TRAVERSE CITY — Five dried cherry processors are hoping a countervailing and anti-dumping case against Turkey will help level the international trade field.
Michigan’s Shoreline Fruit LLC, Cherry Central Cooperative, Smeltzer Orchard Co., Graceland Fruit Inc. and the Utah-based Payson Fruit Growers Co-op filed a petition April 23 through the U.S. Department of Commerce and International Trade Commission against Turkey.
Citing three years of import data, the petition claims Turkey is flooding the U.S. market with dried tart cherries, which is lowering domestic product prices on those who helped build it in the first place.
Now, U.S. cherry processors in the Dried Tart Cherry Trade Committee say a ruling in favor of its industry could result in up to a 628.9% tariff on Turkey’s dried cherry product. According to the filings, the alleged dumping margin is “based on a comparison of U.S. price and constructed value for imports of dried tart cherries from Turkey into the United States.”
“The amount of dried cherries being dumped in this country is growing exponentially over the last three years,” said Don Gregory, chairman of Michigan’s dried cherry task force. “If we don’t stop it, we won’t have a dry cherry industry in the U.S.”
In Michigan, tart cherries represent roughly 75 percent of the nation’s total production. Varieties of these cherries include Amarelle, Balaton and Montmorency. Four to five years ago, Gregory said there were no dried tart cherries in the non-domestic market.
In 2018, Turkey exported 1.5 million pounds of dried cherry product into the U.S., up from 826,430 pounds in 2017 and just 413,893 pounds in 2016.
For a product and market “we created,” Gregory said something had to be done to alleviate the pain many in the U.S. cherry industry are enduring, including “unfair” prices from Turkey.
Until recently, Turkey’s been able to dump cherries into the U.S. market because of duty-free trade access granted under the United States' Generalized System of Preferences, which is targeted toward helping developing nations.
In Michigan, dried tart cherries are marketed for $4.5 to $5 per pound at wholesale. Turkey, on the other hand, markets its product for 89 cents per pound in 2018.
Because of the sinking grower prices in the U.S., some Michigan farmers are reportedly ripping cherry trees out of the ground — an ominous sign that if the industry doesn’t buck, there won’t be one anymore.
“They are dumping into the states for less than a dollar a pound,” said Gregory, a grower and board member of the Traverse City-based Shoreline Fruit LLC. “They are selling it below their cost of production and are putting no value on the cherry in order to grow their product. …We have to compete against that. We get a lot of lip service from the government, but we never get help.
“We hope to get some reprieve from this, or we will be out of this industry.”
The dried cherry processors involved with the case are represented by the Washington, D.C.-based law firm Schagrin Associates.
According to the firm’s Elizabeth Drake, the International Trade Commission’s preliminary determination on the case is due in 45 days, with a vote currently scheduled for June 6. She noted that both the Department of Commerce and International Trade Commission must reach “affirmative preliminary determinations” before any duties are imposed.
“There's been a huge increase in the volume of imports from Turkey,” said Drake, a partner at Schagrin Associates. “From 2016 to 2018, imports of dried tart cherries from Turkey more than tripled, and the industry was very concerned that if they didn't take action now, it would allow those trends to continue and it would cause even more loss of market share to the domestic industry.”
Drake added that the “very low prices” of cherry imports from Turkey are “undercutting domestic producers.”
“Our research indicated that those low prices were the result of unfair trade practices by producers in Turkey, including dumping at prices below the cost of production as well as the receipt of government subsidies from the government of Turkey,” she said. “The prices they are coming in at are so far below (our) estimated cost of production that the dumping margin of 600% would … level the playing field if the case is successful.”
Until a duty is in place, Drake said buyers can continue to purchase product. However, she said there’s a provision in place to dissuade industry players from “stockpiling and rushing in” product before preliminaries duties begin.
“It’s important that all sectors and domestic producers have the ability to use these laws and get fair trade practices remedied,” Drake added. “…There’s been a loss of market share by the domestic (cherry) industry; there’s been a loss of sales volume and shipments to clients — and (a loss) of production and employment.”
Oceana County cherry grower and processor Mike DeRuiter said this lawsuit has “been on our radar” since 2012. Originally, he said the industry wanted to pursue a lawsuit against Turkey in the cherry juice sector but missed the juice concentrate filing by a few years.
“You have to show damages and a few years of data,” said DeRuiter, chairman of the Michigan Cherry Committee and a board member of the Dewitt-based Cherry Marketing Institute. “Turkey owns the juice market for the most part, so if we don’t stop them with the dry market… we will be out of control if the trend continues. We want to catch it before it becomes a monster program.”
DeRuiter added that a lawsuit victory will “even the playing field” for U.S. cherry growers, who could get some relief within 30 to 45 days.
“If we win this lawsuit, import costs from Turkey will be up,” he said. “(Turkey) is doing anything and everything to get prices down to 89 cents (per pound).
“It’s free trade, but it’s not fair trade.”