Editor’s note: The following is one of the issues highlighted in The Packer’s Year in Produce 2023 review.
A contentious issue for decades, the terms of the U.S. tomato trade with Mexico again hung in the balance in 2023.
Through mid-December, the Department of Commerce had not revealed whether it will terminate the latest tomato suspension agreement between Mexican growers and the U.S.
In June, the Florida Tomato Exchange requested that the Department of Commerce terminate the 2019 Tomato Suspension Agreement, which sets an agreed-upon reference price for the sale of fresh tomatoes from Mexico in the U.S. market. The suspension agreement was the fifth such agreement since 1996. If the suspension agreement is terminated, domestic growers would seek new antidumping tariffs on Mexican tomatoes.
By mid-December, seven weeks after the end of the comment period, no decision had been announced by the Department of Commerce.
The issue ignited passion on both sides in 2023, with Florida growers and other domestic voices arguing the need to reset terms of tomato imports and distributors of Mexican tomatoes warning of the economic impact to the suspension agreement end and new tariffs put in place.
Here is some of The Packer’s coverage about the issue in 2023:
June 20
Florida tomato leaders asks Commerce Department to revise approach to Mexico-U.S. tomato trade
Florida tomato leaders want a radically new approach to the Mexico-U.S. tomato trade.
A series of negotiated minimum price agreements between Mexican growers and the Department of Commerce since 1996 has failed to protect U.S. tomato growers, according to the Florida Tomato Exchange (FTE). The group said in a news release that the repeated failures have made it clear that the Commerce Department must terminate the 2019 Suspension Agreement and impose antidumping duties on Mexican tomatoes, as required by antidumping law.
The FTE filed a request with the Commerce Department to end the agreement — the latest of five negotiated since 1996 — because it has “failed to stop unfairly traded Mexican tomatoes from destroying the U.S. tomato industry,” the release said.
“Despite the good faith efforts of the Commerce Department over the last four years, the 2019 Suspension Agreement has not been able to close the loopholes that have always been a problem,” Michael Schadler, FTE executive vice president, said in the release. “It’s become clear that these agreements are simply not enforceable, at least when it comes to the tomato trade with Mexico. Suspension agreements might be an effective tool for products that can be kept in storage until market conditions improve, but for highly perishable items like fresh tomatoes, there is just too much incentive to evade the reference prices when markets are oversupplied.”
The allegations by the Florida growers are as “timeworn and tired” as the state’s gassed green tomatoes, Lance Jungmeyer, president of the Fresh Produce Association of the Americas, said in a statement.
“Consumers overwhelmingly prefer the flavor of vine-ripened tomatoes over gassed green tomatoes like those from Florida,” Jungmeyer said in the statement. “Mexico is a major supplier of vine-ripened tomatoes, which is one reason why the FTE wants to erect a trade barrier. There really is no substitute for a vine-ripened tomato, and to put in duties would simply amount to another tax that shoppers just can’t afford.”
The FTE said that suspension agreements are statutorily required to stop injury to the domestic industry caused by dumping. None of the suspension agreements covering Mexican tomato imports have met that requirement, the FTE said.
In 1994, the year that the North American Free Trade Agreement was signed, U.S. tomato growers supplied about 80% of the U.S. market and Mexico accounted for around 20%, the FTE said. Currently, the group said that Mexico’s share of the U.S. market is almost 70% while U.S. producers have approximately 30%.
June 27
Florida Tomato Exchange: Many growers support ending U.S.-Mexico Tomato Suspension Agreement
The push to end the U.S.-Mexico Tomato Suspension Agreement is supported by most American tomato growers. That’s the assertion of the Florida Tomato Exchange (FTE), which filed a request June 16 with the Department of Commerce to terminate the agreement.
The FTE said in a news release that the Fresh Produce Association of the Americas, which represents distributors of Mexican produce, “wildly” mischaracterized the issues regarding the request, including framing it as a “Florida versus Mexico” issue.
The FPAA didn’t make a legal argument in response to the request to terminate the suspension agreement, the FTE said in its release.
“In 2019, the Mexican industry and FPAA had their day in court to prove that Mexican tomatoes weren’t being dumped and weren’t materially injuring the U.S. tomato industry,” the FTE said in the release. “They lost the case on both counts before the Department of Commerce and the International Trade Commission. It was determined that Mexican tomatoes were being dumped at an average margin of 20.91%, even with the previous suspension agreements in place.”
The current suspension agreement suspends those margins from going into effect as antidumping duties, and the FTE release said that such suspension agreements allow the Department of Commerce to suspend antidumping duties if the agreements stop injury caused by unfair imports.
However, the FTE in its release said none of the tomato suspension agreements, which date back to 1996, have worked to stop the injury caused by dumped Mexican tomatoes, “which is why the FTE finally asked the Commerce Department to terminate the suspension,” the group said.
“Instead of legal arguments against the FTE’s request, the FPAA has mischaracterized the request as a fight between Mexico and Florida,” the FTE said in the release. “It is not. The Florida Tomato Exchange is the ‘domestic petitioner’ in the antidumping case and has always received broad support on this issue from tomato growers across the country. This list includes growers in Alabama, Arkansas, California, Georgia, Michigan, New Jersey, North Carolina, Puerto Rico, South Carolina, Tennessee, and Virginia. In fact, U.S. antidumping law requires antidumping petitions to have majority support from the national industry. FTE’s own membership includes companies that produce tomatoes in many different states.
“The Tomato Suspension Agreement should be terminated because it has not met the statutory requirement to protect against unfairly traded Mexican tomatoes, which continue to injure the American tomato industry,” the FTE release said. “This failure requires a legal default to antidumping duties on Mexican tomatoes.”
Antidumping duties imposed under U.S. law will not stop market access for Mexican tomatoes, the FTE said in its release; “In fact, the duties would fall to zero if Mexican tomato exporters price their tomatoes fairly, according to the law.”
Sept. 28
Study: End of suspension agreement will drive consumer prices higher
A 10-page economic study from Arizona State University says ending the U.S.-Mexico suspension minimum price agreement for tomatoes would raise consumer prices by as much as 50%.
In June, the Florida Tomato Exchange requested that the Department of Commerce terminate the 2019 Tomato Suspension Agreement, which sets an agreed-upon reference price for the sale of fresh tomatoes from Mexico in the U.S. market. If the suspension agreement is terminated, domestic growers would seek new tariffs on Mexican tomatoes.
The termination of the agreement, according to the Fresh Produce Association of the Americas, would dramatically restrict the supply of imported tomatoes, reducing competition on grocery store shelves and raising prices for consumers.
If the suspension tariff is terminated and import tariffs are imposed on Mexican tomatoes, the study found U.S. consumers can expect to see tomato prices increase by an average of 52% across all affected varieties of tomatoes (including cherry, grape, greenhouse, roma, TOV and vine-ripe.)
Led by Timothy Richards, Morrison chair of agribusiness at Arizona State University, the analysis evaluated the impact that terminating the tomato suspension agreement will have on consumer prices, retail sales and economic activity in two states that are central to the tomato supply chain in the U.S., Arizona and Texas, according to a news release.
“In conclusion, our economic analysis of the proposed tariffs on tomatoes imported from Mexico stand to impose real costs on the U.S. economy,” the study said. “Consumers can expect to pay prices that average some 50% higher than they currently are, and grocery retailers, extrapolating from the sample of retailers in our sample, will earn almost $7.53 billion less in revenue.”
Oct. 3
Florida Tomato Exchange: FPAA-cited study has ‘no basis’ in reality
The Florida Tomato Exchange says a study recently cited by the Fresh Produce Association of the Americas is designed to “distract from Mexico’s record of dumping tomatoes.”
The study, authored by Timothy Richards of Arizona State University, claims that tomato prices will rise by an average of 52% if antidumping duties are imposed on imports of Mexican tomatoes.
“This conclusion, however, is based on fantasy and not on market realities,” the Florida Tomato Exchange said in a news release. “The study completely discredits itself on its first page when the author reveals that this prediction is based on a ‘complete removal of Mexican imports from the U.S. market.’”
There is “no circumstance” that would lead to the complete removal of Mexican tomato imports from the U.S. market, the release from the Florida Tomato Exchange said. “That’s not how the antidumping law works and that’s not what American tomato growers are seeking.”
The goal of FPAA and its members, the release said, is to “to create panic among tomato buyers and consumers with the hope that such a panic will cover up Mexico’s record of injuring American tomato growers by dumping tomatoes in the U.S. market.”
The release said the FPAA-cited study claims a price increase of 13% would occur, on average, if antidumping duties result in a 25% reduction to Mexican imports.
“Even this is a baseless overreach,” the Florida Tomato Exchange release said. “For example, U.S. import data collected by the U.S. International Trade Commission shows that from May to September 2019, a period when antidumping duties on Mexican tomatoes were in effect, imports dropped by only 6% as compared to the same period in 2018, demonstrating that even the hypothetical 25% decrease is unsupported by market realities.”
The study also fails to consider the capability of American tomato growers to cover market disruptions should they occur, the Florida Tomato Exchange said in the release.
“Termination of the Tomato Suspension Agreement, and the imposition of antidumping duties, will not put any restrictions on the volume of Mexican tomatoes permitted to enter the United States,” Michael Schadler, executive vice president of the Florida Tomato Exchange, said in the release. “Rather, it will only ensure that Mexican tomatoes are sold at fair prices, in accordance with U.S. and international law, as well as the USMCA.”
There is strong support in the U.S. agricultural community for terminating the Tomato Suspension Agreement and imposing antidumping duties, Schadler said in the release.
Over 100 American tomato growers from 13 states have called on the Commerce Department to terminate the Suspension Agreement, the Florida Tomato Exchange said in the release. This includes tomato growers from Alabama, Arkansas, California, Florida, Georgia, Iowa, Michigan, Minnesota, New Jersey, North Carolina, Pennsylvania, South Carolina, and Tennessee, the release said.
Their call to the Commerce Department was joined by the American Farm Bureau and state farm bureaus from Arkansas, California, Florida, Georgia, Michigan, New Jersey, North Carolina, South Carolina, and Tennessee, as well as fruit and vegetable grower associations from Alabama, Florida, Georgia, Michigan, and New Jersey, the release said.
Oct. 26
FPAA, NatureSweet urge preservation of 2019 Tomato Suspension Agreement
Distributors of Mexican tomatoes are pushing hard to blunt the effort by domestic producers to terminate the 2019 Suspension Agreement between Mexican tomato producers and the U.S. Commerce Department.
The agreement establishes a reference price for Mexican tomatoes.
In September, Michael Schadler, executive vice president of the Florida Tomato Exchange, said there is strong support in the U.S. agricultural community for terminating the Tomato Suspension Agreement and imposing antidumping duties on Mexican tomatoes.
He said over 100 American tomato growers from 13 states have called on the Commerce Department to terminate the Suspension Agreement. This includes tomato growers from Alabama, Arkansas, California, Florida, Georgia, Iowa, Michigan, Minnesota, New Jersey, North Carolina, Pennsylvania, South Carolina and Tennessee.
Termination of the Tomato Suspension Agreement, and the imposition of antidumping duties, will not put any restrictions on the volume of Mexican tomatoes permitted to enter the U.S., Schadler said then.
“Rather, it will only ensure that Mexican tomatoes are sold at fair prices, in accordance with U.S. and international law, as well as the USMCA,” he said in September.
In public comments filed recently, the Fresh Produce Association of the Americas, a group of U.S. distributors of Mexican fresh produce, said the Florida Tomato Exchange provides “no plausible explanation” or factual support for why an antidumping order will do a better job than the 2019 Suspension Agreement to address any alleged problems.
“FTE’s comments are more notable for what they did not address than for the rehash of its weak and unsupported attempt to justify its termination request,” the FPAA said in its filing.
Abandoning the reference price under the 2019 Suspension Agreement and imposing antidumping duties will deprive the U.S. tomato market of vine-ripe tomato varieties that the domestic industry does not produce and will destabilize the U.S. tomato market because of increased volatility in pricing, the FPAA said in its comments. “In short, abandoning the 2019 Suspension Agreement and imposing antidumping duties will harm, not help, the domestic industry,” the FPAA said.
The FPAA told The Packer via email that approximately 450 U.S. companies have signed a letter asking that the suspension agreement stay in place.
The FPAA said in its comments that imposing antidumping duties will not:
- Provide the additional agricultural labor needed by domestic tomato growers.
- Prevent catastrophic hurricanes or freezes that endanger domestic crops or stop the oceans from rising that are raising the salinity of domestic growing fields.
- Improve the FTE members’ poor soil and pest conditions.
- Stem the increasing pressure of urbanization and suburbanization encroaching on farmland.
FPAA also said in its comments that the FTE has “totally ignored” the dramatically increased volatility of the U.S. tomato market if antidumping duties are imposed, compared with the stability and certainty provided by the floor Reference Price under the suspension agreement.
Importers will have to deal with lengthy risks of antidumping duties increasing retroactively and paying increased amounts of collateral for surety bonds needed to cover antidumping duty entries, the FPAA said in its comments. “This uncertainty about the ultimate antidumping duty liability will be an accelerant to an increasingly volatile tomato market if the Reference Price system is terminated,” the group said.
