The Tomato Suspension Agreement should be continued but the agreement should maintain equal market access for all U.S. marketers of Mexican tomatoes, according to a delegation of leaders from the Fresh Produce Association of the Americas, which last week shared these concerns with U.S. Department of Commerce officials and members of Congress.
Instead, the newest proposal from the Department of Commerce would allow a small group of Florida-based marketing companies to establish a virtual monopoly over the marketing and distribution of Mexican tomatoes in the U.S., threatening to put current U.S. importers and marketers of those tomatoes out of business.
“As a whole, the proposed provisions establish a raft of rules and tools to discriminate against some U.S. businesses and benefit large Florida marketing companies,” Jungmeyer said. “These companies, which have long demanded the proposed changes, are using the Department of Commerce to allow them to create a monopoly in the marketplace at the expense of other U.S. marketing companies and consumers.”
The delegation from FPAA made the point that, by all appearances, domestic tomato growers in Florida sought out the Department of Commerce’s dramatic and market-shocking policy changes – notably the termination of the 22-year-old Tomato Suspension Agreement and a subsequent imposition of a 17.56 percent duty on all tomatoes imported from Mexico – to protect them from competition from Mexican producers of higher-quality tomatoes.
“Onerous as those new policies will be for consumers and for businesses that make up the U.S. tomato supply chain,” said FPAA President Lance Jungmeyer, “there is an even bigger and more destructive agenda here. The reality is that some Florida grower-distributors are seeking to establish a monopoly on the marketing of Mexican tomatoes in the U.S. If they are successful, these companies will ultimately drive our companies out of business, endanger the well-being of thousands of people who work for us and eliminate the kind of competition that currently delivers high-quality, affordable tomatoes to average American consumers.”
On May 7 the Commerce Department withdrew from the Suspension Agreement and imposed duties ostensibly to give Florida growers more of an advantage to sell their lower-quality, “gassed-green” tomatoes. The Department of Commerce is now considering new replacement Suspension Agreement policies that offer a clear advantage to the Florida companies, which are not only growers but also distribute Mexican tomatoes through their own large network of re-packers and other middle-market companies in which they have an ownership stake. The Florida companies’ ability to integrate the entire supply chain of Mexican tomatoes makes them uniquely positioned to benefit from the proposed trade policy changes and to put other U.S. importers and marketers out of business.
Among other troubling provisions, the proposed policies will dismantle long-established legal rights that allow produce buyers to seek price adjustments for tomatoes that do not meet quality standards. That will result in U.S. buyers either paying twice or more above the minimum price for Mexican tomatoes or, most likely, buy tomatoes from re-packers across the U.S. that are owned by the Florida marketing companies – not from current importers and marketers who sell popular, high-quality Mexican tomatoes that do not need to be repacked.
“Give us an agreement that allows all companies to use the rules and regulations afforded by the Perishable Agricultural Commodities Act, which was passed by Congress and affords buyers the ability to make adjustments for breach of contract, which is an essential element of interstate commerce. The proposed agreement essentially eliminates these benefits for some U.S. marketers of Mexican tomatoes,” Jungmeyer said.
Jungmeyer added that “FPAA looks forward to continued discussion about these concerns with the Department of Commerce, which has the difficult, but important task of finding common ground for all the parties involved with the agreement.”
Contact:
Erika Dominguez
FPAA
Tel: 520-287-2707.