Key Issue Areas
Tinplate Steel Tariffs | All Forms | Buy American | Immigration | 2023 Farm Bill
Tinplate Steel Tariffs
The Section 232 tariffs on tinplate steel, which is used to make cans for canned food, are exacerbating supply chain issues in the canned food industry and contributing to food inflation. The steel tariffs were implemented to help the American steel industry invest in new or updated facilities. The American canned food industry has historically relied on imports for 40% of tinplate demand, so additional investment would have been welcome. However, the steel industry did not invest in tinplate production – in fact, domestic tinplate production has contracted from 11 production lines to 8 since 2018. More recently another tinplate line was idled recently and a major plant closure is slated for 2023.
Despite the production cuts, the domestic steel industry has been raising tinplate prices and pocketing the profits. The CEO of Cleveland Cliffs bragged to investors in a recent earnings call, “We’re doubling the price of our tinplate because the costs are not increased…So, we are going to have a meaningful, bigger contribution from tinplate” to profits.
Amid dwindling production and rising prices, the 25% Section 232 tariff serves only to drive food inflation, for which the burden falls disproportionately on low- and fixed-income Americans and food banks. 41% of the cost for a 15 oz. can of American-grown corn is the can itself – much more than labor (14%) or even the corn itself (22%). As a result, year-on-year inflation for canned fruits and vegetables in August 2022 was 16.6%. The tinplate tariffs and resulting inflation are making foreign canned food imports, which for the most part face no such tariffs, price competitive with domestically-grown and -packed canned food. For instance, imports of canned fruits and vegetables from China soared 811% in 2020 from 2019.
Hard-cap quarterly quotas on steel imports from South Korea and Brazil place strict limits on key potential tinplate suppliers. A 90% anti-dumping duty on Japanese tinplate also further restricts tinplate availability from allies. The recently-announced tariff-rate quota deals with the EU and UK unfortunately do not meaningfully increase tariff-free supply, especially with the war in Ukraine increasing the need for more canned goods in Europe. The steel tariffs are under the full control of the Commerce Department, which could relieve pressure on this critical domestic industry by taking one of two actions: 1) Announce a categorical exclusion for tinplate steel, removing the tariffs on these products outright, or 2) renegotiate the hard-cap quotas on tinplate steel from South Korea and Brazil.
The federal government administers many important nutrition programs that impact Americans of all ages, backgrounds, and incomes. However, some of these programs, such as the Fresh Fruit and Vegetable Program (FFVP) and the USDA Department of Defense Fresh Fruit and Vegetable Program (USDA DoD Fresh) advantage fresh produce over other forms. This locks out fruits and vegetables in other forms – canned, frozen, and dried – that have been shown to be equally nutritious.
The privileging of fresh fruits and vegetables over other forms contradicts federal nutritional recommendations. USDA’s Dietary Guidelines, “My Plate” Recommendations, and the National Institutes of Health all recommend consumption of all forms — canned, fresh, frozen, and dried — of fruits and vegetables. However, the programs the federal government administers, such as the USDA Fresh Fruit and Vegetable Program and the USDA Afterschool Snack Program, that explicitly prohibit participation of all forms of fruits and vegetables.
Recommendation: We believe that canned, frozen, or dried fruits and vegetables that meet the nutritional guidelines of the program should be eligible for government food programs. Doing so would support American jobs, reduce food waste and spoilage, and stretch federal dollars further.
Many federal nutrition programs, such as the Child Nutrition Reauthorization Act and the National School Lunch Act, contain Buy American provisions to ensure federal dollars support American farmers, producers, and jobs. However, we have seen too often that loopholes and lax oversight results in those dollars being spent on foreign-made fruits and vegetables. For example, there have been several instances of local California school districts importing peaches from China, Greece, or elsewhere despite a robust peach-growing industry in the state. In fact, a 2016 audit by the Department of Education found that not a single school district in California had adequate policies for ensuring transparency and compliance with Buy American provisions. We know this problem extends beyond California. For instance, coalition members, such as the California Canning Peach Association, in collaboration with labor unions across the country, found that more than 80% of apple juice served in schools was Chinese in origin.
An unintended consequence of eligibility preferences for fresh fruits and vegetables, rather than governmental nutritional standards, in federal nutrition programs is that it benefits foreign imports. Locking out canned, frozen, and dried fruits and vegetables from these programs ignores the seasonal and geographic realities of fresh products. Providing fresh fruits and vegetables year-round necessarily requires importation, especially in colder-weather states. This runs cross-purposes against the Buy American requirements in many of these programs. Our shelf-stable, domestically-produced fruits and vegetables are widely available year-round. We can ensure a healthy and nutritious meal for every student across the country, regardless of their location or socioeconomic status, when we harness the complete range of American fruit and vegetable industry.
Recommendation: The USDA and other federal agencies that administer nutrition programs must be more vigilant of and conduct more due diligence on Buy American waivers from participants. Additionally, agencies should thoroughly investigate allegations of non-compliance.
The H-2A Temporary Agricultural Workers program allows U.S. employers or U.S. agents who meet specific regulatory requirements to bring foreign nationals to the United States to fill temporary agricultural jobs. Given the seasonality of our industry, we need larger quotas for our growers. Further, we would like to see the workers at fruit and vegetable processing facilities qualify for the H-2A temporary agricultural worker program.
The bipartisan Farm Workforce Modernization Act (FWMA) is a good start at solving critical labor shortages across our nation. If an individual can prove 180 days or 1,035 hours of agriculture work within two prior years of passage, there is a pathway to farm work eligibility. Most importantly to AFVPGC, the legislation’s definition of agriculture work includes food processors. The FWMA still needs mandatory e-verify provisions; further the legislation arbitrarily excludes the construction occupation and will lead to increased litigation for employers.