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Opportunities for Texas produce are as big as the Lone Star State itself

by Chip Carter | August 05, 2010
With the Texas Produce Association's annual convention set to kick off Aug. 11 on South Padre Island, the state’s produce growers, shippers and importers are faced with some challenges unique to — and opportunities as large as — the Lone Star State itself.

"There are always problems, but there are also some trends that are very favorable," John McClung, president and chief executive officer of the association, told The Produce News in an Aug. 2 interview.

Some of the challenges Texas faces — food safety in particular — are common to every player in the industry. But some are unique, as are some opportunities. To see its future, the Texas produce industry needs only look across the Rio Grande, the famous river that marks the U.S.-Mexico border.

That is not to say that domestic producers are getting short shrift. Their issues and opportunities, along with those presented by the state’s proximity to Mexico, will be part of the agenda at the convention, which is being held at the South Padre Island Sheraton Beach Hotel.

For all intents and purposes, Texas has annexed many of northeastern and central Mexico’s most fertile growing areas. Many Mexican grower-shippers either received start-up and ongoing assistance from, or partnered with, U.S. operations based in Texas. A number of farms and packing operations are owned outright by U.S. interests, again, many of which are based in Texas.

When the U.S. economy soured, Texas benefited as Mexican shippers that previously routed through Nogales, AZ, began sending eastern-bound trucks through southeast Texas to save fuel. And since Texas is the number two consumer of fresh fruits and vegetables in the nation, opportunities for market growth within the state abound.

“I have said to my industry for some years now, there is a perception for some that Texas has lost ground in terms of the domestic industry,” Mr. McClung said. “If you were looking solely at production numbers, it’s true. Texas used to be the number three producer of fruits and vegetables in the country. We have slipped to some place below number 10 — but we are moving more product than we ever have before. That is because we are 60 percent imports. The bottom line is, we have moved the garden across the river. It certainly does not mean the domestic Texas industry doesn’t have a bright future as well. It does. The trends indicate that for smart, aggressive, knowledgeable shippers and growers, Texas is as healthy as it has ever been — probably more so. But it’s a more complicated business these days.”

That business is complicated in part by the mixed bag that comes with having Mexico as a neighbor. On the plus side, a favorable growing climate and an endless supply of affordable labor make Mexico a powerful partner for Texas. On the other hand, increasing violence among drug cartels and a perception among Americans that produce from south of the border is not as safe as that grown on the U.S. side hamper trade and relations.

According to the United Nations Food & Agricultural Organization, Mexico is the world’s fourth-largest producer of citrus. It ranks second in production of lemons and limes, fourth in oranges and fourth in tangerines. It is also a leading producer of tomatoes, peppers, onions and vegetables.

“If you just drop back a minute and look at the statistical realities, about 60 percent of what we now sell within the state and to the rest of the country is Mexican imports. That number is increasing every year,” Mr. McClung said. “You get behind those numbers and you find out that most of what is imported from Mexico is produced specifically for the U.S. market, generally funded by U.S. importers, and the obvious intention is to bring it into the United States for consumption — it’s grown for U.S. consumers.”

That said, “there still remains a vigorous domestic industry in Texas. What you’ve got then, between imports and domestic production, is volume that is the third-highest in the country in terms of states,” Mr. McClung said. Mr. McClung added that “not a week goes by that I don’t have a U.S. or Mexican group in the office trying to figure out what the options are for them. In that regard, it is very promising for Texas. But in Mexico, you are not simply looking at industry growth — you’re also looking at a dramatic increase in the sophistication of the industry. The old days where you hoped the product you got out of Mexico met U.S. standards are largely gone. Mexican grower-shippers are very polished, very sophisticated and know full well what’s expected out of them.”

While easy access to Mexican product ensures Texas’ position as a major player in the U.S. produce market, it also brings “added wrinkles” to production, especially when it comes to food safety.

“What that means in food-safety terms is we have to be extremely cognizant of both security issues that are solely domestic and those that affect imports,” Mr. McClung said. “The FDA has made it very clear for months now that it will hold imports to the same safety standards that it does domestic production, and that it is the industry — the importers and grower-shippers — that will be responsible for assuring that safety. So we have both to worry about.”

Mr. McClung said that U.S. consumer fears about the safety of Mexican produce are largely unfounded. “All you have to do is look at the statistics on illnesses related to product. The reality is — as a matter of fact, not opinion — Mexican product has been every bit as safe as other imported product. You do have incidents that involve imported product that we need to try to make every possible effort to prevent in the future. And we need a good, efficient, industrywide traceback program so when we do have problems, we can minimize the economic bruising that comes from uncertainty in the process.”

When it comes to labor supply, Texas has an obvious advantage over other U.S. states. While “the number of illegal immigrants coming across the river has been reduced sharply in the last couple of years, we do not to our knowledge have a labor shortage; the economy has [shifted] to make more labor available to us,” Mr. McClung said. “At this point, I have heard very few complaints about labor availability from anybody I work for in my membership. I don’t think labor is the issue it once was. That said, we are strenuously supportive of AgJOBS specifically and comprehensive immigration reform generally.”

Mr. McClung said the three major components to any sort of immigration reform are programs like AgJOBS, border security and what to do with the estimated 10 million to 12 million illegal immigrants already in the United States.