A retaliatory tariff slapped on California table grapes by the Mexican government has taken its toll on the state’s exports.
In 2008, Mexico was the state’s second-largest market for table grape exports, accounting for 5.6 million 19-pound boxes, said Jim Howard, vice president of the Fresno-based California Table Grape Commission. In 2009, it dropped to fifth place with 1.7 million cartons.
At issue is a pilot program that allowed trucks carrying products from Mexico to travel throughout the U.S., no longer confined to limited trade zones near the border crossings.
Congress failed to continue funding for the program in 2009, largely because of pressure from the Teamsters union, which claimed that Mexican trucks were unsafe.
Studies reportedly showed, however, that trucks from Mexico were at least as safe as U.S. trucks, and Mexico said banning that country’s vehicles was a violation of the North American Free Trade Agreement.
Grapes, subject to a 45% tariff, were among several dozen produce commodities and other items that carried hefty tariffs.
Rumors have persisted for months that the two countries were on the verge of resolving the issue, but as of mid-June, no new developments were reported.
If there was any good news, it’s that most of California’s exports to Mexico take place later in the season — from late August until early November — said Barry Bedwell, president of the Fresno-based California Grape & Tree Fruit League.
“We still have some time to resolve it” before this year’s export program gets under way, he said in June.
Table grape grower-shippers were not pleased.
“With the size of the tariff, it had an impact on Sun World and a lot of other people,” said Rick Paul, grapes category director for Sun World International LLC, Bakersfield, Calif.
Mexico is a major export market for Sun World, he said, and though he was hopeful that the issue would be resolved before export season starts, the company was not counting on it.
“We’re moving forward under the assumption that (the tariff) will not lifted,” he said. “If it’s lifted, we have time to change our plans.”
The U.S. was wrong in banning trucks from Mexico, said Nick Dulcich, an owner and director of sales for Jakov P. Dulcich & Sons, Delano, Calif.
“We’re breaking NAFTA,” he said.
The company had to find buyers for 100,000 boxes of grapes worth $2 million that it would have shipped to Mexico last year, he said.
Even companies that don’t ship much product to Mexico are affected, he said, because grapes not shipped to Mexico may be marketed in the U.S., increasing volume and cutting into prices.