A Relationship That Works

Nogales, AZ, continues to benefit from its strategic location.

Located almost halfway along the U.S.-Mexico border, Nogales, AZ — which has a sister city of the same name across the frontier — is a name synonymous with fresh produce. Although land ports in South Texas and California have also gained justified fame, Nogales has retained its position as a premier import hub.

Benefiting from a close relationship with growers south of the border, Nogales has also experienced many of the fluctuations passing through the produce trade at the current time. How it deals with them could point the way forward for much of the industry as a whole.

Established and still headquartered in Nogales, the Fresh Produce Association of Americas (FPAA) has long been a vital advocate for the city’s importers, fighting to protect companies against the threat of tariffs and helping lobby for infrastructure improvements.

At its head, FPAA President Lance Jungmeyer has overseen the expansion of the association over more than decade, taking the organization beyond Nogales and along the length of the entire border region.

However, despite the FPAA’s years of hard work, he says there are still a lot of people in the U.S. — with particular reference to politicians — who don’t understand the value of trade. “One of the shared things we see is a push for tariffs and/or other trade restrictions, really from both parties these days and that’s a difference from five to 10 years ago,” says Jungmeyer.

“When you look at the overall balance of agricultural trade between the U.S. and Mexico, U.S. agricultural exports have grown a lot and Mexican agricultural exports have grown a lot too, so both sides are doing well under the trade agreement that we have with the USMCA.”
— Lance Jungmeyer, president, Fresh Produce Association of Americas

“When you look at the overall balance of agricultural trade between the U.S. and Mexico, U.S. agricultural exports have grown a lot and Mexican agricultural exports have grown a lot too, so both sides are doing well under the trade agreement that we have with the USMCA.”

USMCA REVIEW

The United States-Mexico-Canada Agreement (USMCA) is up for review during 2025/26, and Jungmeyer says one key FPAA objective during negotiations will be ensuring market access remains open and that quotas or tariffs are not imposed on imported produce, especially from Mexico.

“It’s a slippery slope. Once you start out with one ag commodity, the other nation responds and it gets messy quickly,” he says. “The truth is, we need each other a lot more than we think.

“If you look at the increase in storm activity that’s happening in the Gulf of Mexico, these storms are growing in frequency and intensity, so the chance that a storm will wipe out all or half of Florida and the Southeast’s production is not unfathomable.”

Given this threat, Jungmeyer says maintaining good relationship and trading program with Mexico is important, emphasizing that FPAA’s role is making sure that relationship continues.

One example is the Tomato Suspension Agreement, which growers from Florida are seeking to remove and replace with tariffs. The FPAA, which represents importers and shippers, says it is focused on maintaining it to ensure its members can continue to trade.

“If companies have to pay duties, which are not refundable necessarily, it creates quite a difficult situation to do business in — if you can’t sell the produce, if you can’t get across the border to do the commerce, you’re not in business,” argues Jungmeyer. “Market access is really one of the key tenets of the FPAA.”

PRODUCE FLOWS BOTH WAYS

One challenge being faced by importers in Nogales is not so much concerned with the process of bringing produce over the border, but rather in sourcing it in the first place from Mexico.

Jungmeyer says the unpredictability of water supply in areas such as Sinaloa, combined with a generalized shortage of labor, has caused some smaller growers to cease operations. “Right now, a lot of water levels in reservoirs in Sinaloa and Sonora are below where we’d like them to be.”

One challenge facing importers in Nogales is not the process of bringing produce over the border, but rather in sourcing it in the first place from Mexico.

On a more positive side, there has been an upsurge in products not typically associated with Nogales passed through the port, such as berries and tropicals. “We’re getting more and more year-round and we’re all seeing more potatoes going from the U.S. to Mexico through Nogales,” says Jungmeyer.

“This is important because it creates more trucking capacity. If you’ve got more trucks going southbound through Nogales, they want to pick up going back up. This symbiosis between U.S. and Mexican produce is crucial for keeping trucking at capacity.”

MAKING ALLIANCES

One such company benefiting from this symbiosis is table grape and vegetable importer Fresh Farms, based in Rio Rico, AZ, the importer hub to the north of Nogales. Currently growing at between 20% to 25% year-on-year, around 60% of Fresh Farms’ business is drawn from grapes, and most of these are from the company’s own farms, according to general manager Juan Pablo Molina.

“We source mainly from our own production in Mexico, but we also grow grapes in the San Joaquin Valley, so we can grow in both countries, allowing us to harvest for around eight months,” he says. “We also have some excellent alliances in Peru and Chile to continue year-round programs with national retailers.”

The other 40% of Fresh Farms’ business comes from squash, cucumbers, bell peppers, hot peppers, pickles, corn and eggplant, as well as some watermelon and melons grown in different regions of Mexico.

Looking ahead, Molina says good supplies of table grapes from California for the rest of 2024 appear likely, with South America also delivering a good start. On watermelon and vegetables, which started from mid-October, supply also looked positive, despite rising production costs.

“The cost of growing in the U.S., as well as in Mexico, has increased for a lot of reasons,” says Molina. “We could talk just about this subject for over an hour, but we need to make sure retailers understand the reasons for this and try to raise the cost.”

One such reason is the fact that labor is a “shrinking commodity everywhere,” according to Molina, and it is here that organizations like the FPAA have a big role to play. “I think our industry associations do a very good job of representing at the government levels,” he says. “We definitely need and have been asking for immigration reform for labor workers and, of course, this is spotlighted in our political arena as we approach elections this November.”

On a more positive note, Molina says Fresh Farms continues to expand its grape volumes and varieties year-round, and has recently moved beyond fresh into Fresh Farms Frozen Cotton Candy, a product that he says is having huge success and will likely lead the company in new directions.

MEASURED GROWTH

Also based in Rio Rico, AZ, SunFed specializes in zucchini, yellow and grey squash, American slicing cucumbers, eggplant and bell peppers, sourced from multiple regions across Mexico.

Although the importer-marketer continues to experience what it describes as “strategic measured growth,” SunFed’s Vice President of Sales and Marketing JC Myers says he is “optimistic, yet realistic” about the availability, volumes and quality for the remainder of 2024.

“Late summer growing conditions have been normal, and we expect production to start up soon,” he says, adding that access to labor, the water shortage, and inflation impact on input costs continue to be top of mind for SunFed’s growers in Mexico.

Myers says there is a need for suppliers to listen closely to their growers’ needs and communicate that through the supply chain. However, he also urges other produce companies to do more to support industry associations, arguing that time and money are needed to make such organizations effective.

As a specialist in the dry veg space, Myers says Nogales’ proximity to growing regions in Baja California, Sonora and Sinaloa make it an excellent choice for distribution of the freshest products. This proximity, he adds, is allowing SunFed to continue to expand in dry veg, and also consider complementary items that are beneficial to both growers and customers.

EXPANDING SOURCING

IPR Fresh is another Nogales-based, specialist importer, this time with a principal focus on conventional and organic colored bell peppers, although the company also imports a variety of other products, including melons, tomatoes, cucumbers, zucchini and squash. IPR brings bell peppers in from Sinaloa and Jalisco in Mexico during the majority of the year, and from the Netherlands during the summer.

With the company recently expanding its warehouse to accommodate the growing demand for bell peppers, IPR president José Luis Obregón says the past 12 months have been “challenging, but rewarding.”

Although IPR expanded its bell pepper offerings and strengthened relationships with customers, water shortages in key growing regions continue, which is likely to lead to lower volumes, tempered by the possibility of record prices.

However, while production costs have risen steadily since the pandemic, Obregón says product prices have not kept pace, and the strong Mexican peso has also created challenges for exporting growers.

Despite the mixed outlook, Obregón says IPR aims to maintain a steady supply of high-quality peppers throughout the season, benefiting from Nogales’ proximity to key growing regions and major distribution centers across the Western U.S.

Another positive point is the beneficial work being done by the FPAA, an organization Obregón says has been in maintaining fair trade by protecting against protectionist efforts from other trade groups. “Continued support like this is essential,” he says.