Tomato Wars: A Discussion of How International Trade, Structural Changes, and Competitiveness Affect the North American Produce Industry

By Estes, Edmund A. | Journal of Agricultural and Applied Economics, August 2003 | Go to article overview

Tomato Wars: A Discussion of How International Trade, Structural Changes, and Competitiveness Affect the North American Produce Industry


Estes, Edmund A., Journal of Agricultural and Applied Economics


The demand for a variety of fresh fruits and vegetables, including fresh market tomatoes, has increased significantly over the past decade because of greater convenience in use, improved selection, and rising health and diet concerns. As U.S. demand for tomatoes and other horticultural crops strengthens, inexperienced domestic and international suppliers believe they can compete effectively within U.S. markets. Free trade agreements have reduced monetary barriers to trade, but remaining impediments, such as institutional and competitive market constraints, represent significant challenges for southern U.S. growers. This paper discusses points addressed by VanSickle, Eastwood, and Woods concerning trade and horticultural market development.

Key Words: fruits, marketing, NAFTA, trade, vegetables

In recent years, consumers have placed greater emphasis on health and diet while also wanting to spend less time shopping for food and preparing meals. Federal agencies, private health organizations, and industry trade associations have initiated public education campaigns aimed at informing consumers about the benefits of eating more fruits and vegetables. Greater consumer awareness about health benefits associated with eating more fruits and vegetables and increased availability, greater convenience, and rising income have pushed fruit and vegetable consumption to record high levels. In total, the average American eats about 740 pounds of fruits and vegetables (fresh and processed forms), and we spend about $76 billion to purchase fruits and vegetables (Kaufman et al.). Collectively, fruits and vegetables are a small but important sector within the U.S. agricultural economy. Since 1990, U.S. fruit and vegetable per capita consumption has increased about 10% while fresh vegetable per capita consumption has risen nearly 22% (Pollack). Sustained demand growth has, of course, attracted the attention of many new domestic and foreign fruit and vegetable suppliers who believe that they can compete effectively in U.S. markets. In this session, presentations by John VanSickle, David Eastwood, and Timothy Woods provided us with their insight concerning a variety of barriers, as well as demand and supply factors that have influenced competitiveness and trade in the fruit and vegetable sector.

As southern U.S. growers reassess crop planting mixes to reflect reduced market opportunities for tobacco, corn, and cotton, popular press articles have noted the strong local, regional, and national demand trends that have occurred in the fruit and vegetable industry. Most recently, USDA releases and produce business articles have documented the rapid increase in availability and consumption of organically grown fruits and vegetables. Currently, relatively few southern U.S. growers obtain a majority of on-farm income from fruit and vegetable sales, but a large number of farmers grow small quantities of high-value fruits and vegetables (Estes). Significantly higher costs and significantly higher production, price, and marketing risks for fruits and vegetables compared to most agronomic crops require that growers evaluate their wealth and financial positions very carefully before committing to growing fruits and vegetables. Candid conversations with experienced fruit and vegetable producers reveals that many do not expect to make a profit every season, so it is important for perishable crop growers to manage cash inflows and outlays and to develop a detailed financial plan covering extended seasons. Fresh market tomato production is an example of the high-reward, high-risk outcomes frequently observed in horticultural crop production. Tomatoes rank among the most popular vegetables preferred by consumers; the average American eats about 18 pounds of fresh tomatoes and about 70 pounds of canned tomatoes every year (Pollack). Annual fresh market tomato per capita consumption has increased about 16% over the past decade (Lucier). Although people continue to eat more tomatoes, many other aspects of tomato demand and supply factors have changed in recent years. …

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