The verdict is out on how a new tomato suspension agreement between the U.S. and Mexico will affect the Mexican greenhouse tomato industry.
Fears about how the suspension agreement could affect tomato markets down the road could influence greenhouse acreage in Mexico this season, said Joe Bernardi, president of Nogales, Ariz.-based brokerage Bernardi & Associates Inc.
“I think you’ll see fewer tomatoes and more vegetables being grown,” he said. “Some growers are concerned about it.”
As of the beginning of the Mexican greenhouse deal this year, however, demand has been too strong for the suspension agreement to have an impact, Bernardi said.
“The prices have been well above the minimum the whole summer,” he said. “We haven’t seen any negative effects yet. We won’t know the real effects until we go through a whole season.”
The industry could actually see some benefits of the suspension agreement if it causes growers to think more carefully about expanding acreage, Bernardi said.
The protected-ag vegetable industry continues to grow, said Alberto Maldonado, general manager of Nogales-based Apache Produce Co., but 2013-14 could see a hiccup in that growth because of uncertainty about the suspension agreement.
“Everybody’s a little confused with what’s going on with the agreement,” he said. “It involves high minimums for all tomatoes, which is sometimes hard to get.”
Growers may not want to make the same investments in protected ag if they’re not sure they can even sell their product in the U.S., Maldonado said.
If all involved parties commit to making the suspension agreement work, it could be a boon to the industry, said Jim DiMenna, president of Leamington, Ontario-based JemD Farms.
“It’s on everybody’s minds,” he said. “In the bigger category, it could add some stability to the category.”
Finding the balance between free trade and an orderly marketing environment is crucial.
“We want a free border, but responsibility is the key,” DiMenna said. “We want to make sure it’s a price that’s competitive. If everybody cooperates, we’ll all benefit, hopefully.”
Aaron Quon, greenhouse and vegetable category director for Vancouver, British Columbia-based The Oppenheimer Group, also said he thinks the agreement could be a boon for the industry.
“It’s too soon to tell, but we do anticipate that the outcome should be positive for both domestic and Mexican growers in terms of returns.”