Tomato industry faces 'extinction' while Florida waits for trade decision limiting Mexican commerce

dgraham@bradenton.comJanuary 25, 2013 

PALMETTO -- Florida tomato growers say their survival is being severely challenged by Mexican tomato dumping, while they await a decision by the U.S. Commerce Department on terminating a 1996 trade agreement.

Today is the deadline for final briefs to be filed in a review initiated when U.S. tomato growers, led largely by Florida farmers, petitioned to end the agreement. The trade pact was intended to protect Florida tomato growers from much-cheaper Mexican tomatoes, which wouldn't be sold below the so-called reference price.

But Florida growers contend the U.S. agreement "is a legalized system of dumping Mexican tomatoes into the U.S. market. Tomatoes are being sold in the U.S. for less than the market value," said Reggie Brown, executive vice president of the Florida Tomato Growers Exchange.

Under the agreement, Mexico can bring tomatoes in at the reference price that was set 16 years ago.

"In Mexico, that is well below the cost of producing them and they can bring tomatoes in with impunity," Brown said. "It is a legalized system of dumping Mexican tomatoes in the U.S. market. It is absolutely essential that the agreement reached meets the letter of the law."

Ninety percent of the U.S. tomato crop agrees with Florida, according to Matt Joyner, director of federal affairs for the Florida Department of Agriculture and Consumer Services.

Manatee and Hillsborough counties each supply 40 percent of the tomatoes grown in Florida, which in turn produces over 70 percent of all fresh-market tomatoes grown in the U.S., according to figures from the University of Florida.

The U.S. Department of Commerce needs to be careful not to "drag its feet to the point that they drag an industry into extinction," Joyner said.

At least three Florida growers have been driven out of business in the last year, all of whom had been in operation for more than a generation, officials said.

"For 20 years we've said 'Let it go.' But we've seen production drop by 40 percent," said Bob Spencer, president of West Coast Tomato in Palmetto.

"You reach a point where you say, 'It's time to stop and fight.'

"Sometimes," Spencer said, "you've got to take on the bully. That's what this country was founded on."

In September, the Obama administration said that the agreement had to be set aside. The Commerce Department said in a preliminary decision that Florida growers, who voluntarily accepted the 1996 agreement, should be allowed to challenge the Mexican growers' practices and prices.

But at least one dissenter will be filing a brief today. The Fresh Produce Association of the Americas, based in Nogales, Ariz., plans to file on behalf of its 120-plus U.S. members who negotiate with Mexican growers.

The association will suggest a substantial rate increase for Mexican growers, and the Mexican government would ensure 100 percent compliance, said Lance Jungmeyer, head of the Fresh Produce Association.

Florida tomato production and cash receipts have fluctuated over the past five years, according to Florida Department of Commerce figures. Cash receipts have ranged from $425 million in 2007 to $620 million in 2008 and 2010. Florida production has declined from 53 million 25-pound cartons in 2007 to 41 million 25-pound cartons in 2011.

Depending on what the U.S. Department of Commerce does with the briefs, the decision may be extended, a hearing may be set and the process may continue. If the final briefs that are filed delay action on the pact, there are two other directions that the process may go, according to Joyner. There is a sunset provision for the agreement, which is set to occur naturally on March 1. If not extended, that would end the current agreement by expiration then.

The Commerce Department also could come up with a renegotiated agreement that enables fair trade.

"Fair trade means you can't sell something into the market as a foreign country for less than your cost of producing it," Brown explained. "But the current parties have an agreement with the U.S. law that suspended a dumping case 16 years ago. The only parties to the agreement are in fact the Mexican producers and the Commerce Department.

"The reality is the suspension agreement has not changed significantly in 16 years, and the inflation rate in Mexico has gone up something over 200 percent in that period," Brown said.

Companies like Wal-Mart that want bargain prices are looking for sources of cheap products, so they are not concerned about who is producing the food, growers contend.

"Wal-Mart has one major concern and that's keeping low prices," Spencer said. "If Mexico ships at their low cost, prices for tomatoes might go up a percentage. If you're the beneficiary of low prices and someone's breaking the law, you're not really concerned because you're making a profit."

Brown called it a national issue, not a Florida issue.

"We just happen to be in production at the time of year when Mexico ships its largest volume of tomatoes," he said.

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