Mexico warns of possible trade war

10/04/2012 5:55:00 PM
Coral Beach

Verbal volleys continue in the conflict about the 16-year-old Mexican tomato suspension agreement, with both sides promising to pull out the big guns.

“Mexico will respond: You should ask those who were in the Mexican crosshairs over the trucking dispute. When Mexico aims, Mexico hits the target,” said Auturo Sarukhan, Mexico’s ambassador to the U.S.

Sarukhan issued the warning of a trade war to U.S. media after the Department of Commerce said Sept. 27 it might end the trade agreement, which set a floor price for Mexican tomato imports after an anti-dumping investigation.

His reference to retaliatory tariffs concern a cross-border trucking program dispute that included duties on U.S. products including table grapes, potatoes and apples. U.S. supporters of the tomato agreement have said they fear Mexico would reestablish those tariffs if the suspension agreement is terminated.

Brown Florida tomato growers, who petitioned the Department of Commerce to abolish the agreement, also have strong predictions about what will happen if they get their wish.

“Domestic producers can as well have the full array of legal rights that all other domestic industries have to address imports, if they are believed to be unfairly traded,” said Reggie Brown, manager of the Florida Tomato Committee, Maitland.

Brown and Florida tomato growers contend Mexican growers have been undercutting them, despite the agreement, since it was begun. He said last year’s “collapse of prices in the marketplace” is what drove them to seek its repeal.

The Department of Commerce made its intentions official Oct. 2 by publishing a notice of intent to terminate the tomato deal in the Federal Register. The department nine months before it must make a final decision. A public comment period lasts until Nov. 2; comments can be made at http://tinyurl.com/MexTomatoes.

Many supporters of the agreement are already on the record with the Department of Commerce.

The Fresh Produce Association of the Americas, Nogales, Ariz., has a list of 370 letters of support from produce businesses, members of Congress, produce associations, chambers of commerce at local and federal levels, retailers, and others on a website: www.savemytomato.com.

Most supporters cite potential retaliatory tariffs on other U.S. produce and products, higher prices for tomatoes, and negative economic ripple effects as objections to terminating the agreement. Bedwell

"… when the U.S. discontinued (the cross-border pilot trucking program) … almost two-thirds of the market for fresh table grapes to Mexico was lost in the first year of those tariffs,” wrote Barry Bedwell, president of the California Grape and Tree Fruit League. Mexico is the second-largest export market for U.S. table grapes.

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When all the USA tomato farmers are out of business, which is most likely mexico's goal here, what do you think will happen to tomato prices? Do monopolies result in better or worse outcomes for the consumer? As soon as we can no longer afford to grow our own produce and mexico is the only supplier, prices will skyrocket and quality will plummet. We will have no food security and will have to beg other countries for food assistance. This reality is not far off unless we get tough on these mexican dumpers. By supporting mexican produce when there are numerous domestic alternatives, you are supporting slave wages, violent cartels, and the accelerated downfall of the USA. How does THAT tomato taste? Soon, our border defences wont be needed to keep mexicans out, because it will be used to keep us from trying to cross the border to find the only food sources that are left. When oil prices skyrocket from the next big war that's just around the corner, you are all going to wish you had supported your local domestic producers. Diesel prices will prevent food from being shipped further than 100 miles. Get ready for starvation and mass rioting. You have been warned.

Here it comes...all the Florida lies. This is only about money..The Florida Growers want a base price of 8.00 so they can rape the US consumer even more for their inferior product. Now come their proxies trying to scare people into supporting their greedy ways. I love the slave wages comment made by their apologists...Florida growers have been been using immigrant labor as indentured servants for years, going so far as to spray pregnant woman with toxins in order to harvest the little green baseballs they call tomatoes. The biggest cartel in this argument is the Florida Tomato Cartel. The Gambino family and John Gotti had Bruce Cutler, The Florida Tomato Cartel has Reggie Brown.

Sarukhan, why don't you get a REAL job?

Here it comes...all the Florida lies. This is only about money..The Florida Growers want a base price of 8.00 so they can rape the US consumer even more for their inferior product. Now come their proxies trying to scare people into supporting their greedy ways. I love the slave wages comment made by their apologists...Florida growers have been been using immigrant labor as indentured servants for years, going so far as to spray pregnant woman with toxins in order to harvest the little green baseballs they call tomatoes. The biggest cartel in this argument is the Florida Tomato Cartel. The Gambino family and John Gotti had Bruce Cutler, The Florida Tomato Cartel has Reggie Brown.

Why is it when there is a collape in market price to the grower, packer, shippers - Mexican or American the consumer continues to pay high prices to the stores? The tomato growers are fighting each other while they all go out of business and the consumer will suffer even more. $4.00 for 25# from the packinghouse $1.49 a pound to the consumer - as they say "it just math"!

Hey, wake up everyone! The real war should be with our retail stores here in the U.S.A. Nobody can sell any tomatoes when they are priced $2.00 to $3.00 per pound. Oh I forgot, yes they can, hothouse or cluster tomatoes. Retail does not do the whole tomato industry any favors the way promote tomatoes

You got that right...

100% true. Ironic that retailers are the first ones to back the free trade of Tomatoes.

I fully Agree... wait and see, after a couple of hurricanes come to Florida, and when Mexican packers are already selling their products to `japan Canada or Europe.

They have diversified their markets!

It baffles me that these agreements are created to begin with. If two businesses do it, they go to jail for price fixing and collusion. If two countries do it, it's an "agreement". Make the tariffs even and let them compete, just like U.S. companies have to do against each other.

Stuart, great points, the Mexicans and US growers are fighting over 21 cent per Lb. reference price, while consumers pay over 1.9 dollars per Lb. all year.
Mean while consumption of fresh vegetables is dropping both in Mexico´s and United States population, so where should the real fight should be taking place.

I am not a apologist for retailers, but many people keep falsely accusing the retailers of pocketing more profits on lower FOB's. First, there are fixed distribution and store level costs, which in the case of unionized companies, can be quite high. Secondly, most major retailer set their price in advance and are unable to react to cheaper FOB's in a timely manner. Take note that retail prices do not rise as drastically and quickly as FOB prices do. If anyone is pocketing additional profits, it's the buying brokers and repackers, but they also take on risks and loses at times, since they are setting prices in advance.

I don't know why the Mexican Produce Group is against stopping the suspension agreement. Seems to me that 17 years ago they could import every tomato they had and sell them for whatever the market would bear. Why is that a bad thing?

I was around 16 years ago when the Suspension Agreement went into place and the distributors of Mexican product were against the agreement because of the set minimum price. One would think they would be happy about no longer having a floor price.

The truth is that it's the Federal Marketing Order for minimum import requirements for the quality of tomatoes that is being violated left and right by misbranding and mislabeling field-grown tomatoes as greenhouse grown so they can bypass the USDA Federal Inspection Requirements.

I for one don't really care where the tomatoes in the store come from as they all taste like crap anyway. I dislike that the varieties have forsaken taste for how it looks on the shelf.

I grow certified organic tomatoes.... you guys should try growing them. 8.00/box is a break even price. The box costs 1.00. Do you want to grow out seedlings, transplant after laying plastic and drip, fertilize, stake, tie, and then pick and pack 25 pounds for 7.00.... I think not. I can't find workers here and if I do they want 12/hour. The competition is totally unfair considering most of these Mexican farm workers get 50.00 a week or less. Oh yeah and the 2 to 5 million in product liability insurance ain't cheap either. Thankfully I can get 3.50/pound for delicious heirloom certified organic tomatoes for our customers who would not touch Mexican produce with a ten foot pole. Those florida growers are not getting rich I assure you. Florida has the worst soil in the nation for growing tomatoes and they are more or less hydroponic grown in pure sand. The fertilizer costs alone are astronomical. Walk a mile in our shoes before you criticize us.

- How many customers are we talking about buying O heirloom tomatos for $3.50 vs the real consumer demand with real tomato prices?

Organic Heirloom are being grown in Mexico & Canada as well, just the same as in NC; same or similar varieties and we, the buying consumers we all share the same needs, eating, going to the bathroom and enjoying a good night's sleep.

The only reason Heirlooms have a $3.50/lbs price is due to lack of supply, which will eventually change.

- Retailer's as part of their strategy go farm direct.

Those retailers practicing this, can pass along those savings to the end consumer, some of them don't because some other department are lagging and the overall picture needs as much milk as possible from those cows that squirt out the most profit to cover losses for the other sectors.

Retailers can but won't adjust because they don't need to yet.

Let's entertain that these growers do get what they intend, help from the government due to their lack of business savvy which leads to incompetence in a free market place. And they lessen the volume of imported tomatos from Mexico.

How long will it take before Honduras, Guatemala, Belize, El Salvador, Nicaragua, Panama, Cuba, Costa Rica, Dominican Republic get heavy into the game? What then? Maybe we should take away their capacity to supply as well? Not happening.

Why? because without the end consumer's needs in mind, we become obsolete, and that is not going to happen.

This is not Mogadishu where the food lords will do away with their wishes and set up their own pricing and squash anybody they want, no sir.

Never, ever forget who pays for your salary, the end consumer, that's who we all work for.

"Never, ever forget who pays for your salary, the end consumer, that's who we all work for.:

Justifying "end consumer" protectionism is tired excuse for poor trading partners and practices. Consumers are like kids, they get what we give them. Do you think the average individual consumer would import a tomato (or any produce item) on their own, if they couldn't get one from their neighborhood grocer? No. Business made that decision for them for business reasons.

Extremely uneducated in all of this, consumers are trusting that "the parents" [read government and retailers] are overseeing their well being and the produce they are eating have passed reasonable tests of care and responsibility.

In addition, the "industry" (and Fernando's) assumption being made is that consumer priority is always driving toward the lowest prices possible at all costs.

Why?

The sustainability of agriculture anywhere should be built upon United States leadership in policy that takes into account the true costs of doing business, the inherent conflict of interest of our trading partners to develop their own domestic industries and and the pragmatic understanding of what real day to day "enforcement" will mean.

This tomato situation is another proof point that we continue to justify unsustainable trade relationships on old arguments of defending consumers who are increasingly becoming more educated on what a mess we're in.

Retailers need to start meaningfully displaying red, white and blue on everything they can and let consumers begin voting with their dollars. Give this 16 years and lets see where things stand.

John you hit it dead on the heas

John you hit it dead on the head

Buy from Heirlooms from Jake

From what I understand some may have gotten lost in translation as English is my second language.

Protectionism is what has been practiced throughout history with tomatoes, as their origin changed from a fruit to a vegetable, in order to apply a 10% tarif in 1893.(1)

You are trying to suggest that consumers lack capacity to make their own decision? As implying that we have a false sense of reality and choosing may only be an illusion?

Your assumptions may hold water for gasoline, toothpaste, or watching the news and I do agree, shame on us for not acting, as we now have the tools.

But in the fresh food sector we do have a choice, as our salaries are not those of moguls which can choose a Netherlands air flown bell pepper over a Honduran, Canadian, Mexican or USA one, which under a blind taste will taste the same as we get the varieties from the same suppliers.

What happened to that perception of a firm US Leadership in policy in the auto, electronic, & clothing industry? It had to change to other countries in order to balance the income of the masses with that of their needs. (read: end consumer & perception adjustment needed)

What did the USA government do to protect the 'made in the USA' businesses that are now being made in other countries? Did it impose prohibitive tariffs for those parts to come in and NOT compete with 'made in the USA'? No, it protected the interests of the masses (read end consumer)

Give this 16 years and Mexico, should be the least of your worries, when China, the world's largest tomato producer reaches these shores, we will need to learn mandarin or do a remake of 'Gone with the wind'.

desaracho25atgmail.com

Ref:
(1) http://www.tomatogardeningguru.com/history.htm

Florida's tomato industry is doomed to follow in the footsteps of Hawaii's Pineapple Growers because: Your costs are too high to compete, all the way down the line: Land, Water, Taxes, Labor (both in the field and packing) are all real disadvantages and thatś not Mexico's fault. To that, add Uncertain Weather Conditions and you've got a problem that can't be resolved by making false claims about Mexico's intentions or commercial policies. On the other hand, Mexico still has a fruit fly problem and Florida doesn't. So what I suggest is, forget about growing tomatoes and stick to crops (like citrus - except limes) that you can grow competitively.

He's has one and he's doing it.

The price fixing's not the problem. That was a condition imposed by the FL tomato industry in exchange for dropping Florida's trumped up charges of dumping - selling for less than the cost of production. (Floridas's cost, maybe - but not Mexico's, and that's not Mexico's fault - it's the reality). And Florida will do it again I suspect, to eliminate the competition and then gouge the consumers.

A common denominator and good point brought forth by John is being avoided in these
comments, FOOD SECURITY! Do we want another country controlling our food supply?
When we are hungry and have to beg Mexican producers for food I believe U.S. farmers
will get more respect.
Jack, the comment about spraying pregnant women with chemicals to harvest the crop is
absurd. Florida farmers are socially accountable for all their actions. Sometimes you have
to look at the employee's responsibility, if the women are pregnant and decide to hide it,
how can the farmer reassign them to a different task after the REI expires. It's a known
Agriculture is a dangerous industry, speak up thats what their asking for, we can make a
safer work place if we all work together.

Wrong Bob...AgMart got tagged doing it. I'll stack a USDA inspected greenhouse grown hydroponic vine tomato from Mexico...against a pesticide/carcinogenic sprayed gassed green any day. PS people, pick up a copy of the book Tomatoland...and you'll see just how socially responsible the Florida Tomato Mafia really is....

Well Jack; Once again our discussion avoids the topic of FOOD SECURITY! Do you want another country controlling our Army? Thats the sure way to do it, leave our food supply in their hands so we have to beg.

FYI: "TomatoLand" is a biased book written based on the stories of disgruntled workers, every industry has them

Bob...a total non issue. Our Army? Really a stretch. Florida tomato growers can't beat Mexico with quality of product, cleanliness, cost-effectiveness, or food safety so you try to manufacture an issue.
FYI...TomatoLand. I'd think you'd be disgruntled too if you were unsafely exposed to carcinogens with the result being birth defects in your family, while you were prevented from organizing or even being paid a living wage. Yeah, Florida growers are such humanitarians, the workers had to bypass them and beg national chains for a penny a pound surcharge to earn something above slave wages...meanwhile the "poor" Florida growers buy produce businesses throughout the US. Sorry, no more Tomato Cartel lies. It's all about monopoly and greed.....and when your old rationale is exposed as false, you try and manufacture new "fears".