TRADE AGREEMENTS TARGET FRESH PRODUCE
Two new agreements may affect the supply of Mexican produce to U.S. supermarket shelves in the coming months:
• The Agreement Suspending the Antidumping Duty Investigation on Fresh Tomatoes from Mexico, or ‘Tomato Suspension Agreement’ for short, was signed in September 2019 and was expected to become effective at the end of March.
• The United States-Mexico-Canada Agreement (USMCA) was inked by the United States in January and could take effect as early as June.
“All fresh tomatoes from Mexico, excluding TOVs (tomatoes on the vine), specialty and grape tomatoes in retail packages of 2 pounds or less, will need to have a USDA quality inspection,” explains Lance Jungmeyer, president of the Fresh Produce Association of the Americas (FPAA), a nonprofit trade association headquartered in Nogales, AZ. “What this means is that while approximately 8% of Mexican-grown tomatoes currently receives a USDA inspection, after April 1, this will be 90% to 92% of tomatoes crossing the border.”
Tomatoes comprise nearly 20% of Mexican produce exports to the United States through the Nogales port, according to Jungmeyer.
Growers are not necessarily worried about tomatoes not making the grade, says Scott Vandervoet, in sales and marketing for Vandervoet & Associates Inc., in Rio Rico, AZ, and the FPAA’s chairman of the board. “The concern is getting tomatoes inspected in a timely manner as they are a perishable product.”
Some growers are concerned the wait for inspection could be a day or two.
“We now have two warehouses instead of one,” says Jim Cathey, director of sales and marketing for Malena Produce Inc., in Rio Rico, AZ, which grows and markets Roma and round tomatoes, which, along with grape tomatoes in bulk, now require inspection.
What this means is a change in the way of thinking about the supply chain, according to Jungmeyer. “For one, we estimated it will cost $220 million to construct the additional warehouse space needed for these enhanced inspections, with other related costs nearing $50 million annually. Plus, there’s less efficiency. If inspections slow the tomatoes down from getting through the port by a day, that’s a day lost in shelf life. That’s significant for vine ripe tomatoes.”
The USMCA replaces NAFTA, or the North American Fair Trade Agreement.
“We are very happy that USMCA was finally passed by Congress and signed by President Trump,” says Matt Mandell, vice president of finance and legal for Rio Rico, AZ-based SunFed. “While not a lot changed from NAFTA to USMCA in terms of agriculture, there were several proposals that could have negatively impacted our business, thankfully none of which came to pass. The best thing about having USMCA passed is that we all know the rules of the game as spelled out by the agreement.”