For those Nogales, AZ, companies dealing in tomatoes, the Tomato Suspension Agreement has added another level of complexity.
Last year, as part of the negotiation around the suspension agreement, Mexican growers signed off on a deal which requires USDA inspection of all round and Roma tomatoes within 24 hours of an arrival at a facility that normally has a USDA inspector.
Raquel Espinoza, managing member and director of sales and marketing for Produce House, LLC BB #:300387 in Nogales, notes, “There are many intangibles with this new agreement.”
Among them are the costs related to inspections and quality. “Puffiness is now a quality defect, and abnormal coloring is now a quality defect,” she explains.
What Matt Mandel, chief operating officer of SunFed BB #:150037 calls the “new reality” of the Tomato Suspension Agreement, is certainly causing hiccups in the supply chain for growers and planting schedules, as well as the impact of duties.
Importers must maintain a customs bond, Mandel says, guaranteeing it will cover any additional costs. “We’ve made commitments to our customers, growers, business partners, and employees, so we do whatever the business calls for,” he says.
Mandel fully expects his costs to rise. “In addition to the direct cost of a required inspection, there are indirect costs associated with logistics, such as coordinating inspections, floor space to store produce waiting for inspection, and possible waste if inspections cannot be completed in a timely manner. There’s also the provision regarding rejections at destination that can have a serious effect.”
At Produce House, Espinosa says the company has been working on creating space for the USDA inspections, but will have to limit the number of packages she takes on a given day, based on storage space.
Paul Guy, president of P.D.G. Produce, Inc., BB #:123372 wasn’t affected by the temporary lull in tomato imports last year as a result of the temporary tariff.
“There still was product available,” he comments, and says when there are shortages, “you look to another area.” The importer and distributor’s top commodities include Roma tomatoes, cucumbers, peppers, green and yellow squash, and eggplant.
This is multi-part feature adapted from the Nogales supplement in the January/February 2020 issue of Produce Blueprints.
