Two Trade Groups, One Goal

Founded in 1942, the Texas Produce Association was little more than a loose group of growers and shippers seeking mutual support and a chance to sell America on the virtues of Lone Star fruits and vegetables. Today, it is hundreds of members strong and represents the interests of the produce market in international law, education, insurance, technology, and marketing, with a vast array or resources at its disposal. John McClung is a veteran of the industry, involved with what is now the Texas International Produce Association (TIPA) for more than 40 years. Although he ceded the role of president and chief executive to Bret Erickson, McClung leads TIPA’s critical Border Issues Management Program.

An interview with John McClung, Texas International Produce Association

An interview with Lance Jungmeyer, Fresh Produce Association of the Americas

What would you consider as the most significant industry changes over the last few decades, particularly regarding the Hispanic market?

McClung: I think it’s pretty apparent most of the supermarket chains and major retailers tailor their stores to the ethnic requirements of their locations. Here in the Rio Grande Valley, we’re about 85 percent Hispanic on average, and there are stores clearly geared to this demographic, which is only to be expected.

As the produce industry globalizes, product becomes more available more of the time, and so you have the tropicals—mangos, papaya, etc.—becoming standard fare, particularly in ethnic communities, but also in nonethnic markets as well, as the appeal of these commodities grows.

Would you say we’re near the point of not referring to this segment as ‘the Hispanic produce market’—that it has become so normalized, it’s the de facto standard for the produce industry?

McClung: That’s a difficult question, because I’m not sure you can ever really say what the ‘standard’ is… But we are seeing substantial increases in mangos, papayas, bananas, and other tropicals in the American diet and these are all Latin American products for the most part. You continue to have the old standbys, but Hispanic buyers are becoming bigger consumers of these as well. All the old favorites are still here, but the guava, the passion fruit, the mamey—these are all finding an acceptance they never had before in the non-Hispanic community.

How have various trade agreements and other legislation affected the flow of produce from Mexico to the United States over the last decade?

McClung: There’s no end to the debates you can have in answering that, I don’t think there’s any question we’re seeing vast increases in the amount of produce coming from Latin America; in Texas alone, we have become the #3 shipper of fruits and vegetables to the entire country, but 25 years ago, those commodities were domestically produced.

Now it’s almost two-thirds Mexican produce and it is not all what you would consider tropical products—it’s things like onions and cabbage and carrots and peppers. You put this together with the classical and new tropicals, and you can see a definite shift in the acceptance of new products, as well as old products from new sources.

We’re reaching a plateau in Texas in terms of both tropicals and nontropicals, which are increasingly coming to us from Mexico. It’s produced, very often, by U.S. money; it is grown to U.S. standards; and the intent is for it all to be consumed in the United States. The cliché I have occasionally used is that we have “moved the garden across the river.”

What are some of the trends TIPA tracks for your members?

McClung: The fact of the matter is we don’t concern ourselves too much with studying day-to-day consumer trends. We take our direction largely from the retail and foodservice communities; we can see what’s happening in those sectors and it gives us a pretty clear picture of what consumers want.

We’ve been keeping an eye on citrus production throughout Texas, and have reached a pretty good understanding of how to stabilize the sector and avoid diseases like citrus greening. Which, by the way, is worth pointing out—as the produce industry globalizes, so do the bugs. They become more varied and more likely to show up in the United States as we continue to seek produce from outside our borders.

You’ve recently taken charge of the Border Issues Management Program (BIMP), what is its mission?

McClung: Anytime you have trade across an international border, issues constantly come up. There are broad public policy issues dealt with in Washington, or in our case, Austin (the state capital), like food safety laws or immigration reform. There are all sorts of technical components that go into maintaining a safe and healthy food supply, and this is a significant part of what BIMP works on.

What are some of the major issues facing TIPA members, and how is the BIMP addressing them?

McClung: We are looking, in Texas, at a surge of volume coming out of Mexico that’s going to require additional resources from the federal agencies—U.S. Customs and Border Protection (CBP), Food & Drug Administration (FDA), Department of Agriculture (USDA)—and this is at a time when, as you know, the economy is in such a state that going to Washington and asking for these extra resources is a difficult assignment. But we have to do it.

The BIMP is also involved in practical daily issues; I was just thinking the other day of all the issues we’ve dealt with in the last year, and it’s pretty impressive! We’ve negotiated a reduction in the syndication fees—for drivers bringing product into the United States from Mexico; we’ve gotten the FDA to double the number of inspectors, from four to eight, at the Pharr-Reynosa Bridge (Texas’ primary port of entry), and to reverse the decision to reduce overtime weekend coverage. We have also attracted an independent food safety lab to the Rio Grande Valley—a big issue—because the FDA has historically and chronically had a lack of lab capacity to do their job properly.

Another big deal is the USDA bringing in a new insect identifier at the Pharr-Reynosa Bridge. You would be amazed at how much difference it can make, because as more and more product comes in, you get bugs CBP agents don’t recognize and they must be identified before product can come into the United States. Doing this without an insect identifier on-site is very difficult; they’ve been getting around it by using an identifier two states away, but it’s a very slow process—so this is a major accomplishment.

At the same time, we’ve gotten APHIS (Animal and Plant Health Inspection Service, part of the USDA) and the CBP to ramp up the Cargo Release Authority program, which means Customs personnel can be cross-trained to do some of the insect identification [for] increased efficiency in moving product through the entry points.

At the state level, Texas has agreed to changes in overweight permit regulations. Traditionally, trucks in Mexico have been able to carry considerably more weight than U.S. trucks, and now they will be able to do so when they cross the border without penalty (in certain limited areas) by buying a permit.

The BIMP also weighed in heavily on the Tomato Suspension Agreement and we have worked with the FDA and other agencies on a number of health and safety issues, some of which are still pending or in draft form. An ongoing mandate is to work with the federal government to figure out how to make these things happen, even without the ideal level of funding or resources we would like to have.

Other examples include pesticide residue on limes. This may seem esoteric, but we import more limes through Texas than we grow oranges and grapefruits combined! Most of the limes consumed in the United States now are coming from Mexico—with very little coming from Florida or California.

Per capita lime consumption is increasing, but it’s almost all coming from Mexico, so it’s a bigger issue than it might seem. Another issue concerns salmonella on papayas, so we’ve been working closely with federal agencies to deal with it before it can cause too many problems.

We also work with the Mexican government on imports and other issues on their side of the border, and work closely with agencies like the Ministry of Agriculture, Livestock, Rural Devel-opment, Fishing and Food (SAGARPA) and the National Service of Food and Agriculture, Health, Safety, and Quality’s Agriculture Health Inspection Office (SENASICA).

In general terms, we work as a liaison between private industry and government on both sides of the border to help companies (with good histories) get products to the market more quickly. These are all things that fall under BIMP’s responsibility.

What major challenges—weather, water shortages, border violence—worry your members most?

McClung: Water is THE big issue for the next decade. Anyplace you have arid land agriculture—and the produce industry loves arid land as there are real benefits to growing in areas where the water supply is limited—you’re going to need water.

We’re no exception down here in Texas; we need water and this will continue to be a global issue. We’ve dealt with water issues in Texas for many years and will continue to do so, so our experience makes us well suited to address this issue. There are changes coming in the way water is managed, which will be a preoccupation for the industry for a long, long while to come.

If you were speaking to a college graduate or a young person looking to start a career in the produce industry, what advice would you give?

McClung: I’d tell him/her to learn to speak Spanish, first. And I would make sure he/she understood that like so many industries, produce is becoming more and more about science, so you better at least know the rudiments of the applicable sciences, which would be a big advantage.

But the industry’s still going to be a growing one for years to come. People are consuming more and more fruits and vegetables, and that’s on an international level. It’s a good business to be in; people will always need to eat.

 Lance Jungmeyer is president of the Fresh Produce Association of the Americas (FPAA), a nonprofit trade group founded in Nogales, Arizona in 1944. Today, it represents more than 100 members who grow, harvest, import, and distribute produce from Mexico. Jungmeyer has led the organization since 2010 and in this interview, we discuss the changes he has seen in the industry during his tenure, the current challenges FPAA members face, and what might be coming in both the near and distant future.

What do you consider the most significant industry change over the last few decades, particularly regarding the Hispanic market?

Jungmeyer: I would say the most significant was NAFTA (North American Free Trade Agreement) in 1993, which ushered in a new spirit of cooperation and a new ideal about how the United States viewed food. Since that time, availability of Mexican fresh fruits and vegetables has grown exponentially. Getting rid of the duties was an important aspect; fresh fruit from Mexico is no different than a New Yorker getting lettuce from California.

In addition, the infrastructure has grown and the ability to get trucks to and from the market is better. Many parts of Mexico that were pretty inaccessible twenty years ago, can now get to market. Mexico has also matured as an export-oriented industry, as U.S. retailers have demanded quality arrivals, traceability, and food safety.

In the next two or three years, what types of opportunities will arise for produce companies trading in Hispanic items?

Jungmeyer: Hispanic items are really two different things—what’s grown and how it is marketed. Certain items might be considered Hispanic, like dried chili peppers or tomatillos; then there are tropical items that you might consider to be Hispanic like papayas and mangos, but are widely consumed by all markets. What Mexico grows, they’re often growing for the United States market as a whole.

I think there are a few things that will create more opportunity like seed varieties. You’ll see more shelf-ready packaging coming out of Mexico, more produce going into clamshells or different kinds of bagging options. Because of labor advantages, they might be more able to do that.

As for other things, the berry category has exploded, more pineapples are coming out of Mexico, and bananas have always been grown there, as well as dragon fruit, cranberries, lettuces, broccoli, cauliflower, and carrots.

Just about anything that can be grown in the United States, you can find a place to grow in Mexico. In West Mexico, in particular, you have such a wide range of microclimates and different types of growers. You’ll see nearly everything grown in California grown in West Mexico, and tropicals and other things you can’t grow in California.

What are some of the more significant challenges facing these firms in the next few years?

Jungmeyer: Everyone in the produce industry is waiting for the Food Safety Modernization Act. Mexico is pretty far along on some of the challenges; in general, produce is going to have to clear sanitary standards. Mexico has different bugs, pests, and insects the United States doesn’t want and these challenges will have to be overcome.

Would you say we’re near the point of not referring to this segment as ‘the Hispanic produce market’—that it has become so normalized, it’s the de facto standard for the produce industry?

Jungmeyer: It’s a gradual process. Ten years ago, you might have considered avocados to be a “Hispanic” item. Clearly, that is no longer the case. In the future we could see the same with papaya, mango, and others. Some items, like tomatillos, and certain chile peppers, will always be considered “Hispanic.”

How has trading with Mexico impacted the flow of Hispanic produce in the United States and Canada over the past decade?

Jungmeyer: There are a few trade treaties being negotiated now like the Trans-Pacific Partnership, a high profile partnership with Asian and Latin American countries and Canada. Depending on what happens, you might see some reforms.

The United States and Mexico have also started to enter into higher level regulatory cooperative councils. This is where you might have customs agencies in the United States and Mexico come together and say, “What can we do to harmonize regulations to make two-way trade easier?” In the end, hopefully we will have less red tape at the border. From a trading perspective, it’s hugely important.

The Tomato Suspension Agreement (setting different price floors at different times of year for tomatoes coming from Mexico) provides greater controls with a much higher floor price. We’re hopeful this agreement will stay in place and allow the United States and Mexico to have peaceful trade relations. Last year, and early this year, we were very worried the United States and Mexico would have an all-out trade war over this issue.

What other Central or South American countries are gaining acceptance with FPAA members?

Jungmeyer: Some of our members do business with Chile, Guatemala, and the Dominican Republic. Even though it is implicit in our association’s name that we would serve all those countries, we do not. We started out as the West Mexico Vegetable Distributor’s Association in the 1940s and changed to FPAA in the 1990s. We haven’t really received direction from our board of directors to expand to other countries yet.

What Hispanic commodities do you think show the most potential for growth in the next two to three years? Why?

Jungmeyer: Well, I don’t know if you would call mangos a Hispanic commodity, but because they are not as widely consumed, they probably have the biggest upside. We’ve already seen avocadoes become hugely popular.

In looking for something that will continue to grow, it is still avocadoes from Mexico—even though the market is saturated with a billion pounds. A few years ago, it was 500 million pounds and everyone thought the market couldn’t take anymore—but people keep eating more and more avocadoes. Typical Hispanic items like tomatillos and dried peppers may not have the same growth potential.

How has violence in Mexico and along the border impacted FPAA members?

Jungmeyer: It’s something everyone is careful about. When you travel in Mexico, you try to be where you want to be by nightfall; it’s not much different than it would be in downtown New York City or Chicago. It is a problem in certain parts of Mexico, more on the eastern side where there might be more conflict.

What consumer trends do you monitor and use to help your members?

Jungmeyer: Our association is focused primarily on government and regulatory issues. From a consumer standpoint, anytime there’s an outbreak or food safety problem, we try to provide the right kind of communication to help allay fears in the market. We also do seminars from time to time about selling trends in the United States.

Do you lobby the government on regulatory and other issues?

Jungmeyer: We try to help members understand regulations… When they want change, we go back to the government and try to explain the industry viewpoint and hope everyone sees eye to eye. We try to help get produce across the border quicker, cheaper, and with less red tape.

How much has the focus on food safety impacted transactions or logistics for FPAA members trading with Mexico?

Jungmeyer: They’ve had various standards for the past ten years. There were some problems with Mexican produce that forced Mexico to get better, and get better quick. And there are changes coming up under the Foreign Supplier Verification Program (FSVP), which basically says if you’re receiving imported produce, you—as the importer—have to prove it meets food safety standards.

Since the United States is bound by international trade treaties to treat imports the same as domestic food, if the FDA is requiring imports reach a higher food safety threshold than domestic produce, this would be considered a violation by the World Trade Organization—and would put the whole FSVP in danger of being thrown out, or the U.S. facing potential retaliatory measures.

Because U.S. agricultural exports are among the few growth segments in the economy, the United States has to consider all the pieces of the puzzle.

How has the rise of “protected agriculture” affected the industry, particularly those who trade Hispanic commodities?

Jungmeyer: The rapid adoption of greenhouse and other protected agriculture in Mexico has made productivity go through the roof; it’s a good four times more efficient to grow tomatoes in a structure versus outdoors in the field. From a cost-benefit analysis, protected agriculture extends the growing season, so fruit or vegetables can be picked earlier or later.

Where do you see FPAA in five years? Ten years?

Jungmeyer: We’ll still be doing the same general kinds of things, whether the topics have changed. Food safety will still be a high priority; the FDA has said food safety is not a destination, it’s a journey.

Working with the government on red tape reduction will also be a huge thing. Maybe in five years, we’ll be in a better position for more preclearance—something they’re pushing for is a good rapid test for microbial, salmonella, E-coli, etc. Currently, random samples are shipped off to a lab to develop a culture. If nothing comes back, and it rarely does, the product is released. Meanwhile, the product has sat at the border for three to five, maybe even ten days.

Another area for improvement might be if the U.S. and Mexico developed greater levels of trust. With sanitary testing, looking for drugs, and other things, if this could be done in Mexico—just across the border or further inland, doing the inspection there, putting a seal on the truck, and then tracking the truck—it should sail right on through the border. It’s starting to happen, but there is a language barrier.

If you were speaking to a college graduate or a young person looking to start a career in the produce industry, what advice would you give?

Jungmeyer: Get involved in a young leadership program from one of the national trade associations like United Fresh Produce Association or Produce Marketing Association.

It’s a good way to meet people and learn about the industry at large. Networking is the most important skill in produce.