Chihuahua News: NAFTA's Bad Apples

Historically an important crop in Chihuahua, locally-grown apples confront a deluge of U.S. imports, which reached 237,000 tons in 2012.

(LAS CRUCES, NM) - Facing ruin, apple producers in the Mexican border state of Chihuahua are mulling an anti-dumping complaint against U.S. imports. Ricardo Marquez Prieto, president of the Chihuahua Regional Union of Fruit Growers, charged that unfair competition from Mexico's partner in the North American Free Trade Agreement (NAFTA) threatens the viability of the local apple industry, which could see tens of thousands of tons of warehoused apples valued in the neighborhood of $65 million go to rot.

"We are going to file a suit against dumping if (Mexican) federal authorities don't get on the ball and move to our side," Marquez vowed late last week, after meeting with federal officials.

Historically an important crop in Chihuahua, locally-grown apples confront a deluge of U.S. imports, which reached 237,000 tons in 2012. Hammered by unusual freezes, Chihuahua's orchards chalked up a 55 percent production decline in the same year.

Contending their troubles go beyond climate issues, the apple producers say production costs are higher in Mexico than in the U.S. According to Marquez, electricity costs incurred by Chihuahua producers are more than three times the prices paid by their U.S. counterparts, or $1.72 per kilowatt hour versus 50 cents per kilowatt hour. Simultaneously, U.S. producers enjoy $400 million in government marketing support, he added.

Although Chihuahua growers have recovered from the deep freeze of 2012, meeting 1992's record harvest of 440,000 tons during last fall's harvest cycle, as many as 80,000 tons of fruit could now spoil because of a Mexican market oversaturation from U.S. imports. Moreover, producers claim they stand to lose money, since national juice processors only pay 86 centavos for each kilo of apples that costs more than 3 pesos to refrigerate.

On February 26, an estimated 4,000 apple producers, processors and industry workers staged an unprecedented demonstration in the state capital of Chihuahua City. The protestors demanded that the federal government put a brake on U.S. imports, provide a two-peso subsidy for each kilogram of apples, and apply a compensatory fee of ten cents on the dollar on purchases of fruit imported before and during the local harvest.

Attracting public attention, the demonstrators gave away free apples to passerby. Marquez said federal officials had ignored a petition for industry protection submitted in April 2013.

Former Chihuahua state legislator and rural affairs analyst Victor Quintana later wrote that the February 26 action represented apple growers' "most important mobilization in their history." According to Quintana, NAFTA's apple imports could jeopardize the livelihoods of 35,000 people, including harvest jobs held by indigenous Raramuri workers. Embarked on the National Crusade against Hunger, the Mexican federal government cannot say a genuine campaign is being waged "while taking away dignified work...," Quintana wrote.

The Chihuahua City demonstration quickly spurred a meeting in Mexico City attended by apple producers, Chihuahua Governor Cesar Duarte and federal officials from multiple agencies. Duarte later said the encounter had resulted in "important advances," adding that efforts were now underway to ship Chihuahua apples to schools and incorporate the product into programs sponsored by the National Crusade against Hunger.

Chihuahua's chief executive also said the federal government agreed to review U.S. imports to determine whether they meet sanitary standards and are not sold at prices below the cost of production, while the Federal Electricity Commission resolved to temporarily halt service cut-offs to refrigeration complexes and negotiate savings in energy consumption.

"The imported apple is not apt for consumption in the United States and tastes like cardboard," Duarte was quoted over the weekend. "The Chihuahua apple is sweet and has consistency."

But Unifrut's Ricardo Marquez said federal officials were still ducking the central problem-cheap U.S. imports. He said U.S sanitary regulations and marketing costs were obstacles to Chihuahua apple growers interested in exporting.

For some, NAFTA could provide an answer to apple crisis. Oscar Corral, marketing director for La Nortenita apple distribution company, said quality could be improved and production costs reduced through a reduction in pesticide usage and the introduction of biological pest controls. An important "nostalgia" market exists in Mexican migrant communities north of the border, Corral said, adding that his company plans on making its third incursion soon into the huge Los Angeles market.

Another, untapped market awaits in countries like Japan, the Chihuahua businessman affirmed.

The apple controversy heated up at a moment when the long-ailing Mexican countryside was reemering as an issue on Mexico's national agenda. In a run-up to a new national agricultural strategy, President Enrique Pena Nieto is scheduled to meet March 5 with national farm organizations in the state of Colima.

Prior to the gathering, six national farmer organizations grouped together in the Authentic Front of the Countryside issued a 10-point reform program as a cornerstone for new government policies. The Authentic Front proposed creating a national enterprise to regulate the food market; implementing a system of national public purchasing; centralizing production credit financing in one institution; and declaring a national strategy for efficient water usage and conservation, among other measures.

The proposals, noted Alfonso Ramirez Cuellar, El Barzon president and Authentic Front activist, hail from long-standing demands of farmer organizations that should serve as the basis for "the national reconstruction of the agricultural sector."

Sources: Nortedigital.mx, March 2, 2014. Article by Ricardo Espinoza. Arrobajuarez.com, March 1, 2014. El Diario de Chihuahua, February 28, 2014. Article by Lourdes Diaz Lopez. Lapolaka.com, February 26, 2014. La Jornada, February 11, 27 and 28, 2014; March 1, 2013. Articles by Matilde Perez U., Victor Quintana, Miroslava Breach Velducea, Ruben Villalpando, and Laura Poy Solano.