Why Tomatoes Are Becoming a Lot More Expensive
Food prices have been climbing quickly for years now, and now there is another essential that could see the prices quickly go up: tomatoes.
Mexican tomatoes are immediately slapped with a rate of 17%, the US trade department said on July 14, announcing that it was withdrawn from a 2019 agreement which suspended prices on the tomatoes imported from Mexico.
This could affect a lot of grocery tomatoes. Although the fruit – or vegetables, depending on which you ask – is also cultivated in Florida, around 70% of the fresh tomatoes consumed in the United States are imported, and the majority comes from Mexico, explains David Ortega, food economist at Michigan State University.
Although the price of a tas of tomatoes can only increase a few tens of hundred, the increase occurs at a time when consumers already have enough inflation, and when the prices threatened by the Trump administration could increase prices further, he said.
“It is one of the most consumed fruits or vegetables in the United States, and it is important to put it in the context of consumer experience with food prices in recent years,” said Ortega. “They are stretched, and even a few hundred add up, especially for low -income households.”
Why the prices of tomatoes increase
The spit between Mexican and American farmers has a long history. In 1996, American farmers complained to a commercial court that Mexican farmers “poured” tomatoes, which means that they were selling tomatoes in the United States at an artificially low price.
In response to the complaint, Mexican farmers have agreed to set a price on the ground on tomatoes to ensure that American farmers are not underestimated. In exchange, the United States has interrupted an investigation to find out if Mexican farmers unfairly threw tomatoes on the American market.
The United States and Mexico have reached new soil price agreements for tomatoes four times since then, but farmers have complained that Mexico has always been involved in unfair commercial practices. The market share of American tomatoes fell to 30% against 80% since 1996, according to Florida Farm Bureau, while imports of Mexican tomatoes increased by 400%.
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The Commerce Department announced for the first time in April that it was withdrawn from the truce, which was called the agreement on the suspension of tomatoes, but said at the time that the prices on imports of Mexican tomatoes would be 20.9%. This rate was slightly reduced in the announcement of the secretary of trade Howard Lutnick, the announcement of July 14 formalized the plans to withdraw. “For too long, our farmers have been crushed by unfair commercial practices that undermine the pricing of products and tomatoes,” he said. “It ends today.”
American consumers may not see the effect of new prices before fall, explains Ortega, because tomatoes are currently in season in the United States, we are counting on tomatoes imported more strongly in winter.
Why other food prices also increase
The statement of tomato prices one day came before new data on government inflation showed that food prices continued to increase. The consumer price index, or ICC, has shown that beef and veal prices increased by 10.6% in June a year ago, that egg prices increased by 27.3% and that coffee prices increased by 13.4%. Overall, inflation increased 2.7% compared to a year ago.
The rise in beef prices, eggs and coffee is not directly linked to prices, explains Ortega. The price of beef increases because drought in 2022 has made too expensive for farmers to keep cattle, and now the inventory of cattle in the United States is extremely low. Americans are still demanding beef, however, high supply and demand and high demand lead to a price increase.
Egg prices increased compared to a year ago due to avian flu, although their price has actually dropped a month ago. And coffee prices are climbing because climate change has affected cultures in places like Brazil and Vietnam, says Ortega.
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However, prices do not help: American producers depend on certain types of lean beef from Brazil to make chopped beef, for example, says Ortega, and the 10% price on almost all imports of food makes it more expensive.
These 10% rates also affect other food products.
“This marks the first inflation report where prices are starting to appear materially in key categories – from devices and furniture to clothing and grocery store,” said Daniel Hornung, principal researcher at MIT, on the CPI report.
It is unlikely that it is the last, he says, because companies are working on their pre-tail stocks and will probably be forced to transmit price increases to consumers soon.
Not to mention the giant prices that the Trump administration has committed to perceive on some of the places where we get a lot from our food, explains Ortega. Trump recently threatened Brazil of 50%prices. If they enter into force on August 1 as currently planned, they will raise the price of beef, oranges, orange juice, etc.
Many of these imports from Brazil cannot be easily replaced by American products. The orange cultures of Florida, for example, were strongly affected by the greening of citrus fruits, which is a disease of trees and by devastating hurricanes.
“If these prices remain in place,” says Ortega, “they will have a significant impact on food prices.”
