U.S. Tomato Prices Seen Doubling Without Mexico Accord

Consumers will pay twice as much for tomatoes if the Obama administration ends a pricing accord with Mexico, according to a study from an American importers group.

U.S. prices of so-called hothouse vine tomatoes would jump to almost $5 a pound from an average of about $2.50 after the 17-year-old agreement ends, triggering limits on imports, according to the study released today by the Fresh Produce Association of the Americas. Mexico’s government opposes ending the deal.

The Commerce Department in September, responding to a complaint from U.S. growers, issued a preliminary decision to end the accord, which has set the price for imports of tomatoes from Mexico since 1996. Mexican officials then threatened to retaliate. The Nogales, Arizona-based importers group has dubbed the dispute a “tomato trade war.” The agency’s final decision is expected later this year.

“This is like playing Russian roulette with America’s pocketbook,” Lance Jungmeyer, the produce group’s president, said today in a statement.

U.S. growers led by the Florida Tomato Exchange have said the pricing agreement is outdated and ineffective, and ending it will create a free market for trade in tomatoes.

Mexican Tomatoes

The U.S. imported $1.8 billion of fresh or chilled tomatoes from Mexico in 2011, a 58 percent increase from 2008, according to the Census Bureau. Imports of the Mexican goods through November were worth $1.4 billion, it said.

“The industry-funded study does nothing to resolve the issues,” Michael Wessel, a spokesman for the Florida exchange and the Certified Greenhouse Farmers based in Fresno, California, said in an e-mail. “U.S. law is designed to ensure that domestic producers and their workers have a fair chance to to compete against fairly priced products.”

U.S. tomato growers have said that without the agreement, which sets a minimum price for the imports, there would be a glut of tomatoes from Mexico. That would drive down wholesale prices, Reginald Brown, executive vice president of the Florida exchange, has said.

Importers have said terminating the accord could clear the way for Florida growers to file a trade complaint alleging that imports from Mexico are sold below cost. That may result in punitive tariffs on the Mexican goods, which would drive up consumer prices, the importers’ group has said.

U.S. retail prices for tomatoes grown in hothouses would increase by as much as 98 percent from December to May assuming Mexico tomatoes are barred from the U.S., according to the study by the Nielsen Perishables Group, a Chicago-based consulting firm. Prices would jump 217 percent for Roma tomatoes and 52 percent for field-grown tomatoes, according to the study.

If Mexican growers are trading fairly, they should have no concerns about the agreement being terminated, the producers’ group said.

(Updates with comment from U.S. growers in seventh paragraph.)
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