Tomato Production, Trade, and the Impact of the
Suspension Agreement
Zhengfei Guan
Feng Wu
Dong Hee Suh
IFAS/GCREC, University of Florida
Sept. 7, 2016
Outline
• Industry Overview
o US & Florida Production, Price and Value
o Mexican Production
o Trade with Mexico
• Suspension Agreement & Impact
o Floor price and binding effect
o Impact on Import volume, market price and volatility
o Main data sources: USDA-NASS, Department of Commerce
Florida Tomato Industry
 Florida largest supplier of fresh tomatoes in the U.S.
 Dominates the U.S. winter fresh tomato market
 But production has been declining.
Production
4500
4000
3500
3000
Million lbs
US and Florida Fresh Tomato Production
2005: Total 3.8B lbs, FL 1.6B lbs
US
Florida
California
2639
2500
2000
1500
950
1000
500
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Acreage
160,000
Acre
US and Florida Fresh Tomato Acreage
140,000
US
Florida
California
120,000
100,000
97500
80,000
60,000
40,000
33000
20,000
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Production Value
million $
1800
U.S. and Florida Fresh Tomato Production Values
2005: $1.6B, FL $0.8B (higher than CA)
1600
1400
1243
1200
1000
800
453
600
400
200
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
National
Florida
California
Yield per Acre
450
CWT/Acre
400
350
300
250
295 (1180 Bx)
200
150
100
50
Florida
California
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Tomato Prices
0.8
$/lbs
Annual Average Prices of Fresh Tomatoes
0.7
0.6
0.5
0.4
0.3
0.2
0.1
US
Florida
California
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Mexican Competition
 Florida and Mexico compete for the U.S. fresh tomato
market historically.
 Total imports ~$3.5B lbs, of which Mexican imports
account for about 90%.
• Mexican Production, Trade, & Government
Support
Mexican Production
9000
Million lbs
Mexican Fresh Tomao Production
8000
7000
Red
7570
6945
6696
6173
6392
6333
6000
Total
7796
7237
6609
5934
5370
5000
4000
3000
2000
1000
0
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Imports Growth
 Imports of Mexico tomatoes have increased sharply in recent
years.
 Market share was about 20% smaller than Florida’s in 2000,
is now more than 3 times higher than Florida’s.
FL Production and Imports from Mexico
3500
Million lbs
Imports from Mexico
Florida Production
3137
3000
2500
2000
1500
1000
949.9
500
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Mexican Support of Protected Agriculture
 The Mexican greenhouse horticulture received substantial amount of government
support.
 In 2009,SAGARPA announced a strategic project to support protected agriculture.
 Greenhouses: $1.2 million Peso/ha, up to $3 m peso per project (~ $250k
in 2009).
 Furthermore, support covers 50% of specialized training and technical assistance (up
to $100,000 peso)
 The same applies to greenhouse insurance, market studies; certification
(GAP&GMP); promotion of protected agriculture product, etc.
Mexican Protected Production
 70% of tomatoes are produced under this technology
 15,000 Hectares (37,000 acres) in 2014/15
 better quality, better pest control
 Reduced weather risk exposure, more predictable
supply
 higher prices
 Higher yield
Year
hectares
acres
2009/10
4000
9884
2010/11
13000
32124
2011/12
14700
36324
Mexican Tomato Yield
Percentage of Protected Production
 Red mainly from protected production (total
production 70% from protected, but the % for red
tomatoes higher).
 50% US imports produced from “greenhouse”
(adapted & controlled environment) in 2014/2015.
Suspension Agreement
 Suspension of Antidumping Investigation (filed in Apr 1996)
 Initial agreement (Dec 6, 1996) set reference prices at:
 $ 0.2108 per pound (Winter: October 23 - June 30)
 $ 0.172 per pound (Summer: July 1 - October 22)
Ref. Price
Winter (Oct 23‐Jun 30) Summer (Jul 1‐Oct 22)
1996
0.2108
0.172
2003
0.2169
0.172
2013
0.31
0.2458
Suspension Agreement
 A new suspension agreement (March 4, 2013); New
reference prices 50% higher
Domestic & Import Prices
0.7 $/lb
US and Mexican Tomato Annual Prices at Major Shipping Points
(open field, adapted env.)
0.6
0.5
0.4
0.3
0.2
0.1
US
MX
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Occurrence Binding Floor Prices (1998-2016)
Weekly Prices of the U.S. and Mexican Tomatoes, 1998 - 2016
$/lb
Restrained
us price
MX Price
2
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
% of the restrained weeks:
Before: 22%
After: 30%
2.00
1/2/10
3/6/10
5/8/10
7/10/10
9/11/10
11/13/10
1/15/11
3/19/11
5/21/11
7/23/11
12/17/11
2/18/12
4/21/12
6/23/12
8/25/12
10/27/12
1/5/13
3/9/13
5/11/13
7/13/13
9/14/13
11/23/13
1/25/14
3/29/14
5/31/14
8/2/14
10/4/14
12/6/14
2/7/15
4/11/15
6/13/15
8/15/15
10/17/15
12/19/15
2/20/16
4/23/16
6/25/16
Occurrence Binding Floor Prices (2010-2016)
Weekly Prices of the U.S. and Mexican Tomatoes, 2010 - 2016
$/lb
Restrained
% of the restrained weeks:
us price
MX Price
1.80
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
Before: 19%
After: 30%
Domestic & Floor Prices
1.80
$/lb
U.S. Tomato Prices and Reference Prices
RF
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
us price
Impact of Agreement (1998-2016)
Import and Domestic Prices Before (1998-2013) and After (2013-2016)
Before
After
Average Import Price
0.45
0.54
Average Domestic Prices
0.42
0.50
Volatility of Import Prices
0.21
0.19
Volatility of Domestic Prices
0.22
0.15
% of the restrained prices
22%
30%
Impact of Agreement (2010-2016)
Import and Domestic Prices Before (2010-2013) and After (2013-2016)
2010-2013
After
Average Import Price
0.47
0.54
Average Domestic Prices
0.50
0.50
Volatility of Import Prices
0.21
0.19
Volatility of Domestic Prices
0.27
0.15
% of the restrained prices
19%
30%
Concluding Remarks
 US/FL acreage continued to decrease but production
and value stable after 2013 Suspension Agreement.
 Average weekly import prices increased by 15%.
 Imports continued to increase after Agreement.
 The two prices are now more correlated.
 More in-depth price analysis showed: Increase in
import prices boosted US price after new Agreement.
 Agreement helped! But is that enough?
THANK Y
Zhengfei Guan
[email protected]
(813) 633-4138
U!