willcoxrangenews.com; Submitted Alan Baker of the Willcox Chamber of Commerce and Agriculture Written by by Frank van Straalen of Eurofresh, Inc:In 1996, the Department of Commerce suspended its Anti‐Dumping Investigation regarding fresh tomato imports from Mexico when an agreement was reached with Mexican Producers, which set a minimum “reference” price. The suspension agreement has been amended from time to time and currently the reference price is $0.21 per pound. This reference price is purportedly based on the sum of growing cost, harvesting cost, selling, general & administrative expenses and profit. One problem with this reference price is that it was drafted based on field production cost because the greenhouse tomato business was almost non‐existent in 1996. Today, greenhouse production represents over half of all fresh tomato retail sales. For comparison, the cost of production at Eurofresh, based on the same formula, is approximately $0.61 per pound or almost three times the reference price! It is clear that sales of Mexican tomatoes at the current price levels provides for predatory marketing to gain market share in the U.S. at the expense of U.S. growers, especially the greenhouse growers.
Mexican production of fresh market tomatoes has increased significantly over the past several years and has been heavily subsidized by the government. The current reference price is being used as a safety‐net for these investments. Just in the past year, total production in Mexico, according to the USDA, increased from 1.6 million to 2.2 million metric tons, up 37.5 percent. Virtually all of this volume is destined for the US market.
As a result, Mexican supplies of tomatoes have saturated the US market causing a dramatic drop in pricing that started in late 2011. The average sales price in 2012 for on‐the‐vine tomatoes achieved by Eurofresh has been below the historical average by 22 percent, which is unsustainable (see graph below). The total revenue shortfall for the company in 2012 is expected to be nearly $30 million which is threatening our very existence and in fact that of the entire US greenhouse industry.