FLORIDA FARMERS INC.
“ A STRUGGLE FOR SURVIVAL”

HISTORY OF THE WINTER VEGETABLE MARKET

The Mexican fresh vegetable industry initially developed soon after World War II with considerable U.S. investment and expertise. Mexican exports were relatively minor until the mid-1950´s, at which point production and exportation began to expand. Cuba had been a source of winter vegetables for the U.S. market during the 1940´s and 1950´s but in 1960 the U.S. economic embargo on Cuba was imposed. Mexico helped to fill the shortfall created by the removal of Cuban vegetables from the market. Further Mexican expansion was encouraged by the termination in the United States in 1964 of the Bracero Program, which had allowed the use of cheap guest labor in the production of fresh vegetables, which greatly decreased the availability of low-cost labor in the U.S. Mexican growers could be more competitive as they still had access to low-cost labor. The flow of financial resources and technical expertise from the U.S. continued, and the market share of the winter vegetable market increased for Mexico, which meant a decreased share for Florida growers. This trend continued into the 1970´s.

In January of 1978, the Southwest Florida Winter Vegetable Growers Association, the South Florida Tomato and Vegetable Growers Association and the Palm Beach-Broward Farmers Committee for Legislative Action, Inc. met to form a joint effort to combat the dumping of Mexican vegetables on U.S. markets. After several trips by the Florida growers´ representatives to Washington, the Subcommittee on Foreign Agricultural Policy of the U.S. Senate Committee on Agriculture, Nutrition and Forestry held hearings to inquire into the threat to the survival of the domestic winter vegetable industry.

In September of 1978, the Florida farmers filed a petition with the United States Customs Service to protect their industry. The petition claimed protection under the Antidumping Act of 1921. By October, the Treasury Department began the dumping investigation. A “tentative deter-mination” decision was expected by April but Treasury extended the deadline until July 19, 1979. On July 16, the Commissioner of Customs, charged with the factual investigation of dumping claims, transmitted to the Treasury Department´s General Counsel a memorandum sum-marizing Customs´ findings. Under each method of testing, the Customs Service determined that margins indicating dumping did exist. The Customs Services, at the request of Treasury Department officials, did not recommend a finding to the Secretary of the Treasury.

At this point, the Departments of Treasury, State, Agriculture and the Office of the Special Trade Representative requested that the Florida farmers withdraw their petition. This action was suggested as necessary if good faith negotiations with the Mexican government on the vegetable issue were to take place. The farmers voluntarily withdrew their petition, in order to encourage negotiation to proceed.

The farmers agreed not to refile the petition while President Portillo was in Washington meeting with President Carter. At the request of Stuart Eizenstat, Assistant to the President for Domestic Affairs and Policy, the farmers did not refile their petition until the last day of the 90-day with-drawal period, and only after an attempt to resolve the issue through negotiations had failed.

In mid-October, Alfred Kahn, Advisor to the President of Inflation, sent the Department of the Treasury an analysis of a possible legal framework for a no dumping finding in a memorandum entitled “Legal and Analytical Options.” This communication was in violation of the spirit of the mutual agreement at the time of the withdrawal of the petition. The dumping in-vestigation record was to be closed to further input as of the date of the voluntary withdrawal.

The Treasury Department, on October 29, issued a tentative finding that dumping had not occurred, undoubtedly in response to pressures from other government agencies.

On November 1, the farmers filed suit in the U.S. District Court seeking reversal of the Treasury Department's tentative preliminary finding. On February 27, the Court dismissed the suit on the basis that it did not have the power to review a preliminary determination. However, the Court´s opinion paved the way for a final decision by the Commerce Department in the antidumping case by March 17. The Florida Winter Vegetable Coalition experienced an administrative “procedure” that began in September of 1978 and continued for years. At various stages in the procedure, the Coalition was led to believe that the facts required a favorable decision and that a favorable decision would be handed down.

Mexican growers went without sanction and the courts ultimately ruled against the Florida growers on appeal of the administrative determinations. It was a lengthy, expensive, tough fight. Some objectives were achieve - a Florida labeling law that required country of origin on all produce and an increased awareness on the part of consumers of the environmental issues at stake. But Florida and Florida farmers lost. This effort was the most sustained and serious effort on the part of Florida winter vegetable industry to fight for fairness in a political and economic environment that proved to be treacherous. Although ultimately unsuccessful, this antidumping fight is credited with helping to focus attention on enforcement and fairness issues and slowing the Mexican takeover of the winter vegetable market.

During the 1980´s Mexico´s position in the United States marketed decreased when the Mexican government adopted export controls. Mexico became a swing supplier, increasing exports during U.S. shortfalls in production, and decreasingexports when adequate supplies in the U.S. meant lower prices.

Production of all major vegetables in Florida increased in the 1980´s, which regained its prominent market share in tomatoes, eggplant, squash and green beans. Bell peppers and cucumbers remained to Mexico´s advantage. Florida´s growth in market shares at that time was due to dramatic technological advances and significant increases in labor costs in Mexico compared with Florida.

From the 1985/86 season through the 1990/91 season, Florida held a competitive edge over Mexico due to gains in pricing advantage. The costs of producing vegetables in Mexico were generally lower, but decreased investment in technology, lower labor productivity and higher costs of resources over which the Mexican government had relinquished control resulted in higher comparative costs. Transportation costs to the border and import and export fees at the time significantly increased the costs of marketing Mexican produce in the United States.

Then adverse weather conditions dulled the cost advantage Florida producers held. Frequent freezes in Florida in the late1980´s gave Mexican growers extremely high prices for some of their produce.