Trade tensions, India tariffs put California almonds at risk

MODESTO, Calif. (AP) — Along large swaths of California's lush central valley, almonds in the fuzzy hulls of tree leaves blow in the wind on thousands of acres of orchards.

Thousands of miles away in India, customers browse the nut sections of busy street markets and grocery stores in search of the best almonds to use in curry dishes, health drinks, ice cream and many other recipes.

Now the future of that market is uncertain. India this month imposed tariffs on almonds and 27 other American products, including apples and walnuts, in retaliation for the U.S. ending India's preferential trade status. Those tariffs took effect June 16 and come on top of a significant tariffs China placed on almonds last year.

"We can deal with market disruption in one country, but to have it in multiple countries is a real challenge," said David Phippen, a partner of Travaille & Phippen, Inc., a farm and processing company in Manteca.

California supplies 82 percent of the world's almonds and has almost 7,000 growers. The Almond Board of California estimates the industry generates about 104,000 jobs in California, and the effect of the tariffs might ripple outward. India is such an important market that the almond board, whose members engage in market research and promotion overseas, has an office in New Delhi with a $6 million annual advertising budget.

The tariffs add about 12 cents per pound to shelled almonds, a 20 percent increase, and about 4 cents for those still in their shells, a rise of 17 percent.

"That doesn't sound like a large number, but India was an important alternative to exports that would've gone into China," said Julie Adams, president of the Almond Board of California. "It's difficult to know what the long-term effect of [the tariffs] will be."

The hit from China tariffs was much harder: the country imposed 50 percent tariffs on U.S. almonds in an escalating trade dispute. Exports to China decreased by about a third, according to the almond board.

Bhupesh Gupta, a grocery store owner in New Delhi, believes higher prices will cut into sales. While India is one of the world's largest consumer markets, it also has huge income disparities and hundreds of millions live in poverty. Even a small increase in the cost could have a large ripple effect on what people buy.

Still, other sellers say that Indians are so passionate about almonds that they will figure out a way to deal with price hikes.

"It won't matter, as anyone who needs almonds will buy no matter what the price," said Delhi grocer Virender Kaneja.