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BusinessEconomicsMarketsNewsTradeTrucking

Trade tensions between U.S. farmers and Mexican tomato growers continues to escalate

The United States and Mexico are on the brink of yet another trade war – this time pitting U.S. farmers against Mexican tomato growers and importers. 

The debate centers around the price of imported tomatoes from Mexico. Florida tomato growers have said the prices of imported Mexican fresh tomatoes are sold below market value, giving them an unfair advantage.

The latest development came July 30, when the U.S. Department of Commerce released a preliminary ruling of a 25 percent price dumping margin on Mexican tomato imports – that Mexico has been selling its tomatoes at artificially low prices, thereby undercutting their U.S. competitors.

The Commerce Department has been conducting a “dumping” investigation into Mexican tomatoes since February. It is expected to complete its investigation in September.

“The U.S. tomato industry looks forward to showing the U.S. International Trade Commission that it has been injured by the surging unfairly traded Mexican imports,” said Michael Schadler, executive vice president of the Florida Tomato Exchange.

Importers of Mexican fresh tomatoes said consumers are voting with their stomachs and their pocketbooks, demanding tomatoes from Mexico.

“Working closely with retailers, food service companies, and other buyers, our members’ main focus is supplying the vine-ripened, high-quality tomatoes that drive sales in stores and restaurants,” said Lance Jungmeyer, president of the Fresh Produce Association of the Americas in Nogales, Arizona.

The debate over Mexican versus U.S. tomatoes has been brewing for decades, but heated up February 7 when the Trump Administration announced it was leaving a 2013 tomato suspension agreement with Mexican tomato growers and restarting a dumping investigation.

“We have heard the concerns of the American tomato-producing industry and are taking action today to ensure they are protected from unfair trading practices,” U.S. Commerce Secretary Wilbur Ross said in a release. “The Trump Administration will continue to use every tool in our toolbox to ensure trade is free, fair and reciprocal.”

The Department of Commerce is expected to complete its Mexican tomato dumping investigation by September 19, when the U.S. International Trade Commission will determine if there is injury resulting from Mexican tomatoes entering the U.S.

If the 25 percent dumping margin is upheld by the Commerce Department, then the cost of tomatoes to consumers could rise anywhere from 40 percent to 85 percent, according to an Arizona State University study conducted in April.

However, an agreement with Mexico could be reached as early as mid-August. The 2013 tomato suspension agreement substantially raised the minimum “reference” price at which Mexican plum, cherry and other tomatoes could be sold in the U.S.

After President Donald Trump pulled out of the 2013 tomato suspension agreement with Mexico, a 17.5 percent tariff was added to Mexican tomato imports starting on May 7. 

Cross-border trade officials in Texas said any tariffs are a big blow to the $3 billion Mexican tomato import industry.

“Just the three [Texas] bridges alone in Pharr, Laredo and Progreso imported almost $1 billion of tomatoes in 2017,” said Dante Galeazzi, chief executive officer of the Texas International Produce Association (TIPA) in a San Antonio Express-News report. 

TIPA, which is based in Mission, Texas, represents growers, domestic shippers, import shippers, specialty shippers, distributors and material and service providers. 

“When you start looking at the number of companies that are touching tomatoes here in the United States and specifically in Texas – you’ve got the importers, you’ve got the guys that are repacking, you have the final sales – all those people have employees that are depending on the Mexican tomato business,” Galeazzi said. “Margins in fresh produce are already razor thin, so if there’s increases, that increase just gets passed down the supply line to the final consumer.”

While Mexican and U.S. officials have been in talks since May to end the 17.5 percent tariff on tomatoes, another recent proposal from the Commerce Department called for 100 percent of “tomato loads crossing from Mexico to the U.S. be inspected for quality and condition defects” at U.S.-Mexico border points of entry.

Mexican government officials said the proposal is “absurd” and would add to trucks’ wait times at border points of entry.

“Dealing with perishable products, this is absurd and would certainly generate logistical chaos with all exports of merchandise,” said Victor Villalobos Arambula, Mexico’s Secretary of Agriculture in a July 18 letter to U.S. Agriculture Secretary Sonny Perdue. 

Arambula also said that the Mexican government could implement equivalent measures on U.S. goods crossing the U.S.-Mexico border.

“If that [100 percent of tomato inspection] proposal is not withdrawn – the government of Mexico will apply quality inspections on all U.S. agriculture goods coming into Mexico,” Arambula said.

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Noi Mahoney

Noi Mahoney is the Cross-Border Freight Market Reporter for FreightWaves.com. He graduated from the University of Texas at Austin with a degree in English in 1999. Mahoney has more than 20 years experience as a reporter and editor. He has worked for newspapers in Florida, Maryland and Texas.

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