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.

Comments (29) Leave a comment 

This comment has been deleted.

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."

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

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

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.

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!

Is that the way you conduct business Daniel?

Sounds about right for all of you from Nogales!

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

In such a perfect world!

Juan, no such as a free lunch.

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.

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

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

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.

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.

Well articulated and should be embraced by all parties!

Thanks,

Robert

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.

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.

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

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.

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

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.

We no longer have "free markets". Since Obama, now we have "fair markets".

Socialism one step at a time.

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.

why was this comment deleted?

to much heat in the Nogales kitchen?

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?

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.

Your right on the money Dale.

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.