In a recent installment of the Indoor Ag Conversations webinar series, “Planting Policy: Growing U.S. Government Support for CEA,” industry leaders gathered to discuss the intersection of policy and controlled environment agriculture.
NatureSweet Chief Legal Officer Skip Hulett highlighted the potential repercussions of terminating the 2019 Tomato Suspension Agreement between the U.S. and Mexico.
“I would almost say we’re fighting for our existence,” Hulett said.
Webinar host Tom Stenzel, executive director of CEA Alliance, commented that the North American market and tomatoes are interdependent on each other in this agreement between Mexican growers and the Department of Commerce.
He also mentioned on allegations of tomato dumping in the 1990s, with reviews involving five companies.
“The duties that are in place to go into effect in July are based on the information from those companies back in the ‘90s — four of which don’t even exist anymore, and the only one that still exists only had like a 2% duty rate to prevent injury,” Hulett said. “But the all-others rate, which is the average of all the other companies that don’t exist, we’re all stuck with what, right now, is between 17[%] to 20%.”
The Commerce Department’s move to potentially terminate the countries’ agreement, which is suspending the antidumping duties, would trigger the duties — and it only applies to Mexico-grown tomatoes, Hulett said.
“In many ways, this is much worse than a normal tariff, because at least you know what you’re dealing with with a normal tariff,” he said.
“These bring so much uncertainty to the U.S. tomato industry and all of our supply chains, based on the way we’ve been doing things for the last three decades. All of that’s at stake,” Hulett added.
Next July, three or four companies will be investigated to determine a new all-others rate, Hulett said.
“And the likelihood is high that they will find — because if you understand how dumping works; I call it magic math — but they will find it, and you may end up with a 30% all-others rate even though you were not even investigated,” he said.
“You had no control over it. You would have to go back, and that takes about two, two and a half years, because of the process,” Hulett continued. “All this time, you’re paying the duty rate, and then you have to pay the difference between maybe the 30% and the 20% going back two and a half years. And so, what happens is the bonding requirement, the sureties, they are a high risk. The bonding is much more expensive. So, I don’t even think the industry realizes what’s about to happen to them. It’s a difficult issue for sure.”
Stenzel mentioned that snacking tomatoes weren’t part of the original case.
“The products that we love now — all the little tomatoes on the vine — those are all new greenhouse products that didn’t even exist back then,” he said.
“The Cherubs we’re best known for, the bestselling snacking tomato in the country, that variety did not exist in 1996,” Hulett added.
“It’s a premium product. It’s one of the highest-priced tomatoes in the U.S. market, even though it’s grown in Mexico,” Hulett said. “Yet, we’re subject to this antidumping thing that we can’t figure out how to get out of.”
“These are the kinds of things where I think it’s important for companies to speak up and tell their stories,” Stenzel said. “I know the U.S. tomato growers, greenhouse growers, have done that and will continue to do so.”
“We do want to invest in the U.S., but if we can’t succeed in Mexico, we can’t continue to invest in the U.S., like we did in Arizona,” Hulett said. “So, it’s a dilemma, and it’s very contradictory, really.”
Your next read:
