Mexican tomato deal promises big changes

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Mexican tomato deal promises big changes

Earlier this month Mexico's tomato growers finally won their protracted battle with producers in Florida to have unhindered access to the U.S. market. But what will the deal mean in the long term? tomates_68886895 _ panorama

After almost eight months of negotiations with the U.S. Department of Trade, the Commission for the Defense of Mexican Tomatoes announced earlier this month it had won a battle against a Florida association that sought to limit its market access.

The decision in favor of the Mexican growers rejected an attempt by the Florida Tomato Exchange to introduce an import tariff for Mexican tomatoes, combating what it claimed was unfair competition and product dumping from the southern neighbor.

Speaking after the deal was announced, Manuel Antonio Cazares Castro from Sonora-based Sistema Producto Tomate Nacional - one of the associations involved in the negotiations - said the victory had only been achieved thanks to the united front shown by growers, the Mexican government and its representatives in the U.S.

The new agreement, as opposed to any continuation of the previous deal, is expected to come into force from Mar. 4. Cazares said Sistema Producto Tomate and its fellow associations were already working to ensure that growers met the conditions outlined by the revised accord.

However, will it all prove to be quite so straightforward? The new deal is substantially different from the previous agreement by imposing a minimum referencing for Mexican tomatoes sold in the U.S., while also accounting for changes since the previous deal was signed.

Given that Mexico exports an estimated US$1.9 billion worth of tomatoes to the U.S. every year, it was clear a great deal was at stake for both countries, with all involved apparently keen to avoid a potentially costly trade war.

Cazares told the agreement would ensure the continuation of Mexican tomato growers' "good working relationship" with the U.S., while offering new assurances over not just pricing, but also quality and traceability.

"This agreement allows us to continue the good relationship that we have had with the U.S. for the last 16 years without any problems," he said.

"The deal is for the good of both countries because we have fresh tomatoes that the U.S. needs and any controversial situation would neither serve to benefit the U.S. nor Mexico, and for the housewife the price of tomatoes would increase."

Cazares also argued the new minimum reference price would work for Mexican growers' benefit by regulating exported volumes when there was an oversupply, ensuring that good prices were maintained.

"We believe that the minimum price will regulate the whole supply - when there is oversupply, the price falls but if we as Mexican producers stop supplies when there are high volumes, the price react accordingly because there will be little product in the market.

"And not just price - and we also going to increase the number of certified growers, the use of good agricultural practices and traceability, so that U.S. consumers can have confidence that we are sending products that are safe to eat."

Cazares expected a new format for the export of tomatoes to the U.S. from Mexico would be introduced by today, claiming that growers who do not have all the necessary documentation "in order" would not be able to export.

"That is what's in the agreement and we have to comply with it in order to continue with our good relations with our customers in the U.S."

Cazares' assessment was echoed by that of Juan Oliva, general manager of Ensenada-based grower cooperative Del Cabo, who believed the deal will aid the flow of product to Mexico's northern neighbor during times of high supply.

"The agreement may help us because we previously had the problem of when there was too much product in the market, there were companies who would sell at prices far lower than the established minimum and this caused prices to fall even lower or to take longer to stabilize."

It should be noted that Del Cabo is part funded by U.S. producer Jacobs Farm, giving it quite a different perspective on the situation from smaller, independent growers.

In fact, Oliva emphasised it had always been  company policy to sell its products at prices far higher than the established minimum level; a practice in which it had been transparent in reporting to both member growers and authorities.

However, he argued that establishing a minimum price for all growers should have a positive long term affect for all Mexican tomato growers.

"Increasing the minimum price and, we hope, having more control over prices will help us as a sector to achieve a greater flow of products during the times of excess production, while also helping us to at least cover our operating costs," he said.

However, Del Cabo's manager also sounded a note of caution when it comes to question of whether Mexican exporters would receive fair treatment compared with their U.S. competitors.

"Provided the agreement is respected by both sides, I believe that it will be beneficial for everyone because on the one hand it will control the supply of products at competitive prices, while at the same time maintaining the competitiveness of Mexican tomatoes in the U.S. market.

"Obviously this implies that we need to comply with good agricultural practices and quality - things that are not greatly demanded of American producers, but at the same time our efforts are valued by the end consumers who, at the end of the day, are the ones that make the final decision."



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