According to a new economic analysis, tomato prices could soon rise by approximately 50%, according to The Fresh Produce Association of the Americas (FPAA).
The FPAA and its members help to ensure North America’s uninterrupted access to fresh, high-quality, healthy, and delicious fruits and vegetables from Mexico.
The document analyses proposed punitive duties on fresh tomatoes from Mexico currently under consideration by the U.S. Department of Commerce.
The study out of Arizona State University shows that this action —triggered by the proposed termination of a critical trade agreement— would have direct economic consequences for American consumers and businesses alike, particularly in Arizona.
In June, the Florida Tomato Exchange (FTE) requested that the Department of Commerce terminate the 2019 Tomato Suspension Agreement (TSA). This sets an agreed-upon reference price for selling fresh tomatoes from Mexico in the U.S. market.
Ending the agreement could limit tomato supply, raise prices, and benefit a few Florida growers.
Led by Dr. Timothy J. Richards, Morrison Chair of Agribusiness at Arizona State University, the analysis evaluated the impact that terminating the TSA will have on consumer prices, retail sales, and economic activity in two states that are central to the tomato supply chain in the U.S.: Arizona, and Texas.
Tomato Prices and More Results
Key results of the Arizona State University study include:
- Suppose the TSA is terminated and import tariffs are placed on Mexican tomatoes. In that case, the prices of all types of tomatoes (including cherry, grape, greenhouse, roma, TOV, and vineripe) will rise by an average of 52.0% for U.S. consumers.
- U.S. grocery retailers alone will see a $7.53 billion decrease in revenue because of the termination of the agreement.
- In Arizona, economic activity will fall by almost $3.40 billion across sectors, potentially losing more than 22,700 jobs.
- In Texas, economic activity will fall by over $4.53 billion across sectors, potentially losing more than 32,000 jobs.
In short, the study confirms what more than 400 businesses across 32 states told Commerce in a filing this week: the impact of tomatoes imported from Mexico generates economic value far beyond their retail value and supports jobs, businesses, and tax revenue in local communities throughout the U.S.
Related Article: U.S. and Mexico Signed New Tomato Suspension Agreement
Comments from TIPA
The Texas International Produce Association (TIPA)discussed the tomato suspension agreement in its last Newsletter.
They said that if the TSA is terminated, most tomatoes grown in Mexico would be subject to duties of approximately 20.91% or more on each box to enter the U.S. This would effectively stop the flow of fresh tomatoes from Mexico.