US, Mexico in food fight over tomatoes: How messy will it get?

Tensions over tomatoes began to simmer in 1996, when the US growers asked the Commerce Department to initiate an investigation into tomato-dumping by Mexican growers, who at the time had just 35 percent of the American market. That investigation was suspended in 2008 after the Mexican growers agreed not to sell tomatoes for less than 21 cents a pound.

But the tomato-throwing began anew in June when the US growers asked the Obama administration to withdraw the suspension of the investigation and cancel the 1996 investigation itself, an action that could pave the way for a new investigation to be initiated, thereby putting new pressures on Mexico.

“There is certainly the potential for that happening,” says Mr. Brown.

The US growers argued to the Commerce Department that several factors have made the 1996 investigation and 2008 agreement out of date, including changes to the dollar-peso exchange rate, increased costs associated with greenhouse production, and the inflation rate in Mexico that has raised costs for growers there, suggesting they are selling at unprofitable prices to maintain market share.

At the same time, the Mexican producers have doubled their exports to the US while US producers’ share of market has shrunk. According to Brown, of the Florida Tomato Exchange, there were 300 to 400 large US tomato producers with about $500 million in sales in 1996. In 2012, there are fewer than 75 producers with sales of $250 million, according to Brown.

The bulk of the US tomato producers are in Florida and California. Both Congressional delegations, plus agricultural commissions, have been active in supporting the US growers.

On Thursday the Commerce Department issued a preliminary finding that the 1996 investigation should be terminated. On Friday, however, the Mexican producers were meeting with Commerce Department officials in an effort to prevent the withdrawal of the suspension of the anti-dumping case. They said they would put forward a “strong proposal.”

If the US growers initiated another anti-dumping case, the US Commerce Department could potentially start the process of investigating it. Ultimately it could result in tariffs on imported tomatoes if the US government found the vegetables were being sold for less than fair market value.

Although the US grows fewer tomatoes than it did sixteen years ago, the industry exported 284 million pounds of tomatoes, most of them to Canada. By way of contrast the US consumed 6.44 billion pounds domestically.

Although half of those tomatoes now come from Mexico, Brown says the US could supply the nation with all it needs if those exports were curtailed.

“We don’t anticipate any shortages,” he says. “We have had the capacity to supply twice the US consumption in the past.”

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