Study: Duties on Mexican Tomatoes Could Cause 40% to 85% Price Increases, Lance Jungmeyer Comments
NOGALES, AZ - Consumers in the U.S. may be paying a lot more for their Mexico-grown tomatoes, according to a recent Arizona State University (ASU) study.
If the U.S. Department of Commerce withdraws from the Tomato Suspension Agreement and applies duties on Mexican tomatoes, the Fresh Produce Association of the Americas (FPAA) warned in a recent press release, consumer prices could rise up to 40 percent on average in the period from May to December, according to the analysis conducted by economists at ASU. And prices on particular varieties of tomatoes could see increases as high as 85 percent.
“This makes no sense. Most Americans crave certain kinds of vine-ripened tomatoes, and now they are going to have to pay more, significantly more,” said Lance Jungmeyer, President of the FPAA. “The unmistakable conclusion of the study is that withdrawing from the Tomato Suspension Agreement will cost American consumers substantially more for a product that has become a major part of their daily diets. Americans can’t afford this kind of sticker shock.”
The study cited by the FPAA was led by Dr. Timothy J. Richards, Morrison Chair of Agribusiness at ASU. The analysis evaluated the impact the withdrawal from the Suspension Agreement will have on prices consumers pay for four varieties of tomatoes—including tomato-on-vine (TOV), vine ripe, Roma, and field/beefsteak—under several market scenarios. The analysis employs data from AC Nielsen.
Terminating the suspension agreement, the ASU analyst found, would reduce the supply of tomatoes in the U.S. market, and raise prices paid by American consumers, particularly during the winter tomato season (October through June).
The analysis noted that, during periods such as the winter, prices for certain varieties like vine-ripened tomatoes, tomatoes on the vine, and Romas could rise more than 85 percent.
“In general, tariffs levied on imports of fresh produce from Mexico are borne disproportionately by U.S. consumers. In this analysis, we show that retail tomato prices in the U.S. may rise by an average of approximately 40 percent if tariffs remove a substantial proportion of the Mexican supply during the critical winter-tomato supply period,” said Richards, according to the FPAA. Richards also noted that, should other factors affect supply of domestic tomatoes, the effects of new tariffs could be even more substantial. “In this regard, imports serve a critical shock-absorber function for U.S. retail markets, given the frequency and severity of supply shocks from weather, disease, or even labor-related events.”
The U.S. Department of Commerce intends to take up the issue of the tomato suspension agreement on May 7th. To learn more about the study, read the FPAA’s press release in its entirety here.