The U.S. Department of Commerce is terminating the Tomato Suspension Agreement (TSA) on July 14, a move described by Fresh International's Javier “JJ” Badillo as a “big concern”.

Badillo, who also chairs the Fresh Produce Association of the Americas (FPAA)’s Tomato Division, told FreshFruitPortal.com that the sector will likely face substantial financial and operational challenges if current policies tighten further or if the suspension agreement with Mexico ends.

“In six to nine months, you could see mid-sized companies potentially walking away,” he said. “In 12 to 14 months, I think you’ll start seeing the reduction in the growth of tomatoes inside the industry, which could have tremendous effects throughout the category.”

Badillo, who’s been a part of the tomato industry for over 45 years, said the situation is a real concern for his company, and that the possibility of shutting down operations is a “very real one” if the policy change goes into effect.

The potential ending of the TSA policy could trigger a 17.09% increase in tariffs on Mexican tomatoes, translating into higher costs for U.S. importers and, ultimately, consumers. In turn, tariff hikes could lead to reduced volumes, particularly of high-demand Roma and grape tomatoes.

All photos courtesy of J. Badillo | FPAA.

“There's always a breaking point where a consumer says, you know what, I'm going to buy less, or I'm not going to buy at all. When you start getting into that scenario, then you start contracting the tomato category as a whole,” he added.

Badillo explained that the current business model under anti-dumping rules requires enormous cash flow. Bonds previously costing around $50 annually could potentially be replaced with letters of credit in the hundreds of thousands to millions of dollars, and up to $5 million for large companies. This, he explained, is just an example of what could happen inside the current business model.

"At the end of a year, companies will go into a review, and depending on how the review comes out, your percentages will go up or down," he said, expressing concern for the eight to twelve months it can take auditors to share their review results. "The interesting part about that, for a smaller company like mine, is that the U.S. government is only going to be able to audit so many companies. Typically, the top five, and however they turn out, will dictate how the rest of the industry plays out."

The results from that business, Badillo added, are retroactive to the very first tomato box shipped that year. "So you're potentially going back a year and six months to two years back to understand how that worth of business did."

All photos courtesy of J. Badillo | FPAA.

Market stability and common ground

Despite regulatory challenges, Badillo observed that the greenhouse tomato segment has been flourishing. The technology has allowed for year-round, reliable supply and has expanded the variety of flavors, colors, and packaging options available to consumers. 

He remarked, “The greenhouse industry is alive and well and evolving every year, with new products coming out.” He also noted that recent industry data reflected that 70–90% of tomatoes sold commercially are greenhouse-grown, evidence that the sector continues to expand its market share.

FFPA Executive Vice President Allison Moore shares Badillo’s outlook on this approach to tomato cultivation. However, she noted Florida growers have gone down a different path.

“A huge segment of the industry has said: 'Let's innovate. Let's use greenhouses to grow these better-tasting varieties.' But you have not seen that same innovation in Florida specifically,” she said. “Instead, we're potentially going to lose an agreement that has created market stability only to prop up a mature green tomato that isn't the preferred consumer variety that we're seeing at retail at this time.”

The Florida Tomato Exchange (FTE), a major advocate for U.S. growers, has openly supported the TSA’s termination, stating it will allow domestic tomato growers to compete fairly in the marketplace. FreshFruitPortal.com reached out to FTE, but did not hear back in time for this publication.

Moore explained that industry stakeholders are hopeful that ongoing negotiations will lead to a revised and workable deal before the July 14 deadline.

All photos courtesy of J. Badillo | FPAA.

“Our focus remains on maintaining an agreement that effectively manages the market,” she said. “This agreement has been an effective tool for nearly three decades, providing stability and fostering innovation in tomato cultivation.”

The economic significance of Mexican tomato imports is substantial, supporting approximately 47,000 U.S. jobs and generating an $8.8 billion impact nationwide, Moore said. States like Texas, California, and Arizona, which are central to the supply chain, are especially attuned to the importance of a stable trade framework.

As negotiations unfold, Moore emphasized that cooperation and strategic planning remain vital.

“I imagine that a lot of the Florida companies that have a heavy presence in Mexico, too, are having these challenging conversations with their suppliers there. We just have to work together to figure out what works and what makes sense to be able to bring to market the consumer-preferred varieties of these greenhouse-grown tomatoes,” she said.

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The FPAA's response to the intention to terminate the Tomato Suspension Agreement

Suspension of U.S.-Mexico Tomato Suspension Agreement a "major victory" for U.S. ag