How trade affects the US produce industry: the case of fresh tomatoes

Abstract

The US produce industry faces intensifying competition from imports, particularly those from Mexico, the largest exporter of produce to the United States. Fresh produce imports from Mexico have grown dramatically in recent years. This study examines the impact of increasing fresh tomato imports from Mexico on market price and revenue of US growers. Results show that tomato prices are highly sensitive to supply, suggesting a saturated market. Imports from Mexico have significant negative impacts on the prices of US domestic tomatoes. A scenario of 50% increase in tomato imports from Mexico could result in a $252 million (27%) revenue loss for American growers, thus posing great challenges to the sustainability of the declining US tomato industry.