The 2019 Tomato Suspension Agreement (TSA) continues to be under great debate amongst tomato growers and shippers on both sides of the issue. In this article, growers and shippers that have been directly affected by the agreement share how the issue impacts them. Earlier this week, the perspective of a U.S. grower was published, and in this article, a grower from Mexico who prefers to stay anonymous shares thoughts on the issue.
As the grower points out, the TSA's origins date back to 1995. At the time, the original NAFTA was being negotiated, and Florida withheld support until an anti-dumping order was put in place against Mexican tomatoes. "There is a long and sordid history around the events leading up to the agreement, but a lot of it is wound up in bureaucratic gamesmanship and politics," says the grower. "Whereas the intent of these five-year agreements is to give the two parties time to rectify any purported wrongs, the TSA has been perpetually renewed, updated, tweaked, made unduly complex, etc., with no end in sight."
Heart of the issue
At the root of the agreement is, ultimately, protectionism, he says. "If you look back over news articles from the past ten years, you will find the Florida Tomato Exchange (FTE) continually throwing jabs at the Mexican tomato industry, calling for an abolishment of the agreement due to widespread violations," says the grower. "What you never hear the FTE mention are facts or evidence that their claims are true."
While the FTE has made clear they want to abolish the agreement, the grower believes the actual intent of the FTE is to make the lives of the Mexican growing community more painful and costly. "Domestic growers benefit greatly from the agreement in that it creates a floor price for 80 percent of the production in the marketplace and thus improves the market for their goods. Florida growers complain greatly about alleged attempts to sell below the floor price. However, they are not bound by this same price and often sell well below the floor price, clearly at a loss, while cursing the Mexican industry for their woes," he says.
The grower says what is also not mentioned is the fact that domestic growers face insurmountable challenges related to labor. "Plainly put, there is not enough legal labor to come anywhere near meeting the need. This results in crops going unharvested, regardless of market conditions. These problems are very real. However, they are completely unrelated to anything happening in Mexico or elsewhere," he says.
Consequences of the agreement
That said, the threat of cancellation of the agreement weighs heavily on the Mexican industry, given it would unilaterally and swiftly change the economics of the industry for all involved--growers, importers, and distributors. "Upon cancellation, duties would come into immediate effect to the tune of almost 21 percent ad valorum to be paid by the importer of record upon entry of the goods," says the grower. "That would be billions of dollars put up in cash that most likely will not be returned, and which may actually, after review, increase and become retroactive," he says. In turn, that would quickly and easily bankrupt most companies and force the majority of tomatoes to stay in Mexico. Prices for tomatoes would then jump for consumers--likely so high that retailers would either limit their offerings significantly if not do away with them altogether.
One more piece of the puzzle often overlooked is that, ultimately, consumers have been driving the changes in the marketplace. They are looking for flavor, uniformity, and consistency in supply. With each new barrier the FTE has tried to put in place, the vast majority of imported goods have stepped up to the challenge and delivered higher quality, better-tasting tomatoes. The grower says he doesn't mean to disparage the domestic industry as some have evolved as well, but he says gassed-green tomatoes simply don't meet the standards of most consumers.
So where does that leave things? This grower predicts another renegotiation is likely on deck. "Florida will demand increases in the floor price, tougher enforcement measures, and the only guaranteed winners are the lawyers," he says. He notes as an example that the last agreement implemented mandatory USDA quality inspections upon entry. "Last I checked, the pass rate of these inspections was somewhere near 99.5 percent," said the grower.
Photo: Dreamstime