August 15, 2016

Don’t let the politicians fool you, TPP is good for the San Joaquin Valley

By Harold McClarty 
President of HMC Farms 

How did we get here? Support for the Trans-Pacific Partnership (TPP) seems to have evaporated into thin air, especially among Republicans who traditionally support such agreements. Donald Trump, the party’s standard-bearer, has chosen to align himself with the economic nationalism wing of the GOP.

For her part, Hillary Clinton (who supported the free-trade deal as Secretary of State) has yielded to the anti-capitalists within the Democratic Party and openly disavows TPP, as well.

As a result, the political odds-makers say passage of TPP, either during the lame duck session or in a new administration, is increasingly unlikely.

This is bad news for San Joaquin Valley farmers, their employees and the sectors of our region’s economy that depend on agriculture.

My family has been farming the stretch between Fresno and Kingsburg since the 1890s. For five generations, we have provided our customers here and around the world with fresh and nutritious peaches, plums, nectarines and grapes.

We are blessed that our trees and vines are planted in the San Joaquin Valley. The combination of unique soils and ideal climate allow us to grow the highest quality fruit that is unmatched by anyone anywhere in the world. 

However, California faces many obstacles that make doing business in the state increasingly uncompetitive, including the costly burden of complying with ever-expanding regulations. If we are not able to respond to these challenges, I am concerned that the business my children will inherit from me will not survive to the sixth generation.

Which is why exports are so important to the long-term viability of our family farm. They allow us to maximize the value of our crops and offer us a hedge against the inherent risks imposed on us by nature and the regulatory risks imposed on us by government.

While we currently sell our fruit to countries in Central America and the Pacific Rim, there is room for further growth. Because of the barriers many of these countries have in place to protect domestic farmers, American farmers are often unable to enter these markets. In fact, we have a $6 billion balance of trade deficit with the TPP countries alone, and it is growing every year.

TPP will reverse this downward trend by creating a more level playing field for American farmers in two key ways:

First, TPP will immediately eliminate or phase out many of the tariffs that limit our access to foreign markets. Other countries often place tariffs, or taxes, on our exports, artificially inflating prices for our fruit and protecting domestic growers. For example, Vietnam levies a 10 percent tariff on the grapes I ship to their country, effectively pricing me out of the market. TPP will remove this barrier to trade within three years and allow me to compete on the quality of my fruit, which is all I can ask for as an entrepreneur.

Secondly, TPP will ensure that our trading partners do not ban our fresh produce based on arbitrary levels of pesticide residues or the presence of already-established pests or plant diseases. Right now, each country can set its own standards, and often use these sanitary and phytosanitary (SPS) measures to limit or severely delay our access to their markets. Under TPP, these SPS measures will be scientifically-based and universally-applied, no longer allowed to be used as a barrier to entry.

Collectively, TPP is projected to increase U.S. fruit, vegetable and tree nut exports by nearly $1 billion, or 8.3 percent. With 60 percent of the nation’s fresh fruits and tree nuts grown right here in the San Joaquin Valley, farming communities up and down Highway 99 will benefit from this free-trade agreement, including numerous related industries dependent on agriculture such as transportation, technology, packaging, insurance and finance. 

Our Valley congressional representatives – Jeff Denham, Jim Costa, David Valadao, Devin Nunes and Kevin McCarthy – must set election year politics aside and renew their efforts to push TPP through Congress. It is time that Valley farmers be allowed to compete in a fairer global marketplace.

Harold McClarty is the President of HMC Farms (Kingsburg, Calif.) and serves as Chairman of the California Fresh Fruit Association and is on the Western Growers Association’s Board of Directors.