Analysis: higher tomato prices if Commerce drops agreement
Consumer prices for some tomato varieties from Mexico could initially rise 40% in the U.S. when domestic supplies are low, according to an analysis on possible effect of duties on imported tomatoes when the Tomato Suspension Agreement is dropped in early May.
According to the Arizona State University analysis, commissioned by the Fresh Produce Association of the Americas, which represents imported Mexican produce, prices could initially rise 40% through the end of the year. The university used retail data from Neilsen.
“This makes no sense,” Lance Jungmeyer, president of the FPAA, Nogales, Ariz., said in a news release. “Most Americans crave certain kinds of vine-ripened tomatoes, and now they are going to have to pay more, significantly more.”
Concerns from seasonal U.S. tomato growers in Florida and other states led the Department of Commerce to announce it would drop the suspension agreement on May 7, which would allow an anti-dumping investigation to restart.
Duties on imported Mexican tomatoes would reduce supplies in the U.S. and lead to higher consumer prices, according to the analysis, led by Timothy Richards, Morrison Chair of Agribusiness at Arizona State University. The analysis focused on several market scenarios involving tomatoes-on-the vine, field/beefsteak, roma and vine-ripened tomatoes, according to the release.
“In general, tariffs levied on imports of fresh produce from Mexico are borne disproportionately by U.S. consumers,” Richards said in the FPAA release. “In this analysis, we show that retail tomato prices in the U.S. may rise by an average of approximately 40% if tariffs remove a substantial proportion of the Mexican supply during the critical winter-tomato supply period.”
If duties are imposed and an event causes U.S. tomato production to dip lower, such as weather or labor supply issues, some prices could rise up to 85%, according to the analysis.
“The unmistakable conclusion of the study is that withdrawing from the Tomato Suspension Agreement will cost American consumers substantially more for a product that has become a major part of their daily diets,” Jungmeyer said in the release. “Americans can’t afford this kind of sticker shock.”
For a copy of the economic analysis, contact Erika Dominguez at Erika@freshfrommexico.com, or 520-287-2707.
Letter to Commerce
Members of the Arizona Legislature’s House Committee on State and International Affairs recently sent a letter to Commerce Secretary Wilbur Ross on the issue at the request of the FPAA. The letter asks the Commerce Department to renegotiate the agreement.
FPAA Tomato Division Chairman Jimmy Munguia and Garrick Taylor from the Border Trade Alliance recently testified to Arizona lawmakers on the effects of the loss of the suspension agreement and implementation of duties.
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