Chamber Business News

U.S. Economy Gets $4.8 Billion Boost from Tomatoes, New Study Shows

Tomatoes: think of how much you take these round red fruits—yes, it’s a fruit—for granted. They’re in your pizza, your pasta, your salad, your juice, etc. They’re basically everywhere. But in order to get from farm to table they need to be transported somehow, from somewhere. This is where talks of trade and tariffs and infrastructure and the economy all come cascading in, which ultimately begs the question: what’s the economic impact of tomatoes?

According to Dari Duval, economic impact analyst with the University of Arizona, tomatoes make a sizable $4.8 billion contribution to the American economy. The figure was outlined in Duval’s study co-researched with Ashley K. Bickel and George Frisvold, and looked at the overall economic activity in 2016.

The full report, “Mexican Fresh Tomatoes: Agribusiness Value Chain Contributions to the U.S. Economy”, dived into the vine-like value system that tomatoes have on the economy altogether, and the different areas its influence reached.

According to a report by the New York Times earlier this year, more than half of all fruit Americans eat comes from foreign lands, as well as more than one-third of vegetables. In fact, there’s been a steady 30 percent-plus increase in imports in both fruits and veggies over the last 40 years.

“In the case of tomatoes grown in Mexico, international agribusiness supply chains support forward-linked industries that deliver fresh tomatoes to end buyers in the United States and Canada, as well as backward-linked industries that supply inputs to agricultural producers in Mexico,” explains Duval.

This has helped boost economic activity, jobs, and income in the United States.

“[Tomatoes] have been a bellwether of health for southern Arizona produce. That translates to jobs at warehouses and trucking and dispatchers,” notes Lance Jungmeyer, President at Fresh Produce Association of the Americas (FPAA), who facilitated the study with the department of agriculture at the University of Arizona. “It helps out the local economy as well as other areas the tomatoes go to, like grocery stores in Des Moines or re-packers in Chicago or Dallas.”

But with all this dependence on produce, such as tomatoes, heading into the United States from our neighbor from the south, how much impact would a decrease in supply have on the economy? A lot, actually. In fact, the study hypothesized what a 5 percent decrease in imports would do to the nation. The impact would be catastrophic and hit the country’s pocketbook by hundreds of millions per year.

“We do know that a dip in supply means an increase in price, that makes it less attractive for consumers to buy tomatoes. And if you’re a large food service provider, like Subway, you might use less tomatoes,” adds Jungmeyer.

Duval said that researchers considered wholesale activity in the United States as well as grocery activity, foodservice sales and transportation. Here’s a breakdown of what they found:

  • $2.8 billion from indirect and induced economic multiplier effects
  • $1 billion in direct wholesale activity
  • $816 million in direct grocery retail activity
  • $145 million in direct foodservice activity
  • $30 million in inbound shipments to Canada

“Most U.S. tomato production is destined for the processed market, therefore imports from Mexico play an important role in the availability and affordability of fresh tomatoes in the United States for much of the year,” Duval’s study points out.

Every day, more than 8.4 billion pounds of tomatoes cross through Nogales, Pharr, Texas, and Otay Mesa, California. Altogether those three import locations make up about 90 percent of the country’s intake of tomatoes. Those imports combined to add nearly $5 billion in economic activity, and brought 33,000 full- and part-time jobs together, with an annual employee compensation of about $1.4 billion.

Nick Esquer

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