Markets calm under new tomato agreement - The Packer

Markets calm under new tomato agreement

03/07/2013 11:47:00 AM
Andy Nelson

Driskill also praised the new PACA role, calling it the “one shining star of the agreement.” The new role will ensure, Driskill and Brown said, that shippers on both sides of the border are playing by the same set of rules.

But the agreement is far from perfect, Brown said.

“We still have concerns that (the new floor prices) don’t reflect the price of production,” he said.

Lance Jungmeyer, president of the Nogales-based Fresh Produce Association of the Americas, is concerned about a scenario in which Florida shippers can sell tomatoes below the Mexican floor prices, effectively shutting shippers south of the border out of the deal.

On the other hand, Jungmeyer said the Mexican industry is happy that the agreement ensures shipments from Mexico can continue, and that anti-dumping investigations won’t.

“If the agreement fell apart we would’ve seen a far worse scenario,” he said. “We got the best of the worst. A lot of distributors are very unhappy with the prices.”

Tommy Wilkins, director of produce procurement for Lubbock, Texas-based retailer United Supermarkets LLC, said the agreement is a mixed bag for retailers.

“I feel the floor pricing is very high, but happy to have an agreement,” Wilkins said. “We need Mexican tomatoes for our (consumers) at certain times of the year. I believe this stabilizes the supply of tomatoes available.”

Paul Kneeland, vice president of produce, floral and seafood for Parsippany, N.J.-based Kings Food Markets, said Kings won’t be as affected as some other retailers, becase it tends to sell high-end product at premium prices.

But the affect on the retail grocery industry as a whole will definitely be felt.

“We know that (consumers) buy less in a short market with higher prices,” he said. “It will affect our margins in store. Obviously retail will have to pass on the cost to the consumer, but how much can be passed will depend on retail ceilings.”

A Commerce Department official said the final agreement had no significant differences from the agreement proposed in February. More than 600 Mexican growers and exporters signed the agreement, up from 450 growers/exporters who signed a 2008 agreement, the official said.

The original 1996 suspension agreement was updated in 2002 and 2008.

New floor prices

The previous floor prices for all Mexican tomatoes — whether grown in fields, greenhouses or shadehouses — was 21.69 cents per pound in the winter and 17.2 cents per pound in the summer.

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