U.S. and Mexican Tomatoes: Perceptions and Implications of the Renegotiated Suspension Agreement

Abstract

The 2013 antidumping investigation suspension agreement introduced new categories of tomatoes and raised reference prices of Mexican field-grown and greenhouse tomatoes by 43% and 89%. We analyze the substitution and complementary relationships among different categories of tomatoes grown in the United States, Mexico, and other countries and measure substitution and income effects of reference price increases. Findings indicate that the new agreement may decrease demand for U.S. field-grown tomatoes in favor of Mexican field-grown and Mexican greenhouse tomatoes. Policies to increase overall U.S. tomato expenditures may be more favorable for U.S. tomato producers than the new reference prices.