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Sahuarita Pecan Festival canceled: Blame it on tariffs, shaky markets, bad weather elsewhere

Shaky international markets, soaring tariffs and bad weather back East have left their mark on Sahuarita, all playing a role in the cancellation of this year's Pecan Festival.

FICO, the company that owns 7,000 acres of pecan trees in Green Valley and Sahuarita, announced Friday that this year's festival is off. The event was launched in 2009, and quickly became a major local and regional draw. It marked its 10th anniversary last November, drawing thousands of visitors to see the largest irrigated pecan orchard in the world.

"It's really a sad call for us but a necessary one," said Nan Stockholm Walden, vice president and counsel for Farmers Investment Co. "We hope the community understands."

Walden said soaring tariffs imposed by China played a big role in the decision but weren't the only factor. The tariffs went from 10 percent in 2017, to 7 percent in January 2018, then soared to 47 percent in summer 2018.

The spike is the result of an ongoing trade dispute between the United States and China that erupted in spring 2018. President Donald Trump has long criticized what he calls unfair trade practices with China and in 2017 ordered an investigation into Chinese practices related to technology, intellectual property and innovation.

In early 2018, 15 to 20 percent tariffs were imposed on 128 Chinese products including fruit, wine, pork and recycled aluminum, and that was just the beginning. Trump ordered the United States to add 25 percent tariffs on $250 billion worth of Chinese products in June 2018, with threats to add $325 billion more.

In retaliation, China slapped tariffs on $110 billion worth of U.S. products and threatened restrictions on U.S. businesses operating there. Both nations added thousands of products to the list by the end of 2018, including agriculture. Several attempts to de-escalate a trade war have failed.

The tariffs affected other countries but China has caused the biggest problems at home. FICO's announcement came at the end of a week of turmoil in financial markets driven by global uncertainty, and amid plans for the United States to increase tariffs again on Sept. 1. Trump earlier this week announced that most of those hikes would be delayed until Dec. 15, acknowledging the potential blow to American consumers, but domestic and international markets reeled amid concerns over a recession and the ongoing trade war. Trump has suggested the dispute could last through 2020.

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Steel tariffs

Walden said the tariffs on pecans haven't been the only damage. FICO built a 40,000-square-foot refrigerated warehouse on its property on Sahuarita Road last year, and she said steel prices doubled during the construction due to tariffs.

She said other nations selling pecans to China — and not subject to tariffs — are able to undercut them.

"We can't compete with the prices those countries are offering," she said.

China is the No. 1 buyer of U.S. pecans.

FICO also owns an orchard in Georgia, which was hit by Hurricane Michael in October 2018.

"This is the worst couple of years in the past 20 years," Walden said of the business. "We see a very tough couple of years ahead."

She said the company plans no layoffs and said, "the underlying business is good and our employees are wonderful."

It's too early to talk about bringing back the festival in 2020, but Walden said they will look at several small-scale events to give the public access to the orchards.

"We're going to be OK because of our size and because we've always been conservative in our business," she said.

In a statement, FICO president and CEO Dick Walden said it's a disappointment to cancel the festival, "but we believe we owe it to our employees to focus our resources on our core business."

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Not giving up

Mayor Tom Murphy said he was saddened to hear about the cancellation, but noted, "the tariffs have had a substantial impact on their business model and I can understand that."

He is open to exploring a partnership with FICO to keep the festival going in the future, noting it is by far the most popular event in the area.

"I think that it is a benefit to the community just like a lot of other signature events," he said, noting the town has a history of working with other partners.

"I know they've got a lot of pride in putting it on, but I think the council would be open to having a discussion on trying to help if there's something that could be done to make it easier to bring back," Murphy said. "I think they'd be open to that discussion."

Members of Congress

Arizona's congressional delegation, including Sen. Martha McSally and Rep. Ann Kirkpatrick, both from Southern Arizona, have long opposed the tariffs, calling them damaging to the state's economy and ultimately saddling families with the financial burden.

In a statement to the Green Valley News on Saturday, McSally, a Republican, assailed China for "cheating for a long time both economically and in stealing technology, which is a national security threat."

She said farmers, including pecan growers, have seen some relief from the administration during the trade standoff, "but that is not a long-term solution."

"I will continue to advocate for a breakthrough in negotiations with China so tariffs can be removed on both sides and we can move forward with fair trade that protects American security, jobs and consumers," McSally said.

Democratic U.S. Sen. Kyrsten Sinema also has long-opposed the tariffs, saying on Twitter on July 19 that "Tariffs hurt Arizona jobs. I'm working with local partners like @ShopFloorNAM and colleagues across the aisle to support manufacturers and protect Arizonans from unnecessary trade wars."

Kirkpatrick couldn't be reached for a comment Friday or Saturday.

This report was first published by the Green Valley News.


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Bobby Joe Smith/Special to the Green Valley News

Crews harvest at Green Valley Pecan in December.