Protectionist pressure on Mexico could double U.S. tomato prices

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Protectionist pressure on Mexico could double U.S. tomato prices

In an ongoing trade tug of war with Mexico, the U.S. could face a substantial jump in tomato retail prices, a study by the Fresh Produce Association of the Americas (FPAA) has shown.

FPAA President Lance Jungmeyer outlined a number of daunting scenarios that could hit tomates_15269761U.S. consumers if Mexican tomatoes fall victim to further anti-dumping investigations.

"In a scenario where a freeze or hurricane cuts U.S. domestic tomato volume by half in the December to May time period and Mexican tomatoes were kept out of the market, the national average price rises 137% to more than US$5 a pound for all varieties, and it goes to $7.31 a pound for grape tomatoes," Jungmeyer warned in a press conference.

The FPAA's media briefing was biting in its depiction of Florida tomato growers, who have been slated as the major antagonists lobbying against the Mexican industry.

Protectionist pressure from Florida could have much larger economic implications for the U.S., said Rick Van Schoick, director of the North American Center for Transborder Studies at Arizona State University.

"When we talk about trade, in many ways we’re talking about security. We’re talking about the economic security of the U.S. and we’re also talking, now that comprehensive immigration reform is back on the agenda, we’re talking about Mexico being able to keep jobs in Mexico," Van Schoick said.

"If the tomato growers of Florida are to win in their argument, Mexico has very legitimate reasons to retaliate with the WTO. They would probably win the case. Last time there was a trade dispute between the U.S. and Mexico, they imposed about US$2 billion worth of tariffs on about 100 products. We don’t want to see a protectionist war because it would hurt U.S. market access."

In a sentiment echoed throughout the conference, Patrick Kilbride of the U.S. Chamber of Commerce expressed deep concern over damaging trade relations with Mexico.

"The U.S.-Mexico economic relationship is too important to allow trade disputes to derail our economic partnership and it’s critical our governments work together to find ways to resolve these situations, short of imposing trade restrictions," the department's Senior Director of the Americas explained.

"According to our own studies, at least 6 million U.S. jobs depend on trade with Mexico. It’s our second largest export market. Last year U.S. producers sold $298 billion in goods to Mexico and through September of last year, we’re on pace to exceed $300 billion in 2012."

JC-Distributing President Jaime Chamberlain elaborated on the implications for the entire tomato supply chain.

"Out of every dollar that purchases tomatoes, 20 cents of that goes to the farmer. 80 cents of that is from further on down the supply chain. That’s from distributors, that’s from retailers, that’s from trucking companies, that’s from box companies. When you see US$1.8 billion in Mexican tomatoes come into the United States, that translates to nearly US$9 billion in total economic impact," Chamberlain explained.

According to the FPAA study, tomatoes are the most purchased fresh vegetable in the U.S., 3 billion pounds of which are supplied by Mexican growers.  In winter month, over half of U.S. fresh tomatoes come from Mexico.

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