Economic Outlook
Mexican Greenhouse Tomato Industry
The Tomato Magazine
August 2005
By Linda Calvin and Roberta Cook
Mexico is the largest producer and per capita consumer of fresh tomatoes
in North America. Therefore, its fresh tomato industry and domestic market
figure prominently in the dynamics of the North American fresh tomato
industry. To understand the evolution of the rapidly growing Mexican
greenhouse tomato industry, it is important to put it in the context
of the total Mexican fresh tomato industry. In Mexico, field growers
play a key role in the greenhouse tomato industry, and field production
dwarfs greenhouse production. The Mexican greenhouse tomato industry
is also characterized by much more geographic and technological diversity
relative to its NAFTA partners.
Exports are very important to the Mexican tomato industry. In 2003, Mexico
exported 46 percent of its fresh tomatoes, with over 90 percent going
to the United States., and most of the rest to Canada. While sizable
volumes of field tomatoes grown by export-oriented growers may be sold
domestically when domestic prices are more attractive, low domestic demand
limits the share of greenhouse tomatoes that remain in Mexico to about
15 percent— often due to lower quality rather than as a strategic
marketing choice. Because of Mexico’s heavy emphasis on the U.S.
as its primary export market for all tomatoes, significant changes in
Mexico’s field and greenhouse industries affect U.S. supplies.
With this in mind, it is important to understand the nature of the Mexican
field and greenhouse tomato industries by region, season, product mix,
and grower type.
Seasonal and Geographical
Concentration of Fresh Market Tomato Production
Mexican fresh field tomato production, excluding production for processing,
totaled 1.8 million metric tons in 2003, more than 12 times the level
of greenhouse tomato production (see table 1). While tomato production
exists throughout Mexico, large volume commercial field tomato production
is seasonally concentrated in a few locations, most prominently, the
northwestern coastal State of Sinaloa (and to a much lesser extent southern
Sonora) in December through April. The State of Baja California (formerly
known as Baja California Norte) ships field tomatoes in the summer through
fall. In the 1990s, the State of Baja California Sur emerged as a new
but still lesser player than the State of Baja California in the field
tomato industry, targeting a late winter/early spring market window that
has since narrowed with the development of greenhouse production throughout
North America.
A few States in central Mexico, such as Morelos, San Luis Potosí,
Michoacán, and Jalisco, produce fresh field tomatoes in the summer/fall,
all with a domestic rather than an export market orientation. A relatively
small cohort of export-oriented, high-yielding producers serve as the
principal players in the Mexican fresh tomato industry in their respective
seasons, for both export and domestic use. Traditionally, Sinaloa and
Sonora accounted for at least 70 percent of Mexican fresh tomato exports,
while the entire Baja California peninsula accounted for most of the
remainder. The bulk of Mexican field growers converting part of their
area to protected culture are located in Sinaloa and the Baja California
peninsula. Growers that locate greenhouses close to their field tomato
bases of operation extend their shipping seasons only marginally; hence,
shipping seasons remain similar.
The Sinaloa Fresh
Tomato Industry
The Sinaloa field tomato industry includes a cluster of around 40 high-technology
export-oriented producers with extensive field tomato growing and marketing
experience. Many of these producers are forward-integrated grower-shippers
with sales operations in Nogales, Arizona. These growers are some of
the best capitalized in the Mexican horticultural sector. Most of
Mexico’s processing tomato production is in Sinaloa, with product
moving between fresh and processed markets according to relative prices.
The bulk of the State’s production is centered in Culiacán,
which enjoys freeze-free winters, making it a principal source of winter
supply to the North American fresh tomato market. In April, production
from Los Mochis and Guasave in northern Sinaloa typically supplants declining
volumes from the Culiacán area. Because of the longstanding economic
strength of this cluster of innovative tomato growers, the input industry
is very strong in Sinaloa, contributing to the relative competitiveness
of Sinaloa growers.
According to the Confederación de Asociaciones Agrícolas
del Estado de Sinaloa (the statewide growers’ organization known
by its acronym CAADES), 2003/04 tomato area (both fresh and processed)
totaled 25,584 ha. The industry is still overwhelmingly field oriented,
but with substantial experimentation with protected culture. Much of
the protected culture is shade house, but plastic greenhouse tomato operations
range from under 5 ha to a few in the 40- to 60-ha category. Growing
in soil is more common than using hydroponics. While Sinaloa’s
warm, humid climate is not suitable for year-round greenhouse production,
its benign winter climate enables it to target the lucrative winter fresh
market for both field and greenhouse tomatoes. Well-capitalized, innovative
field growers ensure an interest in and the capacity for the development
of protected culture tomato production, if it proves to be economically
viable.
The Baja California Peninsula
Fresh Tomato Industry
The bulk of the Baja California peninsula tomato industry consists of
around 50 growers in the State of Baja California, mainly in the coastal
San Quintín Valley, marketing through about 12 shippers. Most
tomato growers remain open field for the majority of their production,
though some are experimenting with protected culture, primarily shade
house (see box, “Spanish Protected Culture Tomato Industry” for
a comparison). San Quintín is located about 150 miles south of
the U.S. border and has a relatively dry climate with winter temperatures
too low for field production. Hence, the region is contra-seasonal to
Sinaloa, with growers shipping field tomatoes to both domestic and export
markets from summer through fall, unless disease conditions cut short
the season. The Baja California field tomato shipping season overlaps
with those in California and the U.S. eastern seaboard, Florida in the
fall, and also competes with central Mexican field tomato production
in the domestic market. Baja California Sur competes with all these regions
in the fall. The region’s protected culture production overlaps
with summer/fall greenhouse production throughout North America as well.
Baja California growers have shifted away from round to roma tomatoes,
a product in which they have more of a competitive advantage relative
to U.S. shippers. Roma export shipments increased as a share of total
Baja tomato shipments from 45 percent in 1997 to 68 percent in 2003.
Roma tomatoes are more suited to the region’s growing conditions
and require less capital investment. Hence, much of the experimentation
with protected culture there has focused on romas, making Baja California
an exception in the North American industry.
Production regions in the State of Baja California Sur are located around
700 miles from the U.S. border. Field tomato production has been relatively
limited and traditionally focused more on the late winter and early spring
periods, when prices are higher and can better support the additional
transportation costs to the border. There are fewer than ten major tomato
growers and exporters.
In Baja California Sur, climate conditions permit growers to produce
in the winter with relatively low-technology greenhouses. In the early
1990s, a major Sinaloa field tomato grower started a large plastic greenhouse
operation in Baja California Sur, capable of shipping in the fall through
late spring. The climatic conditions that enable the Baja California
Sur greenhouse industry to target the fall through spring window likely
help explain the location of the largest greenhouse exporter in the Baja
California peninsula in the southern part of the peninsula (the Todos
Santos area), rather than in the San Quintín Valley.
In contrast to growers in Sinaloa, field tomato growers in the Baja California
peninsula face compelling water, land, labor, and disease constraints.
As a result, production tends to be more erratic from year to year, resulting
in less well-capitalized growers on average than in Sinaloa, perhaps
contributing to the slower development of protected culture production
there. As summer/fall shippers, the growers of Baja California tend to
have lower season average prices than do growers in Sinaloa, who target
the higher priced winter market. This tends to reduce growers’ ability
to recoup the higher investment costs associated with protected production.
Growers in the State of Baja California require high fall prices to earn
a favorable return, whether production is open field or protected culture.
Disease problems have limited fall open-field volumes in recent seasons,
making it of interest to consider protected culture to ensure volume
during the fall when prices are typically above the summer levels.
For all Mexican protected culture growers, attractive economic returns
are highly dependent on selling at a price premium relative to open-field
product. For growers in the Baja California peninsula, there are some
special considerations in this regard since their tomatoes enter the
U.S. through California. To achieve price premiums, some Baja growers
have marketed their shade house tomatoes as greenhouse. In September
2004, the State of California put in place a new regulation covering
greenhouse tomatoes handled or marketed in California, which is where
tomatoes from the Baja California peninsula enter the U.S. The regulation
defines greenhouse tomatoes as tomatoes grown in fixed structures using
hydroponics. Since this definition excludes shade house tomatoes and
tomatoes grown in plastic greenhouses (fixed structures) without hydroponics,
it may limit the ability of growers in the Baja California peninsula
to obtain price premiums relative to field tomatoes. This rule change
may cause growers to revaluate the potential net returns from protected
production. Growers may choose to market their protected culture tomatoes
as hothouse, in which case it will be up to the market (largely commercial
buyers) to decide if there is a significant point of differentiation
relative to those meeting the greenhouse definition. Hothouse simply
implies some type of protected culture and the lack of any formal definition
allows for substantial flexibility in its use and application.
Central Mexican Fresh Tomato
Production and Beyond:
Greenhouse Becomes a Factor
Most of the field tomato production in central Mexico still occurs primarily
in the summer and remains oriented almost exclusively toward the domestic
market rather than the export market. Summer production in central Mexico
is subject to either an abundance or shortage of rain, adversely affecting
tomato quality and yields and the ability of growers to ensure consistent
shipments of field tomatoes. Furthermore, many field tomato producers
in central Mexico are smaller farmers, not well capitalized and without
significant investments in packing, cooling, marketing, and food safety
infrastructure.
Not surprisingly, investments in greenhouse tomato production in temperate
central Mexico are largely coming from outside the region’s traditional
field-grown tomato sector, and include new entrants to agriculture. Investors
are attracted by the yield potential of greenhouses located at relatively
high altitudes (around 2,000 meters), with good light conditions and
dry, mild climates. The temperate climate allows for year-round production,
increasing the likelihood of positive returns on investments in technology.
Hence, the greatest investments in greenhouse technology and the highest
yields tend to occur in central rather than coastal Mexico. Central Mexico
has experienced a gradual expansion in medium- and high-technology greenhouses
for over a decade, with the rate of expansion accelerating in recent
years. With its favorable conditions, central Mexico will likely play
a major role in the evolution of the country’s greenhouse tomato
industry. Most operations are less than 12 ha but two are in the 40-ha
range.
As in other major growing regions, there is heterogeneity within the
central Mexican greenhouse tomato industry. The largest exporter of greenhouse
tomatoes in Mexico is Desert Glory, a U.S. firm operating in Jalisco
and Colima with low-technology plastic greenhouses specializing in cherry
TOVs. Desert Glory is also the largest greenhouse tomato operation in
North America, in terms of area. Jalisco’s mild climate enables
Desert Glory to ship tomatoes year-round, but its low-technology operations
result in low yields.
Investors seeking tomato growing areas relatively close to the U.S. border
and capable of year-round shipping are exploring high-altitude sites
in north central locations, such as Chihuahua and Zacatecas. Medium-
and hightechnology greenhouse operations have been started in high-altitude
locations near Mexico City, such as a 40-ha Bionatur TOV tomato project
in the State of Mexico, outside of Toluca, and in parts of what is known
as the Bajio, such as Querétaro. While operations in this area
are disadvantaged by high costs to ship to the U.S. border, they are
well positioned to serve the emerging demand from Mexico’s rapidly
growing supermarket sector for premium quality products with improved
food safety characteristics. Market diversification may prove increasingly
important for operations in the region as the U.S. market becomes saturated.
A still small but growing cluster of high-technology operations using
glass greenhouses has emerged in the northern Sonora desert in the Imuris
area, near the border with Nogales, Arizona. Part of the expansion in
this sector has come from Sinaloa-based growers aiming to extend shipping
seasons and invest in areas more suited to greenhouse production. This
location is convenient because Sinaloa tomato growers ship their product
through Nogales and have their marketing operations there, too, making
it a source of consolidated supply for buyers. Although its climate is
dry, Imuris is less than 900 meters in altitude, meaning that the summertime
desert heat impedes year-round shipping. A few growers, following the
lead of a nearby firm in Arizona, are investing in expensive pad and
fan cooling systems (appropriate only in dry locations), in the belief
that the potential economic benefits warrant the cost. Whether northern
Sonora succeeds as a source of consistent year-round tomato shipments
will in part depend on summer average price trends and their effect on
profitability.
Some State governments in Mexico have encouraged greenhouse projects
as a way to offer greater employment opportunities to low-income rural
households. The labor-intensive (relative to crops like field corn and
beans) and indoor working conditions of greenhouses are an attractive
option to governments in high-unemployment areas with minimal high-value
field agricultural alternatives. While constrained State budgets limit
direct support, Mexican greenhouse industry experts indicate that in
some cases investors can receive loan guarantees as well as local tax
and other investment incentives.
Mexican Greenhouse Tomato
Industry Structure and Size
Currently, Mexico has some greenhouse tomato production in almost half
of its 31 States. Greenhouse industry expansion is coming not only from
field tomato growers, but from existing as well as new greenhouse tomato
growers, including investors new to agriculture. Based on interviews
with growers and industry experts, Mexican greenhouse tomato production
in 2003 is estimated at 148,300 metric tons (see table 5). The Mexican
greenhouse tomato industry overtook the U.S. industry in area planted
in 1995 and surpassed the Canadian industry in 1999, reaching about 950
ha in operation in 2003. These area estimates exclude most shade house
operations and focus on greenhouses (fixed structures) whether or not
production is in the soil or using hydroponics.11 In 2003, additional
shade house tomato area in production may have totaled as much as 350
ha. Since the end of the 1990s, a combination of rapid growth in Mexican
area and improving technology has combined to erode the gap in total
production volume relative to that of the U.S. greenhouse tomato industry.
However, Mexico lags behind each of its northern neighbors in terms of
technology and yields due to a combination of factors, including location/climate,
and product mix. Around 30 percent of Mexico’s greenhouse tomato
area is comprised of low-yielding greenhouses growing cherry TOV in Jalisco
and Colima. Much of the remaining area is in warm, coastal, seasonal
field tomato areas at low altitudes (Sinaloa and the Baja California
peninsula), which do not produce greenhouse yields comparable to those
obtainable in temperate zones for similar technology levels. In 2003,
Mexico’s average greenhouse tomato yield is estimated at 156 metric
tons per ha, compared with nearly 500 metric tons per ha in the U.S.
and Canada. When cherry TOV production is excluded, Mexico’s average
greenhouse yield increases to 181 metric tons per ha in 2003.
Although Mexico’s greenhouse tomato industry has many small operations
with less than 5 ha, the industry structure is already highly concentrated.
According to estimates by Cook and Calvin, three mostly low-technology
firms controlled about 535 ha, or around 56 percent of total greenhouse
tomato area (excluding shade house) in Mexico in 2003. The three firms
are based in Jalisco, Baja California Sur, and Sinaloa. In 2003, each
firm had a minimum of 60 ha. The next tier of producers is in the 40-ha
range, with all regions of the country represented. In 2003, the estimated
eight-firm concentration ratio in Mexico’s greenhouse tomato industry
was 74 percent.
Originally, Sinaloa field growers who ventured into protected culture
tomatoes focused on production of beefsteak tomatoes, a product similar
to their field tomatoes. But the TOV share of total production has grown,
reaching 15 to 20 percent of all Mexican greenhouse tomato production
in 2003. Some growers are also diversifying into specialty tomatoes,
such as Campari tomatoes. As Mexican growers gain experience with greenhouse
tomato production, they are likely to follow the market trend toward
a more diversified product mix.
As more new players enter Mexico’s greenhouse tomato market, the
development of effective marketing channels will become more of an issue.
Marketing channel fragmentation is a threat to profitable marketing for
firms in all three countries. U.S. and Canadian greenhouse firms are
increasingly seeking marketing alliances with Mexican greenhouse producers
to supplement or provide them with the majority of their winter supplies.
The challenge in these alliances is to constructively market the volumes
of Mexican partners during the shoulder seasons (seasonal overlaps) and
for year-round Mexican producers during the summer as well. Since supply
is abundant in Canada and the U.S. during these periods, the growers
supplying these firms may view the Mexican product as competition. Positioning
of product, in part based on minimizing transportation costs from each
production region to specific markets, can help these alliances to improve
efficiency and market coverage for all parties.
An alternative may be the eventual emergence of large Mexican greenhouse
shippers that consolidate volumes among several Mexican greenhouse growers
in different regions to achieve consistent year-round volumes, imposing
strict quality control, and developing direct linkages with key U.S.
buyers. Growers in Ontario follow this strategy. Attitudes among Mexican
greenhouse growers and large shippers and their ability to collaborate
will influence the likelihood of such ventures. The growers in the best
position to lead a collaborative effort are Sinaloa-based growers, due
to their high level of industry organization and an industry structure
centered on forward integrated grower-shippers who operate their own
distributorships in
Nogales, Arizona (Calvin and Barrios, 1998). Of course, leaders may emerge
among greenhouse-only players as well.
Protected Culture Technology and
Other Considerations
In general, Mexican greenhouse tomato growers attempt to adapt technology
packages, structures, and seed varieties from Spain, the Netherlands,
Israel, Canada, the U.S. and elsewhere, substituting local inputs where
possible and desirable. While Mexican growers benefit from foreign research
and development, they still face the challenge of identifying their own
area-specific appropriate technologies, largely without the support of
domestic public research and development. Not surprisingly, greenhouse
suppliers have a strong influence on the technology decisions made in
Mexico. Industry sources report that decisions are sometimes made based
on the availability of supplier credits rather than the best technology
package for the location. Governments of the Netherlands, Israel, and
Spain are active in promoting adoption of their country’s technology
via preferential credits and other assistance. A scarcity of capital,
experienced greenhouse management personnel, and technological know-how
in Mexico is reportedly to blame for investments in less-than-ideal technology
packages, with many initial attempts at greenhouse tomato production
generating disappointing results.
According to the Asociación Mexicana de Productores de Hortalizas
en Invernaderos (the Mexican greenhouse growers’ association known
by its acronym AMPHI), Mexico’s protected culture area comprises
plastic greenhouses (52 percent), shade houses (44 percent), glass greenhouses
(2 percent), and other (1 percent). In the U.S., winter producers need
to use glass to maximize light transmission during the short days and
to facilitate heating. For year-round producers in Mexico with longer
winter days and less extreme winter weather, plastic structures may be
more appropriate than glass. High-technology systems in plastic structures
are proving to be capable of producing tomato yields of around 450-500
metric tons per ha and even higher in the ideal locations. But as of
2003, AMPHI estimated that only 13 percent of Mexico’s protected
culture tomato area had active environmental control systems. According
to estimates by Cook and Calvin, the share of greenhouse area with active
environmental control systems is higher, at about one-third.
In Mexico, glass greenhouses use hydroponics, but only a few plastic
greenhouses do, though the number is growing. Industry suppliers estimate
that only around 30 percent of hydroponics systems in Mexico use the
high-cost imported rock wool as a growing medium. Most systems use cheaper
yet effective substrates such as tezontle.
As the Mexican industry grows, it is attracting more attention and investment
from suppliers, and better quality, lower cost local alternatives are
emerging. This development will help to reduce investment costs over
time. Similarly, as growers determine the best locations (combining both
market and yield considerations), investments should generate higher
net returns. A few Sinaloa- and Baja-based field and protected culture
growers have been constructing greenhouses in noncoastal areas capable
of longer shipping seasons. If successful, these efforts will spawn more
year-round operators focused on producing consistent, high-quality volumes
with competitive costs.
In general, those coastal field tomato growers who have been experimenting
with protected culture are tending to expand area and invest in upgraded
technology and management, particularly in Sinaloa. Even though Sinaloa
is not the best area for achieving maximum greenhouse yields, growers
there may find converting a portion of their crop mix to protected production
to be an effective business strategy. However, in both the Baja California
peninsula and Sinaloa, some field tomato growers have found greenhouse
production to be much more demanding in technology and management than
anticipated. Those that are further along on the learning curve have
an advantage over newcomers and are better positioned to withstand any
periods of low prices.
Although net returns for greenhouse production are not always higher
relative to open field production, protected culture methods may reduce
several types of risk. Greenhouses provide protection from rain and growers
with greenhouses may be among the few with typical volumes of high quality
tomatoes of any type during periods of inclement weather, enabling them
to benefit from above average prices. Both shade house and greenhouse
production generally increases substantially the export-quality share
of production, improving average pricing. Where greenhouse production
succeeds in boosting yields substantially relative to open field, it
can dramatically decrease the number of workers for a given level of
output. Growers view recruiting and managing fewer workers as an important
advantage. Furthermore, in order to achieve superior quality, many greenhouse
growers invest in greater worker training relative to open field growers.
This can pay off in several ways, including lower worker turnover. Shifting
to protected culture can also decrease food safety risk and offer greater
food safety assurances to buyers. Indeed, responding to rising retail
demand for greenhouse tomatoes fits into growers’ greater emphasis
today on customer service, potentially reducing market risk by creating
greater customer loyalty.
The relative potential returns from alternative technology packages vary
significantly by area (see appendix 2 for more detail on this topic).
Rain is rare during the State of Baja California’s shipping season,
and shade houses may be sufficient to reduce risks and improve returns,
without requiring investment in more capital-intensive greenhouses. However,
risk of disease is greater in shade house than in greenhouse operations.
Due to especially high disease risk during the fall in the northern part
of the Baja California peninsula, growers could eventually determine
that greenhouse production is required to ensure fall volumes. Currently,
some growers are experimenting with what is referred to as “hybrid” structures,
a combination of shade house and greenhouse technology. This may provide
many of the benefits of greenhouses, including reduction of disease risk,
at a lower cost. The process of identifying the most economically viable
technology packages is newer and less advanced than in Sinaloa.
Greenhouse Tomato Exports
It is estimated that 2003 Mexican greenhouse tomato exports to the U.S.
were 125,970 metric tons (see table 1). This approaches Canada’s
level, which was 130,154 metric tons in 2003. Although Mexico’s
total greenhouse tomato production remains much lower than that of
Canada, Mexico’s export share is estimated at 85 percent, compared
with 60 percent in Canada.
Mexico’s higher export orientation means that it is capable of
surpassing Canada as the principal supplier to the U.S. greenhouse market
before it surpasses Canada in total production volume. Indeed, if production
in Mexico continues its current rate of growth, while production in Canada
and the U.S. remains relatively stable, Mexico is set to eclipse the
U.S. and Canadian greenhouse industries in the near term. Ongoing improvements
in technology and yields in all Mexican greenhouse regions will generate
better and more consistent tomato quality. Until now, lack of uniformity
has sometimes caused Mexican tomatoes to receive price discounts relative
to key supplying regions. As quality improves, Mexico will become a more
formidable competitor in export markets. However, demand for greenhouse
tomatoes should also be stimulated by a consistently high-quality North
American product, regardless of origin.
The Impact of the Greenhouse
Tomato Industry on the Fresh Field Tomato Industry
The greenhouse tomato industry is having an impact on field tomato growers,
whether they diversify into greenhouse production themselves, or just
have to adapt to more market competition as the share of greenhouse production
increases. Total U.S. fresh tomato imports from Mexico temporarily peaked
in 1998, before beginning to rise again in 2001 and reaching a historic
high in 2003 (table 2). Market-driven product diversification into greenhouse,
grape, and roma tomatoes has likely contributed to Mexico’s recent
export growth.
Since total imports from Mexico did not surpass the 1998
level until 2003, the growth in greenhouse tomatoes up to that time simply
displaced part of the decline in field tomato volume, without a net gain.
However, given the relatively recent creation of the tariff codes for
roma, cherry, greenhouse, and grape tomatoes (and continuing misclassification
problems with the existing codes), it is not possible to measure the
true changes in shares over time, by tomato type, of U.S. imports of
Mexican fresh tomatoes. But the expanded codes provide an improved snapshot
of the shares in 2003, as calculated by the official DOC data. These
data show that greenhouse tomatoes represented 7 percent of U.S. imports
of Mexican tomatoes, significantly lower in share than round field tomatoes
(41 percent) or romas, but higher in share than either cherry or grape
tomatoes. If estimated miscoded greenhouse tomatoes were included, the
greenhouse share of total U.S. imports of Mexican tomatoes could rise
to 16 percent (based on a total of 125,970 metric tons, as noted earlier),
and the round field share could decline to 33 percent.
As the importance of greenhouse tomatoes increases, growers in Sinaloa,
the undisputed leaders of the fresh tomato export industry, face increased
competition from greenhouse growers in other regions. In addition to
contributing to a changing product mix, the emergence of the geographically
dispersed greenhouse tomato industry in Mexico has begun to reduce the
market share of total fresh tomato exports entering in Arizona, as measured
by DOC crossings data.
In 2003, 66 percent of Mexico’s fresh tomato exports crossed in
Arizona, primarily Nogales (down from 70 percent a decade ago), compared
with 28 percent entering into California from the Baja California peninsula
and 7 percent crossing the border in Texas (table 3). Since much of the
greenhouse volume from central Mexico crosses in Texas, these data put
in perspective the still-small share of greenhouse volumes from this
region compared with the combination of field and greenhouse production
from the traditional industry leaders Sinaloa and Baja California.
DOC import crossing data only reflect total imports at any port of entry
from Mexico, with no indication of volume by growing region. Sinaloa’s
share of Arizona imports can be estimated by comparing DOC data with
tomato export data from the State of Sinaloa, as reported by CAADES.
In 2000, 85 percent of Mexican tomatoes exported through Arizona were
from Sinaloa; in 2003, Sinaloa’s share plummeted to 56 percent.
These data highlight the emergence of new competition for Sinaloa tomato
growers, both field and greenhouse, also exporting through Nogales. Those
vying for shares include the high-technology and high-yield growers in
Sonora and lower-technology greenhouse growers in west central Mexico,
Jalisco in particular. Sinaloa’s dramatic drop in share reflects
an absolute decline in its exports during a period of export growth for
the country as a whole. Analysis of tomato export data for the State
of Sinaloa shows that total tomato exports, all types, declined from
348,113 metric tons in the 1999-2000 season to 272,993 metric tons in
2003-04 (CAADES, 2004). The decline in Sinaloa’s tomato exports,
both in absolute and relative terms, is clear evidence that the emerging
greenhouse industry is already having a competitive impact on Sinaloa.
Not only has the competition increased, but the competition has a higher
quality orientation and it extends to both export and domestic markets.
Greenhouse production may be export oriented, but some new greenhouse
producers are still in the process of achieving the quality and consistency
levels required to be competitive in the export market; tomatoes that
do not meet export standards may be sold on the domestic market. Furthermore,
as rapid growth in the Mexican supermarket sector creates demand for
consistently high-quality fresh produce with food safety assurances,
Mexican internal demand for greenhouse tomatoes will likely expand significantly
over the next decade.
Field tomato growers in Sinaloa have the most experience with protected
culture, the greatest financial resources to invest in technology, and
the ability to shift between field and alternative protected culture
approaches as markets evolve and send different price signals. Since
Sinaloa can experience rain during its growing season, and if greenhouse
tomatoes continue toreceive price premiums, growers may come to favor
plastic greenhouses over shade houses. However, given the relatively
short shipping season and the high cost of hydroponics, much of this
greenhouse production may remain in the soil, and marketed as greenhouse,
without reference to hydroponics. The existence of several large forward-integrated
grower-exporters already embarked on developing more direct linkages
with buyers for field and greenhouse tomatoes provides a robust model.
In contrast, field tomato growers in Baja California generally have less
experience with protected culture. Production in the northern part of
the peninsula still targets the shoulder seasons and the summer rather
than the winter when prices are highest. Baja experiences with plastic
greenhouses have been mixed. Much of Baja is not viewed by greenhouse
technology experts as offering the best conditions for greenhouse construction.
On the other hand, water and disease pressures, longstanding labor shortages,
and food safety concerns should all assure continued experimentation
with protected culture.
Once winter greenhouse tomato production expands enough to meet market
demand, the relative competitiveness of different Mexican export regions
will become more important. The combination of higher transportation
costs to the U.S. border and lower average yields relative to the mainland
may cause the U.S.-landed per unit costs of Baja California Sur greenhouse
tomatoes to be at a competitive disadvantage relative to Sinaloa and
central Mexico products (or San Quintín if winter production were
to emerge there). Nevertheless, within the next 5 years, the most profitable
field versus protected culture technology packages in different regions
of the Baja California peninsula should emerge.
However, some of the recent attempts to locate greenhouse operations
in north central and central Mexico have to date not met expectations,
sending less optimistic signals to outside investors and State governments
about the potential returns from greenhouse investments. Although greenhouse
location decisions in central and north central Mexico may continue to
be partly influenced by the economic incentive programs of State governments,
these programs may be less available, just as the availability of venture
capital may decline in response to underperformance of some of the recent
high-technology projects. Hence, while the Mexican greenhouse tomato
industry will continue to expand, the recent explosion in area may be
unsustainable. Yields will undoubtedly improve markedly in most regions,
but since a large portion of the greenhouse investments is being made
in coastal areas, the average national yield in
Mexico is not expected to reach that of its northern neighbors.
© 2006 Columbia Publishing
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