Nogales: The Cross-Border Produce Success Story

The Southwest region retains its leading import status.

The history of fresh fruit and vegetable imports in Nogales, AZ, can be traced to 1905 when the first shipment from Mexico crossed the border. Now, the largest port of entry for Mexican produce to the U.S., handling around 37% of total imports, Nogales has consolidated its status in the industry, but challenges remain.

For Nogales’ importers, overcoming challenges from rising diesel prices to border delays are going to be top of the priority list for the 12 months ahead, as well as seizing emerging opportunities offered by value-added and ever more convenient options.

One such importer is IPR Fresh, a company that built its business around greenhouse-grown colored bell peppers and cucumbers imported through Nogales. It also handles green bell, mini and hot peppers, plus squash and other items on a seasonal basis. The company covers both organic and conventional.

“Our real strength is in greenhouse-grown colored peppers and cucumbers, where we’ve developed longstanding relationships with growers in Mexico,” emphasizes Vice President Of Marketing And Business Development Mark Munger.

“While our product mix continues to evolve based on customer demand, our focus is on products where we can provide consistent quality, reliable supply and strong year-round programs,” he adds.

Another Nogales-located business, Divine Flavor, focuses on hothouse vegetables, including colored bell and mini peppers, Roma and grape tomatoes, long English, Persian and slicer cucumbers, and squash — all offered as organic or conventional.

During the Sonora grape season, typically from May through July, the company also imports table grapes through Nogales.

“Nogales is a 365-day loading location for us, which gives us the flexibility to utilize the region throughout the year,” says Quality Assurance and Public Relations Manager Michael DuPuis. “We tend to see more customers transition to loading out of Nogales during the winter and spring months, particularly when our grape programs are active.”

Similar to other Nogales companies, Farmer’s Best International imports tomatoes and cucumbers, followed by round tomatoes, green and red bell peppers, eggplant, summer squash, and hard-shell squash during the fall and winter seasons.

Director of Sales Steve Spence says Nogales’ key advantage lies in its proximity to Sonora, Mexico, one of the most important agricultural regions in North America.

“Sonora plays a critical role in Mexico’s export economy, producing a diverse range of fresh fruits and vegetables, including squash, cucumbers, bell peppers, Roma tomatoes, melons, table grapes, and many other commodities,” he says.

“This strong agricultural base, combined with Nogales’ established infrastructure and expertise in handling fresh produce, positions the region as a vital gateway for delivering high-quality fruits and vegetables to U.S. consumers year-round.”

— Steve Spence, Farmer’s Best International, Nogales, AZ

“This strong agricultural base, combined with Nogales’ established infrastructure and expertise in handling fresh produce, positions the region as a vital gateway for delivering high-quality fruits and vegetables to U.S. consumers year-round.”

PROCUREMENT OPPORTUNITIES

IPR’s recently changed the direction of the business, with a greater emphasis on building year-round supply programs and expanding relationships with growers to achieve consistent availability across the seasons, according to Munger.

The business is also focusing on developing direct relationships with retail and foodservice customers. “Historically, Nogales has been an important hub for our business, but we’re increasingly thinking beyond the traditional Nogales model and looking at how we can build a broader North American supply business,” he says.

An example of this has been the opening of a new distribution point in McAllen, TX, which gives IPR another strategic location to better connect Mexican growing programs with markets further east.

“Nogales remains central to our business, but we’re investing in infrastructure, supply and customer relationships that allow IPR Fresh to reach well beyond Nogales,” adds Munger.

At SunFed, which principally imports squash, cucumbers, eggplant, bell peppers, and tomatoes, Vice President Of Sales And Marketing J.C. Myers views consolidation as the biggest opportunity for business growth.

“This is a penny profit business,” he says. “Economies of scale, a greater market share, cross-selling, stronger pricing power, more investment capacity, reduced competitive pressure are the key to growing in the industry, especially with imports via Nogales.”

A slightly different example is GR Fresh. Although headquartered in McAllen, TX, the company imports through Nogales from November through May to cover its western Mexican production, which includes items such as Roma, round, grape, and on-the-vine tomatoes, bell peppers, cucumbers, eggplant, yellow squash, and zucchini, among other items.

Over the past year, says GR’s Vice President Of Sales And Marketing Tony Incaviglia, the business has continued to strengthen around its core commodities while expanding value-added offerings.

As part of this process, the company has introduced and expanded several controlled environment and retail-ready programs, including greenhouse-grown four-count beef tomatoes, plus medley, cherry and grape tomatoes, along with other custom pack offerings.

These programs, says Incaviglia, complement GR’s traditional Roma tomato, pepper, cucumber, eggplant, and yellow and zucchini squash business, while giving customers more options and additional ways to drive sales.

According to DuPuis, Divine Flavor is continuing to see growth across its core commodities, which he views as a positive reflection of both consumer demand and retail partnerships.

In addition to working on the launch of more visually appealing packaging in 2027, the company is working on new grab-and-go formats for seedless mini peppers.

“Consistency remains one of the biggest challenges with this emerging commodity, and we’re seeing some very encouraging results from growers currently participating in our trials,” adds DuPuis.

DuPuis says Divine Flavor is also working with new high-flavor tomato varieties that it believes could be true game-changers, some of which are exclusive to specific growing regions. “We’re excited about the opportunity to be among the first to introduce them to the U.S. market.”

PERSISTENT CHALLENGES

Like any major produce corridor, Nogales faced challenges around logistics, transportation, labor, border efficiency, and maintaining consistent quality throughout the supply chain.

However, DuPuis sees the challenges as opportunities for Divine Flavor to differentiate itself.

“For us, the key is having strong relationships with growers and supply chain partners, planning ahead, and maintaining a consistent focus on quality and execution. The companies that can provide reliability and solutions when challenges arise will ultimately be the ones that continue to succeed.”

According to Spence at Farmer’s Best, logistics remain one of the most significant challenges for distribution through Nogales, with competing gateways — such as McAllen — offering geographic advantages due to their proximity to many large population centers.

“With a substantial portion of the U.S. population located east of Texas, transportation efficiency and freight costs are critical considerations when serving key markets,” he says. “Despite these challenges, Nogales continues to play a vital role as a premier gateway for produce imports. Its established infrastructure, experienced workforce, and longstanding industry relationships provide significant value to importers, growers and customers.”

SunFed’s Myers says stress has come from rising diesel prices — “double last year due to geopolitical conflicts” — combined with reduced refining capacity and limited reserves. The pressures are forcing customers east of the Mississippi to look at alternate crossing points to keep down costs.

Incaviglia at GR Fresh points to rising costs associated with transportation, labor, packaging, customs, and compliance as principal challenges. “With fresh produce timing is critical, border crossing delays can quickly impact quality, availability and cost,” he explains. “We are also dealing with changing trade policies and duties, particularly on tomatoes, which add another layer of cost to an already challenging business environment.”

Munger at IPR says Nogales companies have to deal with the traditional challenges that come with operating through a major international crossing point, such as border efficiency, transportation, labor, and the ongoing complexity of moving perishable products across an international border.

“Those issues can have an outsized impact on fresh produce because we’re dealing with a highly perishable product and very tight delivery windows,” he says.

At the same time, Munger believes one of the challenges — and an opportunity — for companies in Nogales is making sure they are not “overly dependent” on a single point in the supply chain.

“That’s part of the thinking behind our broader strategy,” he explains. “We’re continuing to invest in our grower relationships, our logistics capabilities and additional distribution infrastructure so we have more flexibility in how we serve customers.”

THE ROLE OF THE FPAA

The Nogales-headquartered Fresh Produce Association of the Americas (FPAA) is a key supporter of the city’s importers, and one whose importance to produce businesses can’t be understated.

SunFed Chief Executive Matt Mandel describes the FPAA as “an association of like-minded businesses, often competitors, who feel being a part of something bigger allows [them] to accomplish tasks that are too big for any single company.”

“Whether it be our close-working relationship with relevant federal agencies or the incredible relationships we’ve fostered at the state and federal level, the FPAA is able to better advocate for the greater good of our industry and, by extension, we reap those benefits. A rising tide lifts all ships,” he adds.

It’s a view echoed by DuPuis. “The FPAA has always been a great resource for Divine Flavor,” he says. “They are involved in virtually every aspect of the produce industry and provide tremendous support and advocacy for the Nogales produce community. Their involvement, advocacy, and industry knowledge provide significant value to companies doing business through the region.”

The FPAA brings together the companies and people who make the Nogales produce industry work. For a company like IPR Fresh, Munger says this network is valuable not only from a business standpoint, but also because it gives them a voice on issues that affect the entire supply chain.

“Nogales is a unique produce community because of the depth of expertise and relationships that have developed on both sides of the border,” he adds. “I think the FPAA plays an important role in helping protect and strengthen that ecosystem.”

WHAT’S NEXT

Nogales offers “tremendous expertise and infrastructure,” which IPR combines with strong relationships with growers in Mexico. The opportunity ahead, Munger says, lies in leveraging those assets to serve customers more consistently throughout the year.

“We’re particularly focused on expanding our grower base and strengthening production during periods when supply can be more challenging, including the summer months,” says Munger. “That allows us to offer customers a more complete program rather than simply being a supplier during a particular growing season.”

At the same time, Munger sees an opportunity to take what IPR has built in Nogales and connect it with customers across a much broader geography, especially in terms of fostering direct relationships with retail and foodservice customers.

“For IPR Fresh, the opportunity isn’t simply to move more product through Nogales,” he adds. “It’s to use Nogales as the foundation for building a larger, more integrated, year-round supply business.”

“For IPR Fresh, the opportunity isn’t simply to move more product through Nogales. It’s to use Nogales as the foundation for building a larger, more integrated, year-round supply business.”

— Mark Munger, IPR Fresh, Nogales, AZ

Incaviglia sees further opportunities for future growth through expanding year-round imports of core vegetables. “Nogales remains a major gateway for Sonora and Sinaloa production, and there is additional opportunity in extending the season to help support western domestic business opportunities.”

DuPuis agrees. “Nogales is an important gateway for produce, and its ability to operate as a 365-day loading location makes it an important part of our overall supply chain,” he says. “We see particularly strong opportunities during the winter and spring months, when more customers transition their loading programs through Nogales and our grape programs are active.”

DuPuis also sees growth potential in bringing differentiated products into the market, such as new varieties, specialty items, innovative packaging or programs designed around specific retail needs.

“Ultimately, our goal is to continue being a resource and solution for our customers while focusing on products and programs that we know we can consistently deliver.”