Why despite the establishment of a minimum floor price have imports from Mexico

Question

Why despite the establishment of a minimum floor price have imports from Mexico grown over the years? Who benefits from the importation of tomatoes grown in Mexico? Who suffers When the North American Free Trade Agreement (NAFTA) went into effect in December 1992 and tariffs on imported tomatoes were dropped U.S. tomato producers in Florida feared that they would lose business to lower-cost producers in Mexico. So they lobbied the government to set a minimum floor price for tomatoes imported from Mexico. The idea was to stop Mexican producers from cutting prices below the floor to gain share in the U.S. market. In 1996 the United States and Mexico agreed on a basic floor price of 21.69 cents a pound. At the time, both sides declared themselves to be happy with the deal. As it turns out, the deal didn't offer much protection for U.S. tomato growers. In 1992, the year before NAFTA was passed, Mexican producers exported 800 million pounds of tomatoes to the United States. By 2011 they were exporting 2.8 billion pounds of tomatoes, an increase of 3.5-fold. The value of Mexican tomato exports almost tripled over the same period to $2 billion. In contrast, tomato production in Florida has fallen by 41 percent since NAFTA went into effect. Florida growers complained that they could not compete against low wages and lax environmental oversight in Mexico. They also alleged that Mexican growers were dumping tomatoes in the U.S. market at below the cost of production, with the goal of driving U.S. producers out of business. In 2012, Florida growers petitioned the U.S. Department of Commerce to scrap the 1996 minimum price agreement, which would then free them up to file an antidumping case against Mexican producers. In September 2012 the Commerce Department announced a preliminary decision to scrap the agreement. At first glance, it looked as if the Florida growers were going to get their way. It soon became apparent, however, that the situation was more complex than appeared at first glance. More than 370 business and trade groups in the United States- from small family-run importers to meat and vegetable producers and Wal-Mart Stores-wrote or signed letters to the Commerce Department in favor of continuing the 1996 agreement. Tomato farming is an important business globally. Tomatoes originated in the South American Andes, near where Peru is today, and were used early on by the Aztecs in southern Mexico as a food. Source:Joe Raedle/Getty Images Among the letter writers was Kevin Ahern, the CEO of Ahern Agribusiness in San Diego. His company sells about $20 million a year in tomato seeds and transplants to Mexican farmers. In a letter sent to the New York Times, Ahern noted that yes, Mexico produces their tomatoes on average at a lower cost than Florida; that's what we call competitive advantage." Without the agreement Ahern claimed that his business would suffer. Another U.S. company, NatureSweet Ltd., grows cherry and grape tomatoes under 1,200 acres of greenhouses in Mexico for the American market. It employs 5,000 people altho nh a" hut 10? wnrk in Mexico The CFO Rrvant Amhelan, eid that his comnam, couldn't survive

Explanation / Answer

Q1- YES AND NO THE MINIMUM FLORR PRICING WAS CONSISTENT FROM THE MEXICAN SIDE OF THE DEAL BU THE FARMER IN US WERE NOT ABLE TO HOLD UP THIER SHARE OF THE DEAL AS THEY WERE NOT GETTING MUCH PROFIT FROM SELLING TOMATOES IN THE MARKET

Q2-FLORIDA FARMERS WERE LIMITED IN NUMBERS AND PRIDUCED A LIMITED AMOUNT OF TOMATOES ONLY AND THEY HAD CERTAIN DISADVANTAGES FOR IT

SINCE THE MEXICANS HAD A LOT MORE PEOPLE WITH A LOT MORE CAPITAL AND A LOT MORE CONNECTIONS WITH THE GOVERNEMENT THEY WERE ABLE TO FLURISH IN THE US MARKET

Q3- DUE TO THE IMPORTATION OF TOMATOES FROM MEXICO PEOPLE WHO FLURISHED WERE

PEOPLE WHO SUFFER IT SPRETTY CLEAR THAT PEOPLE WHO SUFFER ARE THE FLORIDA FARMERS BECAUSE THEY SIMPLY COULD NOT KEEP UP WITH THE COMPETITION IN THE MARKET

Q4- YES I THINK MEXICAN PRODUCERS WERE DUMPING THIER PRODUCE IN THE MARKET AS THEY WERE TRYING TO PUSH AWAY THE COMPETITION OUT OF THE BUSINESS(FLORIDA FARMERS)

AS THEY HAS SUDDENLY INCREASED THE OVER ALL PRODUCTION BY 3-5 FLOLDS

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