The Road Ahead
Despite the roadblocks and uncertainties they face, Nogales produce businesses—like others around the country—try to stay positive about the future of their industry.
“We’ve seen an upward trend in cross-border trade in Arizona,” Soberanes says, adding that Arizona-Mexico two-way trade increased by almost $1 billion between 2014 and 2015. “The value of the peso against the dollar may impact that growth, but one thing is for sure: Arizona’s political and business leadership is as strong as ever in advocating for stronger relations with Mexico and increased trade.”
FRESH FORUM Last year, receivers were still experiencing some major border delays. Have traffic flow and inspection time improved?
Ruth Soberanes, Arizona-Mexico Commission
At our 2016 summit in June, representatives of U.S. Customs and Border Protection (CBP) and Mexican Customs (“Aduanas”) made an announcement that both services were implementing a pilot program to co-locate Aduanas personnel inside the Mariposa inspection compound. The program was launched in July: U.S. Customs personnel enter Mexico to conduct pre-inspections and pre-clear U.S.-bound conveyances. Once these conveyances cross the border and enter the U.S. inspection facilities, they are treated as low-risk shipments and expedited through the inspection process. This pilot program has drastically improved the flow of goods and border wait times for commercial vehicles by 85 percent.
Roberto Franzone, Arizona Sky Produce, Inc.
From what we experienced, we had fewer issues this year with delays.
Chris Ciruli, Ciruli Brothers, LLC
Arizona continues to hire border agents in Nogales. Although we would like to see more, the wait times have been improving every year since the port of entry was revamped.
Jerry Havel, Fresh Farms
With the new improvements to our Nogales port facilities, we expect no major border delays this season.
Lance Jungmeyer, Fresh Produce Association of the Americas
Delays have become much less frequent and much less time consuming. The Unified Cargo Processing program at the Mariposa Port of Entry is now open to fresh produce trucks that are part of C-TPAT [Customs-Trade Pact Against Terrorism] and FAST [Free and Secure Trade]. This is estimated to save up to six hours in crossing time per truck, for those that participate. We’re working to enroll more fresh produce firms in the C-TPAT program.
Edgar Duarte, Higueral Produce, Inc.
Overall yes; usually it gets bad during the holidays, like Thanksgiving and Christmas. For example, I remember two years ago there was a food safety issue in Texas with jalapeños, so that slowed things down with trucks crossing through Nogales too. Sometimes we see the same thing with other products, like mangos. But overall, crossing times have been improving, especially since everyone is switching over to electronic documentation. There aren’t as many issues with paperwork being misplaced or lost.
Miguel Suarez, MAS Melons & Grapes, LLC
I hear this complaint all around, but it has not had a big effect on our daily business. Sometimes loads take longer to cross the border, but I think that’s normal during peak crossing periods.
“The future looks bright,” predicts Franzone. “The infrastructure is expanding, the season gets longer, and product lasts longer,” he enthuses. In addition, he believes “growing techniques and resistance to weather and pests seem to be improving every year” as well.
Although business is certainly booming in Nogales, regional produce distributors continue to face both new and old problems. Fortunately, the FPAA is ready and willing to help, in person, and with plenty of information on its website.
“We, as an association, continuously deal with challenges by addressing them, finding alternative solutions, and preparing our members with seminars, workshops, and discussions,” Jungmeyer says. These issues can range from banking and financial woes to the increasingly complex food safety regulations taking effect in 2017. And then there are the things FPAA can’t really do much about—like weather and related consequences.
Wild Weather
Yes, an ever-present issue for Nogales distributors and shippers is unpredictable weather—both in Mexican growing areas and across the United States.
“The weather seems to be different every winter,” points out Jungmeyer. “Unexpected cold snaps in the Midwest and Northeast can really hurt demand from consumers and grocery stores. Meanwhile, in some years, we’ve seen heavy rains and cool weather in west Mexican growing areas, which can delay crops.”
For Jose Luis Obregon, president of IPR Fresh, it wasn’t rain but higher temperatures. “This year, the greatest challenge has been the warmer than usual weather on the Southeast coast, which has caused a season overlap.”
“Weather is weather, and we will deal with the circumstances,” says Havel. “This is a supply and demand business, and storms can of course cause shortages, which drive the prices up.”
And then there are the El Niño and La Niña weather patterns. “With La Niña, the temperatures stay cooler than normal, which could have an effect on the size of fruit,” Suarez explains. “If the sizes on our products stay smaller than normal, that means less yield per acre, which could result in lower supplies.”
Fortunately, forecasters predicted La Niña as a no-show for the winter season. In September, the National Oceanic and Atmospheric Association cancelled its La Niña watch, saying there was a 55 to 60 percent chance for more “neutral conditions” this winter.
Food Safety
Of course, food safety is another ongoing challenge for Nogales distributors, particularly as they import the bulk of their product from Mexico.
“We’re helping train members in food safety,” says Jungmeyer, and the FPAA included several seminars in its November convention. “This included guidance on what kind of food safety training and certifications a company needs to comply with the Food Safety Modernization Act (FSMA), and which types of food safety training will be most relevant to a company.”
Jungmeyer goes on to say that FSMA “means major changes for how the industry operates, primarily from a legal and liability standpoint.” Nogales-based distributors and shippers are “now responsible for ensuring the integrity of food safety in Mexico or wherever else they’re importing from.”
In March 2016 hundreds of top industry officials from both sides of the border met for FPAA’s annual Spring Policy Summit in Tubac, and food safety was the primary topic of discussion. The two-day event featured informational workshops and interactive discussions about the Nogales produce industry.
Havel says Mexican growers are now focusing on three key areas: social responsibility, traceability, and fair trade. He believes Mexico leads the industry in food safety. “Mexican growers take food safety and certification very seriously; they’re working to grow premier product, pack it professionally, and make it the safest in the world.”
Labor Woes
Nogales produce businesses are also contending with labor shortages, and not just in the United States. “Labor continues to be an issue on both sides of the border,” Ciruli says. “Retaining good people is becoming an operational challenge in the United States as well as Mexico.”
November’s passage of a new minimum wage in Arizona, $12 per hour, is also making waves. Labor is still scarce, with thousands of ag workers needed each year, and fewer people showing up. According to a study by the Partnership for a New American Economy, the decline in farm workers is reducing U.S. fruit and vegetable production by 9.5 percent or $3.1 billion a year.
Politics: After the Elections
Local, state, and national election results produced a few surprises and game changers for the produce industry. Only time will tell how much impact the Trump Administration will have on the buying and selling of perishables, both domestically and crossing the border.
Obregon believes, “It’s too soon to tell the repercussions the election results might have on our business. I just hope the flow of fruit and vegetables between Mexico, Canada, and the United States continues as it has up to now. Trade barriers would translate into higher fruit and vegetable costs for the U.S. consumer,” he observes. “In a time when healthy eating is a must, trade barriers would be irresponsible.”
Higueral’s Duarte is more optimistic, and begins his thoughts with a familiar refrain. “People have to eat, so I don’t think it will affect us in a bad way. The Hispanic market is one of our big consumer bases. We handle a lot of chili peppers and items like that—hopefully, they’ll stay here in the United States and keep consuming our products, as long as the immigration status and deportation issues don’t change.
“What we’ve been seeing in the news lately, things are going back to normal. There’s not as much talk about mass deportation, which had everyone really scared before. I don’t see anything changing drastically anytime soon,” Duarte concludes.
The Road Ahead
Despite the roadblocks and uncertainties they face, Nogales produce businesses—like others around the country—try to stay positive about the future of their industry.
“We’ve seen an upward trend in cross-border trade in Arizona,” Soberanes says, adding that Arizona-Mexico two-way trade increased by almost $1 billion between 2014 and 2015. “The value of the peso against the dollar may impact that growth, but one thing is for sure: Arizona’s political and business leadership is as strong as ever in advocating for stronger relations with Mexico and increased trade.”
FRESH FORUM Last year, receivers were still experiencing some major border delays. Have traffic flow and inspection time improved?
Ruth Soberanes, Arizona-Mexico Commission
At our 2016 summit in June, representatives of U.S. Customs and Border Protection (CBP) and Mexican Customs (“Aduanas”) made an announcement that both services were implementing a pilot program to co-locate Aduanas personnel inside the Mariposa inspection compound. The program was launched in July: U.S. Customs personnel enter Mexico to conduct pre-inspections and pre-clear U.S.-bound conveyances. Once these conveyances cross the border and enter the U.S. inspection facilities, they are treated as low-risk shipments and expedited through the inspection process. This pilot program has drastically improved the flow of goods and border wait times for commercial vehicles by 85 percent.
Roberto Franzone, Arizona Sky Produce, Inc.
From what we experienced, we had fewer issues this year with delays.
Chris Ciruli, Ciruli Brothers, LLC
Arizona continues to hire border agents in Nogales. Although we would like to see more, the wait times have been improving every year since the port of entry was revamped.
Jerry Havel, Fresh Farms
With the new improvements to our Nogales port facilities, we expect no major border delays this season.
Lance Jungmeyer, Fresh Produce Association of the Americas
Delays have become much less frequent and much less time consuming. The Unified Cargo Processing program at the Mariposa Port of Entry is now open to fresh produce trucks that are part of C-TPAT [Customs-Trade Pact Against Terrorism] and FAST [Free and Secure Trade]. This is estimated to save up to six hours in crossing time per truck, for those that participate. We’re working to enroll more fresh produce firms in the C-TPAT program.
Edgar Duarte, Higueral Produce, Inc.
Overall yes; usually it gets bad during the holidays, like Thanksgiving and Christmas. For example, I remember two years ago there was a food safety issue in Texas with jalapeños, so that slowed things down with trucks crossing through Nogales too. Sometimes we see the same thing with other products, like mangos. But overall, crossing times have been improving, especially since everyone is switching over to electronic documentation. There aren’t as many issues with paperwork being misplaced or lost.
Miguel Suarez, MAS Melons & Grapes, LLC
I hear this complaint all around, but it has not had a big effect on our daily business. Sometimes loads take longer to cross the border, but I think that’s normal during peak crossing periods.
“The future looks bright,” predicts Franzone. “The infrastructure is expanding, the season gets longer, and product lasts longer,” he enthuses. In addition, he believes “growing techniques and resistance to weather and pests seem to be improving every year” as well.
Ciruli concurs: “If you look at the last ten years’ worth of history, there’s been an increase in crossings through Nogales and there is now a more diverse product line with much longer shipping seasons. We expect crossings through the Nogales port will continue to grow,” he predicts.
Havel echoes these thoughts, and says there’s plenty of room for more growth in Nogales. “The future of the Nogales produce business has never been brighter,” he insists. “The Mexican influence over our produce industry will show continuous growth for the unforeseeable future. A variety of premium products, with an exp-anded season,all grown and packed with the highest regard for food safety and an eye on social responsibility— is a winning combination.”
Images: SNEHIT, Paul Matthew Photography/Shuterstock.com
