WASHINGTON — The United States and Mexico have reached tentative agreement on a pact that could avert a feared trade war over tomatoes, but would sharply raise prices in the process.
The agreement, published in Friday’s Federal Register, calls for Mexican growers to raise the base price of tomatoes sold in the U.S., in exchange for authorities here dropping an investigation into whether the Mexicans were selling tomatoes below cost.
Importers in Arizona said the higher prices would likely mean fewer sales, and the ensuing drop in imports would have an economic ripple effect in Nogales and other ports of entry.
But Florida growers, who originally called for the investigation into Mexican pricing, said they are cautiously optimistic that the decision will help their industry.
“I don’t think we’ll see monumental growth in the industry. It’s really about preservation at this point,” said Matt Joyner, director of federal affairs for the Florida Department of Agriculture.
Growers across the United States need this protection because they simply cannot compete with tomatoes sold below the production price, Joyner said.
But the “outlandish” price hikes proposed in the deal could hurt U.S. companies that package and ship tomatoes, other officials said.
Arizona tomato importers are worried they will lose their grocery store contracts to Florida companies because of the prices called for in the proposal, said Lance Jungmeyer, president of the Fresh Produce Association of the Americas.
“It’s going to have an immediate impact,” Jungmeyer said.
He said that in 2011, $1 billion in produce passed through Nogales, the largest port of entry for fresh produce into the U.S., and that tomatoes typically account for about one-third of that traffic.
If trade is reduced by 10 or 20 percent, Jungmeyer said, Nogales would see a proportionate decline in employment and a negative ripple effect within suppliers.
“People in town are worried,” he said.
But while the association plans to file comments on the proposal, Jungmeyer thinks it is unlikely the final deal will change.
“I think this is the best deal we’re going to get,” he said.
Bret Erickson, vice president of the Texas International Produce Association, agreed with Jungmeyer that while the deal is not perfect, it is still better than the trade war that might have broken out. The disagreement over tomatoes could have carried over to other commodities and hurt other industries, he said.
“We’re pleased to see that we’re close to avoiding a trade war,” Erickson said.
But the cost of avoiding a trade war could be higher prices for consumers.
“If they want great-tasting tomatoes that Mexico grows, they will be paying higher prices,” Erickson said.
Mexican tomatoes are vine-ripened while those in Florida are picked green and ripened with gas, he said.
A study by the Nielsen Perishables Group for the Fresh Produce Association of the Americas predicted that in the winter the price of greenhouse tomatoes could double and the price of field tomatoes could increase about 50 percent.
- Arizona kids in crisis: How you can help
- 11 holiday classics for the ultimate movie marathon
- 2016 college football rivalry games you simply can't miss
- New treatment offers hope for migraine sufferers
- 11 stadiums to watch your favorite football team
- Shopping for a TV? Best models for 2016
- The new beer pairing guide for holiday foods
- Avoid this holiday plumbing disaster in your home
- 7 tips to avoid holiday weight gain
- New treatments mean better prostate cancer survival rates
- 5 of the scariest things found in drains
- 6 tips to create the best family movie night
- New bone marrow procedure holds promise for healing pain
- The best places to celebrate Fall in Phoenix
- Infamous athletes who did the most time for their crimes
- Diet, exercise and aspirin: 3 tools to fight colon cancer
- 2016 baseball highlights, bloopers and blunders
- See how CFOs really feel about business in the Valley
- The best television shows on the internet
- The 5 worst things you could do for your roof
- 6 coolest things brewing in Arizona
- The virus that keeps head and neck cancers on the rise
- State Fair ‘Kid Reporter’ has all the angles covered
- 4 important things to know about timeshare maintenance fees
- Signs of delayed car crash injuries
- The truth about sports concussions
- The Alzheimer's epidemic: Facts you need to know
- The season is here, keep your Fantasy Football team strong all season
- 8 TV shows you can't miss this fall
- Football is here: 6 tips to make this your best season ever