an ol kf clfoutlook for california specialty cropss in the global...
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O l k f C l fO l k f C l fAn Outlook for California An Outlook for California Specialty CropsSpecialty Crops in the Global in the Global
EEp y pp y p
EconomyEconomy
March 1, 2010March 1, 2010
William A. MatthewsU i i f C lif i A i l l I C dUniversity of California Agricultural Issues Center and
Agricultural and Resource Economics, UC, Davis
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Export of California agriculture.p g
Current and future projections ofCurrent and future projections of the global economy.
Future trade potential for pCalifornia agriculture.
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Value of California Exports
Destination for Exports
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Annual Value of California Agricultural Exports, 1995-2008 (base year=2005)
$12.0
$14.0
billi
ons)
(base year 2005)
All ExportsTop Ten Commodities
$8 0
$10.0
xpor
ts (i
n $ p
All Principal Commodities
$6.0
$8.0
gric
ultu
ral E
x
$2.0
$4.0
Calif
orni
a Ag
$0.0
995
996
997
998
999
000
001
002
003
004
005
006
007
008Va
lue
of C
19 19 19 19 19 20 20 20 20 20 20 20 20 20
YEAR 2008 Top 10 Commodities: Almonds, Dairy, Wine, Table Grapes, Pistachios, Rice, Walnuts, Process Tomatoes, Oranges and Strawberries.
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Annual Value of California Exports of Fruits, Vegetables and Tree Nuts, 1995-2008
$3.5
$4.0
billi
on)
Fruits, Vegetables and Tree Nuts, 1995 2008 (base year=2005)
$2.5
$3.0
xpor
ts (i
n $b
Fruits Vegetables Tree Nuts
$1 5
$2.0
$2.5
ricul
tura
l Ex
$
$1.0
$1.5
alifo
rnia
Ag
$0.0
$0.5
95 96 97 98 99 00 01 02 03 04 05 06 07 08
Valu
e of
Ca
199
199
199
199
199
200
200
200
200
200
200
200
200
200
YEAR2008 Top 10 Commodities: Almonds, Dairy, Wine, Table Grapes, Pistachios, Rice, Walnuts, Process Tomatoes, Oranges and Strawberries.
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Share of Annual California Tree Nut Export Values by Variety
80%
90%
100%
e
60%
70%
80%
Expo
rt V
alue
40%
50%
f Tre
e N
ut E
20%
30%
Perc
ent o
f
0%
10%
95 96 97 98 99 00 01 02 03 04 05 06 07 08
199
199
199
199
199
200
200
200
200
200
200
200
200
200
YEARAlmonds Pistachios Walnuts
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$300Annual Net Trade of Almonds with Spain, 1996-2009
$250
illio
ns)
N T d f Al d
$200
rade
(in
$mi Net Trade of Almonds
$100
$150
f Alm
ond
Tr
$50
$100
Net
Val
ue o
f
$0
96 97 98 99 00 01 02 03 04 05 06 07 08 09
N
199
199
199
199
200
200
200
200
200
200
200
200
200
200
YEAR
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$900
Value of California Fruit Exports by Crop, 1995-2008 (base year=2005)
$
$800
$900
mill
ions
)
(base year 2005)
Table Grapes Oranges Strawberries Rasins WIne
$600
$700
port
s (in
$m
$400
$500
nia
Frui
t Exp
$200
$300
e of
Cal
iforn
$0
$100
5 6 7 8 9 0 1 2 3 4 5 6 7 8
Valu
e
199
199
199
199
199
200
200
200
200
200
200
200
200
200
YEAR
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Share of 2008 Export Value of California Fruit by CropTotal Fruit Exports = $3.4 billion
Wine24%Other Fruit
26%26%
Table Grapes
Peaches/Nectarines
5%Table Grapes
17%Raisins8%
Oranges11%
Strawberries9%
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$350
Value of California Vegetable Exports by Crop, 1995-2008
$300
$350
Lettuce
$200
$250
$mill
ions
) BroccoliCarrots
$150
$200
rt V
alue
(in
$50
$100
Expo
r
$0
995
996
997
998
999
000
001
002
003
004
005
006
007
008
19 19 19 19 19 20 20 20 20 20 20 20 20 20
YEAR
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Share of 2008 Export Value of California Vegetables by CropTotal Vegetable Exports = $835 million
Other Vegetables25%
Lettuce35%
25%
Celery7%
Tomatoes, Fresh8%
Broccoli13%
Carrots12%
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Value of California Agricultural Exports to Top Destination Countries, 2001-2008
$2 5
$3.0
billi
ons)
Top Destination Countries, 2001 2008
Canada European UnionJapan Mexico
$2.0
$2.5
port
s (in
$b J p
China/Hong Kong Korea
$1.5
ricul
ture
Ex
$1.0
alifo
rnia
Ag
$0.0
$0.5
Valu
e of
Ca
2001 2002 2003 2004 2005 2006 2007 2008YEAR
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2007Product Category
European Union Canada JapanValue
($million)% Value
($million)% Value
($million)%
Animal Products $50.51 2.4% $115.29 5.2% $90.57 9.5%Field Crops $54.73 2.6% $196.31 8.8% $260.78 27.2%Fruits $213.42 10.0% $864.99 38.9% $308.17 32.2%Tree Nuts $1366.61 64.0% $199.36 9.0% $181.87 19.0%$ $ $Vegetables $15.71 0.7% $640.88 28.8% $58.80 6.1%Flowers and Nursery $9.20 0.4% $22.54 1.0% $1.90 0.2%Wine $423.90 19.9% $182.14 8.2% $55.12 5.8%
2008Product Category
European Union Canada JapanValue
($million)% Value
($million)% Value
($million)%
Animal Products $49.9 2.1% $140.6 5.6% $127.9 12.0%
Field Crops $127.9 5.4% $256.7 10.3% $330.5 31.0%
Fruits $303.4 12.9% $988.6 39.7% $317.5 29.8%
Tree Nuts $1,414.5 60.0% $196.1 7.9% $173.8 16.3%
Vegetables $14.4 0.6% $677.5 27.2% $57.6 5.4%
Flowers and Nursery $7.9 0.3% $24.1 1.0% $3.2 0.3%
Wine $437.6 18.6% $206.9 8.3% $54.6 5.1%
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2008 2009 2010 projection 2011 projection
World 3 ‐0.8 3.9 4.3
Developed economies 0.5 ‐3.2 2.1 2.4
United States 0.4 ‐2.5 2.7 2.4
Euro area 0.6 ‐3.9 1 1.6
Japan ‐1.2 ‐5.3 1.7 2.2
Developing economies 6.1 2.1 6 6.3
Source: International Monetary Fund World Economic Outlook database, January 2010.
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Annual GDP growth rates and projections for selected countries, 2003- 2011
4
6
GD
P
,
2
nsta
nt p
rice
2
0
2003
2004
2005
2006
2007
2008
2009
2010
2011
chan
ge, c
on
-4
-2
perc
enta
ge c
United States
Canada
Germany
-6
Annu
al p Japan
Mexico
-8Source: International Monetary Fund, World Economic Outlook Database, January 2010
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Nominal exchange-rate indexes for largest trading partners, monthly January 2004 to February 2010
110
115
120monthly January 2004 to February 2010
100
105
110
00
90
95
Jan
2004
=1
75
80
85
J
Canada Eurozone Japan China
70
75
-04
-04
-05
-05
-06
-06
-07
-07
-08
-08
-09
-09
-10
Canada Eurozone Japan China
Jan- Jul-
Jan- Jul-
Jan- Jul-
Jan- Jul-
Jan- Jul-
Jan- Jul-
Jan-
Source: ERS
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1.20Annual nominal and real exchange rates , 1990 - 2010
(Euro/$)
1.10
(Euro/$)
1.00
0.80
0.90
0.70Nominal exchange rate
0.60
990
992
994
996
998
000
002
004
006
008
010
Nominal exchange rate
19 19 19 19 19 20 20 20 20 20 20
Source: USDA ERS "Nominal Annual Country Exchange Rates" and "Real Annual Country Exchange Rates." Feb 17, 2010. http://www.ers.usda.gov/Data/ExchangeRates/Note: local currency per $US
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Trade-weighted export exchange-rate indexes, monthly January 1999 to February 2010
120
130monthly January 1999 to February 2010
Almonds Grapes Lettuce
100
110
00
Almonds Grapes Lettuce
90
100
Jan-
99=
1
70
80
60
an-9
9pr
-99
ul-9
9ct
-99
an-0
0pr
-00
ul-0
0ct
-00
an-0
1pr
-01
ul-0
1ct
-01
an-0
2pr
-02
ul-0
2ct
-02
an-0
3pr
-03
ul-0
3ct
-03
an-0
4pr
-04
ul-0
4ct
-04
an-0
5pr
-05
ul-0
5ct
-05
an-0
6pr
-06
ul-0
6ct
-06
an-0
7pr
-07
ul-0
7ct
-07
an-0
8pr
-08
ul-0
8ct
-08
an-0
9pr
-09
ul-0
9ct
-09
an-1
0
Ja Ap Ju Oc Ja Ap Ju Oc Ja Ap Ju Oc Ja Ap Ju Oc Ja Ap Ju Oc Ja Ap Ju Oc Ja Ap Ju Oc Ja Ap Ju Oc Ja Ap Ju Oc Ja Ap Ju Oc Ja Ap Ju Oc Ja
Source: Export data from FAS, exchange-rate data from ERS
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In 2 generations Korea’s economy went through changes that took 100 years in the U.S. and Europe.
In 1970 Korea Agriculture = 30% of Korea Economy In 2007 Agriculture = 3% KoreaEconomy. In 2007 Agriculture = 3% Korea Economy.
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Source: Lee , H. and D.A. Sumner. 2007. The Prospective Free Trade Agreement with Korea: Background, Analysis and Perspectives for California Agriculture.
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f Tar
iff
t Sha
re o
fPe
rcen
tLi
nes
T iff RTariff Rate BracketSource: Lee , H. and D.A. Sumner. 2007. The Prospective Free Trade Agreement with Korea:
Background, Analysis and Perspectives for California Agriculture.
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Average Agricultural Tariff in Korea = 62%Average Agricultural Tariff applied by U.S. = 12%I i l i fIn many cases, potential imports from California agriculture face tariffs of more than 30 percent30 percent.◦ Table grapes, Almonds, Lettuce tariff rates = 45%-
50%
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California Agricultural Exports to Korea 2001 2008
$450
$500
Exports to Korea, 2001-2008
All Agriculture Trade
$350
$400
$450
MIL
LIO
N) Fruits
$250
$300
PORT
S (IN
$
$100
$150
$200
ALUE
OF
EXP
$0
$50
$100
VA
2001 2002 2003 2004 2005 2006 2007 2008
YEAR
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Commodity Rank Share of Export Value
Oranges 2 22%Grape Juice 2 41%Grapefruit 3 12%Grapefruit 3 12%Walnuts 4 9%Cherries 5 8%Lemons 5 5%Lemons 5 5%
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Citrus:◦ No current import competition. ◦ Expected domestic price decrease by 20%-30%.◦ Expected demand would increase equally◦ Expected demand would increase equally.Grape Products:◦ Table grapes could compete better with Chile.◦ Grape Juice and Raisins: Expand greatly due to lack
of significant import competition. ◦ Wine could compete better with Chile◦ Wine could compete better with Chile.
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Fruits and Berries◦ Currently stone fruits and cherries are not a
significant part of Korean market.◦ Elimination of 24%-50% tariff would greatly expandElimination of 24% 50% tariff would greatly expand
market potential. Canned peaches are big part of Korean diet. Elimination of 50% tariff would allow CaliforniaElimination of 50% tariff would allow California peaches a significant price advantage over current imports from South Africa, Greece, and China. Same for PearsSame for Pears.
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Vegetables◦ Even with 45% tariff Korea still imports Lettuce from
CaliforniaCalifornia.◦ Elimination of tariff could expand greatly the export
of lettuce and other leafy greens to Korean Market. Tree Nuts ◦ Already big presence in Korea market, could
potentially expand rapidly with elimination ofpotentially expand rapidly with elimination of tariffs.
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“For agricultural products, the FTA would immediately eliminate or phase out tariffs and quotas on a broad range of products withquotas on a broad range of products, with almost two-thirds (by value) of Korea's agriculture imports from the United States becoming duty free upon entry into force.”
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California continues to be competitive in international agricultural trade.
D i i i h fDespite recent economic issues, the future for California exports remains positive.
Ratification of Korea FTA could have significant economic impact for Californiasignificant economic impact for California agriculture.
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