Downstream Pricing Upends Tomato Suspension Agreement

By Clint Thompson

One tomato industry expert remains frustrated at the lack of enforcement over the Tomato Suspension Agreement (TSA).

Tomato Suspension Agreement

Michael Schadler, manager of the Florida Tomato Committee and executivevice president of the Florida Tomato Exchange, voiced his frustrations at the Florida Tomato Conference in Labelle, Florida, over the Agreement. It is an agreement between the Department of Commerce (DOC) and signatory producers/exporters of fresh tomatoes produced in Mexico to ensure they sell Mexican tomatoes at or above the TSA reference price. In theory, this would eliminate the injurious effects of exports of fresh tomatoes to the United States.

“We’re resigned to the fact that the legal structure of these agreements isn’t perfect. They’re just not that compatible with the way the fresh produce industry works. When you get those imports and you have the distribution and you have multiple products in the mix, there are ways these guys can get creative and find a way into the market,” Schadler said. “The problem is the agreement can only have jurisdiction over that first transaction at the border. When we see cheap prices further downstream in the market, there’s really nothing we can do about it because that’s not the first transaction.”

The Agreement was updated effective Sept. 19, 2019 and applies to all fresh and chilled tomatoes, except those bound for processing, according to the U.S. Department of Agriculture Agricultural Marketing Service. The TSA provides mandatory inspections at the U.S.-Mexico border and voluntary inspections at the destination.

“With the suspension agreement, which is supposed to stop dumping of Mexican imports, we just see so much downstream pricing that doesn’t make logical sense if all of the rules are being followed. We think most people try to play by the rules. But you have to understand when there’s a big glut of imports coming in and those guys only have an option of selling at the reference price or above, or leaving it in Mexico and the natural market price wants them to go down below the reference price which is a minimum reference price from the agreement, these guys have every reason in the world to find a way to get that into the market,” Schadler said. “Otherwise, they lose it. In the perishable business, you don’t want to lose it.”