Fla. Tomato Growers Say Mexico Trade Deal Is Rotten

Post by Ted Robbins, NPR Business News (1/23/13)

Half of all tomatoes eaten in the U.S. come from Mexico, and tomato growers in Florida aren't happy about that. In fact, they're willing to risk a trade war to reverse the trend.

At JC Distributing In Nogales, Ariz., one misstep and you're likely to get knocked over by a pallet full of produce. Forklifts crisscross each other carrying peppers, squash and especially tomatoes from trucks backed into the warehouse loading dock.

Boxes of tomatoes are for sale in an open air market in Immokalee, Fla. Photo: J. Pat Carter/AP

"This is a Mexican truck being unloaded," says JC President Jaime Chamberlain. "He's just waiting for his paperwork to get back."

JC is one of a number of produce distributors just north of the Mexican border. Chamberlain says his company alone handles more than 87 million pounds of tomatoes each year — tomatoes sold in stores across the country.

"This is a box of grape tomatoes, and this is from a grower of ours in Jalisco," Chamberlain says.

For 16 years, the Mexican growers have agreed not to sell tomatoes below what's called a reference price. That was supposed to protect Florida tomato growers from cheap Mexican tomatoes.

But Florida sales have dropped in half anyway, to as little as $250 million a year, while Mexican sales have tripled to more than $1.8 billion.

Reggie Brown, who heads the Florida Tomato Exchange, says Mexican growers have been dumping tomatoes — selling them for less than it costs to produce them.

"The Mexican industry has for significant periods dumped product into the U.S. market during the 16 years of the agreement," Brown says.

So Florida growers are pushing the Obama administration to end the price agreement.

"What would happen if the suspension agreement went away is free trade would truly exist between Mexico and the U.S. in the tomato industry," Brown says.

Lance Jungmeyer, who heads the Fresh Produce Association of the Americas, which represents the Mexican tomato industry, says Mexico is not dumping tomatoes.

"It would be impossible to sustain hundreds perhaps thousands of Mexican tomato companies for years on end selling below their cost. They wouldn't be able to do that," Jungmeyer says.

If the tomato agreement goes away, though, Florida would be free to file an anti-dumping case against Mexico. If that happens, the Commerce Department can impose punitive tariffs on Mexican tomatoes — making them much more expensive and giving Florida an edge.

Mexico could then put heavy tariffs on billions of dollars in products the U.S. sells there: pork, beef and corn. It would be a trade war.

Jungmeyer says what's really going on is that consumers just plain prefer Mexican tomatoes — tomatoes ripened on the vine instead of with ethylene gas, which he says Florida growers use.

"If your choice is a tomato that doesn't really taste like a tomato or a tomato that tastes like a tomato, you want the tomato that tastes like a tomato," Jungmeyer says.

Gary Hufbauer, a senior fellow with the Peterson Institute for International Economics, a Washington, D.C., think tank that supports international free trade, agrees. He says the Mexican tomato industry has innovated, and Florida growers are hanging on.

But Florida voters are important, and no administration wants to be seen as responsible for losing jobs there. Even if, as Hufbauer says, Florida's future isn't in tomatoes, it's a symbolic industry.

"The mental image of the little house on the prairie has most of us captivated in Florida; the little house on the prairie is a tomato grower, a sugar grower or an orange grower — a small part of the economy, but a big part of the popular imagination," Hufbauer says.

Ending the tomato agreement would cost jobs in Mexico and the U.S., says distributor Jaime Chamberlain.

"Your packaging, your marketing, your advertising, your transportation is tremendous. I don't know what would happen to all these trucks on the American roads if you were to eliminate a specific commodity out of the Mexican agricultural deal," Chamberlain says.

Negotiations are continuing, but last fall, the Commerce Department indicated it was siding with Florida. A number of big produce buyers, including Wal-Mart, are siding with Mexico. The trade agreement is set to expire at the end of this month.

What's at stake are higher prices and fewer tomato choices. Of course, you could grow your own.