Tomato plan unreasonable, FPAA says

02/02/2013 08:47:00 PM
Tom Karst

(UPDATED COVERAGE, Feb. 4) The U.S. and Mexico have agreed to a plan that substantially raises prices for imported Mexican fresh tomatoes, but the association representing U.S. importers said the plan is unreasonable.

The Commerce Department announced the plan on Feb. 2. It sets different floor prices during summer and winter, and also specifies prices for  open field/adapted environment and controlled environment production. The plan is not final; comments will be accepted on it until Feb. 11 at the Department of Commerce  Import Administration website.

 The Commerce Department will consider the comments and release a final version by March 4.

Despite widespread media coverage of a U.S.-Mexico trade war averted, however, the Fresh Produce Association of the Americas, which represents companies that import Mexican tomatoes, is critical of the details in the plan. The FPAA was not involved in the negotiations and president Lance Jungmeyer said it’s not a reasonable solution.

Jungmeyer said many Nogales, Ariz., distributors were initially optimistic when learning Feb. 2 of the agreement maintaining suspension agreement. When more details were released, however, growing numbers of U.S. importers and distributors became worried about the effect of the size of the price increases on buyer and consumer demand.

“A price increase this high gives the U.S. industry more room to maneuver, it gives them plenty of room to sell at 10 cents (per pound) below that floor price all day and essentially keep Mexico out of the market,” he said Feb. 4.

The Commerce Department news release on the agreement paints a different picture.

“I am pleased that we were able to come to an agreement on fresh tomato imports from Mexico that restores stability and confidence to the U.S. tomato market and meets the requirements of U.S. law,” Francisco Sánchez, under secretary of commerce for international trade, said in a news release.

“The draft agreement raises reference prices substantially, in some cases more than double the current reference price for certain products, and accounts for changes that have occurred in the tomato market since the signing of the original agreement," he said in the release.

U.S. growers were unhappy with current floor prices for Mexican tomatoes and in 2012 requested the end of a suspension agreement that set those prices since 1996, stopping an anti-dumping investigation.

After being briefed on the deal by the Commerce Department officials, the Florida Tomato Exchange and Certified Greenhouse Farmers released a statement expressing "tentative support" for the revised suspension agreement.

"The agreement as it is currently structured is a step forward," said Reggie Brown, executive vice president of the Florida Tomato Exchange, Maitland, Fla. Brown said the agreement's higher prices validate the contention of U.S. growers that they have been dumped on for some period of time by Mexican tomato imports. "We still feel very strongly that the cost of  production is essential to determining what the correct reference price should be and we look forward in the future for Commerce to obtain that information and adjust the reference prices on that basis."

Martin Ley, vice president of Nogales, Ariz.-based Del Campo Supreme Inc. and spokesman for a consortium of Mexican tomato growers who negotiated the suspension agreement, said in a statement that those growers offered substantial concessions in negotiations over the past year to preserve the suspension agreement.
 
“Even though no dumping or injury to the U.S. industry was demonstrated by our competitors, over the last year our growers worked with our government to overhaul the whole Mexican industry, broaden the coverage and develop tough enforcement schemes," Ley said in the statement.

Ley said the new floor prices will impose hardships on the Mexican industry, but growers hope the agreement will bring long-term benefits.

"Our compromises are expressions of trust and good faith, the essential ingredients to any bilateral trade relationship, and we look forward to similar expressions of cooperation and good will as we head into the comment period," he said in the statement.

The effective date of any final agreement is projected to be March 4, according to a fact sheet provided by the Commerce Department. 

The new reference prices for open-field and adapted-environment tomatoes are 31 cents per pound in the winter and 24.58 cents per pound in the summer, according to the fact sheet. For controlled-environment  tomatoes, the price for winter tomatoes is 41 cents per pound, while the summer price for controlled-environment tomatoes is 32.51 cents per pound. 

The agreement defines controlled environment tomatoes "as tomatoes grown in a fully-enclosed permanent aluminum or fixed steel structure clad in glass, impermeable plastic, or polycarbonate using automated irrigation and climate control, including heating and ventilation capabilities, in an artificial medium using hydroponic methods."

Specialty  loose tomatoes have a reference price of 45 cents per pound for the winter and 35.68 cents per pound in the summer. Specialty packed tomatoes have a reference price of 59 cents per pound in the winter and 46.79 cents per pound in the summer. The agreement defines specialty tomatoes as grape, cherry, heirloom and cocktail tomatoes.

Under the current suspension agreement, minimum prices for all imported Mexican tomatoes, whether field-, shadehouse- or greenhouse grown, are 21.6 cents per pound in the winter and 17.2 cents per pound in the summer, according to the Commerce Department.

In a Feb. 4 news release, Jungmeyer said the new floor prices would serve only what he called the “inefficient” Florida tomato industry.

“It will also be a thorn in the side of U.S.-Mexican relations for years to come,” Jungmeyer said in the release.

The FPAA was not involved with the negotiations between the Commerce Department and Mexican growers. Mexican officials who signed the draft agreement include representatives of grower groups Confederation of Agriculture Associations of the State of Sinaloa, the Agricultural Council of Baja California, the Mexican Association of Protected Horticulture, the Sonora Regional Agricultural Union, and the National Confederation of Vegetable Producers.



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J. Oliver    
Nogales AZ.  |  February, 03, 2013 at 07:35 AM

This comment has been deleted.

Jeff Genitempo    
Daalas,TX  |  February, 04, 2013 at 10:16 PM

Second that!

Gary    
Cincinnati  |  February, 04, 2013 at 10:08 AM

Open-field; adapted-environment; controlled-environment (greenhouse); winter tomatoes; summer tomatoes; specialty loose tomatoes; specialty packed tomatoes; shade house; hothouse or vine ripe; good arrival; fails to minimum standards. It's more than a reference price (since the minimum is a reference price, that in itself is a loophole.) Suggestion - include customers (receivers) in writing the policies or, as J. Oliver stated "memory lane one more time."

Max    
Immokalee  |  February, 04, 2013 at 10:10 AM

Well, the Florida Dept. of AG should be auditing import (Mexican) dealers to make sure that they are "selling" above "floor" pricing!

Jacob    
California  |  February, 04, 2013 at 11:18 AM

How about we all( Mexican And US growers) stop growing so many tomatoes. Let a market be a real market and we wont have to worry minimums

Juan    
February, 04, 2013 at 12:00 PM

At the end it seems to be a struggle between Cuban and Mexican immigrants into the US At the end the NAFTA, as well as the UNO, means nothing. The law is meaningless when it goes against one´s pocket.

Daniel Torres    
Gonzales Ca.  |  February, 04, 2013 at 03:38 PM

Do not forget about the "phantom" sales to a Canadian Invoicing address and the tomatoes are delivered to Dallas-Los Angeles-Philadelphia or any where you want them delivered!

Lanny White    
Firebaugh Ca.  |  February, 04, 2013 at 08:38 PM

Is that the way you conduct business Daniel? Sounds about right for all of you from Nogales!

Tom K    
Lenexa  |  February, 04, 2013 at 10:16 PM

Both sides seem a little/a lot disappointed in the deal. Reminds me of the proverb: "Bad, bad," says the buyer, But when he goes his way, then he boasts." Should be interesting to get some buying side reaction and see how this sorts out... Tom K

Jeff Genitempo    
Dallas, TX  |  February, 04, 2013 at 10:19 PM

In such a perfect world!

Jeff Genitempo    
Dallas, TX  |  February, 04, 2013 at 10:25 PM

Juan, no such as a free lunch.

Jack    
Naples  |  February, 05, 2013 at 09:05 AM

The Mexicans grow items cheaper and better than American farmers do. On the other hand we are talking about the supply of food to our country and I think a country should always protect its domestic food supply.

Andrew    
Phoenix Az  |  February, 05, 2013 at 09:07 AM

Now there's a concept! Let the market sort it out!

KC    
Florida  |  February, 05, 2013 at 09:20 AM

A floor price means nothing when they bill 500 @ 42.00 and then ship 1000 - now you're back to 21.00

Nick    
Nogales, AZ  |  February, 05, 2013 at 10:02 AM

Free markets should not be coerced into a direction by corporations-it does not make them efficient. The issue with this agreement is that it involves too many private interests. As with most political negotiations-there will always be private interests that take focus away from the real issues (market equilibrium) for their own personal gain. Raising the floor price does not provide market equilibrium, but an incentive for market manipulation. Anti-dumping regulations/measures have been long been argued to serve domestic firms and special interests. It provides incentive for predatory pricing in which large production firms can injure its foreign competitors by undercutting its prices, driving the competitor out of business, then later raising prices to capitalize on market share. Where is the regulation? Let’s not just make “plans” to make things better, but enforce those plans that should make this a better marketplace for everyone in the supply chain. The domestic industry that is arguing foul play should be part of the investigation as much as the foreign industry. Monopolies are made by political incentives and industry ignorance by those politicians implementing the policy. Until examples are made on those who are trying to ‘fix’ the market in their favor-this show will always be rigged for volatility and inefficiency.

Robert Korstanje    
Richland,Mi.  |  February, 05, 2013 at 11:10 AM

This type of agreement is very disturbing. It reconfirms the arm twisting by a regional commodity industry. Ultimately the consumer is held hostage on quality but also on price. It is a shame that the Chamber of Commerce is playing contradictory policies when it comes to free trade. Why not focus on food safety, nutrition and health through the consumption of tomatoes, regardless how we produce them. Soon we will need price special protection for greenhouse tomatoes, and other specialty pack. Florida will have to grow up and find ways to entice the food service and consumer to buy products at a premium price.

Robert    
Richland, Mi. 49083  |  February, 05, 2013 at 11:13 AM

Well articulated and should be embraced by all parties! Thanks, Robert

FP    
AZ  |  February, 05, 2013 at 12:33 PM

No one is talking about the consumer who will have to pay for this agreement. I am sure if this was left up to the consumer they would not ratify this. Though what do they know-right. It just comes out of their pocket.

Jay M.    
Chicago, IL  |  February, 05, 2013 at 01:36 PM

Yes, TK, it WILL be interesting to get the sentiment of receivers in general. Fact is, most folks at destination WANT a better market, but legitimately. Higher prices (in theory) improve margins and frankly keep smaller wholesalers from becoming FOB buyers, which keeps the produce chain in line, so to speak. At the same time, I think they want the small and large growers alilke to be profitable so there is a wider palette of product to choose from.

Max    
Immokalee  |  February, 05, 2013 at 03:29 PM

Maybe, but their soil is contaminated and the produce is probably NOT Safe to EAT!

John    
Calif.  |  February, 05, 2013 at 04:03 PM

yeah, the guys who counted the hanging chads can audit the importers. Strange a dealer is sanctioned for selling below the reference price but there is no sanction on the buy side.

dhinds    
Guadalajara  |  February, 05, 2013 at 06:03 PM

Fear-Mongering from Florida (Max's unsubstantiated claims)

FdS    
Culiacan Mexico  |  February, 05, 2013 at 07:03 PM

Evolution; The end of an era. You don't need so much labor, and you have better control of the environment. The unpredictable freezes will still get the fish. You would still need to place a some sort of plastic tarp on top of that sandy acid soil in Imokalee to keep drainage to a minimum, although evaporation will be at a maximum during the summer. That would be Aquaculture, as an option for Florida tomato farmers. PS- You would still need some sort of food safety guidelines tho.

JHR    
Arizona  |  February, 06, 2013 at 12:37 PM

We no longer have "free markets". Since Obama, now we have "fair markets". Socialism one step at a time.

JHR    
Arizona  |  February, 06, 2013 at 12:44 PM

Hey Max, are you the one who chained your workers to the packing line a couple years ago? Then threw tomatoes at them when they weren't working fast enough? Reported in the press? Abusing immigrants? Shame on the FL hypocrites.

Ed M.    
Salinas Ca.  |  February, 06, 2013 at 04:25 PM

why was this comment deleted? to much heat in the Nogales kitchen?

Dale    
Nogales  |  February, 08, 2013 at 09:26 AM

Lets wake up, the problem is not Florida/California vs Mexico but all of us verse the chains. Tomatoes are sold at the FOB level at 22cents/lb and the chains are selling them for $1.99 to $2.99 per pound. Food service will take their weekly amounts because they are on contracts and the new suspension levels will only increase the price of their contracts which will get passed on to consumers. We have taken tomatoes from a staple to a specialty item. Whats next lettuce?

Jimmy    
Denver  |  February, 08, 2013 at 12:59 PM

Mexico is dumping right now, tomatoes in the stores in Mexico are sky high in price but the laundering of money has to continue what ever it cost.

Bradley    
DFW  |  February, 08, 2013 at 03:56 PM

Your right on the money Dale.

JP    
February, 10, 2013 at 10:15 AM

Elaborate on your argument please. Have you even been to México, have you tested soil samples for what you called contamination? Have you tested produce samples to determine it´s not safe to eat? I am sure you are capable of building better arguments, make an effort.

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