City companies, may have to lay off employees because of the port slowdown if they haven’t already, Harris said. Some potato processing plants are shutting down or running at a lower-than-normal capacity.
One french fry exporter typically ships out 1,000 containers week, Harris said. Now, they are down to a handful.
It’s something that affects everyone from small processors to giants like ConAgra Foods Lamb Weston, which processes Columbia Basin potatoes into frozen food such as french fries at seven area plants.
“Like all exporters, we have been impacted by the situation and would like to see it resolved,” said Becky Niiya, communication director for ConAgra Foods. “We've adjusted our production schedules and are working to address unpredictability as best we can.”
Together, food processing and farm jobs make up about 14 percent of Tri-City employment. About 3,800 Tri-Citians worked in food processing last year and another 12,000 worked in agriculture, according to the federal Bureau of Labor Statistics.
Farmers lose $116.7 million in income and the state economy loses $272 million and about 1,100 full-time, year-round jobs for every 5,000 container loads of apples diverted from exports to the domestic market, according to a recent study by the Washington Apple Commission.
DeVaney said the industry is approaching that level of diversion now. That many container loads is about 5 million boxes of apples.
The U.S. also is experiencing a large apple crop, and Americans only eat so many apples, said Rebecca Lyons, international marketing director for the Washington Apple Commission. New York, Pennsylvania and Michigan suffered huge crop losses from freezes when Washington had its last record crop in 2012, which created a domestic need for more Washington apples.
Washington’s woes have East Coast apple growers concerned because any apples that aren’t exported will compete with the apples they grow for U.S. consumers, DeVaney said. That could push down prices.
The export slowdown makes shipping more costly, meaning companies will have to take a loss to maintain the current price — or rise the price and become less competitive, DeVaney said.
Everyone is trying to get their shipments to Asia through, and some are diverting to Canada, but there is limited capacity. Shipping by air is too cost-prohibitive and rail is already congested.
Davenport is concerned about how the delays will affect the quality of his potatoes. Normally, it takes 21 to 24 days to get potatoes to Asian countries via ship. Now, it’s taking another seven to 10 days, he said.
Allied Potato’s spuds go to international processing plants, which use the potatoes to make chips, Davenport said. Those countries lack locally grown potatoes now, making imports crucial.
Allied Potato has gained international contracts because of stability and competitive pricing, Davenport said. But if they can’t deliver, they risk having those customers get their potatoes from Canada and Europe.
There is plenty of competition to export potatoes to Asia from China — the world’s largest potato producer — Europe, Australia, New Zealand and Canada, Harris said.
Apple exporters face similar steep competition.
“They want Washington apples, but if they can’t get them or they can’t get them in the quantities they need it opens up the door for somebody else like France or Spain or Poland,” Lyons said.
No catching up
Every day of the slowdown, Washington gets further behind. And for agriculture, it’s hard to catch up.
“We are not a light switch, you can’t just turn us on and off,” Harris said.
Consumers won’t buy more Washington apples once they are available again, DeVaney agreed. Sales lost because companies can’t export are gone.
Davenport is concerned international customers will cut back on their contracts with Allied Potato next year because of the current shipping woes. Consistency helps companies like his earn business in the competitive marketplace.
If that happens, Allied Potato will have to put expansion plans on the back burner and may spend years working to return to the company’s current volumes, he said.
“We have some of the best products in the world,” Davenport said. “Why can’t we ship some of the best products in the world through the best ports in the world?”