Borderlands: US mulls terminating tomato trade agreement with Mexico

Borderlands is a weekly rundown of developments in the world of United States-Mexico cross-border trucking and trade. This week: The U.S. mulls terminating a tomato trade agreement with Mexico; Walmart opens a fulfillment center near Dallas; Saddle Creek Logistics is opening a distribution center in Arizona; and layoffs hit GulfMark Energy’s operations in Texas.

US mulls terminating tomato trade agreement with Mexico

A monthlong comment review period undertaken by the Department of Commerce recently ended for a debate that centers around whether the U.S. should terminate a tomato trade agreement with Mexico.

With the comment review phase ending last Monday, the Commerce Department is expected to make a decision sometime in the next several months on ending the 2019 Tomato Suspension Agreement.

Tomatoes sold in the U.S. from Mexico are controlled by the U.S. Department of Commerce through the suspension agreement, which sets minimum pricing and regulates sales between growers and importers.

The debate centers around whether Mexico-based growers are dumping exported tomatoes into the U.S. at lower prices that undercut the domestic market.

In June, the Florida Tomato Exchange (FTE) requested that the federal government terminate the agreement, alleging that it has “failed to stop unfairly traded Mexican tomatoes from destroying the U.S. tomato industry,” Michael Schadler, the FTE’s executive vice president, said in a news release.

“It’s become clear that these agreements are simply not enforceable, at least when it comes to the tomato trade with Mexico,” Schadler said. “Suspension agreements might be an effective tool for products that can be kept in storage until market conditions improve, but for highly perishable items like fresh tomatoes, there is just too much incentive to evade the reference prices when markets are oversupplied.”

Florida growers have been pushing for more restrictions on Mexican-grown tomatoes for years. Since 1996, the U.S. and Mexico have negotiated five separate agreements regarding tomato imports.

In 2019, the FTE lobbied for stricter quality control on Mexican-grown tomatoes and more enforcement of import pricing.

As part of the 2019 agreement, Mexico-based growers agreed not to sell tomatoes below a reference price, a seasonably adjusted floor price at which Mexican tomatoes can’t fall underneath and still be exported to the U.S.

The FTE argues that the 2019 Tomato Suspension Agreement isn’t working and wants the Commerce Department to impose tariffs on all Mexican-grown tomatoes.

While Florida tomato growers want tariffs, Arizona lawmakers and trade groups want the Biden administration to uphold the 2019 Tomato Suspension Agreement.

Lance Jungmeyer, president of the Nogales, Arizona-based Fresh Produce Association of Americas, said that doing away with the agreement would cost Arizona billions of dollars and lead to lost jobs, as well as result in higher produce prices for consumers across the country.

“To terminate the agreement would undoubtedly line the pockets of a handful of multi-million-dollar Florida growers, but the cost to America is one we cannot afford,” Jungmeyer said in a statement. “This agreement has been working for American consumers, companies, and communities for nearly three decades — we shouldn’t mess with success.”

A recent study from Arizona State University, the “Mexican Tomatoes: TSA-Tariff Analysis Report,” said terminating the agreement could impact the economies of Arizona and Texas, while limiting options and raising prices for consumers.

On Friday, NatureSweet also gave its support for preserving the Tomato Suspension Agreement. The San Antonio-based company is a grower, packager and seller of produce.

“The suspension agreement is critical to keeping specialty tomato varieties on American grocery store shelves,” Skip Hulett, vice president of general counsel for NatureSweet, said in a news release. “Nearly all of the grape and cherry tomatoes consumed by American families come from Mexico, where growing conditions are ideal for year-round production.”

Adding tariffs to imported tomatoes from Mexico could also affect trade flows in both Arizona and Texas.

In 2022, Mexico exported $2.7 billion worth of tomatoes to the U.S., according to the country’s Ministry of Agriculture and Rural Development.

The Laredo customs district in South Texas — which includes Laredo’s World Trade Bridge and the Pharr-Reynosa International Bridge in Pharr — accounts for the majority of tomato imports from Mexico, followed by the border crossing in Nogales, Arizona.

Walmart opens fulfillment center near Dallas

Walmart recently opened its third “next-generation” fulfillment center 15 miles about south of Dallas in Lancaster, Texas.

The 1.5 million-square-foot facility will enable the retailer to fulfill online orders and will enable the retailer to fulfill more orders more quickly, Walmart (NYSE: WMT) said in a news release.

The Lancaster fulfillment center is one of five next-generation facilities announced last year. The fifth facility was recently announced that will open in 2026 in Stockton, California. The facilities combine technology and machine learning with the aim of achieving faster shipping and delivery, while increasing Walmart.com order fulfillment capacity.

The Lancaster fulfillment center is creating up to 1,000 jobs. The retailer employs over 175,309 associates in the state, spending $90.3 billion with local suppliers in 2022 and supporting 255,379 supplier jobs across Texas, Walmart said.

Walmart opened its first next generation fulfillment center in 2022 in Joliet, Illinois. Other facilities include fulfillment centers in McCordsville, Indiana, and Greencastle, Pennsylvania.

Saddle Creek Logistics to open distribution center in Arizona

Saddle Creek Logistics Services recently leased a 570,080-square-foot industrial building in Glendale, Arizona, according to a news release.

Lakeland, Florida-based Saddle Creek Logistics Services is a third-party logistics provider specializing in warehousing, packaging and transportation solutions for manufacturers, retailers and e-commerce companies.

The Glendale facility features 40-foot clearance heights, 87 dock doors for trucks and four large grade-level doors, a 190-foot concrete truck court and 132 trailer parking stalls.

“Saddle Creek continues to expand into new markets with an ever-growing client base,” Rob Pericht, Saddle Creek’s senior vice president of client solutions and operational development, said in a statement.

The Glendale facility will be Saddle Creek’s first in Arizona. The company has 53 facilities across 16 states.

Layoffs hit GulfMark Energy operations in Texas

The loss of a customer contract is leading to layoffs of 46 workers at four GulfMark Energy locations across Texas, according to a recent notice sent to state officials.

The layoffs include 34 truck drivers for the company at facilities in Gainesville, Bowie, Electra and Chico.

GulfMark Energy said the reduction in its workforce was “due to unforeseeable business circumstances, which is the recent loss of our contract in the Red River area of business.”

The company is also laying off 30 workers across three locations in Oklahoma. The layoffs include 21 truck drivers.

Houston-based GulfMark Energy is a marketer and transporter of crude oil and other products for customers across the U.S. The company has facilities in five states and operates 215 tractor-trailers and five barge terminals.

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