Mexico’s Berry Bounty Fuels Trade Dispute – U.S. Consumers Dismiss U.S. Berry Farmers’ Complaints as ‘sour Berries’

Below is a revised and expanded (in bold) version of today’s Wall Street Journal article “Mexico’s Berry Bounty Fuels U.S. Trade Dispute,” with some balance to provide greater representation of the viewpoint of U.S. consumers in the upcoming Nafta negotiations.

SAYULA, Mexico—An explosion in berry farming here, fed by a growing American obsession with breakfast smoothies and antioxidant-rich fruits, is fueling one of the thorniest disagreements in the talks to redo the North American Free Trade Agreement that resume this coming week.

“Ten years ago, all the fields were for vegetables,” said Héctor Gómez, production manager for a raspberry farm here. “Now, all we grow is berries. It’s just much more profitable.” Mr. Gómez says sales have grown by about 30% per year in recent years owing to increased demand in the U.S., hardier plant varieties and cheap labor.

The value of Mexico’s berry crops has grown more than fivefold in dollar terms over the last decade to an estimated $1.3 billion in 2017. The amount of land planted for berry crops has more than tripled over the period to 88,000 acres.

American farmers, however, complain that their Mexican rivals enjoy unfair advantages, including low-cost farm labor, state subsidies and a year-round growing season that lets them dump cheap berries on the U.S. market when the two countries’ growing seasons overlap in the late spring.

American consumers, however, dismiss those complaints from U.S. farmers as “sour berries” and welcome the significant benefits they receive from low-cost berries and other fruits and vegetables from Mexico. The “more dumping the better” said an American consumer at a Walmart Supercenter in Williston, North Dakota who was interviewed recently while shopping for berries and other fruits. Another smoothie-loving consumer shopping in the Walmart fruit section said she welcomed any subsidies that Mexican berry farmers receive, and remarked “We should be thankful for the generous gift we receive from the Mexican taxpayers when they subsidize their berry farmers and make our berries and smoothies more affordable.”   

The issue has emerged as a key bone of contention in Nafta renegotiations, which enter their fourth round on Wednesday in Washington. U.S. President Donald Trump has highlighted agriculture as a crucial area where the 1994 free-trade accord needs to be improved. However, economists warn than any changes in trade policies with Mexico that provide greater protectionism for American farmers could cause serious damage to the U.S. economy by raising prices for American consumers. Higher food prices would especially harm America’s low-income households and those on fixed incomes say economists.

American farmers in Florida, Georgia, the Carolinas, Texas and California say that the Mexicans often sell berries in the U.S. at discounts of as much as 25% below production cost. But American consumers throughout the country welcome those deeply discounted prices below production costs, said spokesperson and chief economist Carol C. Conway for the Consumer Coalition for Competitive Commerce (CCCC). “What could be better for our consumers than to be able to purchase Mexican berries below the cost of production?” asked Conway. “America shouldn’t complain about those prices; rather we should be thankful and celebrate the deeply discounted berries.”

“Nafta has hurt me a lot more than it’s helped me, by allowing Mexico to dump cheap berries here, much more than I’ve been able to sell to them,” said Steve McMillan, a 64-year-old grower from Enigma, Ga., who has about 60 acres of blackberries on his seventh-generation family farm.

Mr. McMillan said that Mexican-produced berries sell for between $5 and $10 per case (a case is 12 six-ounce cups of berries) in the early summertime. “We have to sell them for $12 just to break even,” Mr. McMillan said, mainly because of the cost of farm labor, which can cost about $200 per picker per day. Farm workers in Mexico typically make about one-tenth what workers in the U.S. earn.

While sympathetic to Mr. McMillan’s concerns, Conway points out that Nafta has helped American consumers a lot more than it’s hurt them. And the consumer savings of millions of dollars per year in lower prices for berries and other Mexican fruits and vegetables are spent by Americans on many other goods and services. Although largely unseen and easily overlooked, that spending supports and creates thousands of jobs throughout the economy in many industries in many states.

During Nafta talks last month in Ottawa, the U.S. team introduced a proposal to make it easier for American producers to bring antidumping cases in the perishable and seasonal fruit and vegetable sector. Under current law, farmers have to prove that unfair competitive practices hurt them over the course of a full calendar year. The U.S. proposal would let growers bring an antidumping case before mediators based on a single, monthslong growing season.

Mexico’s Nafta negotiators rejected the proposal, according to people familiar with their thinking. Mexico’s lead Nafta negotiator, Kenneth Smith Ramos, said the U.S. wanted to “focus in an arbitrary manner only on the months when Mexico exports the most.” Senators from Mexico’s ruling party said this past week they would reject any deal that made it easier for U.S. farmers to launch anti-dumping investigations for seasonal produce.

American consumers should also reject the proposal, said Conway. “What American berry farmers call ‘unfair competitive practices’” she said, “could also be called ‘consumer-enhancing trade practices for a better and more competitive and prosperous America.’” 

Kevin Murphy, chief executive of Driscoll’s Inc., the world’s largest berry company, said the U.S. proposals could hurt growers in all three countries, as well as U.S. consumers by causing prices to rise. “Over the last 25 years, Nafta has enabled the rapid growth of fruits and vegetables in the U.S.…(including) year-round produce,” Mr. Murphy said. “It would not have been possible without the production from Mexico.”

Here in Sayula, where dozens of berry farms are preparing to harvest their third crop of the year, Splendor Produce has expanded production by roughly 30% each year over the past nine years. That owes to more resilient plant varieties, consistently low wages, and rising demand from U.S. consumers, who will suffer economically if U.S. berry farmers are successful at manipulating Nafta reforms to their advantage by limiting competition and raising berry prices for Americans.

MP: As French economist Bastiat wrote more than 150 years ago, “It is necessary to treat economics from the viewpoint of the consumer. All economic phenomena, whether their effects be good or bad, must be judged by the advantages and disadvantages they bring to consumers.” Prediction: That advice will likely be largely ignored in the upcoming Nafta negotiations, where only the advantages and disadvantages of the U.S. producers and farmers will be considered.