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Even Farmers Who Don't Export Produce Are Caught Up In Tariff Wars

NOEL KING, HOST:

OK, now we have a story where there's good news, but it's making people anxious. This season's apple crop is expected to be the ninth biggest ever in history, and some small apple farmers are worried about that. Katelyn Harrop of Iowa Public Radio has the story.

KATELYN HARROP, BYLINE: Timeless Prairie sits on a dusty road in Winthrop, Iowa. In each direction, it's corn and soy as far as the eye can see. Apple farms are scarce in these parts. But through this small, tree-lined property, owners Dave and Susie Differding have carved out an orchard.

DAVE DIFFERDING: So we had a lot of our good apples coming out of here - the camis (ph), the EverCrisp. We take them to the farmers markets, and we sell out.

HARROP: A summer hailstorm left the Differdings things with a smaller harvest than they had hoped for this year. But even then, they're concerned about selling their apples. The roots of that concern started last season, when Differding found regional grocery chains weren't buying his fruit. That follows years of solid sales to those chains.

DIFFERDING: He said, I've got apples stacked up in my cooler, and it'll take me more than a week to sell them. And he said, I just don't have room for your apples and not able to buy them.

HARROP: The Differdings say without those grocery sales, they lost $40,000 last season and expect to lose at least the same this year. Here's why - as increased tariffs hit American products, apple farmers are among those getting hurt. The tariffs come from countries including India and China in response to U.S. tariffs on steel, aluminum and other goods. Today tariffs sit at 60% and 70% for those selling to China and India.

What frustrates the Differdings is they've never exported their apples, and they don't plan to. But as Jim Bair - CEO and president of the U.S. Apple Association - explains, that doesn't mean they're free from feeling the trickle-down impact.

JIM BAIR: Well, even if you're not someone who's directly involved in exporting, you're still impacted by the prices because those apples that would have been destined for export markets stay in the United States. They overhang the market and depress prices for everybody.

HARROP: A big harvest this year could mean more opportunities to export apples. But with large tariffs making that less appealing, it could also mean a flood of fruit onto the domestic market. That leads to lower prices and stiffer competition, and some smaller producers like the Differdings struggle to compete.

BAIR: The combination of the size of the market - because of the loss of a third of our exports - and the larger crop are going to crash headfirst into each other.

HARROP: Larger producers are also feeling the impact. Chuck Zeutenhorst heads First Fruits Marketing in Yakima, Wash. While his company sells lots of apples domestically, one of their top overseas markets is India, which has a 70% tariff on apples.

CHUCK ZEUTENHORST: It's like pushing a rope. There's just so much production that can end up in the country, and so that's why we also have very developed export markets. So significant changes in those export markets causes problems.

HARROP: Zeutenhorst says he's confident the company will be able to expand its domestic market. That means producers with razor-thin margins face increased competition from bigger growers. Dave Differding understands that and finds it discouraging.

DIFFERDING: Well, it's significant for us. You know, equipment that we thought we would be able to afford - then that all adds up, and you've got to sit back and say, I can't do it.

HARROP: While harvest is winding down at Timeless Prairie, some of the country's largest orchards are still in the thick of it, and producers won't know the full impact of the latest tariffs until after the last apple is picked.

For NPR News, I'm Katelyn Harrop in Iowa City.

(SOUNDBITE OF STEV'S "WHILE YOU'RE FADING") Transcript provided by NPR, Copyright NPR.