Imports – goods produced in other countries but sold “here” (in this case that’s the U.S.). They come up in the news a lot – are they destroying jobs? Why do we allow them? Who benefits?
Today, let’s start by imagining your trip to the grocery store. You walk into the fruit and vegetable section. There near the front sits a case of blueberries. 2 pints for $5.
I remember a time when the price of blueberries really varied. Sometimes they were like $5 for a not so large box. Now, however, it seems you can always get a deal! Awesome! But, why is that?
Well a few things have been occurring in the blueberry market over the past ten to twenty years. We are going to talk about both the demand and supply side. This is a long post, so bear with me.
Demand for Blueberries
First – an increase in demand for blueberries. Google “benefits of blueberries” and you’ll get a long list of articles discussing their nutrients, antioxidants, etc., etc. Throw them in your smoothie, toss them in a salad, eat them by the handful, or – best of all – use them for some blueberry muffins (recipe at the end)! There are never enough blueberries! In 2019 the average consumption of blueberries per person was about six times what it was in 2000! (0.33 pounds/person to 2 pounds/person). (Kramer, Simnitt, and Calvin 2020, p.37)
Greater demand for something should lead to higher prices. If not, there would be a constant shortage of blueberries and empty cases at the grocery store.
However, we have seen a DECREASE in the price of blueberries. Prices per “flat” in 2010 were between $17 and $25, while in 2019 they were between $11 and $13 in both the Fall and Spring (Kramer, Simnitt, and Calvin 2020, p.41)
If demand has increased but the price has decreased, then there must be an increase in supply. That supply is coming from BOTH an increase in domestic production and an increase in imports.
Domestic Blueberries
Let’s first talk about the domestic supply of blueberries. The first commercial crop of “high-bush” blueberries was in New Jersey in 1916. Yes, New Jersey, who knew? In fact, the state berry of New Jersey is the blueberry. (Blueberry Council)
Different types of these high-bush blueberries are grown throughout the U.S., not just areas with the same climate. In 2017, the top of the list was Washington, Georgia (who, by the way, is NOT the leading peach producer), Michigan, Oregon, New Jersey, California, North Carolina, and Florida. (World Atlas)
As an aside, you may be surprised that Maine is not on this list. This discussion is about “high-bush” blueberries, while Maine blueberries are “low-bush.” Maine is the largest producer of low-bush blueberries. The best pie I’ve ever had was made with Maine blueberries. I’d love to get my hands on some. (Visit Maine)
Blueberry production in these states has risen dramatically in the last 10 years. Between 2010 and 2019, blueberry production increased over 40%. Additionally, while blueberry production was mainly concentrated in May, June, and July, as of 2019 it had spread out from April to September. (Kramer, Simnitt, and Calvin 2020, p.38)
Florida, Georgia, and California produce some blueberries as early as April, but most blueberries produced in April are from Florida (this is important for later). Michigan, Oregon, and Washington produce blueberries as late as September. The peak blueberry producing month is, by far, June. Very few are produced in the late Fall through winter months. (For a very pretty graph of this, go to page 38 of Kramer, Simnitt, and Calvin 2020 or or directly to this USDA link. Finding the data was not as clean as I would have liked, otherwise I would have made one myself).
Imports
So, if we have fresh blueberries at all times, but they are only produced in some months of the year where do we get them? We import them!
In the graph below, we can see imports of blueberries into the U.S. each year from 2017 to 2019.
Figure Source: USDA Data: https://data.ers.usda.gov/reports.aspx?programArea=fruit&top=5&HardCopy=True&RowsPerPage=25&groupName=Noncitrus&commodityName=Blueberries&ID=17851#P389758875201448d90b5e43c865c3b60_3_1273
It is clear from the graph that we import much fewer blueberries during those months when we are producing them in the U.S. Recall that June is the month with the highest blueberry production. It is also the month with the fewest imports.
Canada is the second highest blueberry producing country (with the U.S. being the highest), and the U.S. imports blueberries from Canada mainly in July and August. (Atlas Big)
Chili, Peru, Mexico, and, to a lesser extent, Argentina also produce blueberries that are sold in the U.S. (USDA Report) Ten years ago, imports from Mexico and Peru were mainly non-existent, but in the last few years, there has been a dramatic increase in imports from these two countries.
The majority of imports are during the late fall and winter months (September to March); however, Mexican imports overlap with peak Florida production in April. (Figure 3 on p.40 and Figure 4 on p.41 from Kramer, Simnitt, and Calvin 2020). The figure above shows that April imports have been increasing, even in the last few years.
Recap
So, let’s review:
1. People in the U.S. like blueberries.
2. The U.S. produces a lot of blueberries – mainly during the summer months.
3. The U.S. also imports a lot of blueberries. Most imports are during the non-summer months, although there is overlap in production with the U.S., mainly from Mexico and Canada.
Ok… here comes the juicy stuff.
Do “we” like imports?
Last September (2020), United States Trade Representative (USTR) Robert Lighthizer initiated a request to the U.S. International Trade Commission (ITC) to investigate whether blueberry imports were hurting domestic blueberry growers. While legal, it is very unusual for the USTR to initiate a review to the ITC.
Why did they initiate this request? Well, it was probably mostly for political reasons, but the argument is that some blueberry farmers feel that they are being hurt by the imports from other countries. (USTR report)
From the examples given in the report, Mexico is a big target for the complaints as the U.S. imports blueberries from Mexico in April and May (and other months), but those are months when Florida is producing blueberries. Additionally, Mexican imports have been increasing in the last few years. The U.S. mainly imports from Canada during July and August – peak seasons for blueberries in the North West. The rest of the months, the US is not producing blueberries anyway, so they are not affected by the freshly imported berries.
Let’s get back to the question of this post: “Are Imports Bad?”
No one will likely dispute that blueberries imported during the winter season are great! We (people buying blueberries) get to enjoy them all year long. I don’t have to buy frozen blueberries in the winter for my pies or be devoid of a good salad with fresh blueberries in them. A USDA report estimated in 2015 that imported blueberries during the off-season had brought $377 million of value to consumers (Arnade & Kuchler 2015)
The foreign producers are also going to be fans. They have a huge market to sell blueberries!
However, what about during those months when US production overlaps with imports from Mexico and Canada?
Well, then it depends on who you ask.
If you ask me – a consumer of blueberries – I love imports of blueberries during the Spring and late summer! Imports keep the price of blueberries down. If we stopped Mexican imports during April then Florida producers would have an essential monopoly on blueberries during those months – and there would be fewer blueberries in the market than any other month in the year (to figure this out, I looked at this graph and looked at the total production of US blueberries if we didn’t allow US imports just during March and April (Kramer, 2020).
If you ask the Florida blueberry producers, however, they would love to have a monopoly on blueberry production! Why? They get to sell blueberries at higher prices!
One (more realistic) solution to help Florida producers could be to add tariffs on blueberries. Tariffs are taxes on imports into a country; they raise the price of goods produced in other countries. Tariffs would give Florida farmers a leg up as they can potentially charge higher prices for their own blueberries than otherwise.
Countries sometimes set different tariffs based on the time of year (seasonally). For example, orange season in European Mediterranean countries is from October to May. During this time, tariffs on oranges coming into Europe can be as high as 16%! During off season when Europeans still want to buy oranges, but they can’t get fresh oranges from within the EU, tariffs are lower. For example, between June 1st and the 15th of October, tariffs are capped at 3.2%. They’ve done this to protect European orange farmers during peak season, but to allow Europeans to get cheaper oranges when they aren’t in season in the Mediterranean. (See my post on oranges)
So, why doesn’t the U.S. have seasonal tariffs on blueberries?
Well, for one, there is a trade agreement with Mexico, Canada, and the U.S. (the USMCA) protecting free trade of most agricultural products (including blueberries). This agreement is an update of the North American Free Trade Agreement (NAFTA). The USMCA was signed in July of 2020 – just a few months before the USTR requested the International Trade Committee to investigate whether tariffs should be added to blueberries. (For more on the free trade agreements, go to this fact sheet on the USTR.)
Beyond the trade agreement, there is the price issue – tariffs would increase the price of blueberries for consumers. Consumers prefer lower prices.
Finally, you could imagine that Mexico and/or Canada might retaliate by adding tariffs on U.S. goods exported to their countries. (see page 8 for concerns by dairy, fruit, pork, and corn producers on this USTR report). Tariffs on our exports would decrease the amount of our goods they buy… hurting our farmers.
Who would like seasonal tariffs? Florida blueberry farmers
Who would not like seasonal tariffs? Consumers, foreign producers, and (maybe) farmers in the U.S. of other products if there are tariffs placed on those goods in retaliation.
So, what is the decision? Will there be tariffs on blueberries? Will we see a rise in the price of our blueberries?
“The U.S. International Trade Commission (USITC) [on February 11th] determined that fresh, chilled, or frozen blueberries are not being imported into the United States in such increased quantities as to be a substantial cause of serious injury, or the threat of serious injury, to the domestic industry producing an article like or directly competitive with the imported article.” (USITC Press Release)
In other words, the International Trade Commission rejected the claim that imports were significantly hurting blueberry farmers in such a fashion that would warrant a tariff.
Their full report was released in March 2021. To warrant a trade restriction, they had to address three things: (1) has there been an increase in imports of blueberries. (2) is the domestic industry harmed or at threat of being harmed? (3) are imports causing a significant harm or threat of harm.
Here are the short answers to each.
(1) Yes, there has been an increase in imports. Sixty percent of the increase occurred during non-US producing months.
(2) & (3) Is there significant harm to the industry? Here they looked at a number of factors to determine no:
- overall domestic blueberry producing acreage increased from 2015-2019
- overall domestic freezing capacity increased from 2015-2019
- domestic market share (relative to imports) during the main US growing season was pretty constant (slightly increasing)
- employment was relatively steady, although fluctuated yearly
- net sales increased from 2015 to 2019
- price increases during the biggest US growing months. (However, prices decreased from March-April and August-October, the tails of the US production months. They argue that this would not warrant significant harm. I'm guessing this right here is why Florida farmers wanted the tariff -- their prices were falling from increased Mexican imports).
- profits overall fell but they were still "reasonably profitable"
So, overall, they ruled that the domestic blueberry industry has not been significantly harmed from the increase in imports.
...
But, the short answer to whether “Are Imports Bad?” is "It depends on who you ask!"
Main Sources (others linked above):
Original inspiration from: Martin, Eric. February 11, 2021 "Blueberry Imports Don't Hurt US Farmers, Trade Commission Says." Bloomberg. Link.
Most info from: Kramer, J. Simnitt, S. and Calvin. L (2020), Fruit and Tree Nuts Outlook: September 2020, FTS-371, U.S. Department of Agriculture, Economic Research Service, September 29, 2020. (Specifically the Blueberry Market section by Jaclyn Kramer.) Link.
Kramer, J. 2020. Blueberry imports from Latin America increase to meet year-round demand. U.S. Department of Agriculture, Economic Research Service, September 21, 2020. Link.
Fresh, Chilled, or Frozen Blueberries: Investigation No. TA-201-77. 2021. U.S. International Trade Commission. Link
Blue Blueberry Muffins
What got me through my first year of graduate school? (1) Having my brother living in the same city - built in friend! (2) Baking (3) Hannah Swenson baking mysteries. The Hannah Swenson series are baking mysteries about a woman in Minnesota who owns a bakery and solves murders - with the help of her two boyfriends (yes, it sounds weird when you describe it that way). Some of these books are now Hallmark movies! Anyway, second semester of my first year of graduate school I finally felt I had sometime to breath, so around 10pm when I was done studying for the night I would read for a bit before falling asleep -- taking my mind off of economics for a beautiful 30 to 60 minutes.
These blue blueberry muffins are inspired from the recipe in "Blueberry Muffin Mystery" by Joanne Fluke.
Muffin Mix:
1.5 cups fresh or frozen blueberries (if frozen, do not need to thaw)
1 Tbsp. flour
¾ cup melted or softened butter
1 cup (200 grams) sugar
2 eggs
½ cup buttermilk (regular milk, or even yogurt also works)
½ cup (125 grams) blueberry pie filling
1 tsp. lemon zest, optional
3 tsp. baking powder
½ tsp. salt
2 cups (245 grams) flour
Topping:
½ cup sugar
¼ cup flour
¼ cup cold butter
½ tsp. lemon zest, optional
If making right away, preheat the oven to 425 degrees (note: you will turn the temperature down to 350 to bake them).
Add the blueberries and 1 Tbsp. flour to a small bag and gently toss so the flour coats the blueberries.
Mix the butter sugar until well mixed (can use a mixer or just by hand). Add the eggs and lemon zest. Stir in the blueberry pie filling. Add the milk and then the flour, baking powder, and salt. Then mix gently. Fold in (carefully stir in, slowly) the blueberries.
In a small bowl, mix the flour, sugar, and lemon zest for the topping. Cut in the butter (I usually cut the butter up into pieces and then use my hands to mix it all together).
If you are making this the night or day before you plan to enjoy your blueberries, cover both bowls and put in the refrigerator.
When ready to bake, preheat your oven to 425 (if you have not already). Fill your muffin tins with batter (about 3/4 full). It will make around 15 muffins. Sprinkle the topping over the muffins.
Put the muffs in the oven and IMMEDIATELY TURN THE TEMPERATURE DOWN TO 350. Bake for around 25 minutes or until lightly golden on top.
Enjoy "immediately" (maybe let them rest for 5 to10 minutes) with a little butter.
