Posted: Tuesday, January 29, 2013 8:48 AM
Courtesy of U.S. Potato Board
A load of U.S. potatoes is unloaded in Guetemala. The U.S. Potato Board and other commodity groups in the Pacific Northwest and California are investigating the possibility of creating an insurance plan to protect shippers from having loads rejected without cause by foreign governments.
By JOHN O'CONNELL
The U.S. Potato Board has begun studying the need for a new insurance plan that would protect fresh produce shippers from having loads rejected by foreign governments without good reason.
USPB began the assessment, funded by a $40,000 Technical Assistance for Specialty Crops grant through the USDA's Foreign Agricultural Service, earlier this month at the request of several potato shippers.
John Toaspern, USPB's vice president for international marketing, said commodity groups representing California cherries and pistachios and Northwest tree fruit have also experienced the problem and are supporting the effort.
USPB provided about $5,000 in matching funds. The study should be complete by June.
"I hired a couple of USDA guys who are now doing consulting to really look at trade numbers, talk to (the Animal and Plant Health Inspection Service) and talk to exporters and really try to quantify what the issue is and how often it occurs," Toaspern said.
He noted a few months ago, Taiwan rejected four loads of U.S. chipping potatoes based on the false pretense of a health risk posed by small sprouts. When foreign governments block shipments, Toaspern said shippers are out freight costs, port fees accumulate and commodities often spoil.
Shippers would pay a small percentage of the value of their loads for the coverage, which would be offered through a private provider with USDA backing. He hopes the program will fit within USDA's existing framework. Otherwise, Congress would have to establish a new program. Toaspern believes a final product may still be several years out.
Rupert, Idaho, grower Randy Bauscher, who sometimes ships seed potatoes internationally, has had good luck and developed strong business relations in several countries throughout the years. But he had one container sent to Sri Lanka rejected over a paperwork issue. Though he found a home for seed in the Dominican Republic, he made no money on the shipment and understands the value of USPB'S proposal.
"It's a big concern," Bauscher said, adding he knows of others in the business who have dumped shipments in the ocean with no market to accept them.
Richard Matoian, executive director of American Pistachio Growers, said it's rare for foreign governments to reject or delay approval of nut shipments, but it's costly to the shipper when it happens.
He believes some small shippers simply avoid the foreign export market due to the uncertainty. In Japan, he said pistachio shippers have faced problems with differing residue test results and sudden policy changes.
"I know of one of our processors who had a problem with a load in Japan, and the difficulty he had in getting that load back was a significant economic concern of his," Matoian said.
Dan Kelly, assistant manager of the Washington Growers Clearinghouse, representing Washington tree fruit growers, said loads are rejected both domestically and abroad, but the domestic side "offers a few more protections."
Chris Zanobini, executive director of the California Cherry Board, said shippers have long discussed the problem, and his organization is looking into USPB's proposal.