The Tomato Trade Wars
TUCSON, Ariz. -- Tomato growers in Florida and Mexico are feuding over prices -- and it's the same argument heard nearly twenty years ago when NAFTA was first signed. American farmers feared cheaper Mexican crops would flood the market here and put them out of business. But this brewing tomato trade war also shows how much the agricultural trade has changed since NAFTA began.
American produce importers and Mexican growers predict this dispute will bring about a trade war. But Florida growers say right now, it’s a price war. And they say, Mexico is undercutting their ability to sell fresh tomatoes.
So late this summer, a group of Florida tomato growers petitioned the U.S. Department of Commerce to tear up a pricing agreement with Mexican producers. If Commerce does that -- and the agency is considering it -- the tomato growers here can file an anti-dumping complaint against Mexico.
"We do not see a good business model in producing tomatoes and selling tomatoes for less than the cost of growing those tomatoes," said Reggie Brown of the Florida Tomato Exchange.
Brown says the average box of Florida tomatoes sells for about $6. The cost to grow that same box is $9-10.
Now look at how the same industry is faring just south of the border.
In the tiny town of Imuris, in northern Sonora, about an hour south of the Arizona border, sits some of Florida’s competition.
A group of migrant workers kills time listening to music while waiting for a bus ride home. They came up to Imuris from central Mexico to work in Carlos Fisher’s massive greenhouse operation, Sierra Seed Company.
It’s a good example of the boom in free trade. In 2011, Mexico sent about 2.8 billion pounds of tomatoes into the U.S. That’s more than triple what they exported in 1993, the year before NAFTA began: 800 million pounds. The numbers grew across the board.
Steven Zahniser is an economist with the U.S. Department of Agriculture. He said in 1993, Mexico's total imports to the U.S. were valued at $2.7 billion. In 2011, they totaled $15.8 billion. They grew heading south, as well. U.S. agricultural exports to Mexico increased from $3.6 billion to $18.3 billion over the same period.
Traditionally, Mexican tomato growers targeted the West Coast market, and Florida the East Coast. But in recent years, with cheaper and more efficient shipping, Mexico tomatoes are now available everywhere. And this is how businessmen in Mexico like Fisher did it.
"This is a big part of our business here, this is where we graft the tomatoes. Take a healthy root system and unite it with a very good, vigorous variety and we turn it into a super-plant," Fisher explains.
Starter tomato plants make up the bulk of the income from this farm. The company turns out 12 million grafted starter plants every six weeks. Those end up planted further south in the fields of Sinaloa, known for its hot and ideal growing climate.
It costs $5 to grow a box of tomatoes here and it sells for about $9. So unlike Florida growers, Mexican tomato farmers are turning a very good profit. But all that's threatened by Florida's pricing challenge. Fisher said if tomato production here scaled back, he’d close down his farm.
"I’ve done this all my life and I don’t think I can see myself doing anything else. So yeah, it is very scary. And I don’t want to move to Florida, that’s for sure," he said.
Fisher’s operation is part of the Fresh Produce Association. That's a trade group based in Nogales, Ariz. This small border town has been in the tomato business for the past 100 years. These days, nearly half the tomatoes imported from Mexico come through here.
Lance Jungemeyer, the president of Fresh Produce, says Florida is playing politics by pushing this dumping complaint right now.
"Well, it’s very simple. There’s an election going on in the United States and Florida is a swing state," Jungemeyer said.
Back in another election year, 1996, Florida also accused Mexican importers of dumping tomatoes on the U.S. market. Commerce agreed then and set a minimum price at which Mexican tomatoes could be sold here.
This time around, Mexican growers and importers say a Commerce decision against them will spark a trade war and punitive tariffs against other U.S. agricultural goods.
"I have spoken with people in the Mexican government who have stated they are taking this very seriously," Jungemeyer said.
Florida is pushing for a decision before the November election. If a trade war sparks up over tomatoes, the next battleground could be the beef, pork, or any other NAFTA good headed south.
Read an update about the U.S. Department of Commerce decision.