Zhengfei Guan Feng Wu Dong Hee Suh IFAS/GCREC, University of Florida Sept. 7, 2016 Tomato Production, Trade, and the Impact of the Suspension Agreement
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Zhengfei GuanFeng Wu
Dong Hee Suh
IFAS/GCREC, University of FloridaSept. 7, 2016
Tomato Production, Trade, and the Impact of the Suspension Agreement
• Industry Overviewo US & Florida Production, Price and Valueo Mexican Productiono Trade with Mexico
• Suspension Agreement & Impacto Floor price and binding effecto Impact on Import volume, market price and volatility
o Main data sources: USDA-NASS, Department of Commerce
Outline
Florida largest supplier of fresh tomatoes in the U.S.
Dominates the U.S. winter fresh tomato market
But production has been declining.
Florida Tomato Industry
Production
2639
950
0
500
1000
1500
2000
2500
3000
3500
4000
4500
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Million lbs US and Florida Fresh Tomato Production2005: Total 3.8B lbs, FL 1.6B lbs
US Florida California
Acreage
97500
33000
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
AcreUS and Florida Fresh Tomato Acreage
US Florida California
Production Value
1243
453
0
200
400
600
800
1000
1200
1400
1600
1800
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
million $ U.S. and Florida Fresh Tomato Production Values2005: $1.6B, FL $0.8B (higher than CA)
National Florida California
Yield per Acre
295 (1180 Bx)
0
50
100
150
200
250
300
350
400
450
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
CWT/Acre
Florida California
Tomato Prices
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
$/lbs Annual Average Prices of Fresh Tomatoes
US Florida California
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
66966173 6392
6945
63335934
6609
5370
75707237
7796
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Million lbs Mexican Fresh Tomao Production Red Total
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.
Imports Growth
FL Production and Imports from Mexico
3137
949.9
0
500
1000
1500
2000
2500
3000
3500
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Million lbs Imports from Mexico Florida Production
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 Support of Protected Agriculture
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 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 0.1722003 0.2169 0.1722013 0.31 0.2458
Suspension Agreement
A new suspension agreement (March 4, 2013); New reference prices 50% higher
Suspension Agreement
Domestic & Import Prices
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
$/lb US and Mexican Tomato Annual Prices at Major Shipping Points (open field, adapted env.)
US MX
Occurrence Binding Floor Prices (1998-2016)Weekly Prices of the U.S. and Mexican Tomatoes, 1998 - 2016
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
$/lb Restrained us price MX Price
% of the restrained weeks: Before: 22% After: 30%
Weekly Prices of the U.S. and Mexican Tomatoes, 2010 - 2016
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
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
$/lb Restrained us price MX Price
% of the restrained weeks: Before: 19% After: 30%
Occurrence Binding Floor Prices (2010-2016)
U.S. Tomato Prices and Reference Prices
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80 $/lbRF us price
Domestic & Floor Prices
Impact of Agreement (1998-2016)
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%
Import and Domestic Prices Before (1998-2013) and After (2013-2016)
Impact of Agreement (2010-2016)
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%
Import and Domestic Prices Before (2010-2013) and After (2013-2016)
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?
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