WASHINGTON — The Fresh Produce Association of the Americas fired back a warning that an escalating trade battle with Mexico over tomato prices could result in long-lasting damage in trade disruptions and job losses.
The Florida Tomato Exchange filed documents last month with the U.S. Department of Commerce and the U.S. International Trade Commission to terminate the 16-year-old tomato suspension agreement with Mexico. Currently, the agreement sets a minimum price that Mexican producers and exporters can sell their fresh tomatoes to eliminate damaging effects of exportson U.S.-grown tomatoes.
The exchange argues that the action was required to restore fair competition to the market and eliminate predatory actions by Mexican producers. Florida growers' concerns were backed by Florida Commissioner of Agriculture Adam Putnam, who sent a June 28 letter suggesting the 2008 suspension agreement has not protect Florida's growers because it's been unrecognized by new producers in Mexico and has not been enforced by the U.S. Department of Commerce.
But the latest outcry from Florida growers prompted a warning from FPAA.
"Tomatoes are the No. 1 food export item from Mexico to the United States," Lance Jungmeyer, president of Nogales, AZ-based FPAA, said in a July 17 statement. "In this era of global trade, the U.S. government should not put up a trade barrier with Mexico, our nation's No. 2 overall trading partner."
FPAA said that the latest dispute could result in trade disruptions and more expensive tomatoes if Florida is successful in pressuring for higher floor price.
"In the end, consumers will only end up paying more for tomatoes," Mr. Jungmeyer said in the statement. "Retailers will pay more and they will be forced to pass on those costs to hard-working families."
The trade interruption could end up hurting Florida's economy and a broad spectrum of industries, Mr. Jungmeyer said. Residents of Florida benefit from $7.58 billion in two-way trade between Florida and Mexico, with more than $2 billion of that in exports from Florida to Mexico.
"U.S. distribution companies, not just in the border states of Arizona, California and Texas, rely on Mexican tomatoes because their customers have asked for the flavor profile and consistent volumes that the Mexican tomato industry supplies," Mr. Jungmeyer said. "A trade war would mean not only a loss of jobs throughout the U.S., but ironically it could mean consumers end up paying higher prices for the reduced offerings of tomatoes on supermarket shelves."
But Mr. Putnam argued that tomato growers are already being hurt, saying that tomato imports reached some $1.8 billion last year, three times the value when the 1996 petition was filed, yet there has been no change to the reference price in the suspension agreement.
"Already suffering from weak demand in a difficult economy, Florida's tomato growers cannot compete in a market flooded by unprecedented imports of tomatoes from Mexico at prices well below the cost of production," he said in the letter to U.S. Commerce Secretary Rebecca Blank.