Too soon to tell effects of tomato suspension deal

05/24/2013 11:08:00 AM
Tom Burfield

Recently raised floor prices for tomatoes coming into the U.S. this season from Baja California could shake up the tomato deal for grower-shippers on both sides of the border — or they may not.

While many growers have their own opinions on the new floor prices and the merits of the latest tomato suspension agreement pushed by Florida tomato growers, most say it’s too early to tell what the effect will be on tomato shipments or the selling price of the fruit.

“It definitely will have an impact on our business,” said Joe Bernardi, president of Nogales, Ariz.-based broker Bernardi & Associates. “I’m not sure exactly how yet.”

Bernardi said he believes the less government gets involved in business, the better.

“But, as always in our industry, we all learn to adapt and evolve with what the rules are,” he said.

“It’s really a battle between Florida and Mexico, but it does alter the marketplace,” said Tom Deardorff, president of Deardorff Family Farms, Oxnard, Calif.

Deardorff believes the agreement will have “more of a ripple effect than a direct effect” on California’s tomato industry.

He does not expect to see any major immediate impact.

“I think it’s more of a long-term issue,” he said.

San Diego-based Andrew & Williamson Fresh Produce, which imports tomatoes from Baja California, supported the original suspension agreement and supports the revised agreement, said John King, vice president of sales.

“For the investments we are making, we’re comfortable with the pricing that is in place currently,” he said.

As of early May, the revised agreement had not affected the company’s tomato program, King said.

Brian Bernauer, sales director for Oceanside, Calif.-based Fresh Pac International, which also imports tomatoes from Baja California, called the situation “unfortunate.”

“There’s a really big difference between what we do and what (Florida growers) do,” he said.

Fresh Pac focuses on flavor for its conventional and organic tomatoes, he said, while Florida ships “more of an industrial-type tomato that is used mostly for slicing and targeting foodservice.”

“We’re hoping that our emphasis will pay off,” he said.

In some cases, the actual supermarket price for tomatoes may be determined more by retailers than by the floor price, he said.

Tim Biggar, salesman for Tom Lange Co., Escondido, Calif., which sells tomatoes from Baja California, said he’s not yet sure whether the new floor price will impact his business.

“We’ll have to see how good of a job marketing people do,” he said.

But he believes shoppers will feel the pinch.

“Floor prices will be higher, which means consumers will pay more in the end,” he said.

U.S. greenhouse growers strongly favor the agreement, said Ed Beckman, chief executive officer for Certified Greenhouse Farmers, Bellevue, Wash.

“It was an issue we fought for,” he said.

Greenhouse growers are pleased that the agreement defined greenhouse product.

“It’s clearly spelled out what a controlled environment greenhouse tomato is,” he said.

The agreement also sets specific pricing for greenhouse tomatoes and for field and “adapted environment” tomatoes, which would include shade cloth structures.

“In crafting this new agreement, the Department of Commerce and Mexico agreed that greenhouse tomatoes grown in a controlled environment are a unique product as compared to field and shade cloth product,” Beckman said.

But he said the impact of the agreement won’t depend on what is written on paper.

“It comes down to enforcement of the agreement by the Department of Commerce and the (U.S. Department of Agriculture’s Perishable Agricultural Commodities Act),” he said.


New tomato prices

The floor prices set by the tomato suspension agreement signed early this year by Mexican growers and the U.S. Department of Commerce:

  • Open-field and “adapted-environment” tomatoes are 31 cents per pound in the winter and 24.58 cents per pound in the summer.
  • Controlled-environment tomatoes are 41 cents per pound in the winter and 32.51 cents per pound in the summer.
  • Loose specialty tomatoes are 45 cents per pound in the winter and 35.68 cents per pound in the summer.
  • Packed specialty tomatoes have minimum prices of 59 cents per pound in the winter and 46.79 cents per pound in the summer.

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