Mar 8, 2013
Groups at odds over tomato trade pact

A proposed trade agreement governing imports of fresh tomatoes from Mexico to the United States might have averted a U.S.-Mexico “tomato war,” as many headlines said in February.

But it hasn’t stopped what seems to be a war between American tomato growers and those in the United States who import and distribute Mexican tomatoes.

The U.S. Department of Commerce announced Feb. 3 that it had initialed a draft agreement suspending the antidumping investigation of imports of fresh tomatoes from Mexico that was originally initiated in 1996. Public comments were taken through Feb. 11, and the agreement was expected to go into effect March 4.

“I would not anticipate it being significantly different than it’s currently crafted,” said Reggie Brown, executive vice president of the Florida Tomato Exchange, in February. “The commitment is for those procedures and processes to take place.”

Those procedures and processes include suspending an investigation that Mexican growers were “dumping,” or selling fresh tomatoes for less than their cost of production. In a plan that U.S. Agriculture Secretary Tom Vilsack said allows the U.S. tomato industry “to compete on a level playing field,” a new schedule of reference prices is established. Besides increasing the categories of tomato types from one to four, to reflect changes in the tomato market, the reference prices have been raised “to better reflect the realities of today’s marketplace,” according to a Department of Commerce fact sheet.

Prices are also differentiated between winter and summer season selling.

For example, prices for open-field and adapted-environment tomatoes are listed as 31 cents a pound in winter and 24 cents in summer; specialty loose prices are 45 cents a pound winter, 35 cents summer.

Florida Tomato Exchange members support the agreement, though several areas of concern remain, Brown said, including the reference prices it sets and enforcement.

“The reference prices established in the agreement were not based on the cost of production,” he said. “We anticipate pursuing those numbers with an administrative review, which we have the ability to request from (the Department of Commerce) on the first anniversary of the agreement.”

Gene McAvoy, regional vegetable Extension agent with the University of Florida in southwestern Florida, called the agreement “a step in the right direction.”

“The past few years, we’ve seen product coming in from Mexico at, like, $5 a box, and when you start to look at the cost of the box and transportation, it’s hard to see how they can even do that unless they are dumping product into the U.S.,” McAvoy said. “The new agreement raises the price to $7.71, $7.75 (a box) – at that point, that’s about a break-even price for our growers.

“That will prevent that undercutting and allow us to stay in business, so it’s a good thing (compared to) being crippled the last few years. It’s been horrible.”

Horrible might be the word importers in Arizona would use in reference to the new agreement. They’ve been very vocal about their lack of support for it, taking a stand that is the polar opposite of that of the growers who do.

“We had gone 16 years with the current suspension agreement the way it had been since 1996, with no problems whatsoever,” said Jaime Chamberlain, president of J-C Distributing in Nogales, Ariz., and immediate past chairman of the Fresh Produce Association of the Americas (FPAA). “And the problem here with this and the reason Florida came at us this way is because Mexico has been extremely successful in giving American consumers what they want and the quality they want, and the food safety certifications and the productivity per acre is amazing.

“Unfortunately, Florida, to their detriment, they have not had those technological advances or those productivity advances. It’s not our fault Florida has not progressed with the times; they haven’t seen better quality and productivity come out of their fields.”

Chamberlain said the real loser is going to be the American consumer.

“We’re going to be forced to sell our products at higher prices and therefore, the U.S. consumer is going to have to pay more all the way around, whether foodservice or retail,” Chamberlain said. “Wherever we’re at, you’re going to have to pay more for your tomatoes.”

FPAA President Lance Jungmeyer predicted prices could go up 50 percent to 100 percent as the Mexican tomato supply decreases.

“The simple fact that the price is going to be raised so much is going to discourage a lot of Mexican growers from staying in the tomato business,” Jungmeyer said. “People are already seeing their customers call and say, ‘I don’t know if we can do business after March 4.'”

Mexican growers are in the middle of their season right now, so the effect of the new agreement will be immediate, Jungmeyer added.

“We don’t expect the remainder of the season is going to be very pretty from a financial standpoint for U.S. companies that distribute Mexican tomatoes or for Mexican growers,” Jungmeyer said. “We’re happy that a trade war has been averted, but what we’re left holding is not very pretty.”

Responding to questions from VGN, Department of Commerce Public Affairs Specialist Lorri Crowley released the following statement:

“The Department consulted intensively with the Mexican growers/exporters as well as the domestic tomato industry in an effort to develop an agreement that would be in the interest of all parties and meet the requirements of U.S. law. We believe the proposed agreement more accurately reflects the realities of the current tomato market and fulfills the requirements of the trade remedy laws.

“The proposed agreement strengthens enforcement by incorporating a reporting mechanism administered pursuant to the U.S. Department of Agriculture’s Perishable Agricultural Commodities Act (PACA) fair trade regulations. In addition, the initialed agreement anticipates broader coverage and enhanced enforcement in Mexico as a result of separate mechanisms put in place by the Government of Mexico. These mechanisms are designed to ensure that essentially all Mexican growers/exporters are signatories to the agreement.”

Kathy Gibbons




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