Tomato Wars: what will happen with Mexican tomatoes?

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Posted 10:09 AM 9/30/2012 : Tomato Wars: what will happen with Mexican tomatoes?

Tucson-The U.S. Department of Commerce has announced a preliminary decision to squash a 16-year-old trade agreement with Mexico.

It all started in the 90's when under pressure from Florida tomato growers, the commerce department began an investigation into whether Mexican growers were dumping their tomatoes on the U.S. market by selling at below market price, but when Mexican growers agrees to a minimum price, federal authorities suspended the investigation.

Thursday, the department sided with Florida growers announcing they may reopen the investigation.

Arizona distribution centers said it's a decision that could affect Arizona's economy directly.

The tomato trade is a major driving force for Nogales' economy.

Produce from Mexico is constantly stopping by border distribution centers and onto local grocery store shelves.

"If produce were to end, it would really put a dent in our business here," said Oscar Villa, manager of Villa's Market.

Villa's Market just opened on Grand Ave.

"We opened at this time of the year because produce season is coming, so we thought it was a perfect time. People are going to be employed. People are going to have money, so it's going to help us out. We provide low prices, so it's going to help our customers out," said Villa.

Villa said getting produce from Mexico and driving down the street to pick it up helps him keep competitive.

"I can compete really well against the big box stores during produce season because I buy my tomatoes locally," said Villa.

But if the department of commerce decides to withdraw the suspension agreement with Mexican tomato growers, Oscar Villa fears he won't be able to offer low prices at his store anymore.

"My advantage here is going to be gone," said Villa.

The decision would force Villa to look for produce in California or Florida or wherever else he can find tomatoes, and then the produce would have to go to a distribution center before making its way to Nogales.

All that movement would add to the price, and he thinks that would put him out of business.

"There's a very good possibility that the Mexican government may retaliate in an all out agricultural trade war," said J-C Distributing owner Jaime Chamberlain.

Retaliate by putting duties on poultry, beef and fruit affecting jobs and grocery prices.

The following is a statement from Florida Tomato Exchange and Certified Greenhouse Farmers.

U.S. Tomato Growers
Applaud Department of Commerce
Preliminary Decision to Terminate Suspended Antidumping Investigation
Could Lead to Requested Suspension Agreement Termination
(Sept. 27, 2012)

(Maitland, Florida) The Florida Tomato Exchange, along with the Certified Greenhouse Farmers, heralded today's preliminary decision by the U.S. Department of Commerce to terminate the antidumping investigation initiated by domestic tomato growers 16 years ago.

This action follows a request made by the industry in June of this year seeking to withdraw their case and terminate the existing suspension agreement governing trade in fresh tomatoes between the U.S. and Mexico.

As the Department indicated, if the final decision on this matter is to terminate the antidumping investigation, it will also result in the termination of the suspension agreement.

Since the June request by the domestic industry, dozens of Members of Congress, Agricultural Commissioners from numerous states, and organizations representing industry workers have publicly indicated their strong support for the grower's requests.

The leadership and staff of the Department have been generous with their time and we appreciate their hard work.

Reggie Brown, Executive Director of the Florida Tomato Exchange said; "today's preliminary decision is welcome news to domestic growers and the workers who have suffered under an outdated and failed agreement governing trade in fresh tomatoes with Mexico. The domestic industry has jumped through every hoop put in our path by our opponents who simply want to protect the sweetheart deal that they've enjoyed for far too long. While we would have preferred that today's announcement would have ended the fight, the preliminary decision ratifying the domestic industry's position will help reverse the downward spiral the industry has been facing. We especially want to thank the majority of Florida's Congressional delegation that fought for the State's industry and its workers."

Edward Beckman, President of the Certified Greenhouse Farmers said, "all we want is a level playing field. Today's preliminary decision sends the signal that the current approach isn't working for U.S. growers and ratifies the complaints that we have made. The process isn't over, but domestic growers are now more confident that fair trade conditions might be restored in the not-too-distant future. Growers all across this country can breathe a short sigh of relief, before the next stage begins and we are confident of a successful outcome."

In June, 2012, U.S. tomato growers filed a request with the Obama Administration that the antidumping petition they filed in 1996 be withdrawn and the suspension agreement that is in place be terminated.

In August, for the first time in a matter such as this, the Department of Commerce announced a "changed circumstances" review. Responding to this request, the growers provided certifications that producers of more than 90 percent of domestic production (based on official Department of Agriculture 2011 data) were in support of the request.

This exceeds the 85% threshold in the law. Today's preliminary decision is coupled with a specific plan for completion of the review by the Commerce Department.

The following is a statement from Fresh Produce Association of the Americas:

FPAA Denounces Commerce's Tomato Decision as Hasty, Unwarranted and Politically Motivated
Department of Commerce Signals Intent to Terminate Tomato Suspension Agreement One Day Before a Scheduled Meeting with Mexican Growers to Renegotiate the Agreement

NOGALES, Arizona (Sept. 27, 2012) - The surprise decision by the Department of Commerce to publish preliminary notice of intent to terminate the tomato suspension agreement is hasty, unwarranted and possibly motivated by political interests within the Obama Administration, according to the Fresh Produce Association of the Americas.

"Commerce today delivered a slap in the face to the goodwill showed by the Mexican growers, who were scheduled only tomorrow to have a meeting with Commerce to renegotiate terms of the agreement," said Lance Jungmeyer, President of the Fresh Produce Association of the Americas, a Nogales, Ariz., based association that represents U.S. based distributors of fresh fruits and vegetables.

"The Mexican grower groups had tried in vain for four months to schedule a face-to-face opportunity to renegotiate this agreement," Jungmeyer said. "The fact that Commerce chose to terminate the agreement the day before this meeting only underscores the political pressure that Commerce was facing from the industry in Florida, a key swing state in the upcoming election."

Mexican grower groups, the official signatories to the tomato suspension agreement, had received confirmation from the Department of Commerce that it had accepted a Sept. 28, 2012, meeting, where the growers intended to renegotiate the agreement. In fact, the growers were en route to Washington, DC, the day this news was delivered.

The FPAA also is dismayed by the lack of credence that the Department of Commerce gave to the nearly 350 letters it received from U.S. interests expressing support for continuation of the agreement. Groups supporting continuation of agreement were as diverse as the U.S. Chamber of Commerce, Food Marketing Institute, National Restaurant Association, National Pork Producers Council, American Dairy Federation, American Meat Institute and many more.

"Even Walmart, the biggest retailer in the world, supported keeping the tomato suspension agreement," Jungmeyer said. "Their promise is everyday low prices for their shoppers, and they clearly see that terminating the agreement could raise tomato prices for consumers, at the same time as reducing selection and variety in one of the top categories in the whole produce department."

FPAA is not a signatory to the agreement, nor are its members. However, terminating the agreement and initiating a new anti-dumping investigation, which Florida growers have said is their goal, has enormous implications for jobs generated by the U.S.-based companies that import Mexican tomatoes, and the ancillary businesses that support this industry.

"Tens of thousands of jobs in border states like Arizona, Texas and California rely on the tomato-importing industry," said Alejandro Canelos, Chairman of the FPAA and Director of Apache Produce, a major employer in Nogales, Ariz. "These companies are third- and fourth-generation family operations that are the cornerstones of the local employment base."

"Historically, Commerce has never made a decision this quickly when it was contested," Jungmeyer said. "In this case, the decision to terminate the agreement was fiercely contested by numerous U.S. interests who said doing so would be bad for their business. Either the Administration does not care about these businesses, or it is motivated by political concerns."