Bloomberg News

Mexican Tomato Growers Make Proposal to Salvage U.S. Pact

October 19, 2012

Mexican tomato growers yesterday made what they say is an unprecedented proposal to the U.S. Commerce Department to salvage a 16-year-old pricing agreement for exports to the U.S.

The proposal would extend the current accord to cover 100 percent of Mexican tomatoes instead of the current 85 percent, Martin Ley, a representative for the growers from Mexico, said in an interview after meeting with Commerce Department officials yesterday in Washington. His group is also offering to add 18 percent to 25 percent to the floor price, depending on the type of tomato.

“We have presented a very comprehensive proposal,” Ley said in a phone interview. The offer to increase the floor price is “about six to eight times higher than the previous increases we’ve had under the agreement.”

Acting on a petition from U.S. producers led by Florida growers, the Commerce Department on Sept. 27 issued a preliminary decision to end the agreement, which has been in place since 1996. A final decision could come between mid- November and late May.

While U.S. producers say that doing away with the agreement will result in a free market, American importers and the Mexican farmers say it may trigger tariffs and ignite a trade war.

Mexican Challenge

Mexico is urging the Commerce Department to respond promptly to the growers’ proposal, Deputy Economy Minister Francisco de Rosenzweig said in an interview yesterday. The nation is working to diversify its tomato exports to countries such as Japan due to the “uncertainty” triggered by the U.S. decision, de Rosenzweig said.

The deputy minister said in a Sept. 27 interview that Mexico would consider retaliatory tariffs on $1.9 billion worth of U.S. exports if, after exhausting all legal appeals, the tomato agreement isn’t reinstated.

Arturo Sarukhan, Mexico’s ambassador to the U.S., said last month that the Commerce Department’s action “seems to be dictated by politics rather than policy” and that his nation was prepared to challenge the preliminary decision.

A higher price floor “won’t have an impact on the U.S. consumer, because the tomatoes we bring to the U.S. market already command a high price,” Ley said yesterday. Retail prices for the goods in the U.S. can vary from $1.20 a pound to $3.99 a pound during the course of the year, depending on the type of tomato, he said.

The Commerce Department declined to comment yesterday on the Mexican proposal.

Reggie Brown, executive director of the Florida Tomato Exchange, a growers group, said politics has nothing to do with the request to end the agreement.

“It’s about simple economics and fair trade,” he said. The goal of the U.S. growers remains “the restoration of fair terms of competition in the tomato trade,” Brown said.

Mexico exported $2.1 billion worth of tomatoes last year, 93 percent to the U.S., the nation’s Agriculture Ministry said in a Sept. 6 statement.

To contact the reporter on this story: Nacha Cattan in Mexico City at ncattan@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net


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