Wednesday, December 8, 2021

Supply Chain Delays Deliveries For Californian Farmers

SACRAMENTO, Calif. (AP) – With a historic drought threatening future crops, Californian farmers now say it is difficult for them to export the crop they have due to the kink in the global supply chain that has caused container ships to line up in queue. The southern California coast has nowhere to ship the goods.

Due to supply chain issues, retailers fear their shelves – and online shopping carts – will be empty during a crucial holiday shopping season, prompting state and federal leaders to take emergency action to clear the congestion.

But the lag of ships entering U.S. waters also means fewer people are crossing the Pacific Ocean back, leaving farmers in one of the country’s most important agricultural regions with nowhere to ship their produce.

“We are at the mercy of foreign shipping companies,” said Roger Isom, president and CEO of the California Ginners and Producers Association and the Western Agricultural Processors Association. “We are in the game, someone changed the rules for us, and we have no way to fix it.”

California is the country’s only supplier of tree nuts – almonds, walnuts and pistachios. Most of them are sold to other countries, according to the California Department of Food and Agriculture, and their exports totaled more than $ 8.1 billion in 2019.

READ MORE: How to make fragile global supply chains stronger and more resilient

But Isom said last month that more than 80 percent of scheduled shipments had been canceled. Processors paid much more to ship their produce to other ports, sending pistachios and walnuts by train to Texas and Maryland, and cotton bales to Peru. Isom said they are losing money on these sales, but they have to do it or they risk losing their customers.

This is especially the problem of walnuts, which are in high demand in Europe for the Christmas holidays. But Isom said California’s orders “are now being filled by other countries.”

“One of our members lost $ 7.5 million in one month of sales due to a failure to meet timely commitments,” Isom told state lawmakers Wednesday during an informational hearing on global supply chain issues.

Part of the reason for the shortage of ships is the intense demand for food, which keeps shipping prices so high that many ocean carriers simply rush back to Asia after leaving Southern California, bypassing the smaller port in Oakland, where most of the tree nuts are shipped. state.

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Danny Wang, chief executive of the Port of Oakland and president of the California Association of Ports Authorities, said last week that there were no containers or ships at one of the port’s container terminals.

“The operator told me that this is the first time in history that they have been operating in Auckland where they have not had a single vessel call,” Wang said. “This is an example of a supply chain that dictates this market distortion.”

But the solution is not as simple as simply deploying a few ships to Los Angeles and sending them north to Oakland. Assembly Member Patrick O’Donnell, Chairman of the Assembly’s Ad Hoc Committee on Ports and Movement of Goods, said maritime carriers need relationships with terminal operators, trucking companies and warehouses – all of which require contracts.

“It takes time. You can’t just turn on a dime, ”he said.

Mike Jacob, vice president and general counsel for the Pacific Merchant Shipping Association, said it was “important for us” to restore shipping in ports in both Northern California and the Pacific Northwest, adding that the three companies have dedicated direct service calls to the port of Auckland, while two more are scheduled to begin in January.

The Biden administration announced last month that the Port of Los Angeles will soon begin operating around the clock to help bridge the backlog of ships. California Governor Gavin Newsom, a Democrat, has waived some government regulations that allow companies to pack more cargo onto trucks.

“To address this challenge, every stakeholder in the supply chain must step up and make tough choices — including governments,” said Dee Dee Myers, Newsom’s senior advisor and director of the Governor’s Business and Economic Development Administration.

Fruit and nuts are California’s fifth largest export sector, including electrical and industrial equipment, automobiles, and parts, according to an analysis of trade data from Michigan State University.

California’s exports accounted for more than 10 percent of all U.S. exports in 2020. In terms of agriculture, California accounted for 16 percent of all U.S. exports in 2019.

“There is a lot of focus on imports and the challenges these organizations face as they import important goods,” said MP Cecilia Aguiar-Curry, a Democrat whose rural Northern California county includes many farmers. “However, California’s agriculture is heavily dependent on the export of its goods, and – I cannot overemphasize that – we are in an urgent position.”

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