– Chinese imports are threatening to drive out what remains of
Gilroy’s fabled fresh garlic industry.
Most garlic farmers left Gilroy long ago for the Central and San
Joaquin valleys. The city still boasts the country’s biggest grower
in Christopher Ranch, but Bill Christopher said Tuesday that recent
cuts to his farm’s garlic crop will continue if laws governing
garlic imports aren’t changed soon.
Gilroy – Chinese imports are threatening to drive out what remains of Gilroy’s fabled fresh garlic industry.
Most garlic farmers left Gilroy long ago for the Central and San Joaquin valleys. The city still boasts the country’s biggest grower in Christopher Ranch, but Bill Christopher said Tuesday that recent cuts to his farm’s garlic crop will continue if laws governing garlic imports aren’t changed soon.
“I’m losing customers to Chinese garlic,” Christopher said. “Next year’s crop will be about the same, but we have to see how the year goes.”
For the first time last year, California growers produced less garlic, about 81 million pounds, than the 86 million pounds imported from China. Since 2001, when Chinese imports started denting the U.S. market, Christopher Ranch has taken 40 percent of its garlic fields out of production. The farm is now growing about 60 million pounds annually, down from a peak of 90 million.
Like all farmers, fresh garlic growers are finding it increasingly difficult to compete with imports that are almost always substantially cheaper than domestic products. A box of garlic that costs Christopher Ranch $18 to $20 to grow and pack is sold off a Chinese steamer for about $13.
And Christopher Ranch has not just slashed production. It now buys Chinese garlic, though Christopher said the imports account for only a tenth of what it produces for the retail market.
“We’re buying a little because we have customers who are asking for it because it’s so inexpensive,” Christopher said. According to the California Department of Food and Agriculture, California growers are now farming 26,000 acres of garlic, down from 40,000 in 1999.
Michael Coursey, a Washington D.C. attorney for the Fresh Garlic Producer Association said Tuesday that “the Chinese are succeeding in driving out the domestic industry. The industry has contracted and the government doesn’t care.”
Chinese imports are also cutting into the dried garlic market, accounting for about half of the dehydrated garlic sold in the U.S. Gilroy Foods, however, is processing mostly California garlic from the Central Valley, according to Greg Estep, a senior vice-president with ConAgra Foods Inc.
“We process an insignificant amount of Chinese garlic that we handle for customers who have asked us for it, but we think California garlic is the best in the world and we’re committed to it,” Estep said, though he could not quantify how much Chinese garlic his company buys.
Chinese garlic was first imported in vast quantities in the early 1990s. U.S trade officials determined that the Chinese were “dumping” the garlic, or selling it at prices below production costs (Because China does not have a market economy, U.S. officials figure its production costs based on those in India.).
In 1994, U.S. Customs officials issued an anti-dumping order and socked Chinese importers with a 377 percent tariff. Shippers were allowed to pay lower tariffs if they proved they weren’t selling below costs, but they had to put up cash deposits equal to the difference between the declared value of the imports and the highest tariff rate. If, as long as two years later, commerce officials determined that the shipper was not dumping the garlic, the government would issue a refund.
The rules worked. After peaking at 55 million pounds in 1993, Chinese garlic imports dipped as low as 205,000 pounds in 1996. But imports started climbing again as shippers took advantage of a loophole in the anti-dumping ordinance. Existing shippers must pay cash deposits on their products, but new shippers need only post bonds. In 2002, imports leapt to 42 million pounds and more than doubled that last year.
“The tariffs worked for a couple of years, but they found loopholes,” Christopher said. “New shippers can ship without a duty for a year, but once there’s a finding that they’ve dumped, they just disappear.”
Coursey said that Chinese shippers and importers, who have to post the bonds, work in cahoots to stay one step ahead of customs agents. Often, by the time the U.S. Department of Commerce attempts to collect on a bond, both the shipper and importer are out of business, though they’re likely operating as new entities.
“The scandal of this thing is that it’s just a big con game,” Coursey said, “and the Chinese run it without any fear of getting caught. To my clients, its appalling that there’s such an open defiance of the law without out any measurable retribution of any kind. It’s as if the dumping order doesn’t exist.”
Commerce department statistics reveal a wide discrepancy between collected and uncollected garlic bonds. In 2004, the federal government received about $175,000 in garlic import duties. At the end of the year, it had nearly $25 million outstanding.
Fred Gassert, an import specialist with U.S. Customs, said the fact that the bonds came due last year doesn’t mean the agency is having trouble collecting on them. He said the government preferred bonds because they allow for more accurate assessments of importers.
Coursey said a legislative effort at closing the loophole is languishing in Congress. A bill has passed in the U.S. Senate, but is stalled in the Ways and Means Committee in the U.S. House of Representatives. That committee is chaired by Bill Thomas, R-Bakersfield, which is home to the Garlic Co. Calls to Thomas’ offices in Washington D.C. and Bakersfield were not returned.
While he waits for a change in the law, Christopher’s strategy is to tout the superiority of his garlic over that coming from China.
“I try to tell customers that California garlic is consistent and grown with the highest safety standards,” he said. “Chinese garlic is grown in what they call ‘night soil,’ mixed with human waste water. And who knows what else they’re spraying on it.”