Posts Tagged “NAFTA”
The first 20 years of NAFTA has had a big time impact on the fresh produce industry, and produce trucking.
Americans are now consuming twice the fruit and three times the vegetables from Mexico and Canada as they did before 1994, and it takes refrigerated equipment to deliver it to markets.
Likewise, U.S. growers and shippers more than tripled the amount of produce they export to Mexico during the first 19 years of the North American Free Trade Agreement, according to a recent report from the U.S. Department of Agriculture (USDA).
Part of the increase in Mexico’s produce imports from the U.S. is attributed to the rapid expansion of Mexico’s supermarkets. As of November 2014, H-E-B had 43 stores in five Mexican states, and Wal-Mart had 2,114 stores in Mexico.
The U.S. is now importing more cucumbers and mushrooms from Canada than it exports. Before NAFTA, the U.S. was a net exporter of those commodities to Canada.
“In 2011, Mexico and Canada combined supplied about 13 percent of the fresh or frozen fruit available in the U.S. and 17 percent of the available fresh or frozen vegetables. In 1990, these shares each equaled 6 percent,” according to the USDA’s report.
Details on specific U.S. production and import/export of specific commodities are included in the report. There are also discussions about retaliatory tariffs related to cross-border trucking requirements.
While a good portion of the trucking industry opposesd NAFTA, particularly as it relates to the safety of Mexican trucking operations, as well concerns over rates being adversely affected, this information relates to the year around produce availability under NAFTA.
It wasn’t that many years ago when you would walk through the produce section of your supermarket you’d never have seen items like fresh raspberries or green beans in the dead of winter.
This time of year Mexican grown accounts for a lot of fresh produce eaten by Americans, and it’s the result of the North American Free Trade Agreement — NAFTA — which took effect 20 years ago last month.
In the years since, NAFTA radically changed the way we get our fruits and vegetables. For starters, the volume of produce from Mexico to the U.S. has tripled since 1994.
One reason for this growth is NAFTA eliminated tariffs on items such as cantaloupes, which used to have a 35 percent tax on them when they crossed the border. No tariffs meant lower prices.
Another reason is NAFTA encouraged investment. This mean U.S. companies linvesting hundreds of millions of dollars in Mexican farms. That has helped create year-round supply and demand for U.S. and Canadian customers.
For example 20 years ago, you did not have 365-day distribution of tomatoes from Mexico to the United States. Now you’ll find Mexican tomatoes in U.S. supermarkets every single day of the year.
A big emphasis has emerged in recent years on locally grown fruits and vegetables. Many retailers are buying locally grown as often as they can. The claim is locally grown has been been shipped long distances, or has been bred to produce product that has a longer shelf life, with less taste.
However, the produce industry has made great strides in packaging and shipping more flavorful fruits and vegetables from Mexico.
USA imports of fresh fruit and vegetables have increased significantly since the 1990s, and this has increased loading opportunities during a time of the year when it is an off season for a majority of American grown produce items.
These off season suppliers for fresh produce are primarily the Southern Hemisphere countries countries near the equator for bananas.
While it is trendy and cool to be associated with locally grown produce these days, locally grown is minor compared to the strong growth in volume and variety of fresh produce that is imported. These imported fruits and vegetables has allowed U.S. consumers to eat more produce, and for truckers to haul more produce, on a year-round basis. This is product that normally would not be available.
The USDA states that between 1990-92 and 2004-06, annual USA imports of fresh fruit and vegetables surged to $7.9 billion from $2.7 billion, with the share of total USA imports for agriculture rising to 13.3 percent from 11.5 percent. USA exports of fresh produce also increase, but less. As a result, the United States has increasingly become a net importer of fresh produce.
As of 2007, USA fresh produce trade was dominated by a few regions. Fresh vegetable imports from Mexico and Canada were over $3.2 billion, which comprises the single-largest trade channel among regions of U.S. fresh produce trade.
USA fruit trade is more diverse than vegetable trade in terms of foreign trade partners. Whereas fresh vegetable trade is largely concentrated within North American Free Trade Agreement countries and Asia (95 percent of exports and 84 percent of imports), fresh fruit trade with those regions is less significant (85 percent of exports and 28 percent of imports).
Because fresh produce is highly perishable and seasonal, geography has traditionally played a major role in the global trade patterns of fresh produce.
The main sources of USA fresh fruit imports are banana-exporting countries, and the Southern Hemisphere and NAFTA regions. The banana exporters — Colombia, Costa Rica, Ecuador, Guatemala, Honduras and Panama — are the largest providers of fresh fruit to the United States.
Together, these countries supply 36 percent of total U.S. fresh fruit imports, with bananas making up more than three-quarters of the fresh fruit value shipped by these equatorial countries to the United States. Southern Hemisphere countries — Argentina, Australia, Brazil, Chile, New Zealand, South Africa and Peru — supply 32 percent of U.S. fresh fruit imports. The NAFTA region supplies 27 percent of U.S. fresh fruit imports.
The structure of the U.S. fresh fruit import mix, however, has changed substantially, particularly since the 1990s, as grape and tropical fruit imports have grown faster than bananas.
Blueberries are a good example of an item that has grown quickly and hugely over the past decade. Other fruits and vegetables, such as asparagus from Peru, are also inching toward the list of items that are outpacing banana imports.
Is the Mexican truck border program falling apart? If so, that would be music 
to the ears of many, if not the majority in the trucking industry. On the other hand, produce shippers and others will not be too happy.
As reported here on August 23rd, a federal audit would be coming soon on the cross-border pilot program involving Mexican based trucking companies being allowed to operate in the USA.
The Federal Motor Carrier Safety Administration estimated that 46 Mexican carriers would participate in the three-year pilot program. The feds were planning to conduct 4,100 inspections during this time. However, only four Mexican trucking companies have participated, involving only four trucks and five drivers. A total of 89 inspections have been conducted by the FMCSA. Ouch!
The controverisal program has created some strange bedfellows in trucking. For example the Owner-Operators Independent Drivers Association (OOIDA) and the International Brotherhood of Teamsters seldom agree on much of anything. However, they’ve tightly held hands fighting this issue based around fears that a flood of Mexican trucks in the USA will drive down freight rates, many of which are not much different from 20 years ago. There also are concerns by owner operators over safety issues with Mexican equipment and lack of training among Mexican drivers.
Meanwhile produce shippers and others favoring Mexican trucking access to USA markets like the idea of greater competition leading to lower freight rates.
If the pilot program falls apart, with few Mexican trucking companies interested in participating, some produce shippers are concerned the Mexican government will re-implement tariffs of everything from apples to pears and potatoes – with some tariffs being as high as 20 percent.
The North American Free Trade Agreement (NAFTA), under which this pilot program is operating, requires the USA to permit cross-border trucking. However, legal challenges over the years by American carrier groups have prevented Mexican trucks from operating north of the border for over 10 years.
There’s been the ongoing political fight involving the trucking aspects of the 
North American Free Trade Agreement since the Clinton administration. Several months ago the Obama Administration implemented a pilot program whereby Mexican trucking companies could begin operations in the United States.
Apparently about 20 trucking companies from south of the border are awaiting approval from the U.S. to begin operations here. Produce shippers are salavating at the prospects of access to more transportation and cheaper rates to move fruits and vegetables to markets across the U.S. and Canada. Meanwhile, many in the trucking industry are fighting made over the prospects of unsafe Mexican trucks undercutting freight rates.