U.S. Tomato Growers On The Outside Looking In

The U.S. vegetable industry has gone through many trials over the last 30 years. International trade was one of the first issues I was pressed about when I started at the University of Florida. Mexico and Florida had gone through several rounds in a trade dispute over marketing fresh produce in the winter market. There was a reprieve in that battle when the U.S. Department of Commerce negotiated a suspension agreement with Mexican growers who agreed not to sell fresh market tomatoes in the U.S. below a fixed minimum price.

The attention in trade then went to Canada and the growth in the greenhouse vegetable trade. Greenhouse growers in the U.S. contended that Canadian and Mexican greenhouse tomato growers were selling their tomatoes at below fair market value. That case was dismissed by the U.S. International Trade Commission on the basis that the market share for imported greenhouse tomatoes in the U.S. fresh tomato market was too small to have a significant impact on U.S. growers of fresh market tomatoes. The logic assumed that all fresh market tomatoes competed in the same market whether they were grown in greenhouses or in open-field cultivation. Since that ruling on greenhouse grown tomatoes, we have seen a meteoric rise in imports of greenhouse grown tomatoes from Mexico and Canada.

Change In Latitudes

Thirty years ago, the greenhouse tomatoes we saw in the market generally came from Europe. In terms of tomato imports, they represented only 13% of all tomato imports in calendar year 2000, with more than half of those imported greenhouse tomatoes coming from Canada (51.5%). They are now the dominant type of tomato imported from Canada (95% of all Canadian imports are greenhouse tomatoes) and a large share of the imports from Mexico (39.2% of all Mexican tomato imports now being greenhouse grown).
 
In calendar year 2011, greenhouse tomatoes represented 44.7% of all imports. Several factors play a role in this change. First, greenhouse tomatoes fall outside of the control of the suspension agreement with Mexico and they are not restricted in their exports to the U.S. as a result of that suspension agreement. Second, quality has taken on greater roles in the U.S. produce market and, right or wrong, greenhouse vegetables are generally viewed as being of better quality. Third, food safety has been a growing crisis within fresh produce and it is easier to control production and food safety in a greenhouse environment. Buyers recognize that advantage and have given more shelf space to greenhouse grown produce in retail markets.

Competing Under Cover

Mexico and Canada have seized the opportunity to fill the demand for greenhouse-grown vegetables. We have seen some growth in U.S. production of greenhouse vegetables, but not nearly to the degree that Canada and Mexico have grown. USDA reports that greenhouse tomatoes represented 29.6% of all fresh market tomato shipments in 2010. They represent 38% of all imports in 2010.

I have written several times about the decline in demand for fresh market vegetables. Our growers not only suffer from a weakening demand for their product, but also greater competition from imports that are increasingly greenhouse grown. U.S. growers are making a transition to greenhouse production, but that transition has been slow and has given foreign suppliers a chance to take market share. U.S. growers are going to need to find better ways to compete in this market. They are going to need to examine the products they grow in open field cultivation, or they are going to have to transition even faster to greenhouse production. They cannot rest on their past success and hope to have a solid future.

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