Tomatoes imported from Mexico could face a supply chain squeeze caused by new regulations finalized in September between the U.S. Department of Commerce and Mexican growers, experts say.
The new regulations call for up to 92% of imported Mexican tomatoes crossing the U.S.-Mexico border by truck to be inspected by officials from the U.S. Department of Agriculture (USDA).
The inspections are “to prevent the importation of low-quality, poor-condition tomatoes from Mexico, which can have price-suppressive effects on the market,” the department said in a statement.
However, officials with the Nogales-based Fresh Produce Association of the Americas (FPAA) said the new inspection rules are unnecessary and would lead to delays at the border.
“At that level, the inspections are not only unnecessary, they also have the potential to destabilize the U.S. tomato market,” said FPAA president Lance Jungmeyer in a release. “It is completely unnecessary to require USDA to conduct quality inspections on an item that has already demonstrated a historical pass rate of 99.76%.”
Even some of the largest retailers in the U.S. are concerned the inspections will hold up tomatoes at the border.
“Any delay in inspections would lead to quality degradation and added cost,” wrote James R. Bailey, senior director for federal government affairs at Walmart Inc., in a September letter to the U.S. Department of Commerce. “Given the high quality and low failure rate of Mexican tomatoes, such intensive inspections do not seem proportionate to the risk.”
Jungmeyer said the new 92% inspection rule would harm trade at the Nogales port of entry along the U.S.-Mexico border, where tomatoes make up almost 20% of produce imports.
“The inspection provision is essentially a non-tariff trade barrier whose ripple effects will not only damage the U.S. tomato market but many other industries that trade with Mexico,” Jungmeyer said.
In Texas’ Rio Grande Valley, where more tomatoes cross into the U.S. than at any other U.S.-Mexico crossing point, officials said delays are a concern.
When tomatoes are imported from Mexico, they are stored in warehouses at the border before being transported to sellers, officials said.
“Warehousing space is going to be a problem; trucking’s going to be a problem,” said Jaime Garcia, general manager at importer Kingdom Fresh in an interview with the McAllen Monitor. “I believe there will be new bottlenecks along the supply chain. It could be at the bridge but I think it’s going to be more at the warehouses.”
In Nogales, FPAA officials have estimated that it will cost $220 million to construct the new warehouse space needed for the enhanced inspections, as well as other related costs of close to $50 million per year.
“We worry that U.S. market will not be able to bear this dramatic cost increase,” Jungmeyer said.
The new tomato agreement is the latest chapter in a long-standing dispute between U.S. tomato growers and Mexican growers. Domestic growers have long argued that Mexican grown tomatoes of poor quality have been sold in the U.S. at lower prices, undermining the market.
Officials in Mexico are looking for ways to avoid disrupting trade at the border when the new tomato quality inspections take effect in March 2020.
Sergio Esquer, vice president of Mexico’s National Agricultural Council, said they tried to get the 92% inspection rule removed from the agreement.
“[It] is an issue that unfortunately we could not remove” during the negotiation, “but fortunately not everything is lost, I believe that Mexico still has all the capacity to be able to press and that inspection be removed,” Esquer said in an interview with La Jornada.
Esquer added they are working on a provision that, “if after 24 hours, it is not inspected, we will release the cargo.”