Posted: Thursday, November 18, 2010 9:00 AM
Tariff imposed to retaliate against cancellation of truck program reduced
By DAVE WILKINS
A tariff reduction is helping U.S. potato processors regain some lost market share in Mexico.
Exports of U.S. frozen potato products to Mexico totaled 4,909 metric tons in August, a 49 percent jump from August 2009, according to recent U.S. trade data.
The sharp increase is directly related to Mexico's decision in August to reduce the tariff rate on U.S. frozen potato products from 20 percent to 5 percent, industry officials said.
Fry exports still have a long way to go to get back to where they were before Mexico imposed the 20 percent tariff to begin with, said John Toaspern, vice president of international marketing for the U.S. Potato Board.
"We're better off now than we were in August 2009, but still worse off than before this whole thing started," Toaspern said.
Processors shipped 6,878 metric tons of U.S. frozen potato products to Mexico in August 2008.
A year later, monthly shipments had plummeted by 52 percent to just 3,296 metric tons.
The steep drop was the direct result of retaliatory tariffs, industry officials said.
In March 2009, Mexico imposed tariffs on dozens of U.S. agricultural products in retaliation for the U.S. government's cancellation of a pilot program allowing Mexican trucks on U.S. highways.
Frozen potato products were among the hardest hit. The 20 percent tariff had an immediate effect, resulting in a 41 percent decline in exports to Mexico during the 2009-10 marketing year.
Then in August of this year, Mexico announced some changes, reducing the tariff rate on some products and adding others to the list.
The rate reduction for frozen potato products has made U.S. frozen fries more competitive with those produced in Canada, but the industry is still working toward elimination of the tariff, Toaspern said.
"Five percent is still a bit of a disadvantage," he said.
Several ag commodity groups, including the National Potato Council, the lobbying arm of the industry based in Washington, D.C., has been urging Congress to reinstate the pilot trucking program.
An increase in frozen potato shipments to Asia has helped the industry make up for the steep drop in exports to Mexico.
Exports of frozen potato products to South Korea totaled 44,616 metric tons during the 2009-10 marketing year (July through June), an increase of 31 percent from the previous year.
Exports to China increased by 15 percent during the same period to 44,013 metric tons.