Mexican growers propose higher tomato floor prices

10/19/2012 02:57:00 PM
Coral Beach

tomatoesA compromise proposal from Mexican growers to raise the floor price of tomatoes exported to the U.S. is being heralded by some as the best thing for bilateral trade and a positive outcome for consumers and domestic growers.

Representatives for Mexican growers met with Commerce Department officials Oct. 18 and proposed boosting the floor price of imported Mexican tomatoes 18%-25%, depending on tomato variety. They also propose to include all Mexican growers in the 16-year-old trade agreement, which currently covers about 85% of them.

Martin Ley, vice president of Nogales, Ariz.-based Del Campo Supreme Inc., was among the delegation meeting with U.S. officials. He told the New York Times after the meeting that the proposal would prevent prices from “hitting the floor.”

Reggie BrownBrownReggie Brown, executive director of the Florida Tomato Exchange, said Oct. 19 that he didn’t know anything first-hand about the proposal, although he’d seen media reports. However, he said Florida growers believe the trade agreement was fundamentally flawed from the beginning.

“It’s basically a license to dump,” Brown said. “It’s not about free trade, it’s about managed trade and it is managed in favor of the Mexican growers.

“We have no intention of engaging in a negotiative process in the press. We want to restore fair competition in the tomato trade.”

Currently the floor price for Mexican tomatoes coming to the U.S. is about 21 cents per pound from Oct. 23 through June 30 each year. Summer tomatoes from Mexico have a floor price of about 17 cents per pound from July 1 through Oct. 22.

The proposal from the Mexican growers would hike the floor price to more than 25 cents per pound for field tomatoes and 27 cents per pound for greenhouse tomatoes.

Lance JungmeyerJungmeyer“This increase is 6 to 8 times higher than previous increases under the agreement. Previous increases have been around 3%,” said Lance Jungmeyer, president of the Fresh Produce Association of the Americas, Nogales, Ariz.

Jungmeyer said he believes Mexican proposal makes sense from all perspectives.

“This is the best thing for bilateral trade and U.S.-Mexico relations overall,” Jungmeyer said Oct. 19.

“Consumers will not be impacted at the supermarket level or in restaurants,” he said. “This is because Mexican tomatoes are always sold above the reference, or floor, price. By increasing the floor price, the proposal increases the level of protection for the domestic U.S. industry and helps ensure supplies from a broad range of growing regions.”

The protection for U.S. growers included in the Mexican proposal has a strong enforcement mechanism, Jungmeyer said, because it would cover 100% of Mexican growers instead of only 85% of them.

“There will be enforcement activities on both sides of the border to ensure compliance,” Jungmeyer said.

The Florida growers’ challenge of the tomato agreement spurred talk of a trade war, with some U.S. produce exporters fearful of Mexican retaliatory tariffs similar to those imposed when the U.S. failed to meet cross-border trucking provisions of the North American Free Trade Agreement.

After the Commerce Department announced a preliminary decision to end the tomato trade agreement on Sept. 27, Mexico’s ambassador to the U.S., Arturo Sarukhan, referenced the retaliatory tariffs that were up to 45% on some products.

“Mexico will respond: you should ask those who were in the Mexican crosshairs over the trucking dispute. When Mexico aims, Mexico hits the target,” Sarukhan said in an e-mail to U.S. media.

The Commerce Department has until May 2013 to reach a final decision on the request from the Florida growers.



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Max    
Immokalee  |  October, 22, 2012 at 09:10 AM

The "floor price" that Mexico exports at, needs to be at of very near the "market price" that Florida producers are receiving daily during the season. This means more money for Mexican producers and a "FAIR DEAL" for Florida producers. There can be NO other WAY!

Bobby    
Bradenton,FL  |  October, 22, 2012 at 09:38 AM

No "Floor Price" is going to work unless Commerce has the manpower and "knowledge" to police it. This is by no means a "Win" for US Tomato Growers because there has been no accountabilty since the agrrement was inked 16-years ago.

MM    
AZ  |  October, 22, 2012 at 09:50 AM

@Max - I understand what you are saying, and on the one hand it makes sense that the "minimum" price should be what the Florida producers are receiving on a daily basis. This is what occurs in a completely free market economy with one exeption. The problem is that with an extremely perishable product, people are willing to (and must) sell at below cost from time to time to avoid a complete loss on the product. You know it, I know, the dumping laws do not account for it. I would love for any Florida tomato grower to tell me that they themselves have not sold product at a price below the CURRENT minimum price, much less the proposed new reference price. Do you honestly think a single Florida grower would be amenable to THAT agreement? of course not. @Bobby - No accountability? How many times has anyone filed a formal complaint claiming a breach of the agreement? Not once. People can whine and complain and moan all they want but unless something is ever actually proven to have happened, anecdotal evidence is worthless.

Will    
Dallas, TX  |  October, 22, 2012 at 10:57 AM

'FAIR TRADE" VS "FREE TRADE" Middle class is hurting 23 million people+ are out of work or stopped looking We cannot afford to ship our jobs over seas this is a microcosism of our underlining economic problems best served if you read a copy "The Betrayal of the American Dream" by Donald Bartlett Amazon '

Organicfarmer    
Western North Carolina  |  October, 29, 2012 at 07:34 PM

What we need is an extra added to equal the diffence the farmer pays in labor. established yearly on the previous years averages. I wish I had labor as cheap as they do. It seems to me the Mexicans, along with the rest of Central America, will become our growers... we can either let them do it here where we can watch them and they have to pay the same overhead on payroll and equal wages, or else it is giving up growing vegetables anywhere in the US.

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