Protecting American Farmers or large companies?

Let’s make one thing clear! I love the USA. I love our Florida farmers. I believe in America first and having our farmers grow our food is extremely important. I do believe our farmers deserve more for their products, I just don’t believe this is the way to accomplish this and more importantly it will be disastrous for the consumer.      

TOMATO SUSPENSION AGREEMENT

I usually side with the current administration, when it comes to policy, but this time they came to the wrong conclusion and here are some of my take aways.

 IT’S POLITICAL OR IT’S POLITICS

Secretary of State Marco Rubio, former Florida Senator, was a big advocate for the Florida Tomato Growers and now has the president’s ear and without any conclusive facts I am sure he helped push this with President Trump as well as Howard Lutnick. That in conjunction with the push for America first policies and tariffs, which the suspension agreement is neither, More on that later. The data used was skewed to make Florida’s case, mostly because the people in the administration know nothing about growing, selling , packing, shipping, marketing of fresh produce. I will give Trump, Rubio and Lutnick the advantage when negotiating world peace but when they want to speak about fresh produce they better bring a team and AI to go toe to toe with this college drop out.

THIS IS NOT TARIFFS

Without going too far into the weeds, the major difference is with a tariff you pay the fee and you are done, so you pay the 17%, you know your added cost, make your prescribed profit and done. With the dumping claim, the Florida Tomato growers can ask for a review that can go back 2 years and then if decided the “Importers” which are AMERICAN COMPANIES, would be forced to pay an additional duty as far back as 2.5 years. How would you like to run your business with those factors? Wait it gets worse! Department of Commerce only can review 2 to 6 companies Max, if determined that there was dumping, ALL tomato growers pay the additional fee. Wait there is more. Who do you think gets to pick what companies are reviewed? Yup the Florida Tomato growers BUT WAIT. If a Mexican grower does not want to get revied they can pay. Pay who? Yup you guessed it the Florida Tomato growers. Sounds like legal extortion to me.

 IT'S NOT DUMPING Its FRESH PRODUCE

I originally thought that the dumping claim was selling below production cost, which is the case for most other commodities not for tomatoes. Just an FYI fresh produce no matter what country it is grown at one time, or another is sold below production cost, it is better to lose a little money than to lose it all which is very possible on a perishable item. Dumping rules for tomatoes is selling below the Mexican National market price, but of course if that wasn’t bad enough there is more. First, as part of the average price they throw out the low prices. For those that are not familiar with fresh produce sales, it is very rare that produce gets sold for one price. Even in my business I can sell 5 loads of red peppers in a day and not one load would be the same price, we operate on an average price. Remember produce is a perishable item, prices will go up, prices will come down but if you don’t sell it will go rotten and will be worth nothing.

 MEXICAN TOMATOES HAVE PUT FAMILY FARMS OUT OF BUSINESS.

There is no doubt there are less tomato farmers in Florida, and it is also a fact there are less farmers in the USA, across all commodities. First, we will fact check the Florida farmers.

Fact one, growing tomatoes or any other crop is hard and not always profitable. There have been many instances of crop failure, weather events, natural disasters that have put farmers out of business. The Florida tomato growers are correct there are less farms and thy claim it was because of “Mexican tomatoes” which is not entirely true. Florida is one and has been one of the fastest growing states in the country for the past 3 decades. When you have more people, you need more land to build more homes. Much of that land was farmland and those farmers were paid handsomely for that land, sometimes sold for more money than they could make farming for 10 years or more.

Throughout the farming industry there. Has been a consolidation of farms into corporate run mega institutions, in part backed by Wall Street money. Many of these companies, including the 4 or more Florida companies that brough this dumping suit have also gobbled up these smaller farms and I am sure they did not pay top dollar for the smaller companies they helped put out of business.

 THE PAST, PRESENT AND FUTURE

There was a time when Florida tomatoes dominated the market. I can remember when Florida roma tomatoes would be selling for $12 and Mexican roma tomatoes were selling for $5 at the same time, albeit that was about 30 years ago.

Slowly the Mexican growers invested in Greenhouses, new varieties of tomatoes with better flavor profiles, technology and started making headway into the markets. No one can dispute that a vine ripened tomato will taste 100% better than a gassed green tomato. For the non-produce people. Florida grows a mature green tomato, which is gassed to bring up the color. This in fact is a preferred tomato for institutions such as fast-food chains because it slices better and stays together better than a vine ripened tomato. This is still the place where Florida tomato dominates. In fact, if Florida could produce year-round, they would have a captive audience with these institutions. As far as retail, consumers prefer a vined ripened tomato, no matter where the country of origin. They could be Tomatoes on the vine, TOV, grown in the USA, Mexico, Europe and Israel to name a few. FYI, no other countries have had to jump through hoops like Mexico to market their product in the USA. Back to retail. You would be hard pressed to find a Florida gassed green tomato at your local supermarket because it is not the flavor that consumers want and to be completely honest if given the choice they would pay more for a vine ripened tomato. Truth be told, Mexico was probably the competition 30 years ago, but today they are NOT THE SAME TOMATO. In the last 2 weeks, California gassed green tomatoes where in the $5 to $8 range while Mexican Vine ripe tomatoes were $12 to $17 fob range. It is not the same tomato and to their credit California is not part of this anti-dumping claim.(Check out today’s video and I’ll tell you the Crenshaw melon story.

 FLORIDA CAN GROW ALL THE TOMATOES THE USA CONSUMES.

It seems like not one season that goes by that Florida is impacted by hurricanes, freeze, wind or all the above. It’s a fact of life no matter where in the world you grow fresh produce, Mother nature has the last word. Mexican tomatoes account for 70% of the tomatoes sold in the USA.

In a year with zero mother nature events, in a market that is purely supply and demand, what do you think would happen if you hindered 70% of the supply? Prices will skyrocket and it would be much more than the proposed 17% duty, you can easily have a 50% to 100% rise in tomato prices. Check out this news clip, where this farmer thinks the price for his tomatoes should be $25 a box, currently the retail contracts are about $12 a box for tomatoes.

Now if that is a regular year what would happen if there was a weather even in Florida? Keep in mind, there is usually something that contributes to market disruptions. In today’s video I will tell the tomato story of one of my best days in produce, profit wise and it’s all about tomatoes. If Mexican growers who account for 70% of the production, cut back their production and there is a disaster in Florida, we could see $100 a box tomatoes, that is not hyperbole!

Mexico does not only grow tomatoes, but they are also a strategic supplier of many items that cannot be grown in sufficient supplies to meet consumer demands, such as Lettuce, broccoli, Cauliflower, herbs, cucumbers, eggplants, peppers, and many more. Now that Florida has the blueprint and politics behind them, I would bet the ranch they will be adding more items to their anti-dumping claim, which would be great for the few mega farming companies at the great expense of the American consumer. This is the most inflationary policy that I have seen in my 50 plus years in fresh produce and it is the future if we don’t change it.

PERPLEXING FACTS

Every year large retail negotiates fixed pricing for farm products. Every year farm inputs,supplies, regulation adds to the cost of production, but every year large retail negotiates to pay less for product or the same and never for more. The perplexing question for me, if you fight when you must pay $.25 more a box, why weren’t you in the fight not to pay 17% or more in price? The short answer is they will just pass it along to consumers, the longer answer they will charge the consumer more but will expect the growers to pay some of it.

Perplexing- It’s USA companies who pay the tariffs, NOT Mexican companies. In fact, part of the anti-dumping literature prohibits the Importer, usually American company, to charge back the duty to the Mexican grower. These companies usually work on about 10% sales commission so not advantageous. Another interesting fact. Some of the largest importers, if not the largest tomato importers of Mexican tomatoes are the same companies that have claimed that Mexico is dumping and are obligated to pay the same tariff. AHHHHH but one caveat, they wouldn’t be part of the additional charge if it was ruled that there was dumping. So, they could request a review of another company in Mexico, bring that suit, not bring that suit if Mexico pays them not to bring that suit and then if found that some were dumping, all but the Florida tomato growers who were importers would have to pay the additional monies. Yeah, sounds legit to me.

Lastly, As I mentioned earlier, Secretary of State Marco Rubio, when a Florida senator was a huge advocate for the end of the suspension agreement. I can understand if he thought it good for his state, but why not an equal opposite push from Texas, Arizona and California? Do they realize the serious adverse effects to their economies? Does the department of commerce understand that American suppliers of seed, plastic pesticides, packaging sell their product to Mexico and again the Importers who pay these charges are US companies not Mexican companies.

SOLUTIONS AND IN CONCLUSION

Again, I love all our farmers, no matter where they live. Without them we don’t eat. It is a tireless endeavor and many times without thanks or profits for all of their hard work. In case you didn’t know I was in favor of ending the suspension agreement. The caveat there was I wanted a complete end, no dumping claims, just free trade for market share, based on your products. I am also and advocate for helping USA growers compete as well as protect but this is not that. We as a country thrive on technology and this was available to our growers to help reduce cost through automation plus find better solutions and practices in growing beautiful, fresh produce that looks good, taste great and is affordable to consumers. Many of our growers in Florida, California, Texas and many other places have used this to enhance their products. In fact, we do grow tomatoes in Greenhouse in the USA, that are just as delicious as Mexican vine ripes and consumers love them. The Florida tomato growers have not kept up with or unwilling to make the necessary investments and have been crying foul and using the government to “level the playing field” but in reality the field was level, they didn’t know how to play.

My solution If the Florida tomato growers really believe Mexico is dumping tomatoes, I suggest you not buy 1 box of Mexican tomatoes? As I stated earlier these growers are the LARGEST importers of these tomatoes, so why would they support the growers they are complaining about? Let us see how that works out for you? Since the USA wants to curtail the Mexican tomato production and the dumping claim is pegged to the higher price of the Mexican National market I would feed my country first. Charge the Mexicans less for their tomatoes, which makes it harder to claim dumping if they are sold for more in the USA.

For the first time in my life, I am an advocate for another country over my own, but this only pertains to the Florida tomato growers because I know this is wrong. It is wrong because a few families profit immensely while the American consumer will be drastically impacted. There is a 100% tomato price will rise if this order is not changed, the only question will they rise only 17% or will they rise 200%, time will tell.

The produce industry has stayed relevant, proactive, fair, productive without government intervention because the people in it understand it. We deal with constant issues, disasters, weather events daily and pivot on a dime and always come through. Everything I just mentioned is not how government operates and the reason it should not be involved, they just don’t get it! Remember we are the only industry that our departments were full of product during covid, where other’s shelves were bare. FYI Mexico was a big reason for those shelves being full.

As a side note, large retail has a new business model, sell less produce for more profit. This is already a disastrous indication for things to come, we need more consumption of fresh produce to #MAHA not less, let’s not curtail production, we can’t afford the consequences.

I am a US Veteran. I BLEED RED, WHITE AND BLUE,

I love our Florida farmers I believe this is the wrong way to go.

God Bless you, God Bless our Farmers and GOD bless the USA.