U.S. potatoes could recapture market share from Canada
By DAVE WILKINS
A reduction in the Mexican tariff on U.S. frozen potato products could give both processors and growers a boost, industry officials said.
Mexico imposed stiff tariffs on dozens of U.S. agricultural and manufactured products in March 2009 in retaliation for the U.S. government's failure to reinstate a cross-border trucking program.
Mexico announced a number of changes last month, including a reduction of the tariff on fries and other frozen potato products from 20 percent to 5 percent.
The reduction could help U.S. growers recapture some of the spud acreage and processing volume they've lost to Canada over the past year, industry officials said.
"I think it bolsters the U.S. industry," Dale Lathim, executive director of Potato Growers of Washington, said in an interview.
After Mexico imposed the 20 percent tariff on U.S. frozen potatoes, major processors shifted more of their production to Canada, industry officials said.
"Now you will see a lot of that business come back to the U.S.," Lathim said. "I view it as a very positive sign for both the processors and the growers."
The value of frozen potato exports to Mexico has plummeted by about 50 percent since the tariffs were imposed, industry officials said. They estimate it cost the industry about $33 million during the the 12 months ending in March.
The tariff reduction should make the U.S. more competitive, although Canada still enjoys a 5 percent cost advantage, said John Toaspern, vice president of international marketing for the U.S. Potato Board.
"It should definitely help," Toaspern said in an interview. "Now we're just 5 percent above Canada. That still gives them a slight advantage, but their shipping costs are higher. I think we'll see an ability to regain a lot of that lost market."
John Keeling, executive vice president of the National Potato Council, has led the charge in trying to get the potato tariff eliminated.
While a reduction to 5 percent is certainly helpful, the council will continue to push for complete elimination of the tariff, Keeling said.
"It doesn't change the fundamental need to find a solution to get the tariffs down to zero," Keeling said in an interview. "As long as the tariff exists, it creates a bias for Canadian fries over U.S. fries."