Time to take a fair look at the tomato trade - The Packer

Time to take a fair look at the tomato trade

11/05/2012 01:42:00 PM
Reggie Brown

Reggie BrownReggie Brown Florida Tomato ExchangeIn recent weeks, media outlets have been overrun with news of the dispute between Mexico and the existing antidumping suspension agreement between the U.S. Department of Commerce and Mexican tomato exporters.

The majority of this coverage has not been factual, and it’s time to set the record straight.

The beginning

In 1996, American tomato growers brought a dumping case against the Mexican industry.

Our government found preliminary dumping margins ranging up to 177% and material injury.

Mexican growers then entered into an agreement not to export tomatoes for less than the negotiated reference price. Enforcement has failed. Domestic producers have worked with the Department of Commerce for the past 16 years to identify and solve the problems, yet the agreement has increasingly failed to meet the minimum statutory requirements for fair terms of competition.

Present day

In submissions made over the past four months, domestic tomato producers who account for more than 90% of domestic production have sought to terminate the suspended investigation and suspension agreement in an effort to have fair trade conditions restored.

Why? Because a lot has changed in the past 16 years: Our economy and the Mexican economy have changed drastically. Inflation in Mexico has risen by almost 250%. Growing methods have evolved.

Greenhouse production, in particular, evolved from a boutique product to one now representing roughly 40% of Mexico’s exports.

Yet the reference price — intended to eliminate at least 85% of dumping margins — neither reflects the changing cost structure in Mexico’s field production, the difference in types of tomatoes or higher costs of production from different production methods, such as greenhouse growing.

In the past 16 years, imports from Mexico have grown rapidly, while domestic production continues to shrink. Domestic producers are losing vast sums and a number of producers are closing shop.

As a result, tens of thousands of U.S. jobs are at risk.

The Mexican government put out a study of greenhouse production costs in 2007 showing that their producers who export had costs as much as 400% higher than the summer reference price in place — meaning the reference price in place is as little as 21% of the cost of production of greenhouse tomatoes in Mexico.

This situation is unsustainable and impossible to compete against.

The future of domestic tomatoes

The current agreement is outdated, doesn’t meet the requirements of U.S. law, doesn’t provide the relief that U.S. producers are entitled to under the law and has proven unenforceable.

When domestic producers filed the petition on June 22, they had every reason to expect that Commerce would agree to withdrawal, and do so quickly, as has been the precedent.

This is the first time where foreign producers have fought to keep a U.S. trade remedy in place. That tells the real story.

The current situation favors Mexican growers and protects the windfall profits they’ve been reaping.

Mexican growers are pursuing scare and bullying tactics. They’ve threatened retaliation against customers and producers of products not involved in the case.

These threats, if carried out, are simply illegal.

Mexican special interests have also suggested that domestic producers are trying to eliminate their product from the marketplace to eliminate competition. This accusation is totally false.

Terminating the suspension agreement and suspended investigation simply eliminates any existing government oversight of imports. No restrictions on trade will result.

Domestic growers are entitled to free and fair trade — and that’s all they want.

It’s time to end the charade, assess the facts and level the playing field. That is the only chance we have to salvage our domestic tomato market and save the tens of thousands of jobs nationwide that are currently at risk.

Reggie Brown is the executive vice president of the Maitland-based Florida Tomato Exchange.



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jack    
Texas  |  November, 06, 2012 at 06:41 AM

We are so touched by the Florida Tomato Cartel's deep concern for their worker's. Six decades of exploitation have certainly illustrated that. Oh..bullies....The Five Families of the tomato Mafia, so masterfully represented by Mr. Brown, are indeed the trend-setters for bullying. More falsehoods from Florida.....

Gary    
Cincinnati  |  November, 06, 2012 at 09:32 AM

If the five families of the tomato Mafia, as Jack puts it, has their way, they will still be growing only mature green tomatoes for the next 50 years and blaming other producers for their problems - price, market share, flavor. One day the fast food merchants are going to say "one year and you have to have a vine ripe tomato". Then what. Mr. Brown?

MM    
AZ  |  November, 06, 2012 at 11:59 AM

Tens of thousands of jobs nationwide are at risk if the agreement is cancelled... I don't know where these jobs Reggie references are coming from, but I believe that figure to be false and misleading. Regarding the "threats" that are being made, they are not threats at all. The comments Mr. Brown is referencing actually didnt come from the producers at all. And to his comment about the legality of the situation, Mexico has won a dumping case against US producers of other goods and NO DUTIES WERE IMPOSED, though the reserve the right to do so at any time. Dear Mr. Brown, enough with your shenanigans, falsities, lies and propaganda. If you want to talk about the facts, please keep it to the facts. The day that Florida growers agree to NEVER SELL A SINGLE BOX below their costs of production, we'll talk.

Lance Jungmeyer    
Nogales, AZ  |  November, 27, 2012 at 04:23 PM

Reggie Brown uses misleading information and faulty mathematics in this piece. He asserts that the current reference price under the tomato agreement is only 21% of the cost of production in Mexico. To arrive at this number, he references a 2007 Mexican government study that looked at marginal producers of 0.1-5 hectares. It is misleading to assert that small projects such as this have the same cost structure as larger commercial operations. In Sinaloa, for instance, there are numerous greenhouse operations of 100 hectares or larger. But his faulty math is most misleading, and embarrassingly so. In a filing with the Department of Commerce, Mr. Brown’s group references this same study, but instead inflates the size of the operations to 20 hectares to 50 hectares. Furthermore, Mr. Brown’s group overstated the company sizes of these farms by 1000%, by incorrectly converting square meters to hectares. In reality, 10,000 square meters equals 1 hectare. Mr. Brown’s group relied on a conversion factor wherein 1,000 square meters equals 1 hectare. Faulty mathematics aside, the notion that an entire industry of thousands of Mexican tomato producers could collude to sell at only 21% of their costs for a long period of time stretches the imagination. The fact is, Mexican tomato producers have evolved and become more productive. The seed varieties typically grown in Mexican produce fruit sets that allow the plant to be harvested vine-ripe about every other day for up a period of 15-20 weeks. By contrast, a typical pole-grown Florida tomato is picked only 2-3 times. Mr. Brown has said his eventual plan is to seek relief under U.S. trade law. But one must ask, why should the Federal government reward an uncompetitive industry?

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