CCM President Casey Creamer held meetings last week with top trade officials within the United States Trade Representative (USTR) and the US Department of Agriculture (USDA). The messages were simple and clear. We congratulated the Administration on the completion of the Phase One Trade deal with China, but also strongly communicated that the citrus market is continuing to suffer due to high retaliatory tariffs. Creamer highlighted that navel sales volumes were down 36% in 2019 compared to the prior three-year average. Continuing that 2020 is starting much lower than in 2019. Creamer also indicated that we see pricing impacts outside of China and that grower returns are well below the cost of production.
Administration officials communicated that they fully intend to ensure that China keeps its commitment to purchase additional agricultural commodities. In addition, to date, they have received no request from China to reduce the buys based upon the coronavirus outbreak. Creamer emphasized the need for citrus to be prioritized when the Phase One deal becomes effective on February 14th with the peak export season beginning around March 1st and that additional citrus purchases would be beneficial for Chinese consumers dealing with the coronavirus.
China recently announced that they were halving the retaliatory tariffs placed on agricultural commodities on September 1st, 2019. This only reduced the additional tariffs by 5% for citrus, with the total tariff and value-added tax (VAT) of 65%. This tariff reduction on its own will not lead to a change in the market. China must ramp up purchases soon for the market to return to some level of normalcy. CCM will continue to work closely with industry marketers to help USDA and USTR enforce the China Phase One agreement.