U.S.-Mexico fruit trade – U.S. Dept. of Agriculture, Economic Research Service report
Dennis A. Shields
Abstract: Fruit trade between the United States and Mexico increased from $146 million in 1986
to $334 million in 1990. The United States exported $48 million of fruit, mostly deciduous fruit,
to Mexico and imported $286 million from Mexico, primarily orange juice, mangoes, strawberries,
Keywords: Fruit, exports, imports, Mexico, United States. Negotiations for the North American Free Trade Agreement (NAFTA) may reduce or eliminate trade restrictions between Canada, Mexico, and the United States. Trade ministers from the three countries met in June 1991 to begin the talks, and later met in October. The Agricultural Negotiating Group has held working meetings throughout the fall to discuss the exchange of tariff offers and requests on nontariff measures. Higher level talks are scheduled to resume early next year. Trade flows of many agricultural commodities, including fruit, would be affected by such an agreement. The U.S. fruit industry is particularly concerned about trade between the United States and Mexico. For some fruits, Mexico may gain market share in the United States, but for others, the United States may be able to increase exports to Mexico. This paper examines fruit trade between Mexico and the United States during the last 5 years.
U.S.-Mexico Trade Increases
Agricultural trade between Mexico and the United States increased from $2.3 billion in 1982 to $5.3 billion in 1990. About 10 percent of all U.S. agricultural imports come from Mexico, while about 7 percent of all U.S. exports go to Mexico. Mexico is the fifth largest market for U.S. agricultural exports, and the United States is by far the largest export market for Mexico. The balance of agricultural trade has switched between the two countries, but U.S. exports have led imports in the last 3 years. In 1990, the United States had a $760-million agricultural trade surplus with Mexico.
Mexico Dominates Fruit Trade, but U.S. Gains Ground
Although trade of fresh and processed fruit between Mexico and the United States has been only about 5 percent of total agricultural trade between the two countries, it increased from $146 million in 1986 to $334 million in 1990 (calendar year). In 1990 Mexico’s fruit exports of $286 million to the United States consisted primarily of orange juice, mangoes, strawberries (fresh and frozen), grapes, and limes. U.S. fruit exports to Mexico in 1990 were $48 million, only 2 percent of total U.S. fruit exports, but were up from only $5.7 million in 1986. Fresh apples, pears, prunes (fresh and dried), raisins, and peaches make up the bulk of U.S. exports to Mexico.
Mexico’s Orange Exports Top the List
Oranges and orange products represent the largest commodity group of Mexican fruit exports to the United States at over $90 million in 1990, up from $21 million in 1986. Frozen concentrated orange juice (FCOJ) imports from Mexico represent less than 15 percent of total U.S. imports, but they are the second largest, behind FCOJ imports from Brazil. Like Mexican FCOJ exports to the United States, Mexican fresh orange exports have been quite variable and depend upon supply conditions in both countries. In 1990 the United States received about 28 percent of its fresh orange imports from Mexico, compared with 13 percent in 1989. However, Mexican imports account for less than 1 percent of U.S. domestic consumption. Total U.S. citrus imports from Mexico increased from $25.2 million in 1986 to $101.8 million in 1990, the largest value increase of all U.S. fruit imports from Mexico. Mango imports from Mexico have more than doubled from $24.7 million in 1988 to $52.4 in 1990, returning to pre-1986 levels. A change in the phytosanitary requirement that restricted and then eliminated the use of ethylene dibromide (EDB) on U.S. mango imports in 1986-87 significantly reduced U.S. mango imports; however, U.S. mango imports then increased as exporters gained experience using the required treatment, a hot water dip. About 95 percent of the U.S. mango supply is imported, with about 80 percent coming from Mexico and the remainder from the Caribbean Basin Initiative group (primarily Haiti). U.S. per capita mango consumption has increased from 0.05 pounds in 1970 to 0.42 pounds in 1989. Strawberries (fresh and processed), at $31.2 million in 1990, are the third largest U.S. fruit import from Mexico, up from $23.1 million in 1986. Exports of fresh strawberries from Mexico represent about 9 percent of Mexican production and about 4 percent of U.S. consumption. In 1990, frozen strawberries accounted for 60 percent by value of Mexico’s strawberry exports to the United States. U.S. fresh grape imports from Mexico were $18.9 million in 1990 but reached $43.8 in 1988. Limes, $7.8 million in 1990 compared with only $3.5 million in 1986, round out the top five Mexican fruit exports to the United States. Mexico is one of the world’s largest lime producers, and its lime exports to the world have grown at an annual-average rate of 9 percent. U.S. lime imports, mostly from Mexico, account for almost half of U.S. consumption.
Deciduous and Dried Fruit Lead U.S. Fruit Exports to Mexico
Mexico produces small crops of apples, pears, peaches, and nectarines relative to its population and is a net importer of these fruits. Shortfalls in Mexican domestic production, strengthening demand, and eased trade restrictions have increased Mexican deciduous fruit imports. Fresh pears are the highest valued U.S. fruit exported to Mexico, representing about one-fourth of the 1990 total value, or $12.6 million. Pear exports to Mexico in 1986 were less than $1 million. About 25 percent of U.S. fresh-pear utilization is exported, primarily to Canada and Mexico. U.S. fresh apple exports to Mexico have also grown explosively, increasing from $0.75 million in 1986 to almost $7 million in 1990. However, the Mexico market accounts for only about 3 percent of U.S. apple exports, while Canada, Taiwan, and Hong Kong are the largest U.S. markets. Dried prune exports to Mexico almost doubled from $1.6 million in 1986 to $3.0 million in 1990. Raisins had more dramatic gains, from $18,000 to $3.4 million in the same period. U.S. fresh-peach exports to Mexico rose from $184,594 in 1986 to $4.2 million in 1990. Many of these peaches are used for processing in Mexico.
Growing Seasons in Both Countries Are Similar
Because the growing seasons in Mexico and the United States are similar, Mexico’s mango and citrus exports compete directly with Florida production. The season for other fruits is slightly earlier in Mexico. For example, the Mexican grape harvest begins just before peak U.S. harvesting in July and August, but closely follows California’s desert area production. Mexican strawberries enter the United States mainly between September and June, usually peaking in March and April. Most fresh fruit is seasonally scarce in Mexico City, where about 20 million people consume over 50 percent of the horticultural products marketed in the country. Mexico has little or no controlled-atmosphere storage, so U.S. apples from storage are shipped between March and July. Pear shipments to Mexico usually peak in April. Stone fruit is shipped to Mexico during the summer months when it is available from U.S.-producing areas.
U.S. Fruit Trade Restrictions
U.S. tariffs on fruit imports vary considerably by commodity. Fresh oranges are subject to a tariff of 2.2 cents per kilogram, or roughly an 8-percent tariff on an ad valorem equivalent basis. FCOJ imports are assessed at 9.25 cents per liter, single-strength-equivalent basis, or about 25 percent ad valorem equivalent. Lime imports have a 2.2-cents per kilogram import tariff, or about 15 percent ad valorem equivalent. Mangoes enter at 8.27 cents per kilogram, or about 10 percent ad valorem equivalent. A list of U.S. tariffs on fruit imports are shown in table A-9. U.S. Federal marketing orders can affect the terms of trade. Under Section 8e of the Agricultural Marketing Agreement Act of 1937, as amended, U.S. imports of certain items are subject to the same size, quality, and maturity standards imposed on domestic production of fruits by Federal marketing orders. Federal marketing orders that affect Mexico’s major exports to the United States include Florida limes, California desert grapes, and California raisins. As an example, limes imported from Mexico must comply with the Florida lime marketing order for size, quality, and maturity standards. Limes, as well as most other fruit, must also meet phytosanitary regulations that minimize the threat of insect or disease infestation of domestic production areas and are designed to protect consumer and producer health and welfare. Mexican Persian lime exports to the United States currently undergo treatment for fruit flies at the packinghouse. The Secretariat of Agriculture and Water Resources (SARH) supervises the treatments, and USDA’s Agricultural Plant Health Inspection Service (APHIS) makes periodic inspections to ensure that proper procedures are being followed. Mexican Key lime imports were banned between 1983 and mid-1991, when APHIS determined they might be infected with citrus canker.
Mexican Fruit Trade Restrictions
A standard 20-percent tariff applies to almost all fruit imported into Mexico. Mexico significantly reduced tariffs and officially eliminated import licenses for most fruits after acceding to the GATT in 1987. The lifting of import permit requirements helped increase U.S. pear exports to Mexico from 1,882 metric tons in 1986 to 26,798 in 1990. Import permits were required for fresh apples until May 31, 1991, but, due to tight domestic supplies, imports without permits were allowed during restricted periods in 1988, 1989, and 1990. [Figures A-1 to A-5 Omitted]
Dennis A. Shields is an agricultural economist with the Commodity Economics Division of the Economic Research Service, USDA. Joani Dong is an agricultural economist with the Horticultural and Tropical Products Division of the Foreign Agricultural Service, USDA.
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