With US regulators changing stance on whether or not to apply tariffs on Mexican fruit and vegetables, as well as the uncertainty regarding the Tomato Suspension Agreement, some growers have opted to stay out of the US market until the dust settles. Many of them are smaller growers who must choose more carefully where they are to invest.
"The situation is getting complicated because the issue is resulting in too much cash flow coming out of growers' pockets," said Alberto Pedraza of Texas-based El Dorado Growers. "Some of the smaller growers in Mexico are electing to stay in the domestic market. They don't really have enough cash up front to pay the bond required to trade with the US. Also no one wants to invest in a risky environment."
Pedraza added that this will have a lasting effect into next year. "Another consequence is that some of these growers are not investing into next season, meaning it is possible that fewer tomatoes will be coming from Mexico into the US next year. What will this mean for US consumers? The result will be that demand will increase as will prices."
He said that El Dorado Growers and other companies are continually working on their programs in order to position themselves well for the future. "We remain focused on making sure our current program is the best it can be. We are aiming to be even more efficient so we can meet any further challenges in the future."
Central Mexico production going well
As far as the current season stands, the central Mexican growing regions are enjoying steady volumes. These include San Luis Potosi, Zacatecas and Puebla, with Baja in the Northwest expected to come back online within the next week or two. Pedraza said El Dorado Growers' central Mexican program runs from May until the end of November.
"Our program is currently located in San Luis Potosi, in the northeastern part of the state," he shared. "It's a very nice region and the climate provides stable conditions throughout the summer months. Tomatoes are grown throughout the central part of Mexico at this time of year. Baja growers are just waiting for their tomatoes to size up which will take another week to ten days."
Limited US supply to prompt stronger market
Some of the US supply regions are not producing at the same rate as expected due to generally cooler conditions during the early summer period. But this should change by the end of August as more regions like the Midwest and Canada increase production. Until this happens, tomato prices are predicted to climb.
"There is not so much volume coming out of the Midwest right now," Pedraza observed. "Right now, if the Mexican - US border were to close, there wouldn't be enough to meet US demand. However, Leamington and the Midwest should come online in about four weeks. Roma prices are in the $12 - $15 range, while Rounds are $12 - $16 and with limited supplies in the market, we can expect prices to increase over the next week."
For more information:
El Dorado Growers
Ph: +1 (956) 580-3200