AMERICANS could be paying more for a beloved dinner staple soon at Walmart and other top retailers.
The food product is increasing in cost as part of a new law set to take effect later this month.
Starting July 14, any fresh tomatoes that are imported to the United States from Mexico will face a 17% tariff.
It comes as the Commerce Department detailed plans to let what’s known as the Tomato Suspension Agreement end.
The truce was made in 1996, and it sought to protect American farmers while keeping prices on tomatoes lowered and fair.
US officials, at the time, accused producers in Mexico of selling a surplus of tomatoes at a manufactured low price, and struck a deal to ensure that there were price floors and inspections.
Over the years, the Tomato Suspension Agreement has been renegotiated, even in 2019 during President Trump’s first term.
PAY UP
Tomato distributers that face the increased costs as part of the tariff, like NatureSweet, will not be able to cover it, meaning it could be passed onto consumers down the line.
“There’s no scenario where I can absorb those tariffs,” Rodolfo Spielmann, CEO of NatureSweet, told Bloomberg recently.
“The margins are not high enough.”
Spielmann said that, as a result, he expects a price increase of around 10% when distributing tomatoes to retailers like Walmart, Kroger, Albertsons, and Whole Foods Market.
Those retailers that also can’t absorb the increase could then pass the increase onto shoppers.
Mexico currently accounts for around 90% of tomato imports in America, according to the United States Department of Agriculture (USDA).
About three-quarters of all fresh tomatoes nationwide are imported in general.
Additionally, the United States has not produced enough tomatoes domestically to cover demand in decades.
Some industry analysts believe that a supply shock may follow, increasing grocery inflation farther.
How to cut the cost of your grocery shop
BELOW are some tips on how to reduce the amount you spend on groceries.
- Write yourself a list – Only buy items that you need. If it isn’t on your list, don’t put it in the trolley
- Create a budget – Work out a weekly budget for your food shopping
- Never shop hungry – You are far more likely to buy more food if your tummy is rumbling
- Don’t buy pre-chopped veggies or fruit – The extra they’ll charge for chopping can be eye watering
- Use social media – Follow your favourite retailers to find out about the latest deals
- Be disloyal – You may want to go to different stores to find the best bargains
- Check the small print – It’s always worth checking the price per kg/lb/litre when comparing offers so you’re making a like for like decision as a bigger box won’t necessarily mean you get more
- Use your loyalty cards – Don’t be afraid to sign up to them all. They all work slightly differently – work out what bonus suits you better and remember to trade in your points for additional rewards
FAIR FOR FARMERS
Still, Republican lawmakers in Florida, one of the largest domestic tomato producers, have argued that the end of the Tomato Suspension Agreement and the tariff puts things on the right track.
“The termination of the suspension agreement will allow tomato growers to compete fairly in the marketplace,” a letter from senators Ashley Moody and Rick Scott noted.
Robert Guenther, executive vice president of the Florida Tomato Exchange, echoed a similar sentiment.
“It hasn’t worked,” he told Bloomberg.
“[What] you’ve seen is a consistent reduction in the market share of US tomatoes.”
The question remains, though, will US farmers and tomato producers be able to meet the market demand, even if the agreement ending allows for a fairer marketplace?
At least five other grocery essentials are also expected to see price upticks later this year.
A beloved breakfast favorite is on the list.
Some shoppers are also turning to a key method to save money amid the possible bump in cost.
