Deal may push Mexican tomato prices higher - The Packer

Deal may push Mexican tomato prices higher

02/11/2013 09:05:00 AM
Tom Karst

Specialty tomatoes - grape, cherry, heirloom and cocktail varieties - have reference prices from 35.68 cents to 46.79 cents per pound in the summer and 45 cents to 59 cents per pound in the winter, depending on pack. That would translate to a reference price for loose specialty tomatoes in 20 pound cartons at $7.14 per carton in the summer and $9 per carton in the winter.

Regardless of the size of the price increases, some in the industry said a trade war sparked by a new anti-dumping investigation would be damaging to parties on both sides of the issue.

“In the big picture, I think everybody in the industry would acknowledge that we are glad it has come to a resolution,” said Bruce Peterson, president of Peterson Insights Inc., Bentonville, Ark.

The higher tomato prices from Mexico may hurt smaller buyers more than larger buyers, he said.

The biggest retail and foodservice buyers can easier plug higher prices into their cost formulas. Small buyers depend on lower prices to create margins, Peterson said.

It is disappointing to see the industry spending time and money on the tomato dispute rather than trying to increase consumption of fresh produce, said Joe Comito, chairman of the board for Norwalk, Iowa-based Capital City Fruit Co. Inc. Comito referred to the avocado industry as an example of what should be done instead, with growers from Mexico, California and Chile driving avocado consumption higher with combined promotion efforts.

Consumer reaction to the agreement could be negative, Comito said.

“When this goes into effect, all they need is for the press to pick it up and say tomatoes have increased in price by this certain percentage because of this suspension agreement and consumers will quit buying because the perception is that they are too high,” he said.

Wayne Passoff, owner of tomato repacker Wayne’s World, Chicago, said he didn’t think the government needed to inject itself in the market.

“Let the farmer be the farmer, and let demand and supply direct the price anywhere in the world,” he said.

One concern about the agreement is how pricing of tomatoes will change, said Gary Myracle, executive director of produce field procurement for Associated Wholesale Grocers, Kansas City, Kan. Currently, Myracle said most of AWG’s seven divisions buy Mexican tomatoes.



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Garland    
Chino Hills, CA  |  February, 12, 2013 at 11:45 AM

I agree with Joe Comito's analogy to the avocado industry. We, as an industry, should be banning together much more in order to promote increasing produce consumption. Until we get consumers out of the middle aisles and into the produce department, buying more fruit and vegetables, these types of debates seem to be forgetting the "Big Picture." Can everyone not come to an agreement that will benefit the farmers as well as consumers?

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