Tariff smells sweet to Gilroy garlic farm
Trump tax on Chinese goods aids U.S. products
A lot of people think the trade war with China stinks.
But one Bay Area business is breathing easier: Christopher Ranch, the nation’s largest commercial garlic grower, which stands to gain from a 25% tariff the Trump administration imposed on Chinese garlic and other goods this month.
“This is a unique moment,” said Ken Christopher, the executive vice president of the Gilroy company, who said he was “elated” when the news was announced. A photo on the ranch’s Facebook page shows Christopher celebrating by jumping in a bin of garlic skins and throwing them into the air like confetti.
It’s been a long, hard road for U.S. garlic growers, who have struggled for years against Chinese competition. For Christopher Ranch, a previous heyday came in 1993, when it grew 100 million pounds of garlic. But Chinese garlic soon flooded in, and only now is the company producing 100 million pounds again.
In the meantime, the number of American garlic growers has shrunk, from 12 commercial garlic farms in the 1990s to three today, according to Christopher, who estimates that 30% of garlic eaten
in the U.S. is produced by China and 30% by his family’s company.
In September, President Trump slapped a 10% tariff on garlic arriving from China. That helped. But it was the 25% tariff that got Christopher excited.
With 1,100 employees, Christopher Ranch is the largest employer in Gilroy, which calls itself the “garlic capital of the world.”
“Garlic is the key identity of the city,” Christopher said as he showed off his garlic processing center. “It’s just part of our DNA here.”
Christopher Ranch is heavily focused on the U.S. market, with 90% of its garlic staying in the country. It exports a limited amount to countries including Mexico, Canada and Japan.
Despite Gilroy’s claim to being the garlic capital, Christopher Ranch grows only a few hundred acres in Gilroy. The rest of its approximately 5,900 acres of garlic fields are in the Salinas Valley, in the Modesto area and near Fresno.
After harvest, the garlic is trucked to Gilroy, where it is kept in cold storage. It is also cleaned, cracked, peeled and sometimes roasted there, and Christopher Ranch controls everything from the seed selection process to the sale to retailers.
“At any moment on the continent, this will be the most garlic you’ll find,” Christopher said of his operation.
The Stinking Rose, a San Francisco restaurant known for its garlic-centric dishes, buys only California garlic because of its consistency and reliability for the restaurant’s dishes, according to restaurant co-owner Dante Serafini. The restaurant orders more than 50 tons of garlic per year to supply its San Francisco and Beverly Hills locations with garlic.
“California garlic is the most consistent,” Serafini said. “It’s got the taste that we could predict the most of any, because when you’re cooking and you’re using this much garlic ... you want it to taste the same all the time.”
The Stinking Rose buys garlic from suppliers whose garlic originates from Christopher Ranch or the Garlic Co. of Bakersfield, another commercial grower.
“We have to take the best product, California products on the market, that’s why we go with the reliable people,” Serafini said. “That’s why we don’t shop for price.”
Before the 10% tariff enacted in September, Chinese garlic cost $15 to $20 per box, while California garlic was about $50 to $60 per box, according to Christopher. Now, with the 25% tariff Chinese garlic will be $40 to $45 per box, he said.
The prices of Chinese garlic will rise more than 25% because some shippers will restrict their exports, Christopher said in an email.
“The tariff really has a one-two punch in that it raises prices due to lack of supply,” he said. “We anticipate that even more Chinese shippers will choose not to sell to the U.S., further increasing the likely price of that garlic.”
Christopher hopes his company can increase its market share while the tariff is in place. In August, he went to Washington to urge the International Trade Commission to introduce a 25% tariff.
Christopher and other growers believe China’s export prices for garlic give its exporters an unfair advantage. Chinese shippers, he told the commission, “continually sell their garlic in the U.S. market at prices below their cost of production,” thus causing “tremendous financial damage to American garlic producers.”
This underpriced garlic first flooded the market in 1993, Christopher said, and despite duties that were soon slapped on, it has continued to arrive cheaply. In a 2016 report, the Government Accountability Office said that $577 million of imported garlic avoided duties — and while it didn’t specify which country or countries failed to pay the duties, it did note that China was responsible for 95% of the unpaid duties for a long list of products, including garlic.
The Chinese Consulate in San Francisco did not respond to a request for comment.
Garlic originated around 3,000 years ago in central Asia and was transported by caravans to other parts of the world, according to Eric Block, an emeritus professor of chemistry at University of Albany, State University of New York and garlic historian. China has extensive experience in growing the crop and is a major exporter.
“It’s enormous,” Block said of China’s market share for garlic. “They export 80% of all garlic in the world. They’re by far the largest exporter of garlic, and the United States is by far, I believe, one of the largest importers of garlic.”
Christopher expects that his company won’t feel the effects of the tariff until late this week and says he anticipates a surge in demand for American garlic.
He hopes the trade war may spur people to start asking where their food is coming from.
“There’s relief for our industry and also an ability to get the message out,” he said.