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Competition between Mexico and Central America countries in the U.S. vegetable markets: the melons case

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Authors: J.J. Espinoza Arellano
Issue: 96V-3 (173-184)
Topic: Plant Production
Keywords: Econometric model, free trade agreement, productivity, peso devaluation, tariffs, international agricultural trade

Mexico was the primary foreign source of melons for the U.S. market for many years. However, in recent years, Mexico's share of the U.S. melon markets has significantly declined while that of Central America nations increased. For example, during the 1970s and early 1980s, Mexico supplied more than 90% of U.S. cantaloupe imports whereas in recent years Mexico has supplied about 30% of the U.S. market.
Similar declines in market share have been observed for honeydew and watermelon. The objective of this study is to empirically identify, and forecast the effects of primary economic forces affecting United States. Mexico and Central America nations melon trade in winter and spring seasons. Analysis is accomplished with a price equilibrium econometric model of the U.S., Mexico and Caribbean nations and cantaloupe, honeydew and watermelon industries.
The analysis shows the 1994‑1995 peso devaluation to have the greatest short‑run influence on Mexico's ability to export while the largest long‑run negative impact was associated with stagnant Mexican melon yields. Mexican agricultural labor cost and accelerated growth in Mexican per capita income have important impacts on melon exports but are of less importance than yields. In general, the tariff‑reducing provisions or NAFTA have a comparatively modest influence on Mexico's ability to export to the United States.

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