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Imports pressure U.S. winter strawberry markets

U.S. blueberry growers have made a loud case that imports threaten their existence.

Last month, a handful of domestic blueberry growers testified at a hearing of the U.S. International Trade Commission (ITC), saying that imports, primarily from Mexico, during the U.S. season are below the cost of production, and they threaten domestic growers’ existence.

Agtools analysis found Mexico certainly has increased market share in the U.S. in the past five years.

This time around we are going to look into another issue that is going on right now between Florida and Mexico.

The commodity this time? Strawberries.

The concern is that Mexico is continuously increasing imports into the United States at costs below production, which makes it difficult, if not impossible, for Florida growers to compete. For a more in-depth look into the issue you can read more here.

Based on the arguments and accusations flying from both sides, Agtools wanted to look into the data to see what they could find. I think you will agree that the data is pretty intriguing.

Blue Book has teamed with Agtools Inc., BB #:355102 the data analytic service for the produce industry, to see what the data shows about a fruit or vegetable in 2021.

First, let’s get a general overview of production volume as it relates to Mexico and Florida. The graph below shows that in 2017, Mexico overtook Florida in total volume. While Florida’s production has remained steady, Mexico has increased production on a yearly basis.

One of the main reasons Florida is concerned, is that the Mexican season mirrors the Florida season as you can see below.

In 2016, Florida produced more volume than Mexico from January through April. However, Mexico outperformed Florida at the tail end of the year, or the “beginning” of the 2017 season, but peak volumes mirrored each other.

Fast forward two years and you can see that Mexico has nearly caught up in production volume at the beginning of the year and surpassed Florida at the end of the year.

The 2020 season is even more telling, with Mexico out producing Florida during the peak season and completely overshadowing them at the end of the year. In fact, if we use 10 million pounds as a standard for production, Florida surpasses that amount only twice in the last 6 years, while Mexico exceeds the mark 5 out of 6 years (Oct – Dec timeframe).

It’s fairly obvious when and where Mexico is picking up volume. They start earlier, produce more earlier, and tend to go a little longer in the season. All of this leads to additional pressure on Florida.

Now let’s look into pricing. For this, we will focus on January – March to capture the peak season for both regions and concentrate on central Florida and Mexico crossings in Texas and Otay Mesa.

Looking back to 2016, the last time Florida outproduced Mexico, pricing was stable and competitive. Florida is slightly higher than both Mexico crossings, but they are also the first to drive the market down with Mexico following suit.

Two years later in 2018, Florida stays in between the two Mexico crossings and is even the cheapest option post-Valentine’s Day and through the first two weeks of March.

Last year a similar pattern emerged. Florida is higher in price at the beginning of the year, but well within the competitive realm with Mexico.

Around Valentine’s Day, Florida brings the market down and Mexico follows suit. Florida follows with a spike in price towards the end of February that Mexico once again follows.

The first month of 2021 seems to be following the same pattern as years past. Mexico’s volume is nearly three times that of Florida, yet pricing remains stable between both regions.

As in years past, Florida is at the top of the market prior to the first major ad of the year.

Looking at the overall picture, a similar pattern emerges with the blueberry issue. Public demand is on the rise for strawberries, and Mexico is producing more to capture those opportunities.

The question that stands out from this data is what is keeping Florida from increasing their own production volume?

Have the returns been so low that it doesn’t make sense to plant more acreage or is it another issue altogether, like weather? Look at the difference in growing conditions between Florida and Mexico right now.

The growing conditions in Mexico are considerably better for production of strawberries. While this is a sliver in time, the pattern remains consistent, especially when looking at the potential hurricanes Florida faces.

Another variable which affects the markets is currency and don’t underestimate the effect that fluctuations can have on volumes and markets. During the middle of March 2020, the Mexican peso devalued in excess of 30%, making Mexican imports that much more attractive.

It is important to say that we are not choosing sides in this battle but are intrigued by the data surrounding it and hope that by providing a little more factual insight into this issue, you can draw your own conclusion.

Either way, it is definitely a story to follow in the coming months.

Matt DeBoer is senior vice president of Agtools Retail Segment Sales. He has over 20 years in the produce industry from the sourcing side to the retail segment, and he is a diehard Minnesota Vikings fan.