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NAFTA rewrite key to future, growers say

mecThe future of the American grower depends on a rewrite of the North American Free Trade Agreement, some believe.

“In order to survive, the American small and medium-sized produce farm business needs immediate changes,” said Richard Bowman, director of farming at J&J Family of Farms, said at a June 29 U.S. Trade Representative hearing on NAFTA talks.

“A weekly limit or quota needs to be established on the quantity of specialty produce entering the American markets,” he said.

Cheap Mexican produce has hurt producers in Florida and Georgia, and Bowman said expanding year-round Mexican produce shipments to the U.S. will cause problems for growers up the East Coast and Midwest.

At the same hearing, Mike Stuart, president of the Florida Fruit and Vegetable Association, said the NAFTA era has seen explosive growth in Mexican produce to the U.S. that has been “profoundly negative” for Florida growers.

“Obviously NAFTA has been good for a lot of agriculture and specialty crops, but folks in the Southeast have our problems with it as far as having product coming in during our market and terribly hurting prices,” said Charles Hall, executive director of the  Georgia Fruit & Vegetable Growers Association. “I don’t know what the solution is, but I’m hoping it is a part of the negotiations and we will be able to figure out some way to help the Southeast.”

However, putting in place new anti-dumping tools within a modernized NAFTA would roll back the benefits of the agreement, said Lance Jungmeyer, president of the Fresh Produce Association of the Americas.

Calling the concept for protection of seasonal producers “anti-consumer,” Jungmeyer said tariffs or other restrictions on volumes coming from Mexico would disrupt produce supply and pricing for retailers and foodservice operators, he said.

“I think this thing has the potential to really harm consumers and buyers and the U.S. exporting industry,” he said. “You have to assume Mexico and Canada would do the same thing.”

A fresh start?

Florida fruit and vegetable producers were encouraged by the Trump administration’s stated intent in NAFTA negotiations to seek a separate domestic industry provision for perishable and seasonal products in anti-dumping/countervailing duty proceeding, said Reggie Brown, executive vice president of the Florida Tomato Exchange, at a House Agriculture Committee hearing in late July.

The provision would help Florida growers, he said.

For example, Florida’s marketing window for strawberries is two to three months long and that window is being overwhelmed with imports, Brown said.

 But because Florida’s strawberries only represent about 15% of U.S. production, it has no trade remedy.

“Those industries that don’t make up more than 50% (of total production) have no ways to defend themselves against unfair trade practices,” Brown said. “The perishable and seasonal change that we are talking about would simply narrow the period in which the investigation would be focused on.”

The limited time frame investigation would only apply to perishable commodities, and any injury remedy would be applied only for that limited time frame and not linger for months or years, he said.

Brown called for a change in U.S. trade regulations that would permit seasonal fruit and vegetable producers representing less than a majority of U.S. production to more easily bring anti-dumping actions.

Beyond the objectives of a new NAFTA agreement, Brown said the Florida fruit and vegetable industry also is asking the Trump administration to pursue other “near-term remedial and political steps” to help reverse what it calls Mexico’s unfair practices as quickly as possible. Brown said that Mexico has been subsidizing and providing incentives to their producers to expand fruit and vegetable production at the same time produce from Mexico is sold at prices that constitute dumping.

The cost of production for Florida tomatoes is about $10 per 25-pound carton, he said. While Mexican exporters are not supposed to sell a 25-pound box of tomatoes in the U.S. at less than $8.30 at the border, Brown said that Mexican tomatoes can be found at terminal markets for as low as $5-6 per carton in certain times of the year.“We have family farmers being forced out of business by unfair trade practices coming from our competitors to the south,” he said. “Once they are gone, they will never come back.”

With a wage rate in Mexico of about one-tenth of that in the U.S., Mexico has a built-in advantage, Brown said. 

Mexico’s expanded exports of fruits and vegetables since 2000 has resulted in the loss of farm sales in Florida alone between $1 billion and $3 billion per year, Brown said.

While U.S. tomato production declined from 40% from 2000 to 2016, Mexican tomato volume grew by 166% in the same period. Years ago, Mexico competed with U.S. tomatoes from December to March, while now the competition from Mexican tomatoes is year-round, Brown said.

“Despite U.S. trade remedy measures and a long-standing Suspension Agreement, Mexican tomatoes continue to surge into the U.S. markets at unfairly low prices.

He also said the Trade Priorities and Accountability Act of 2015 includes a goal to make import relief mechanisms for perishable and cyclical agriculture are accessible and timely.

Do no harm

Whatever anti-dumping provisions are put in place to help U.S. growers compete against Mexican imports, other U.S. fresh produce marketers don’t want them to be used by Canada and Mexico to create new barriers for U.S. exports.

“We recognize there are other areas of the produce (industry) who have different concerns, but our focus for our members is to make sure we don’t see seasonal tariffs imposed by Canada or Mexico,” said Kate Woods, vice president of the Northwest Horticultural Council, Yakima, Wash. The council represents apple, pear and cherry growers in the Northwest U.S.

Woods said the group is pleased that the U.S. Trade Representative has published priorities that include maintaining existing reciprocal duty-free market access for agricultural goods and strengthening science-based sanitary and phytosanitary (SPS) measures.

However, she said the council doesn’t want any language in a retooled NAFTA that would make it easier for tree-fruit producers in Mexico or Canada to bring anti-dumping cases against U.S. growers, packers, and shippers.

Growers in Arizona and California believe NAFTA has generally served the industry well, said Matt McInerney, executive vice president at Western Growers.  “We recognize there are other areas of the country that have not seen themselves benefiting under NAFTA to the degree others have,” he said. 

The United Fresh Produce Association is focusing on the broad principles of NAFTA during the renegotiation process and not focusing on particular regions, said Robert Guenther, senior vice president of public policy.

“We support the administration seeking to understand these concerns (of Florida tomato growers and others), and potentially assisting vulnerable commodities with World Trade Organization-acceptable support programs,” Guenther said in an e-mail statement. “However, the answer to competition cannot be erecting protectionist barriers that would only be mimicked by other countries to protect their own industries from U.S. exports.”

The Trump administration expects to begin NAFTA negotiations by mid-August, with ambitions to conclude the talks by early next year.

Discounting the idea of a single industry position, Brown said that every grower and region will need to “carry their own water” in the debate over what a new NAFTA will look like.

 “It’s a free country and everybody will have to speak for themselves.”

The Packer

August 02, 2017 | 4:46 pm