Mexico's tariffs hold on; U.S. producers react

06/26/2009 02:35:00 PM
Ashley Bentley

Tariffs enacted by Mexico in March cut the U.S. pear exports by a third and threaten to do the same or worse as other fresh produce crops approach export seasons.

“It probably delayed us another two weeks because it pushed fruit back onto the domestic market because it’s not selling in Mexico,” said Jeff Correa, international marketing director for Pear Bureau Northwest, Milwaukie, Ore.

Pears were hit with a 20% tariff March 19, and six other produce items have tariffs ranging from 10% to 45%.

At the time, pears were the only item dealing with the higher cost of doing business with Mexico.

The Northwest usually wraps up pear shipments to Mexico by the first week of July.

This year, shipments to Mexico have been down 50% and sometimes more, Correa said, because of the tariffs, a stronger dollar and the lagging economy.

The second half of May, the Northwest shipped 60,000 boxes to Mexico, compared with 135,000 the year before.

California should take over with pears in about three weeks, Correa said.

The Northwest may still be shipping.

Mexico reinstated the pre-North American Free Trade Agreement tariffs in direct retaliation to Congress’ move to stop funding the Department of Transportation’s Cross Border Trucking Pilot Program.

In response to the tariffs, President Obama ordered the Department of Transportation, the Office of the U.S. Trade Representative and the State Department to come up with a new plan that would appease Mexico and also address safety concerns of Congress.

The department is the lead agency in developing the new proposal.

Ray LaHood, secretary of the Department of Transportation, addressed the issue May 21 at the National Press Club and said the White House was vetting a proposal.

“I hope once we have a chance to share that information with Congress, that we can have the Mexican truck program reinstated,” LaHood said at the time.

LaHood also said he thought there would be a chance this summer to resolve the issue in a way that reflects what Congress wanted, which revolves almost exclusively around safety.

“Secretary LaHood testified before Patty Murray’s transportation subcommittee last week,” said a representative of the department June 25. “He says that people are looking over a final proposal, and he promises to go up to the Hill soon.”

A resolution early this summer would spare table grapes — which have the highest tariff at 45% — and onions, but there is skepticism in the industry that anything will be done soon.

“That alternative is being vetted with impacted agencies, but we don’t know anything of this proposal or if it’s being funded and, if so, where the funding is coming from,” said Barry Bedwell, president of the California Grape & Tree Fruit League, Fresno.

Produce industry associations, as well as private companies and producers, have sent letters to Congress and met with representatives from their states since March to get their point across.

Bedwell was in Washington, D.C., the week of June 15 for that purpose.

“I’ve had nine meetings today with congressional representatives to really articulate our growing concern over our lack of progress on this issue,” Bedwell said June 17. “We found a lot of sympathy and understanding, but in terms of a real solution in getting the tariff revoked, we can’t say that’s getting discussed in any detail.”

The No. 2 market for California table grapes is Mexico, and the state shipped 5.5 million boxes last year.

The export season should start in August, and ramp up by October.

“We stick out like a sore thumb,” Bedwell said. “We estimate, at minimum, our shipments would be down 75%, and I can’t imagine any significant amount being shipped to Mexico.”

The apricot export season just wrapped up, and Bedwell said California shipped only 14,000 boxes to Mexico this year, compared with 64,000 last year.

That’s with a 20% tariff, as well as a smaller crop and stronger domestic marketing.

Correa said some industry groups are considering banding together and hiring a public relations representative to help keep the issue in consumer media.

U.S. onion exporters are also awaiting their export season.

Wayne Mininger, executive vice president of the Greeley, Colo.-based National Onion Association, said he hopes the strong relationships the U.S. and Mexico have in onion trading will serve as an advantage.

“Mexico grows and sells a lot of onions to the U.S., so there are significant market operations in place,” Mininger said. “We hope to bank on those relationships to an extent and see onions move to Mexico over the summer and into the fall when the larger amount goes that way.”



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