A yearlong U.S. trade dispute with Mexico has cost American fruit and vegetable exporters millions of dollars in lost opportunities, and concerns about retaining market share in an essential export destination are mounting.
Since March 19, 2009, tariffs of 10% to 45% have hurt a range of fresh produce exports to Mexico, including pears, onions, apricots, cherries,
“If there are not California table grapes on the shelves in Mexican retail stores, there will be something else,” said Kathleen Nave, president of the Fresno-based California Table Grape Commission. “We lost market share, and we lost the retail commitment to having the product on the shelf, and we will in some ways have to start over.”
On March 19, 2009, Mexico enacted tariffs of 10% to 45% on grapes, pears, onions, apricots, cherries, strawberries, dates and head lettuce as a result of a cross-border trucking dispute.
California grapes have a 45% tariff, while tariffs for onions and head lettuce are 10%. Apricots, cherries, pears and strawberries have a 20% tariff.
U.S. Department of Agriculture statistics show U.S. exports of cherries, pears, grapes, lettuce, onions and berries to Mexico totaled $225 million in 2008 but sank 53% to just $106 million in 2009.
“It is critically important for this tariff to be removed,” Nave said.
California grape shippers — who exported 5.5 million boxes with a value of $60 million to Mexico in 2008 — suffered a 70% drop in volume in export shipments in 2009.
March 10 marked the first anniversary of a vote in Congress that brought a U.S./Mexico cross-border trucking pilot project to an abrupt halt, resulting in the tariffs. Mexico is the second-largest export market for U.S. produce companies.
The Alliance to Keep U.S. Jobs, a coalition 140 groups from agriculture, manufacturing and industrial interests, renewed their call for a quick resolution of the issue.
Nave said the grape industry leaders have been working on resolving the issue since June of 2009.
Nave said she is encouraged that U.S. Trade Representative Ron Kirk on March 9 indicated the issue is a priority.
“We certainly would have liked to see it resolved much sooner, but we are happy it is at the top of the list and have forward momentum toward resolving the issue,” she said.
The dispute with Mexico over trucking access has costing American growers and industries more than $2.5 billion, the alliance has said.
While manufactured goods comprise about 65% of 90 products hit by the tariff, agricultural commodities have been hit hard as well.
Export sales of fresh pears to Mexico were off $20 million dollars and 28% in 2009, while U.S. cherry exports to Mexico were off 19% and about $700,000 lower compared with 2008.
Mexico takes 13% of the Northwest pear crop, said Mark Powers, vice president of the Northwest Horticultural Council, Yakima, Wash.
“We can’t walk away from it — this isn’t an optional market,” Powers said. “Our guys have to continue to do business in that market,” he said.
Powers said pear growers are still shipping to Mexico, but f.o.b.s have suffered. While volume shipped to Mexico in 2010 has been running ahead of 2009 because of a larger crop, Powers said the f.o.b.s are off $3 to $4 a carton — nearly equal to the 20% tariff.
“The price of that tariff is being borne by growers in Washington and Oregon,” he said.
So far, the toll from the tariff to pear growers has been estimated at more than $11 million. “It is money coming out of the local economy,” he said.
Exporters are worried U.S. pears will lose market share to Southern Hemisphere suppliers this spring if the issue is not resolved, Powers said.
John Keeling, executive vice president and chief executive officer of the Washington, D.C.-based National Potato Council, said in a teleconference on March 9 that the Mexican tariff caused 2009 frozen potato sales to slide more than $30 million and 41% from 2008.
Travis Blacker, president of the Idaho Grower Shippers Association, Idaho Falls, said the 20% tariff on U.S. potato exports has contributed to the closure of one processing line at one Twin Falls frozen potato processor.
While Blacker said it was hard to say how the dispute has impacted the fresh market — growers are enduring low prices after high yields created oversupply last fall — but he said the lower demand from Mexico could likely push Idaho potato acreage lower for the upcoming season.