From Greenhouse to Household: The Tomato in Oaxaca
1. Introduction
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2. Production
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3. Distribution
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4. Markets
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5. Conclusion
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6. Research/Background Information
1. Introduction
When I first visited the food markets of Oaxaca, I was amazed by the quantity and variety of food that was found there in the middle of the dry season. Based on the taste of the food I’ve eaten so far, I assumed much of this was still disconnected from the industrial food system. Since all the vendors are relatively small scale and everything was unwrapped, I had a bucolic vision of how it was produced. Upon doing more research, it became more evident that most of the fresh food is produced industrially, and some is sourced from out of state. One thing I noticed was that all the apples in the markets were from Washington, U.S.A. This system mimics the food system of the United States, with Abastos in Oaxaca city as the central distribution point for the state.
For my topic, I did a supply chain analysis for tomatoes in Oaxaca. This focuses on every aspect of the supply chain and answered my research question of "where and how are tomatoes grown, distributed and sold in Oaxaca?" My inspiration for this topic has been a long time in the making. In high school I worked for my dads wholesale produce company, which was a middle man in the global supply chain. So I've always had an interest in the entire food distribution system, and more recently in how food is grown. Here in Oaxaca, an unbelievable amount and variety of fresh food (that is unrefrigerated) is sold at the markets year-round. The constant availability of cheap tomatoes is a relatively recent phenomenon in Oaxaca. Government incentives for greenhouse construction, new growing techniques increasing efficiency and export oriented production have increased the supply of tomatoes not just in Oaxaca but all over Mexico (and in export markets like the U.S.). I read an article about the increase of greenhouse construction, but consequent increase in abandoned. This really sparked my interest towards studying tomatoes.
2. Production
My first step in the process was to find out where and how these products were grown. I found they are grown all over Oaxaca (but mainly in the central valleys), and the main method is industrially (using advanced technology and synthetic fertilizers, pesticides, herbicides and fungicides). Oaxaca faces strong competition from other states that have more established greenhouse industries; Sinaloa, Jalisco, Baja California Sur, Baja California, Sonora, Estado de Mexico and Chihuahua. For example, 1 in 3 red tomatoes produced in Mexico are from Sinaloa (1). Still, Oaxaca has also been part of the rapid expansion of tomato production, but only more recently. There were 5 hectares of greenhouses in 2004, but there about 315 ha now. This is still increasing, and currently includes about 40,000 producers in the Mixteca, Sierra Norte, and Central Valleys (3).
Mexico has a lot of natural strengths when it comes to growing tomatoes. The climate conditions allow for ideal winter production, allowing it to be a year round grower. Labor is also cheap here, but capital costs tend to be higher. Other weaknesses include overheating (which diminishes yields), inexperienced management, lack of infrastructure and reliable input suppliers and inconsistant product quality. A lot of these aspects don't matter for as much for domestic growers, but when competing with export growers and growers in the United States and Canada, the margins of error are much smaller. Mexico has more greenhouse acreage than the U.S. or Mexico, but the yields are lower in Mexico, producing 777,691 tons in 2009. It still grows more greenhouse tomatoes than the U.S. or Canada (1). Greenhouses are the best method to grow tomatoes; they get the highest production per hectare at 350 tons/ha vs. 30-40 tons/ha for tomatoes grown outdoors (1).
In Oaxaca, the government touted greenhouses as "monuments to efficiency", the "future of the campo" and has supported their construction them with loans. The only problem is that constructing them doesn't guarantee success. In fact the failure of greenhouses has been a major problem; nearly 60% of the greenhouses in Mexico have failed (3). This is mostly due to the ignorance of producers, lack of technical knowledge and capacity, and a lack of marketing skills. The same government that supported their construction has not provided the technical consultation necessary for success. Big farmers with enough resources can pay for outside consultation, but the price is not cheap. Mario Robles, who has 11 different greenhouses outside of Zimatlan de Alvarez, said it costs $40,000 for agronomists to provide them with growing assistance. Most farmers cannot afford this, especially the small farmers already in debt for building their greenhouse. Another farmer who has a much smaller operation outside of Ocotlán de Morelos (just south of Oaxaca) is part of a cooperative of twelve growers that meets once a month for a course where they teach eachother about growing tomatoes. He said that "the experts are us!"
It would be incorrect to state that greenhouses have been all bad; Mario Robles is a success story. He's only been growing tomatoes for ten years, and already has a profitable operation. Not too long ago, he was growing tobacco under contract for the British American Tobacco Company and struggling to get by as American tobacco consumption plummeted. He started with a $6,000 loan for the government for his first greenhouse. Now he can support 45 employees growing 8 ha and is at sufficient scale to export value-added heirloom tomatoes to markets in the United States. It is clear that the government needs to support growers more, and it would be a good investment on their part considering that they support a lot of the loans. Although it's not surprising to me that the culture of corruption of Mexico has claimed yet another victim! It's also curious that they supported a lot of greenhouse construction in politically tense areas right before elections, and then abandoned the farmers afterwards.
Abandoned greenhouses in Oaxaca
Of the three greenhouse operations that I visited in the central valley, various different growing methods and technologies were used. In general there are less high tech operations in Mexico (less hydroponics, grafting, automation, etc). The main thing that differentiated their growing methods was what market they intended to grow for. Those producers who sold to the domestic market used less technologically intensive production. While the export grower used a lot of technology (like hydroponics), isn't allowed to use certain chemicals, and must adhere to stricter government regulations in general (they must follow U.S. regulations). Mario has a very high tech watering and nutrient delivery system, that used mostly hydroponics. All is has to do is press a button, and a computer run system mixes the necessary chemicals and pumps the needed quantities of water and nutrients directly to the roots of the plant. The other two mix their nutrients manually.
The smallest greenhouse I visited (0.4 ha) used worm castings to supplement chemical fertilizers. They also had a very small experimental greenhouse that was 100% organic, but they weren't sure if it would be worth it financially to continue the experiment. The biggest grower I visited had Neem trees to deter insects. There are very few organic greenhouse tomato growers in Oaxaca. First of all, it is very difficult to grow tomatoes organically. The main reason is that they are very susceptible to pests and disease. This is most easily treated with chemicals; organic pesticides exist, but cost a lot to implement. Although organic producers can still use advanced technology (like Mario's computerized watering system), the organic fertilizers are more expensive. Another reason is that there is no demand in the local markets for organic products, mainly because they cost more. Producers cannot charge more because in a poor area such as Oaxaca, there is no demand for more expensive organics. It is also very costly to comply by regulations, which requires a lot of paperwork and certification by private companies. I would also question the sustainability of growing organically in Oaxaca, because the tomatoes would only be destined for the United States. Organic food transported thousands of miles is only a minuscule step in the right direction. Plus, organic greenhouses are still industrial, grown in monocultures and still require a lot of outside inputs and technology.
The nursery grows tomato starts that are transplanted in greenhouses all over Oaxaca. This is one of eight nurseries in Oaxaca. Located just south of the city, they are a one stop shop for farmers. They sell tomato starts, all of the needed inputs (chemical fertilizer, pesticides, insecticides, fungicides, etc.) and technical consultancy (about thirty percent of their business). Bigger greenhouses like Mario's have their own nurseries. Here is the process of how they start to grow tomatoes.
This is the potting soil, consisting of peat moss (from Canada) and perlite (a volcanic rock from Mexico). All of the inputs for the nursery are produced off site.
The seeding trays are washed with disinfecting chemicals prior to seeding. They buy all their seeds (in this case from Modesto, CA), 90% of which are hybrid meaning they are more likely to germinate and grow with certain characteristics. They are panted by hand, because an automatic planting machine costs upwards of $30,000.
The trays are watered daily with a nutrient mix. Once they are ready for customers (28 days after planting), they are transported to farmers in wooden or plastic crates.
The tanks holding the nutrient mix. The water comes from "pipas", water trucked in from other places. The two other greenhouses had 50 meter wells to supply their water. Water is a very limited resource in Oaxaca, and the groundwater table is dropping rapidly.
3. Distribution
Distribution is a difficult part of the tomato industry in Oaxaca. One of the reasons that a lot of farms fail is that they receive poor prices for the products, or have trouble getting them to a market. To get around this, producers on different scales use different methods to get their products to market. The smaller producer we talked to said that he only sells to small buyers in Ocotlán, because he does not grow enough (only one greenhouse) for it to be worth it to transport his produce even to Oaxaca. When some producers have a few acres, and others have thousands, it's all about scale. They need to compete at different levels to get by. Smaller growers can sell directly to vendors, or sell to an intermediary that consolidates tomatoes from different greenhouses and sells them for export. Mario Robles, who had eleven greenhouses, sold directly to three wholesale buyers in the Abastos Market in Oaxaca. He has a truck, so he can transport big loads of tomatoes there. And he doesn't need to deal with small customers, so he can focus only on growing. His scale of growing also allows him to transport tomatoes to the United States and Mexico City. In order to make the trip worth while, he needs to make sure that he can fill a tractor trailer with boxed tomatoes. It costs about $3,900 to shit a load to Tiajuana, Mexico, where they can be imported to the U.S.
4. Markets
The main driver of the system is economics. Mexico is a big grower of export crops, and the United States is the main market. It's estimated that Mexico exports about twenty percent of its fresh vegetables, but tomatoes are much more export-oriented than other crops. Tomatoes are the biggest export crop, but most of those grown for export are grown in more Northern states (6). Sinaloa is the biggest export grower state, and has a very old and established winter fresh veggie industry that is at the right scale (BIG!) to compete with American and Canadian tomato farms. The United States is a voracious consumer of tomatoes, and is dependent on imports during winter months. Imports account for 1/3 U.S. tomato consumption, Mexico accounts for 71% of this (6).
Seasons have a major impact on tomato prices in North America, reverberating to producers and consumers in Oaxaca. Florida and Mexico compete for the U.S. winter and early spring markets, while Mexico imports peak in the winter. In the summer, Canada dominates the market and makes it difficult for Mexico to compete. This is when big growers in Sinaloa reduce their production to compensate, increasing the price on the Mexican market. When they are all at full production in the winter, prices are low and Sinaloa tomatoes get dumped on the market in Oaxaca. This lowers the price below the cost of production. When prices are higher in the summer, production in Oaxaca increases. Climate change has benefited producers in Oaxaca; very unusual (cold) weather during the past 3 years in Sinaloa has reduced their production in the winter. Sinaloa lost 70% of its tomato crop in Feburary of this winter during a cold snap, which caused prices to jump 11% in Mexico (4).
A lot of farmers in Oaxaca grow for the regional market only. They are at too small a scale to compete with the 'big guys' in Oaxaca, but more so the northern growers in Mexico, the U.S. and Canada that use advanced technology and big greenhouses to reach economies of scale are lower their price while making more money. When the market in Oaxaca is flooded, Mario needs to look for other places to sell his tomatoes. Wal-Mart is more of an exclusive buyer, because they a have a lot of quality control paperwork to supply them. He spent the time and money to be able to sell to them, as a form market security. He found out that that was just a dream. They continually lowered the price they paid for his tomatoes after they got him onboard. Indeed, there is a high cost for low prices.
Economies of scale. The top greenhouse complex is located in Sinaloa, the 8 ha facility on the bottom is that of Mario Robles in Oaxaca. Photos taken at the same altitude.
Mexico hasn't always been able to sell tomatoes to the United States without troubles. In 1996, tomato farmers in Florida complained that Mexico was dumping cheap tomatoes on the American market, putting them out of business. The U.S. Department of Commerce opened an antidumping investigation on Mexican tomatoes being sold on the American market. This established a minimum reference price floor for tomatoes from Mexico, helping American farms compete. The price floor has been raised a few times over the years, and is still in effect (5).
The international aspect of business also means that sanitation can be hard to track. There are very few sanitation regulations, and those that do exist are sparsely enforced. Just one e-coli or salmonella outbreak on Mexican tomatoes could hurt the whole industry tremendously. Recognizing this, the Mexican government has started a Sanitary Vegetable Commission that certifies farms for good agricultural practices (GAP's). The only problem is that it is much easier to be certified for bigger operations, although their very size puts them at risk for outbreak. It's also difficult to get the farm workers to comply with the rules, given they are low-paid and often uneducated in what can cause contamination.
5. Conclusion
The connection of my topic to culture, community and place is very strong. The food culture, something that is being lost around the world, is still a very strong tradition in Oaxaca. And nothing is more place based than growing food, especially the methods used and the variety grown. In Oaxaca as food comes from further away and people become less connected with place, it is both hurting peasant livelihoods (who can’t compete) and hurting communities. Tomato production is touted as a great benefit to the campo, and has the financial backing of the government. Unfortunately, I saw that the small producers have yet to benefit due to a lack of technical support and difficulty competing with other big growing operations. They are all still very dependent on inputs shipped in from around the world, non-native hybrid varieties and the profits are often consolidated at distributors and agrochemical companies. And as more and more greenhouses go up, the market it bound to get flooded at some point. As I learned more, I increasingly questioned the usefulness of government programs in Mexico.
On the other hand, most of the tomatoes grown in Oaxaca are consumed here. The industrial growing method keeps prices low, increasing access to fresh fruit for low income Oaxacans (of which there are many). If farmers receive the correct growing assistance, they can be successful and grow their operations. A slow transition to organic growing techniques would help wean them from being dependent on outside companies for inputs, but current market conditions don't allow them to charge a surplus for this. It's representation of many of the things that are wrong with our current food system. When industrial inputs get more expensive with the inevitable rise in oil prices, farmers will have to adapt to more environmentally friendly techniques. They certainly won't be shipping tractor trailer loads of tomatoes to California anymore. Climate change will create more uncertainty in growing conditions and water availability, as it has in Sinaloa for the past three years. I question if Mexico should be making these investments in infrastructure given these future uncertainties, but it's clear that the world is still stuck on the development paradigm. They argue that developing rural areas with value-added technological advancements like industrial greenhouses will benefit the rural poor. It will take major shocks to the system for things to change. This project made me take the whole picture into account. It's easy to get frustrated when these farmers are not meeting my ideal vision for how things should be grown. Yet, it doesn't make economic sense for them to grow organically unless they are exporting. We live in an economic system that rewards efficiency without taking into account environmental or social costs that might be very high. For example, the cost of spraying pesticides on the tomatoes if born by the workers that spray them, the consumers that eat them and the people who drink the water near the greenhouse. All in all it was a fantastic learning experience, and should be very applicable for what I hope to do in the future.
6. Research/Background Information
Timeline
3/5 – Wrote questions in Spanish for vendors/farmers
3/19 – Talked to vendors at Abastos, found new sources, narrowed food that I’m going to trace to tomatoes, visited farms
3/26 – Finished research of cited sources
4/2 – Created outline for infographic tracing food from farm to table
4/8 – Finish project
Sources
1. "Infografas: El Tomate." Sala de Prensa. Secretaría de Agricultura, Ganadería, Desarollo Rural, Pesca y Alimentactión, 06 Sep 2010. Web. 5 Apr 2011.
<http://www.sagarpa.gob.mx/saladeprensa/infografias/Paginas/Tomate.aspx>.
2. Interview with three farmers on 3/15/2011.
3. Martinez, Raciel. "Invernaderos, injerto que muere."Noticias 17 Feb 2011: n. pag. Web. 18 Feb 2011.
<http://www.noticiasnet.mx/portal/principal/invernaderos-injerto-que-mue>.
4. Rosenberg, Mica. "Mexico tomato crop devastated by cold snap." Reuters U.S. Edition. Reuters, 28 Feb 2011. Web. 28 Mar 2011.
<http://www.reuters.com/article/2011/02/28/mexico-vegetables-idUSN282819702011022>.
5. USDA Economic Research Service. "ERS/USDA Publications."Vegetables and Melons Outlook. USDA ERS, 27 Aug 2008. Web. 28 Mar 2011.
<http://www.ers.usda.gov/publications/vgs/2008/08Aug/VGS328.pdf>.
6. USDA Economic Research Service. "ERS/USDA Briefing Room." Vegetables and Melons: Tomatoes. USDA ERS, 09 Oct 2009. Web. 2 Apr 2011.
<http://www.ers.usda.gov/briefing/vegetables/tomatoes.htm>.
My sources were all very helpful to me. The infographic from the Mexico Department of Agriculture (SAGARPA) gave me a lot of insight into the scale of Mexican production, and where most of the production is centered. My interview with farmers was probably the most useful source. They told me things that could not be found in studies and government data. I got to see production methods firsthand and they told me about the challenges they have faced with distribution and dependance on markets they have no control of. The other sources were much more technical. The United States Department of Agriculture spends a lot of money on it's Economic Research Service. They do a lot of research on foreign markets, in order to see who is competing with U.S. farmers and the production methods they are using. Since greenhouse tomato production has been growing rapidly during the past twenty years, they have a lot of data on the subject.
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