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COMPETITIVENESS OF FLORIDA AND MEXICAN
FARMERS IN THE TOMATO TRADE:
HOW DOES SUBSIDY REMOVAL AFFECT IT?
Nainish K. Gupta and Christina H. Gladwin
IW92-20 July 1992
INTERNATIONAL WORKING PAPER SERIES
FOOD AND RESOURCE ECONOMICS DEPARTMENT
Institute of Food and Agricultural Sciences
University of Florida
Gainesville, Florida 32611
COMPETITIVENESS OF FLORIDA AND MEXICAN FARMERS IN
THE TOMATO TRADE: HOW DOES SUBSIDY REMOVAL AFFECT IT?
Nainish K. Gupta and Christina H. Gladwin
Food and Resource Economics Department
University of Florida
July 14, 1992
Ui2E.SITY OF FLORIDA LIBRARIES
The news of the proposed North American Free Trade
Agreement (NAFTA) has been received with mixed emotions.
While economists, especially trade economists, have received
the news favorably, Florida farmers do not seem to be happy
with it. They apprehend that this agreement will affect them
adversely. Some even fear that Florida's fruit and vegetable
industry may be wiped out due to the differences in
agricultural policies which might give the Mexico farmers an
edge over their counterparts in Florida. Indeed, some of
these sentiments were recently echoed by Frank Bouis,
President of the Florida Fruit and Vegetable Association
The future of fruit and vegetable agriculture looks
pretty dim....Introducing foreign competition without
incr asing demand will mean aoss of U.S. farms ....The
Unite States is losing the competitive race that
determines where its fruits and vegetables come
from....U.S. government policy is to encourage less
developed nations Mexico, the Caribbean, Andean
nations, and others to export fruits and vegetables to
the United States....The country is faced with a trade
negotiation with Mexico to be conducted by an
administration that just doesn't seem to appreciate the
problem of comparative competitiveness and how it is
affected by domestic policies....They [domestic policies]
impose economic burdens that inevitably result in higher
costs. And that means more imports and/or reduced
availability of fruits and vegetables because of the
market driven nature of the industry (Bouis, 1991).
The source of the Florida farmers' apprehension seems to
lie not in their inefficiency relative to Mexican farmers but
in the additional financial burdens resulting from policy
interventions such as: environmental regulations, wage rates,
costs of credit, and above all, governmental protection in the
form of tariffs and subsidies. In other words, Florida
farmers seem to believe that even though they are efficient
producers of tomatoes, they may not be able to compete with
Mexican tomato farmers because Mexican farmers are somewhat
protected by subsidies whereas US farmers are not. How
"competitive" would Mexican farmers be without subsidies, even
small ones? This paper attempts to answer that question.
The term "competitiveness" does not have a definition in
neoclassical economic theory; it is a political concept.
Economists' perception of competitiveness is that it is the
result of the combined effect of market (usually policy-
induced) distortions and comparative advantage. "Comparative
advantage" is an economic concept, concerned with trade and
optimal welfare in an undistorted world. Competitiveness, on
the other hand, relates to long-term survival (Thurow, 1992).
If a firm cannot survive by selling at the going price, it is
not regarded as competitive. If it is able to survive because
it is able to increase its market share at the going price, it
is regarded as being more competitive. And economic
competition between nations as well as firms is going to be
the name of the game in the 21st century (Thurow, 1992:22).
Japanese firms, according to Thurow (1992:125,149) are
competitive because they don't maximize profit but do maximize
long run survival subject to a profitability "greater than
zero" constraint. American firms lose market share to them
because they are too constrained by the short-term goal of
maximizing profits; in the case of the consumer electronics
industry, for example, they left the market after being
consistently undercut by the low-priced and low-profit
An increase in competitiveness of a firm, however, does
not necessarily imply an increase in national welfare in the
short run. This is so because a firm may be inefficient in
through government support (including subsidies). Conversely,
rendered uncompetitive because of costs resulting from
government intervention. In international trade, it is the
economic cost of production plus the additional economic costs
to get the commodity to the foreign buyer that determines
competitiveness. Hence, in order to properly assess
competitiveness, one needs to take into account policy
interventions (e.g., taxes, subsidies) that influence the
factor prices faced by producers (Sharples, 1990).
Proper assessment of competitiveness becomes especially
important in the context of international trade in
agricultural products. Available evidence suggests that many
countries pursue a host of agricultural and trade policies
which distort the working of the free market and which very
often alter the nature of trade. While such policies are
generally aimed at protecting their producers from the world
market, they are also instituted to enhance competitiveness in
the world market. Indeed, public policy-induced distortions
can and do impact competitive performance to such an extent
that actual trade patterns significantly diverge from what
they would have been on the basis of comparative advantage
alone (Menzie and Prentice, 1987).
Having said all this, we now return to the issue of
competitiveness of Florida and Mexico farmers in tomato trade.
To begin with, we provide a brief overview of the fresh winter
vegetable industry in Florida and Mexico in the hope that this
will serve as a useful backdrop for the discussion of
competitiveness in the context of NAFTA.
The fresh winter vegetable industry consists of six
vegetables, namely tomatoes, bell peppers, squash, cucumbers,
eggplant and green beans. While tomatoes are but one of the
many vegetables produced in Florida, they are by far the most
economically important and have been at the center of debate
over the impacts of NAFTA. During the 1990/91 season, fresh
tomatoes produced in Florida under the Federal Marketing Order
966 amounted to over 1.38 billion pounds with an FOB value of
over $515.7 million. On average, tomatoes annually account
for more than one third of the total value of all vegetables
produced in Florida. Competition is also the greatest in the
case of tomatoes (Taylor, 1992).
Florida and West Mexico supply about two-thirds of all
the fresh tomatoes consumed in the United States from October
to July. California, Texas, South Carolina, and several minor
supply areas producing late in the fall and again in the
spring supply the remaining one-third. The main competition,
however, is between Florida and the State of Sinaloa in
Mexico. Although Florida primarily serves the eastern U.S.
and Mexico the western U.S., the two compete in the midwestern
U.S., with the final outcome in terms of market share
depending on their relative competitiveness. Florida has
higher market share from October to December and May to July,
while Mexico has higher market share from January to April.
As Florida periodically suffers from freeze spells during
January-April, per unit production costs rise, as a result of
which Florida's market share suffers a decline.
Mexico has shipped fresh tomatoes to the United States
for many years. Starting with 100 million pounds in 1957/58,
Mexican tomato exports to the United States increased sharply
to over 800 million pounds in 1978/79, with a consequent
decline in Florida's market share. This sustained expansion
of Mexican tomato exports and the consequent loss of Florida's
share in the U.S. market induced Florida's tomato producers to
resort to legal means (the market order regulation of January
1969) and political pressure (the dumping charge of October
1978) to seek protection against the Mexican producers.
Fresh fruits and vegetables imported into the U.S. have
been subject to a tariff since 1930. The tariff on fresh
tomatoes imported from Mexico has remained unchanged since
1951, when the rate was set at 1.5 cents/pound for tomatoes
imported between November 15 and the last day of the following
February, and 2.1 cents/pound for those imported during the
remaining periods. The duty had the effect of raising the
cost of supplying tomatoes to markets in the United States,
but this effect has gradually disappeared over time: the duty
added 23 per cent to the costs of supplying tomatoes in
1951/52, 20 per cent in 1967/68, 12 per cent in 1973/74, 10
per cent in 1978/79 (Zepp, 1981) and a mere 6 per cent in
The duty enabled the Florida tomato farmers to be
competitive in selling mature green tomatoes until 1972/73.
But as regards the vine ripe tomatoes, Mexican farmers held a
cost advantage over Florida farmers even with the imposition
of the duty. In other words, since 1973/74 Mexican producers
have held a total cost advantage over their Florida
counterparts in both vine ripe and mature green tomatoes even
with the imposition of the import duty. Implementation of the
proposed free trade agreement between Mexico and the United
States will result in a removal of the tariff currently in
place on Mexican tomato imports and thereby make Florida
farmers, in their eyes, less competitive still.
2. ANALYSIS OF COSTS OF PRODUCTION
What do the cost of production data say about this issue?
Several studies analyzing the costs of production and
competitiveness between Florida and Mexico have been done for
the fresh winter vegetable industry. The first study was done
by Fliginger et.al. in 1969. They found that the total cost
of producing vine-ripe tomatoes in Mexico was about two-fifths
that of Florida, with the ratio being more or less for
individual production inputs. Marketing costs for tomatoes
from the farm in Mexico to shipping points on the U.S. side of
the border were higher than from the farm in Florida to
shipping points in Florida, but the total cost involved in
deliveries to Chicago was about even for both areas. Mexico
thus had a slight cost advantage in delivering to markets in
the western portion of the U.S., and Florida had a slight
advantage in delivering to markets east of Chicago. The study
also found that given its advantage in cost of production and
climate for winter production, Mexico would probably continue
to increase its exports of vine-ripe tomatoes to the U.S. and
Florida production of vine-ripe tomatoes during the winter
season probably would continue to decline. Florida, however,
could continue to dominate and retain a stronger competitive
position for mature-green tomatoes.
Zepp and Simmons conducted another study into the issue
of competitiveness in 1979. They found that Florida appeared
to have a net competitive advantage (total of the cost
advantage plus the FOB price advantage) in tomato production
and that the greatest comparative advantage occurred in the
spring. Future competition between Florida and Mexico would
be most intense during the midwinter (December through April)
when the southern areas of Mexico were in full production. A
continuation of the higher rate of input price inflation in
Mexico than in the U.S. would enhance Florida's cost
competitive advantage in tomatoes during these months, and
would probably permit Florida growers to enlarge their share
of the midwinter market. They also found that as Mexico's
rural wage advantage diminished, Mexican producers may try to
hold down labor costs by adopting new practices such as
harvesting more tomatoes as mature greens or using plastic
mulch. Year-to-year variation in market shares would still
occur as unusually good or bad weather conditions in one area
or the other affected that area's production.
Another study was done by Buckley et. al. in 1986 to
assess the cost and price advantages of producing the six
winter fresh vegetables in Florida and the West Mexico state
of Sinaloa. They found that Sinaloan growers could produce
winter fresh tomatoes more cheaply than Florida growers. But
import and export fees at the U.S. border increased total
costs for Sinaloan producers beyond total Florida costs. Any
major reduction in border fees on vegetables could shift the
cost competitive advantage for all vegetables to the Sinaloan
growers. They also found that Sinaloan producers would ship
vegetables to the United States as long as prices remained
high enough to cover duties and transportation costs in
addition to production costs. Labor was the highest of the
input costs which had been generally increasing since 1978 in
both countries, but Mexican wage rates in 1983 were 11 percent
of those paid in Florida. Fertilizer and imported chemicals,
cartons, and seeds were expensive for Sinaloan producers while
land rent was a significant cost for Florida's producers, due
mainly to urbanization and economic pressure to divert land to
higher paying uses.
The latest study has been done by Taylor in 1992. He
finds that as the current tariffs on fresh tomatoes have not
represented a significant trade barrier for some time, the
removal of tariffs is not likely to significantly alter the
forces that have driven competition in the industry.
According to him, the reason for the increase in the Florida
tomato industry's shipments to the U.S. domestic winter market
rests in the industry's impressive ability to improve
productivity and not in the existence of tariffs or other
forms of protection.
It is quite apparent from the above review of literature
that all comparisons for assessing competitiveness have been
done ignoring subsidies, even though it is common knowledge
that government policies can and do affect competitiveness by
altering (decreasing or increasing) costs of production for
domestic producers via subsidies and/or taxes in input and
output prices that might change the true picture of
competitiveness. To properly assess competitiveness, an
effort must be made to look at what costs would be, given
subsidy removal, such that both sides have an equal playing
Where might subsidies enter into costs of production?
Table 1 gives the data on financial costs of various inputs
and their respective weight in the total preharvest cost of
producing one carton of tomatoes in Florida and Mexico for
1990/91 (the latest year for which data are available).
Adjustments have been made to account for the substantial
yield differences between the two countries in order to make
the data comparable. As can be seen from the table, the
biggest contributor to the cost of production- for both
countries is the item called "Miscellaneous and Overheads".
This item, accounting for nearly 25% of the costs in both the
countries, includes things such as paint, plastic mulch,
plastic string, replacement stakes, and scouting.
Labor is the second largest cost category, accounting for
approximately 18% of the total costs of production. It is
interesting to note that even though wage rates in Mexico are
substantially lower than those in Florida, the total wage bill
in terms of its weight is higher in Mexico. One explanation
that could be offered for this is that Mexican tomato
production is extremely labor intensive while it is
capital intensive in Florida. This explanation is further
substantiated by the fact that machinery accounts for 17.25%
of the costs in Florida, whereas it accounts for only 6.5%
in Mexico. On the other hand, interest contributes 15% to
Mexican production costs while it contributes only 3.5% to
Florida costs. The third major cost of production thus
differs in the two countries.
Chemicals, consisting of bactericide, fumigant,
fungicide, herbicide, insecticide and surfactant, are the
fourth largest group contributing to costs of production,
accounting for 16.5% in Florida and 10.9% in Mexico. This is
not surprising, but the fact that Florida costs are greater
than Mexico's costs is surprising given Mexico's reported
disregard for United States Environmental Protection Agency
(US EPA) standards.
Table 1. Comparative Costs of Production for Tomatoes in
Sinaloa and Florida, 1990/91.
Production Costs per Sinaloa Florida
Carton (25 lbs.) (average)
: $ % ,$ %
Seeds 0.20 7.27 0.21 6.16
Fertilizer 0.24 8.73 0.22 6.45
Chemicals 0.30 10.9 0.56 16.43
Labor 0.51 18.55 0.60 17.60
Machinery 0.18 6.55 0.59 17.30
Interest 0.41 14.91 0. 12 3.52
Miscellaneous & Overheads 0.67 24.36 0.89 26.09
Land Rent 0.24 8.73 0.22 6.45
Total Cost/Unit 22.75 100.00 3.41 100.00
Source: Taylor (1992).
Land rent, accounting for 6.45% in Florida and 8.73% in
Mexico, is the fifth largest category contributing to costs.
The Mexican co-operative land ownership system of elidios
substantially brings down land rents; whereas in Florida, the
land market is a free market and opportunity costs bid up land
rents. Hence it is surprising that land rents which are in
effect subsidized contribute to a larger extent in Mexico than
Fertilizer shares the fifth spot with land rent and
accounts for 8.73% of the total cost of production in Mexico
and 6.45% in Florida. This is puzzling, given the Mexican
agricultural policy to heavily subsidize fertilizers, whereas
no such subsidies are available to Florida farmers. The next
section addresses this puzzle, uses it to illustrate the
importance of including the value of subsidies in calculating
the cost of production, and focuses on the implications that
this important valuation has for drawing inferences about the
competitiveness between Mexico and Florida tomato farmers.
3. ROLE OF SUBSIDY REMOVAL IN COMPETITIVENESS
The Government of Mexico (GOM) views the fertilizer
industry as a strategic industry in the context of its overall
objective to make effective use of the nation's energy
resources and to achieve agricultural self-sufficiency. The
Mexican Fertilizer Company (FERTIMEX) is supervised by the
Ministry of Energy, Mines, and Parastatal Industries (SEMIP).
Prices of fertilizers are fixed by the Ministry of Finance
(SHCP) with the approval of the Economic Cabinet. As a
result, FERTIMEX operates more as a GOM department under SEMIP
rather than as a commercial enterprise. FERTIMEX is for all
practical purposes a monopoly, totally protected from market
forces. Potential competitors (importers and domestic
producers) have not shown interest in the fertilizer sector as
prices are set at heavily subsidized levels, far below import
Fertilizer prices paid by farmers in Mexico have been
falling steadily in real terms for many years, with the gap
between domestic price and import-parity price widening over
time. The price of fertilizer is set at the same level,
whether the farmer picks it up at the factory or has it
delivered to the railhead near its final destination. Given
such an incentive environment, virtually no fertilizer is sold
at the factory.
FERTIMEX's distribution objectives have been to deliver
fertilizer to farmers as close as possible to the farmgate.
Thus, FERTIMEX is obligated to deliver or ensure deliveries of
small shipments to 2,600 sales points, creating logistical
difficulties and raising transport costs due to excessive
reliance on land transportation, in particular on high cost
truck transport for 50% of all plant shipments. Hence in
1989, fertilizer distribution was managed by FERTIMEX at a
cost of about US $45 per ton, of which US $20 per ton related
to transport costs from plants or ports to warehouses.
The price for fertilizers paid by farmers or distributors
at the nearest railway station is unrelated to FERTIMEX's
production and distribution costs or to international prices.
Farmgate prices, substantially lower than the import-parity
prices, do not cover FERTIMEX's total costs and as a
consequence substantial budgetary transfers are made to cover
its losses. Total budgetary transfers to FERTIMEX amounted to
US $477 million (0.3% of GDP) in 1986. FERTIMEX also receives
substantial indirect subsidies from the Mexican Petroleum
Company (PEMEX) in the form of low ammonia prices. The GOM
budgetary transfers to FERTIMEX added up to an estimated US
$2.5 billion between 1986 and 1990.
Table 2. Prices of Selected Fertilizers Paid by Farmers in
Mexico and U.S. (in $ per Metric Ton).
Year Mexico U.S. Mexican price
as % of U.S.
1984 155.75 265 58.77
1985 125.90 247 50.97
1986 94.55 243 38.91
1987 96.20 277 34.73
1988 197.30 282 70
Source: FAO, Fertilizer Yearbook 1990.
Table 2 presents data on complex fertilizer (18-46-0)
prices paid by farmers in U.S. and Mexico for the period 1984-
88. (More recent data are not available.) The prices for
Mexico have been arrived at by converting the prices
designated in pesos into U.S. dollars, using the prevailing
As can be seen from the table, fertilizer prices paid by
Mexico farmers were as much as 30 per cent lower than those
paid by Florida farmers in 1988. Despite this, fertilizer
costs per carton of tomatoes (25 lbs.) amounted to US $0.24 in
Mexico (see Table 1) against US $0.22 in Florida. This means
that Mexican farmers use 2.68 lbs. of fertilizers per carton
of tomatoes against only 1.72 lbs. by Florida farmers. In
other words, Mexican farmers use substantially (56 percent)
more fertilizer per carton of tomatoes than Florida farmers.
However, since Mexican farmers' purchases of fertilizer are
heavily subsidized, their costs of fertilizer are only 9 per
cent higher than that of Florida farmers. Had Mexican farmers
paid the same prices as Florida farmers, their fertilizer bill
per carton of tomatoes would have been US $0.34, not US $0.24.
In that case, the difference in per unit cost of production
between Florida and Mexico would decline from the present
level of US $0.66 to US $0.56, as shown in table 3, thereby
enabling Florida tomato farmers to expand their market beyond
Table 3. Revised Comparative Costs of Production for
Tomatoes in Sinaloa and Florida, 1990/91.
Production Costs per Sinaloa Florida
Carton (25 Ibs.) _(average)
_$ % $ %
Seeds 0.20 7.27 0.21 6.16
Fertilizer 0.24 8.73 0.22 6.45
Chemicals 0.30 10.9 0.56 16.43
Labor 0.51 18.55 0.60 17.60
Machinery 0.18 6.55 0.59 17.30
Interest 0.41 14.91 0.12 3.52
Miscellaneous & Overheads 0.67 24.36 0.89 26.09
Land Rent 0.24 8.73 0.22 6.45
Total Cost/Unit 2.75 100.00 3.41 100.00
Fertilizer Subsidy Removal 0.10 3.64 0.00 0.00
Revised Total Cost/Unit 2.85 100.00 3.41 100.00
In sum, one needs to ascertain the value
received by domestic producers in a country.
on the subsidy
If one ignores
government subsidies, inferences about competitiveness are
likely to be distorted.
4. IMPACTS OF FERTILIZER SUBSIDY REMOVAL ON MEXICO
All subsidies, large and small, are against the spirit of
a free trade agreement. Given the importance to Florida of
its fresh winter vegetable industry, there is no doubt that
Florida tomato producers will be arguing for an end to Mexican
protection and the removal of all subsidies, so that there
really 1is. a "level playing field" between Mexican and
Floridian competitors in the tomato trade. Where would a
removal of fertilizer subsidies leave Mexican producers?
Clearly, it would cost Mexican tomato producers $0.10 per
carton in the United States--and possibly a substantial part
of market share in the Midwest United States.
Is this why the Mexican government would resist
fertilizer subsidy removal? In our opinion, no. Viewed from
the perspective of the Mexican policy maker, the important
issue here is: what would fertilizer subsidy removal cost
subsistence maize producers who comprise the majority of
campesinos in Mexico? And the answer is: much more, maybe the
difference between life and death for peasants who have
traditionally produced maize and beans (la milpa) on small
rainfed plots in Southern Mexico. Mexican campesinos have
already been hard hit by the inflation and rise in consumer
prices of the 1980s which decreased their real wages by 40
percent. Cheap fertilizer has in the past supported "cheap
food, cheap labor" policies which have kept malnutrition down
and guaranteed physical survival for part-time subsistence
farmers in rural areas of Southern Mexico; but at the same
time these policies have also kept urban and rural wages down
(deJanvry 1981). Clearly, it is time for Mexico to break this
vicious circle and "get prices right" (Timmer, Falcon, and
Pearson 1984), in part by allowing food prices, fertilizer
prices,, and wages to rise.
Yet how to diminish the suffering of the poor, who tend
to be consumers of basic grains for at least part of the year,
in the process of structural adjustment? Mexican peasants
have already been through the "lost decade" of the 1980s.
Mexico's debt moratorium issued in the decade in 1982; its
debt-restructuring agreement of 1989, which reduced Mexico's
debts of $107 billion by about $15 billion, saw the decade end
(Economist, Oct. 12, 1991: 30). Financial stress, the debt
crisis, and "structural adjustments" were the buzzwords of the
decade which symbolized a decrease in the standard of living
for the average Mexican citizen, whose purchasing power was
cut in half (Vickers 1991:86).
For Mexico as for other countries all over the world that
"adjusted" in the 1980s, structural adjustment programs (SAPs)
meant a switching of resources from the production of
nontradable, subsistence goods to tradables or exports,
continual devaluation of an overvalued currency, privatization
of parastatals (government-owned industries), slashing of
tariffs and import licences, and a whole new emphasis on free
markets. The increased emphasis on the production of exports
was made necessary by the debt crisis which hit Mexico along
with other middle income developing countries in Latin
America, e.g., Brazil and Argentina, as a result of both the
oil price hikes of 1973 and 1979 and the interest on two-
thirds of the debt being calculated at "floating" interest
rates which soared in the early 1980s. Mexico's case was only
unique because its government officials were the first to
declare that debt-servicing was an obstacle to growth, and
resolving the debt problem had to involve debt reduction
(Economist, Oct. 12, 1991: 17).
Yet internal as well as external factors were
contributors to the debt crisis, and these required internal
changes. Brazilian economist Bacha (1988) claims that, in
contrast to other middle income developing countries of
Southeast Asia and southern Europe, Latin American countries
have had a relatively closed economy as measured by a small
proportion of manufactured exports, in spite of a history of
successful import substitution policies, and thus greater debt
to export ratios. Because they relied on exports of primary
products, which suffered a decline in their terms of trade
during the 1980s, and because they were relatively closed to
trade, Latin American countries had greater vulnerability to
the oil price shocks of the 1970s than did other middle income
The current economic program of President Carlos Salinas
de Gortari has gone far in making these necessary internal
changes and "opening up" the Mexican economy to trade and
foreign investment; some claim it amounts to a revolution in
Mexico's economy (Conger 1990). For the agricultural sector
and desperately poor campesinos, structural adjustment in the
1980s has meant an end to SAM (Sistema Alimentario Mexicano)
which promised food self-sufficiency and decent peasant
incomes for rural Mexicans in 1980-81 (Luiselli 1989), cuts in
rural credit by more than half, and an overall decrease in
public investment in agriculture by four-fifths (Economist,
March 2, 1991: 44). Gone are requirements that 51 percent of
Mexican businesses be owned by Mexicans; even ejido land,
which since the Revolution cannot be sold but must be kept in
the family as individual parcels or owned collectively, can
now be sold.
Now in the 1990s, can Mexican subsistence producers
survive another jolt in the form of removal of fertilizer
subsidies and an increase in fertilizer costs? This is
doubtful, given that maize production twenty years ago--in
1973-74--was very fertilizer-intensive, with farmers in Puebla
applying an average of 800 kilos per hectare (Gladwin 1976).
One way out of this dilemma is for Mexico to target fertilizer
subsidies at small-scale food producers on rainfed farms in
Southern Mexico through rural development programs already in
place, e.g., the Plan Puebla (Gladwin 1976). This solution
has been recommended for African governments faced with the
burgeoning costs of fertilizer subsidies and structural
adjustment conditions mandated by the IMF and World Bank
(Gladwin 1991, 1992). A targeted fertilizer subsidy would not
only serve to keep fertilizer affordable to those food
producers least able to pay for it, but also it would
eliminate the "uneven playing field" seen as unacceptable by
Florida tomato farmers who are not only competitors of Mexican
farmers but also future partners in the new free trade
Inferences about competitiveness between Mexican and
Floridian tomato producers are distorted by government
subsidies given to one side only. All subsidies, large and
small, are against the spirit of a free trade agreement.
Given the importance to Florida of its fresh winter vegetable
industry, there is no doubt that Florida tomato producers will
be arguing for an end to Mexican protection and the removal of
all subsidies, so that there really is a "level playing field"
between Mexican and Floridian competitors in the tomato trade.
Given the expected negative impacts on Mexican peasants of a
complete removal of Mexico's fertilizer subsidies, however, we
recommend a targeted fertilizer subsidy which would be
targeted at food (maize) producers on rainfed plots in
Southern Mexico. Such a targeted subsidy could reach
campesinos through rural development programs like the Plan
Puebla in the South. It would not reach Mexican tomato
producers in Northern states, and so would ensure that an
level playing field existed between Mexican and Floridian
producers in the tomato trade.
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Domestic and External Factors." Paper prepared for the
Conference on Comparative Development Experiences in Asia and
Latin America, East West Center/ University of Hawaii,
Honolulu, April 20-22, 1988.
Bouis, Frank, "Social Concerns When Regulating the Fruit and
Vegetable Industry" Address at the Look Through The '90s
Workshop sponsored by The S-222 Regional Research Committee
and Farm Foundation, June 1991.
Buckley, K.C., J.J. Vansickle, et. al., Florida and Mexico
Competition for the Winter Fresh Market, Agricultural Economic
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Conger, Lucy, "The Challenge of the Campesinos." Institutional
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Fliginger, John C., et. al., Supplying U.S. Markets with
Fresh Winter Produce: Capabilities of U.S. and Mexican
Production Areas, Economic Report No. 154, USDA-ERS, March
1969 (supplement dated September 1971).
Food Agricultural Organization, Fertilizer Yearbook 1990.
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of Hierarchical Decision Models." American Journal of
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Gladwin, Christina, "Fertilizer Subsidy Removal Programs and
Their Potential Impacts on Women Farmers in Malawi and
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deJanvry, Alain, The Agrarian Question and Reformism in Latin
America. Baltimore: John Hopkins Press, 1981.
Luiselli, Cassio, "Agricultural Dilemmas of Mexico:
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