Attack of the Killer Tomatoes : Florida Farmers Stew Over Surge in Mexican Imports

Florida’s winter crop is in the soup, and Paul DiMare is seeing red.

DiMare raises tomatoes--as well as zucchini, yellow squash and cucumbers--on 8,000 acres scattered across southern Florida. It is a vocation that has brought him face to face with the new world of free trade, and he isn’t smiling. Nor are farmers, packers and shippers throughout Florida, which produces 95% of the nation’s winter tomato crop.

The reason for their anger: a surge of imported Mexican fruit and vegetables, particularly tomatoes, grown at perhaps half the cost faced by farmers here.

When President Clinton was pressing aggressively for congressional approval of the North American Free Trade Agreement in 1993, the Florida congressional delegation initially withheld its support.

So Clinton guaranteed that the trade pact’s technical provisions would protect Florida farmers from Mexican tomatoes and other winter crops. In a letter to the state’s congressional delegation, he wrote that he was “committed to take the necessary steps . . . to protect the U.S. vegetable industry.” With that, the Florida lawmakers promised their support, which turned out to be pivotal.

“He made a promise to Florida farmers,” DiMare said. “As far as I’m concerned, he hasn’t upheld it.”

Clinton must now figure out how to placate farmers in Florida, where agriculture is the No. 1 industry, without harming importers who depend on shipments from Mexico, consumers concerned about higher prices and a Mexican government struggling with a painful recession and a sharply devalued peso.

Never mind that tariffs on tomatoes were relatively low even before the controversial trade agreement with Mexico was passed--1 1/2 cents a pound, a rate that had a negligible impact on prices down the line. Rightly or wrongly, NAFTA is casting a shadow over every trade dispute between the United States and its immediate neighbors.

The tiff over tomatoes typifies the difficulties posed by increased international commerce. In 1996, said a Clinton administration official who is trying to find a solution, “it’s a huge political problem.”

Any number of U.S.-Mexico trade disputes are growing riper by the day, in California as well as elsewhere. California avocado growers are trying to block the import of lower-cost Mexican fruit. Last month, the Clinton administration angered Mexico--and won the applause of political allies in the Teamsters--when it denied Mexican truckers access to interior highways in California, Arizona, New Mexico and Texas.

California tomato farmers have no direct stake in the Florida dispute because they produce most of their crop in the summer, when Mexico’s weather is too hot. But they have an interest in the precedent the outcome could set, as do avocado growers and others thrown into competition with Mexican farmers.

In Florida, whose winter tomatoes go fruit-to-fruit with Mexican produce, no one is better equipped to compete than Paul DiMare. His grandfather, a Sicilian peddler, arrived in the United States at the turn of the century. His father sold fruit from a pushcart in Boston’s West End.

Now, said the 55-year-old DiMare, his family oversees one of the largest fruit and vegetable farming operations in the country. In addition to the 8,000 acres he and other family members rent and own in Florida, they operate farms in California’s San Joaquin and Imperial valleys and in South Carolina--a total of about 15,000 acres.

By DiMare’s account, field hands in Mexico are paid $3 a day; his workers, pulling green tomatoes by hand from the 4-foot-high vines and shouldering the plastic barrels that they have filled, earn an average of $50 a day. He pays an additional 20% for Social Security, workers’ compensation and unemployment insurance.

As a result of the free-trade agreement, tariffs tumbled, quotas climbed and in rolled the tomatoes--at $3 to $5 for a 25-pound box, a bargain compared with the $8 to $10 DiMare said it costs him to plant, grow, pick and ship a similar quantity.

“I can’t outdo the numbers,” said DiMare, whose payroll is down as much as 35% from last year because he has had to cut production.

In the packing shed behind his modest office, green tomatoes are rolling down conveyors to be boxed. In the last year, 840 million tomatoes passed down that line. But will the pace continue?

“I see 35% to 50% shrinkage in [Florida] farming if something isn’t done immediately,” DiMare said. “It’s going to be a disaster. . . . They overproduce, and they’re shipping in here below the cost of production.”

Already, Florida is losing some tomato production, although the Florida Fruit and Vegetable Assn. says it is not yet certain how much. Ray Gilmer, the association’s director of communications, said one major packinghouse went out of business last year, and eight to 10 growers closed down.

A greater impact, Gilmer said, has been the migration of major Florida growers to Mexican farms--as well as to South America--to take advantage of a trend toward yearlong contracts, which require them to “follow the sun” to supply customers all year round.

On Monday, Florida filed a complaint asking the U.S. International Trade Commission to determine whether surges in imports of Mexican tomatoes and peppers had damaged the U.S. winter vegetable industry.

U.S. Trade Representative Mickey Kantor, who managed Clinton’s 1992 presidential campaign and then completed the NAFTA negotiations, said the trade agreement has nothing to do with the problems faced by Florida’s farmers, who had been vulnerable to Mexican imports long before the treaty was in effect. He attributes the downward pressure on prices to the fact that the peso lost more than half its value last year, which made all Mexican products cheaper when purchased with dollars.

“What we’re trying to do is resolve some inequities which resulted from devaluation of the peso, resulting in an influx of tremendous numbers of Mexican vegetables and tomatoes,” Kantor said in an interview.

But in the view of advocates of free trade, what is happening in Florida is just what should be happening: The low-cost producers are coming out ahead, forcing the rest to cut costs or find another line of work.

“This is a classic case,” said trade scholar Gary Hufbauer of the Institute of International Economics in Washington. “The [fruit and vegetable] industry is at a competitive disadvantage. Florida probably should be reducing its production of tomatoes dramatically. The tomato is not in their long-term future.”

Under terms of the trade pact, the tariffs, or import taxes, placed on tomatoes began dropping by 10% a year when the agreement took effect in 1994. Similarly, the amount of tomatoes Mexico could ship to the United States began climbing. By 2003, all tariffs and quotas will disappear.

Kantor said the administration, looking for ways to satisfy Florida without violating the trade pact, favors legislation advanced by the Florida congressional delegation to count Mexico’s tomato imports weekly rather than seasonally and impose tariffs whenever they surge. Mexican officials oppose this, and the argument will probably be resolved by a U.S.-Mexican panel.

Enter the supermarkets, the Mexicans and the distributors, each expressing concern for the consumer.

Representing supermarkets, the Food Marketing Institute accuses the Florida growers of a campaign “to wreak havoc on their sole competitor.”

The Mexican government has focused on the U.S. commitment under the trade pact to open its markets to Mexican goods. “The proposed change clearly violates U.S. obligations under the NAFTA,” Herminio Blanco Mendoza, the Mexican secretary of commerce, wrote to Kantor.

As for those who distribute the winter tomatoes from Mexico, mostly through the border crossing at Nogales, Ariz., Humberto Monteverde, head of Nogales-based H.M. Distributors, said: “I’m very confused. Being brought up in a free-market society, I thought competition is good for everybody, including the consumers.”

And if the United States limits Mexico’s sales of tomatoes to this country, Mexico might retaliate by restricting U.S. wheat shipments, which averaged $42 million a year before the trade pact went into effect and $105 million since.

Monteverde said he fears that for all the numbers he can marshal to highlight the value of competition, one number is not on his side: 25.

That is the number of electoral votes in Florida.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Seeing Red

While tomato production by U.S. growers has remained relatively flat

Domestic shipments, in millions of pounds:

1995*: 144.7

... imports have surged ...

Imports, in millions of pounds:

1995*: 109.6

... cutting into prices paid to growers.

Cents per pound:

1995*: 24.9 cents

Unfortunately for consumers, retail prices continue to rise.

Retail price, per pound:

1995*: $1.51

* Figures are for December of each year.

Sources: U.S. Department of Agriculture, Bureau of Labor Statistics