Deal may push Mexican tomato prices higher

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

Importers project higher prices and reduced volumes by early March, the expected effective date of a new suspension agreement between Mexican tomato growers and the U.S. Commerce Department.

The Commerce Department announced the plan on Feb. 2. The agreement sets different floor prices for Mexican fresh tomatoes during the summer and winter and also specifies prices for open field/adapted-environment and controlled-environment production.

The proposal raises minimum prices substantially, in some cases more than double the current floor price for certain products.

U.S. growers had been 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.

There are no winners with the new suspension agreement, said Jaime Chamberlain, president of J-C Distributing Inc., Nogales, Ariz.

“I think the American consumer, whether at the retail or foodservice level, will end up paying the price,” Chamberlain said.

He said the market price for Mexican tomatoes will increase and volume will decline when the new prices become effective. The Commerce Department said the prices should be in place by March 4, following a monthlong comment period.

“If you are a repacker, you will see an immediate increase in price,” Chamberlain said.

Prices will be passed down the supply chain to consumers, he said.

The agreement raises the winter period (Oct. 23 through June 30) reference price for open field/adapted environment tomatoes from current levels of 21.69 cents per pound to 31 cents per pound. For a 25-pound carton of Mexican tomatoes, that would raise the price from $5.42 per carton to $7.75 per carton.

For the summer period, from July 1 to Oct. 22, the reference price for open field/adapted environment tomatoes from Mexico was raised from the current level of 17.2 cents per pound to 24.58 cents per pound. That translates into an increase from $4.30 per 25-pound carton in the current agreement to $6.15 per carton in the new deal.

Where as previous suspension agreement had only one reference price for summer tomatoes and another for winter tomatoes, the new suspension agreement also creates new categories for controlled environment and specialty tomato varieties.

Controlled environment tomatoes, other than the specialty varieties, now have a reference price of 32.51 cents per pound in the summer and 41 cents per pound in the winter. That would translate to $8.13 per 25-pound carton in the summer $10.25 per 25-pound carton in the winter.


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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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