YAKIMA, Wash. — Tariffs, trade wars, labor costs, climate change. Uncertainty abounds in the apple industry and other sectors of the economy, but in the long run the world’s growing population will need more food.
That’s what Vikram Mansharamani, economist and Harvard lecturer, told hundreds of apple growers Dec. 3 at the Washington State Tree Fruit Association annual meeting at the Yakima Convention Center.
Mansharamani spoke of four trends in the global economy people should pay attention to: a Chinese economy slowed by producing too much steel and aluminum; accelerated technology allowing more supply with the same or fewer inputs; and massive energy growth from fracking and alternative energy. Those three all create too much supply and the fourth — consumer demand slowing in the world’s largest economies because of aging populations — decreases demand. All together they create deflationary pressure and cause prices to fall.
It leads to currency wars to protect exports and is “fertile ground” for populism, putting your country first, less cross-border lending and investment and globalization in retreat, Mansharamani said.
But technology will help undeveloped countries leapfrog in development and there will be a “middle class explosion, a global consumer boom,” he said, “a demand shock, which is the perfect medicine for too much supply.”
Nigeria’s population is increasing, on average, at 540 people per hour and India at 1,800, he said, adding 1 million people to India’s labor pool every month.
“Ultimately, I think the whole idea of globalization being dead is wrong. Re-globalization will happen. We’re already seeing it with NAFTA 2.0. It will come. I can’t imagine we don’t have more free trade in North America,” he said.
Another conference speaker, Jim Bair, president and CEO of U.S. Apple Association, said NAFTA was the “best trade deal in history” for agriculture in general and boosted apple exports to Mexico and Canada.
President Donald Trump has said he will pull out of NAFTA altogether if the U.S. House doesn’t vote to ratify his new United States Mexico Canada Agreement, Bair said.
“I’m uncertain he has the authority to do that. If he does it would be very bad because it would mean a return to pre-NAFTA, 20 percent tariffs,” Bair said. “So we are calling on Congress to ratify it.”
Bair said Trump doesn’t receive information from the bottom up so U.S. Apple teamed with Farmers for Free Trade to produce a TV commercial to get its message to him that tariffs are hurting the apple industry. It featured a Pennsylvania grower, since Pennsylvania was a key to Trump’s election. It aired during the "Fox & Friends" TV show so Trump would see it.
“We know he saw it because he commented on it,” Bair said.