Florida, FPAA exchange salvos in tomato dispute

01/24/2013 06:45:00 PM
Tom Karst

With negotiations between Mexican tomato growers and the U.S. Commerce Department ongoing and apparently seeing some progress, the rhetoric about the consequences of dropping a regulated price floor on imported tomatoes shows no signs of letting up.

Consumers could face sharply higher prices and reduced supplies if the U.S. government terminates a price agreement with Mexican tomato growers and then imposes antidumping duties, according to a new pricing study funded by Mexican tomato interests.

In September, in response to requests from the Florida tomato industry, the Commerce Department announced a tentative plan to terminate a minimum price suspension agreement with Mexican tomato growers that has been in place since 1996.

Since then, a variety of U.S. business, retail and food-producing organizations, including Wal-Mart Stores, National Restaurant Association and Food Marketing Institute, expressed support for retaining the U.S.-Mexico tomato trade pact. The Commerce Department has yet to take final action on terminating the suspension agreement but could do so by spring.

Study shows threat

Adding to the threat of a trade war is a new economic analysis from the Nielsen Perishables Group, paid for by Nogales, Ariz.-based Fresh Produce Association of the Americas, which represents importers of Mexican produce.

The study — at http://savemytomato.com — presents a sobering scenario based on the total or partial withdrawal of Mexican tomatoes from the U.S. market.

The study also looks at the potential market effect if U.S. tomatoes were removed from the market by a weather event at the same time Mexico was excluded.

The study is based, in part, on what happened in a wake of a February 2011 freeze, which greatly reduced Mexican tomato production.

“We found that if Mexican imports are excluded from the U.S. market, retail prices during the December-May timeframe can be expected to rise by 97.9% for hothouse round, 96.9% for hothouse vine, 61.3% for grape tomatoes, 217.2% for roma, and 52.1% for field tomatoes,” Tim Richards, Morrison Chair professor of Agribusiness at Arizona State University, wrote in the report.

A teleconference about the new research Jan. 24 featured several speakers supporting the current tomato agreement, including Lance Jungmeyer, president of the FPAA; Rick Van Schoick, director of the North American Center for Transborder Studies at Arizona State University; Patrick Kilbride, senior director of the Americas for the U.S. Chamber of Commerce; and Jaime Chamberlain, president of JC-Distributing, Nogales.

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Reggie Brown says he wants free trade and that he can’t imagine a scenario where Mexican tomatoes would be excluded from the U.S. But in his own press release from June 25, 2012, Brown says “The suspension agreement isn't working, and needs to be terminated. The facts have changed and the current agreement is unfair to U.S. growers and their workers. It's time to abandon the agreement which limits our ability to ensure fair trade in tomatoes and give us a chance to compete. The existing agreement ties our hands behind our backs while a flood of unfairly priced tomatoes swamps our market. The Obama Administration should do what every previous Administration has done in similar circumstance by quickly terminating the suspended investigation and suspension agreement. That will allow for the facts to drive the result should the industry file a new petition and for fair trade to work.”

Brown has telegraphed Florida’s intentions, which is to file a new anti-dumping petition, and the practical impact is that it will deter Mexicans from growing tomatoes and selling them into the United States. The preliminary anti-dumping duties from 1996 were arrived at unfairly, and Mexico should have fought them. The duties were frightening enough that Mexico entered into the suspension agreement, because the duties would have caused such extreme cash-flow issues that only those with very deep pockets could continue in business. So while Reggie Brown says Mexican tomatoes would not be excluded by Commerce, as a practical matter they would be. This is protectionist football at its finest, and Reggie Brown is quite the play-caller. Unfortunately not too many people can see past his charade.