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USA: Tomato Tariff Wars

by Laura DurnfordRadio Netherlands
March 11th, 2002

Whether you call it a love apple', a tomAHto or tomAYto, the humble fruit of Solanum lycopersicum may well be the most legislated vegetable in the history of international trade. Yes a fruit that was legally defined as a vegetable by the American Supreme Court back in February 1887. This was in order to benefit from tariffs placed on all vegetables imported from the West Indies just 4 years earlier. More than 120 years later the USA also slapped levies on tomatoes coming over the border from Canada and so a messy trade war started simmering.

Americans consume almost 17 pounds of fresh tomatoes per person every year. It's a $1.4 billion industry. Most are grown in Florida and California but, thanks to a bilateral free trade agreement of 1988 and the 1994 North American Free Trade Agreement, Canadian tomatoes now command more han 43% of the market, beating imports from Belgium and The Netherlands. But far from nourishing economic health and pleasing the business-oriented palate, this particular globalisation recipe is making a mess of the whole kitchen.

You say TomAHto...

Seventy percent of all Canadian greenhous tomatoes are sold in the USA. But a few US growers complained that they couldn't compete against the cheap prices of these Canadian imports. In October 2001 the US imposed a border duty of around 30%, accusing their northern neighbours of dumping' or selling below the cost of production. The Canadians retaliated by forming a Tomato Trade Alliance and complaining that US field tomatoes were being dumped in Canada.

Leo Caligaro, Vice President of Hydro Age Farms in Florida, was one grower who complained about the Canadians. "I don't feel it's fair because the ground is not level," he says. "Even though they say the industry is not subsidised that cannot be because they have been selling at 50% of their cost of production!"

...And I say TomAYto

Nonsense, says Jack van der Kooy, who owns Sunchoice Products in Simcoe, Ontario, where he produces more than 1.2 million pounds of tomatoes a year from 3.5 acres of greenhouses: "Our tomatoes are marketed almost entirely in the US. If we were selling below the cost of production we wouldn't be in business long!"

Price of Success

Both these companies produce tomatoes in a controlled greenhouse environment. But different levels of efficiency are blamed for the discrepancy in Canadian and American prices. For example, the cost of keeping tomatoes cool in Florida is estimated to be five times higher than for heating greenhouses in Ontario. So Canadians feel they're being penalised for their success.

"The petitioners in the USA have resorted to politics in order to reduce our competitiveness," says Van der Kooy.

Family Key

Another key to Canada's success is an emphasis on family-run farms, whereas America has increasingly opted for a large-scale approach. In Tampa Bay in Florida for example, the 15,000 strong town of Ruskin no longer calls itself The Tomato Capital of the World'. Although the annual tomato festival still takes place every May, many local, family-run farms have had to sell their land to big agricultural corporations. By contrast, in the similarly sized "Tomato Capital of Canada", Leamington in Ontario, another annual festival celebrates the 800 acres of local family-run greenhouses which still produce around 80% of Ontario's vegetables, of which 60% is tomatoes.

Among these is AMCO Produce' run by Fausto Amicone. He thinks that starting out on a large scale led his American competitors into expensive mistakes: "Every area has its own climate and pests and that's all a learning curve," he explains.

"We've been through that and now the US is going through it as well. The problem is, they started heavy -- they said, let's put up 20 acres here and let's go learn!' That's what's making their production costs much higher than ours."

Everyone's a Loser

The new US border tariffs could cost Fausto Amicone 4 million dollars by the end of 2002. He feels betrayed that the most efficient producers are being punished in this way. "Free trade to me now is just a big joke," he exclaims.

And while he's wiping this splat of American protectionism off his face, his countrymen are aiming their own missile as the food fight escalates, saying that if they can't have free trade, they want fair trade'.

"The most asinine thing that could happen is that there will be two trade barriers," says one spokesman, "one on our tomatoes going down and one on their tomatoes going up. Now who loses in that? The consumer loses, we all lose. This is stupid."





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