10/09/2012 09:09 EDT | Updated 12/09/2012 05:12 EST

Canadians Victims Of U.S.-Mexico Tomato War

Canada is caught in the crossfire of a tomato war between the U.S. and Mexico.

The price of tomatoes from Canada has dropped 40 per cent because of a glut of low-priced Mexican varieties flooding the U.S. market, according to the Ontario Greenhouse Vegetable Growers.

In 1996, the U.S. Department of Commerce set a minimum price on Mexican tomatoes imported into the United States. Now, 16 years later, that minimum price hasn’t changed and it’s too low, say tomato growers in Florida.

Perfect growing seasons and bumper crops in Florida, California and Mexico have also pushed prices down this year.

Those low prices undercut Canadian tomato exporters, especially those in Leamington, Ont., the tomato capital of Canada.

Leamington is also often referred to as the Greenhouse Capital of North America. The greenhouses in Canada’s southernmost town cover an area roughly the size of 1,000 Canadian football fields.

Don Taylor, chair of the Ontario Greenhouse Vegetable Growers, said 70 per cent of the province's greenhouse growers are marketing their produce to the U.S.

“The lower price means the greenhouse growers are less profitable,” Taylor said.

Steve Enns, owner of Enns plant farm, knows that first-hand. He said tomato prices are lower than his cost of production.

“Returns are 10 cents a pound, which is less than it costs us to grow them,” Enns said.

Expansion at risk

Enns has a 14-hectare greenhouse farm and grows mostly tomatoes. He recently spent $7 million to build an additional five hectares of greenhouses.

“That’s all at risk. Had we known what markets were going to do, we probably would have held off on expansion,” Enns said. “But we did it and now we’re trying to deal with the market as it is.”

The three major products grown in Ontario greenhouses are tomatoes, sweet bell peppers and cucumbers. However, it’s tough for growers to change crops.

“Once you’re set up for tomatoes, there is expense involved in retrofitting for another crop,” Taylor said. “These prices this year have people rethinking expansion plans.”

That means a blow to the Windsor-Essex economy, Taylor said.

He said the greenhouse industry has been expanding here for nearly 20 years.

“The concern relates to the economic activity in the region,” Taylor said. “Greenhouse production and expansion in the last 10 to 20 years has been an economic driver in the Windsor-Essex area.”

U.S. to decide on policy soon

Back in the U.S., the Commerce Department indicated in late September that it may side with Florida tomato growers and squash a 16-year-old trade agreement with Mexico.

“If the [agreement] is dropped, it’s hard to know how we would be affected,” Taylor said. “We’re following it with concern. It could affect our ability to export to the U.S. and the price of tomatoes.”

Even retail giant Wal-Mart has asked the U.S. Commerce Department to keep the agreement.

“Termination of the tomatoes agreement will benefit no one, and will lead only to uncertainty and unpredictability in the market,” Wal-Mart wrote in a letter.

The Obama administration extended the agreement in 2008. But in an election year, that may change.

“I don’t know their motivation, but it’s a fairly important year in the U.S.,” Taylor said. “In past elections, Florida has been a hard-fought state, politically.”

The Commerce Department said it will make a final determination on the future of the tomato agreement within 270 days.

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