US groups fear big price hikes, trade war over Mexican tomatoes

Jan 25 2013, 09:28 IST
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US consumers would be hit with huge premiums for fresh tomatoes. (Reuters) US consumers would be hit with huge premiums for fresh tomatoes. (Reuters)
SummaryUS consumers would be hit with huge premiums for fresh tomatoes.

US business groups warned on Thursday of skyrocketing tomato prices and a damaging trade war if President Barack Obama's administration follows through on a preliminary decision to end a long-standing tomato trade agreement with Mexico.

"We are concerned as US distributors about the ability to continue to be able sell Mexican tomatoes with the tomato trade dispute that's going on between the United States and Mexico," said Lance Jungmeyer, president of the Fresh Produce Association of the Americas.

He said a new pricing study had found that US consumers would be hit with huge premiums for fresh tomatoes, with prices doubling or worse, if distributors were forced to withdraw Mexican tomatoes from the marketplace.

Under some scenarios, tomatoes could become "more expensive than steak," Jungmeyer said, adding that prices could quickly spiral to levels "more than the American consumer can bear."

The US Commerce Department signaled in September that it favored ending the 16-year-old tomato agreement on grounds that it failed to protect US growers, especially in Florida, against Mexican tomatoes that are sold in the United States, allegedly below the cost of production.

A final decision is not due until May, but a Commerce official said US-Mexico negotiations over the issue continued in Washington this week.

Terminating the tomato agreement would clear the way for Florida growers, who compete fiercely with Mexico for the US winter and early spring market, to file a new anti-dumping complaint against their Mexican rivals.

Jungmeyer said such a complaint would almost certainly lead to preliminary but "prohibitive duties" that would sharply curb or cut off Mexican supply completely, due to increased costs for US importers and distributors.

That, in turn, threatens to "put the Department of Commerce and Mexican growers on a collision course that would have disruptions to trade all around," Jungmeyer said.

Mexican officials have already raised the threat of retaliation if Mexico's tomato exports to the United States, valued at nearly $2 billion a year, are damaged by the trade dispute and failure to extend the tomato agreement.

'SMACKING OF EXTORTION'

Their warning was echoed on Thursday by Patrick Kilbride, a senior US Chamber of Commerce official, who joined Jungmeyer on the conference call in they which both spoke to reporters.

"In any trade relationship, and especially in one as broad and deep as the US-Mexico relationship, there's going to be a number of areas at any given time where there are disputes," Kilbride said.

"In a number of areas on both sides

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