Markets calm under new tomato agreement

03/07/2013 11:47:00 AM
Andy Nelson

(UPDATED COVERAGE, 12:34 p.m.) The first week under a new tomato suspension agreement began calmly, with Mexican volumes low enough to keep prices above new market floors.

The U.S. Department of Commerce made the new agreement — approved by Mexican growers representing 85% of exports to the U.S. — official on March 4, a little over a month after the department proposed increases to floor prices on Mexican tomatoes.

Spurred by the Florida tomato industry’s allegations about Mexico dumping product below production cost, the agreement sets floor prices for Mexican tomatoes during the summer and winter, with four price levels covering open field/adapted environment, controlled environment production, and loose and packed specialty tomatoes.

For some products, the floor price more than doubled.

Two days after the agreement became official, market conditions trumped the new price minimums, said Jesse Driskill, operations manager in the Nogales, Ariz., office of Meyer LLC.

“Most of the markets are above the floor prices,” Driskill said. “Markets have strengthened a little bit.”

A cold winter in Mexico has kept the lid on volumes, and Driskill doesn’t see a surge in production anytime soon.

On March 6, the U.S. Department of Agriculture reported prices of $11.95-13 for two-layer cartons of vine-ripened tomatoes 5x6 from Mexico, up from $8.95-12.95 last year at the same time.

For Nogales-based Farmer’s Best, it was also business as usual as of March 6, said Jerry Wagner, the company’s director of sales and marketing.

“We have a new floor price and wish it had been a little closer to reality, and been lower than what was instituted, but we will continue to abide by it.”

Farmer’s Best plans to increase tomato acreage in Mexico for the upcoming season to meet consumer demand, Wagner said.

“As always, we’re very appreciative of the continued support we receive from our customers here in the U.S.”

Driskill is critical of terms of the agreement.

“I’m not happy with it at all,” he said. “Florida has done a masterful job of taking advantage of current laws and regulations and bending them to their benefit.”

Reggie Brown, executive vice president of the Maitland-based Florida Tomato Exchange, was pleased that the Mexican government signed on to the agreement, and that enforcement was boosted by a new role for the Perishable Agricultural Commodities Act branch of the U.S. Department of Agriculture.

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