By the time the cargo ship made it to India last summer, the container of apples from the U.S. had started to rot. The overseas trip had taken more than two months, about double the amount of time expected in past years.
After an inspection at the port, the Indian government said it found mold on the apples and refused to let the shipment into the country, according to John Ledeboer, the director of international business development CMI Orchards in Wenatchee, Wash. The company had to pay a wave of additional fees to dispose of the apples, he said, bringing the cost of the spoiled container to roughly $100,000. CMI Orchards eventually halted its shipments to India altogether.
“That was a straw that was part of what broke the camel’s back. We had a lot of adjustments in India on product that didn’t arrive as it should have,” Ledeboer said. “It’s the longest transit time we’ve ever looked at, so we’re in unknown territory.”
CMI Orchards is just one of many American agriculture companies whose reliance on exports has been threatened by clogged ports and container shortages, which have pushed transit times dramatically higher since last summer. With freight shipments often stalled for weeks on end, companies have increasingly struggled to ship meat, fruit and vegetables overseas to markets with red-hot demand for U.S. farm exports.
Between May 2021 and January 2022, containerized U.S. agricultural exports were more than 25 percent below what they would have been if it weren’t for the supply chain crisis, according to a University of Connecticut study obtained by the New York City News Service. The study was presented to U.S. Department of Agriculture staff at an Economic Research Service seminar last month.
The export losses cost farmers $10.1 billion last summer and fall, according to the study. Losses were driven by far fewer shipments of fresh products, including meat, fruits, nuts, oilseeds and animal feed.
“This is a growing issue for perishable commodities,” said Sandro Steinbach, an agricultural economist who co-authored the study. “It is a very dramatic shift that we’ve had. We hadn’t been prepared for any of these changes. And farmers lost a lot of exports.”
The most significant export losses for American farmers were in key agricultural markets like Taiwan, South Korea and Japan, the study said. Cargo shipments from the U.S. to Asia have been particularly delayed, in part because high American demand for foreign goods has made the reverse route more profitable for shippers.
A fifth of total confirmed U.S. agricultural export sales fell through last year, according to a survey released last month by the Agriculture Transportation Coalition. Most of the sales were lost because the farmers were unable “to deliver within the contracted time period.”
In California, the top U.S. agriculture exporter, a growing reluctance to ship perishables to faraway markets could have widespread consequences for the state economy. In 2020, the state exported more than 40 percent of its $50 billion agricultural market, when measured by value.
“Because of the delays and the logistical challenges, we’re just moving less fruit overseas,” said Casey Creamer, the chief executive at California Citrus Mutual, a trade group. “We can’t afford to put that much fruit on and just put it in limbo. We have to have some assurance that it’s going to make it there.”
The Russian invasion of Ukraine in late February has further tangled global supply chains, making it unlikely that trade logjams will be resolved anytime soon.
Despite the losses, soaring prices of American food could boost farm income if high input costs don’t eat up the profit gains. Agricultural exports soared to a record high in 2021 as the coronavirus pandemic eased and the U.S. reached an agreement to deescalate a yearslong trade dispute with China.
World food prices jumped by 13 percent to a record high in March, according to the United Nations Food and Agriculture Organization index, as the Russia-Ukraine war threatened to spark shortages of grains and oils. World wheat prices surged by 19.7 percent last month, the FAO index showed. Russia and Ukraine together account for more than a quarter of global wheat supply.
But farmers have seen their operation costs rise sharply in recent months, which could start to squeeze any gains. Energy prices have climbed sharply since the U.S. and Britain announced a ban on Russian oil imports in early March. The conflict has also worsened a global fertilizer shortage, sending prices to record highs.
The supply chain crisis could eventually flood U.S. markets with too much of certain food products, making it more difficult for farmers to sell at profitable prices. Nearly 90 percent of farmers in the ATC survey said they would try to sell a product in the U.S. in the case that an export sale was lost.
“Even growers who aren’t producing for export don’t want the domestic market to become crowded with produce that was originally intended for overseas consumption,” said Eva Moore, a spokesperson at the South Carolina Department of Agriculture.