Tomato prices south of the border

MONTICELLO, Ark. -- Arkansas tomato farmers who read Kelly Bryant's weekly tomato newsletter noticed in 2003 that Mexican farmers were receiving a higher price for their tomatoes than they were.

This prompted them to ask why, and should they be doing something different in order to receive the same price as Mexican farmers, said Bryant, an economist with the University of Arkansas Cooperative Extension Service in Monticello.

Bryant, whose newsletter keeps county agents and farmers abreast of tomato prices at various locations and in different markets, researched the question and now has some answers.

First, Arkansas tomato farmers can rest a little easier.

"The higher prices received by the Mexican farmers in 2003 seems to be an anomaly," Bryant said. "In 2002 and 2001, shipping point prices received by Arkansas farmers were as good as or better than those in Mexico.

"The 2003 event was set up by poor weather along the East Coast of the United States in the spring that reduced tomato production in Florida and South Carolina, causing a nationwide shortage of tomatoes."

On June 9, 2003, supply-to-date from western Florida was down by 49 percent while supply-to-date from Mexico was up by 39 percent, Bryant noted.

Another factor is that Mexico had an excellent quality crop in 2003, which would have resulted in better prices.

Bryant said Mexico's quality tomato crop probably had more to do with favorable growing conditions than production practices. He also noted that Mexico grows some tomatoes in green houses, which results in higher quality.

Bryant said it's likely that Mexico sent only their best tomatoes to the United States. He said many of their tomatoes are consumed in their own country, but "they only increased their exports to the United States in 2003 because we had a production shortfall and high prices.

"In this case, it would make sense to export your best tomatoes where they can receive the best prices and consume the lesser quality tomatoes in Mexico where there is no production shortfall and prices are not as high."

Bryant noted that the difference in prices between Arkansas and Mexico tomatoes in Chicago and New York was not large. In Chicago, the difference was $1.50 to $2 per box. In New York, it was $1 or less.

Mexico also supplied tomatoes to Los Angeles and San Francisco and would have enjoyed a transportation advantage to those markets.

The importation of tomatoes into the United States is likely to remain a trend for a long time. It will be driven by a healthy appetite for the red vegetable.

"The pounds of tomatoes consumed in the United States have been increasing annually for the last several years. 2002 was a record year for tomato consumption in the United States, and 2003 is forecast to be even greater. Consumption in 2003 is expected to be 18.6 pounds per capita, up from 18.3 pounds per capita in 2002."

Bryant said tomato imports to the United States increased greatly in 1995 and have remained relatively high ever since. Since 1995, between 30 percent and 40 percent of U.S. tomato consumption has been supplied by imports.

The Extension economist suspects that many of the tomatoes imported for the fresh market come from greenhouses in Mexico and Canada.

Lamar James is an Extension communications specialist with the University of Arkansas.

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