Japanese earthquake affecting California oranges

Workers at Gillette Citrus Inc. have a little less to do this week after an order of citrus they were supposed to box and prepare for shipment to Japan was canceled.

That's no surprise, considering the level of devastation there following the largest recorded earthquake in Japan's history, said Jim Lamb, the Dinuba packing house's manager.

In fact, what did surprise him was only one of his 10 planned shipments to Japan was canceled.

"We're a pretty large exporter to Japan," said Lamb, who has double-checked with buyer representatives for his Japanese customers to make sure more orders weren't being canceled.

So far, the disaster doesn't appear to be having much effect on the export of citrus and other crops raised here in the Valley to Japan. But the fuller effects on exports may not appear for weeks.

"We are watching that closely," said Kevin Severns, general manager for Orange Cove-Sanger Citrus Association, noting that his cooperative has a light shipment of citrus heading to Japan this week.

"I think everybody's anticipating there will be some effect. How severe we don't know," he said.

Japan was the third-biggest buyer of agriculture commodities from Tulare County in 2009, with purchases totaling more than $3.88 million.

Rice, which isn't grown commercially in this county, was Japan's biggest import from California that year, with $422 million in purchases. Of the commodities that Japan buys that do originate in Tulare County, the California Farm Bureau Federation reports the following 2009 California sales:

> $96 million in almonds

> $67 million in beef

> $61 million in citrus and

> $52 million in walnuts

> $31 million in dairy products

Mike Poindexter, general manager of Poindexter Nut Co. in Selma, said a shipment of walnuts from his company sailed from the Port of Oakland to Japan this morning as scheduled. So far, he's not hearing of any major delays in shipping there despite reports of at least one major Japanese port severely damaged by a tsunami.

"We are operating under normal conditions," with no reports of major delays for the ships heading to Japan, said Robert Bernardo, a spokesman for the Port of Oakland, which ships $3.4 billion worth of goods annually, the largest part of which are agricultural goods from the Valley.

That's because the two largest shipping ports in Yokohama and Tokyo -†where most of shipments from California to Japan go — weren't damaged, he said.

"A lot of the farms [in Japan] that produced ag products have just been devastated. I see there will be an export of those products to that country that are a necessity items," said Manuel Cunha, president of the Nisei Farmers League, a Fresno-based grower-support group originally started by Japanese- American — or "Nisei" — farmers.

It seems likely rice will be in high demand, as it's a major staple of that the Japanese diet, and it's a dry good that can last a long time and without refrigeration.

Similarly, nuts, dry fruits — including raisins -†dry milk, canned foods and other non-perishable foods from this region could see demand from Japan rise 10-20 percent, Cunha estimated.

"Not a lot of dairy is shipped into Japan. They have some pretty high tariffs," said Richard Cotta, chief executive officer of California Dairies Inc. in Visalia.

But he said it seems likely Japan could have an increased demand for dry milk because the country's damaged electrical grids limits availability of reliable refrigeration, and "if we were to have requests for that, we would have product available. We could get it very quickly."

Not that requests for more non-perishables have begun pouring in yet from Japanese buyers, said Poindexter, whose company's primary source of walnuts are Tulare County groves.

He said the buyers he deals with aren't increasing or decreasing orders of agricultural goods until they get a better handle of what is needed and what will be in demand.

"In my mind, if other customers need product, they will not have to wait. Japan will be my number-one priority for shipping product," he said. "I would hope it's like that everywhere. When you have somebody that's in an emergency situation, you go to the front of the line."

But experts seem less sure about what will happen to sales of non-perishable goods -†including citrus -†to Japan.

"There's gong to be a significant effect on our exports to Japan. It's probably our biggest export market after [South] Korea," said California Citrus Mutual President Joel Nelsen.

A big part of the reason is the damage to Japan's transportation infrastructure, he said. "Moving the stuff from the dock to the rest of the market is a major challenge."

It's far from the only problem. Lamb noted that the buyer who canceled citrus shipment said it was because of a lack of gas to transport the fruit once it arrives in Japan.

"A lot of the warehouses in Japan are robotic," capable of stacking pallets of goods up to 100 feet high, and many aren't operating right now because of earthquake damage and lack of power, Poindexter said.

He said one of his Japanese contacts told him the warehouse he works at is being abandoned.

The there's the disaster's effects on people's ability to buy goods.

Poindexter said he's heard from his buyers that trains aren't running in several parts of the country, making it difficult, if not impossible, for Japanese people to get to work and to shop.

And the disaster could cause the country's economy to slip so badly that some U.S. goods may decline in demand while other staple items may experience greater sales.

"It's too early to tell if this will be a long-term market [effect]. We've got to get a better assessment on the infrastructure there," he said.

"Food's going to take priority, I'm sure," Poindexter said. "I just hope the freight rates in Japan don't skyrocket just because they need product there."