Derek Sandison,

Washington state’s agriculture industry is known for its diverse crop portfolio and innovative marketing strategies. At the Washington State Department of Agriculture (WSDA), we work to preserve and maintain the industry’s viability and vitality.

In recent years, producers have weathered the storms of the heat dome, wildfire smoke impacts, extreme cold and drought. Earlier in the year, soil moisture and snowpack indicated that the worst of the drought may be behind us, although current precipitation levels tell us otherwise.

Recognizing the challenges associated with changing weather patterns, as well as the variable nature of agricultural markets, the state Legislature approved in 2023 a proposal for a statewide promotional program. The program will help advertise Washington products – grown, raised, made and produced – at every level from local stores to international markets. This will contribute to the competitiveness of Washington’s agricultural products and the overall success of the state’s commodities.

A mixed bag

While producers across the state generally enjoyed strong prices in 2022, overtime costs, along with other elevated input costs, continue to eat away at potential profits. Washington is vulnerable to trade disruptions and export requirements. Experts believe the Washington state agricultural economy could experience up to a 24% decrease in average net cash income in 2023.

Many factors may contribute to this decline, including world and national events like inflation, high interest rates, the Russia-Ukraine war and supply chain issues. However, the major driver of the decline is overall elevated input costs.

Trade outlook

Washington’s agriculture industry is heavily reliant on trade. Each year, up to 90% of our wheat crop is exported, along with more than 70% of our potatoes (mostly as frozen french fries) and around 30% of our apples and cherries.

Covid-19 significantly impacted Washington exporters due to market closures and extreme supply chain disruptions. Markets have reopened and port congestion has substantially decreased, although some supply chain challenges persist. Overall, trade is returning to pre-pandemic patterns.

In 2022, Washington’s food and agriculture exports were valued at $8 billion, an increase of nearly 4% over the previous year.

In 2022, apples fell off the top five exports chart. In 2021, apples came in at No. 4, and in 2022, they were at No. 6.

The top five exports for 2022 were fish and seafood at $1.3 billion, frozen french fries at $969 million, wheat at $894 million, dairy products at $769 million and hay at $647 million.

Washington’s top five export countries remain unchanged from 2021-22, with Canada being No. 1.

Canada has maintained its ranking as Washington’s top export market for many years. Canada is also the top destination for several individual Washington products including seafood, cherries, onions and fresh blueberries.

Top priorities for Washington’s agricultural export industry include:

• Securing trade agreements. While Washington enjoys a strong reputation for high-quality, high-value products we are at a competitive disadvantage in many countries in terms of price due to tariffs, and we face restrictions in others due to a lack of market access provisions. Our competitors are steadily taking our market share as they enter into modern, free trade agreements with our trading partners.
• Increasing funding for trade programs in the 2023 Farm Bill. Increased funding for trade promotion is a top priority for Washington’s agriculture industry.
• Addressing supply chain issues. The Covid-19 pandemic exposed and exacerbated severe faults in the supply chain. Shoring-up infrastructure of our transportation systems and ports while improving communication between all parties are critical first steps that will help provide stability for Washington agricultural exports now and in the future.

Labor costs

Washington’s cost to farm was 26.8% higher than the national average in 2021, with labor costs being the No. 1 expense. With the state having the highest minimum wage in the country, and farmers now navigating overtime pay for workers, it’s no wonder that labor accounts for a quarter of all farm expenditures in Washington. These high input costs can make it difficult for farmers to turn a profit and remain competitive in the global marketplace.

In 2021, Washington producers spent $2.15 billion on hired labor. Additionally, there are proposed changes to worker safety requirements that could increase costs to employers, as well as changes to the H-2A program that will significantly increase wages and ultimately the cost of farming. H-2A is a visa program that allows farmers to recruit and hire from other countries for agriculture work on a seasonal basis.

Farmers cannot always raise crop prices to relieve this pressure, leaving many in a tough situation.

Trucking rates

Another input cost driving the decrease in net income this year is trucking rates. Trucking rates are still 45% above their five-year average, despite the downturn at the end of last year.

Fertilizer

The war in Ukraine also has significantly impacted the price and production of fertilizer, specifically potash.

While prices for fertilizer have softened relative to 2022 prices, they remain high.

In the U.S., we expect potash availability to be relatively undisturbed because we primarily source from Canada. However, fertilizer availability in other parts of the world that rely heavily on Russia – a world supplier of potash – likely will decrease due to the ongoing war. 

Apples

The Washington apple industry is a prime example of the challenges the state’s agriculture sector faces. Despite a bumper crop year, the industry is facing headwinds due to increased freight rates, a lack of container availability at ports and a loss of export markets.

In the first six months of the 2023 marketing season, U.S. fresh apple export volume was down by 12% compared to the previous year, a significant blow to an industry that relies heavily on exports. It also highlights the vulnerability of Washington’s agriculture industry to trade disruptions and export requirements.

That being said, I’m optimistic that Washington’s farmers can weather the storm and continue to produce a bounty of unique and high-quality crops for years to come.

Supply chain

With so many commodities across Washington reliant on trade, some of the biggest impacts on the state’s farm economy will come from outside the borders, including difficulty with the supply chain. Tractor and combine parts have been hard to come by, and inflation significantly affected the price of fuels and chemicals.

Food security

We remain on the battlefield of food insecurity, working to help hunger relief organizations feed hungry Washingtonians, and producers to get their products to those who need it most. Our agency was tasked with creating a state alternative to the federal food box program in response to heightened food insecurity resulting from the Covid-19 pandemic. Food insecurity continues to be a priority issue, with the number of people seeking food assistance in Washington doubling during the pandemic and now with rising food costs due to inflation.

We received $18 million from the 2023 legislative session for state fiscal year 2024 and $17 million for state fiscal year 2025 to extend the We Feed Washington pilot food program for two final years.

While this is far less than we requested, we will work to stretch those dollars as far as we can. As the myriad government Covid-19 relief benefits wane, like the recent reduction in monthly Supplemental Nutrition Assistance Program (SNAP) allotments, the reality of the economic conditions, plus high food costs, means those most at risk of hunger remain vulnerable.

Invasive species

Our pest program staff fight on the front lines of our fields by looking for and eradicating invasive species like the northern giant hornet and Japanese beetle. In 2022, our teams did not find any hornets or nests. The Japanese beetle, however, is an infestation that our teams have been working to eradicate since the discovery of three beetles in 2020.

Last year researchers uncovered X-disease phytoplasma in cherry and peach planting stock. Nurseries, researchers and our agency are all working together to conduct more testing to ensure that nurseries are up to date on the latest recommendations to prevent pathogen introductions.

WSDA received a grant from the U.S. Department of Agriculture to test our mother trees for the disease and is currently partnering on a grant with the Oregon Department of Agriculture to gather more information on vectors of X disease.

As we continue to fight to feed hungry Washingtonians, battle invasive species and keep trade strong for Washington agriculture, WSDA remains committed to its mission of supporting agriculture and serving the public.

Derek Sandison is the director of the Washington State Department of Agriculture.