Optimism remains strong in the border city.

Originally printed in the April 2024 issue of Produce Business.

Located close to the midway-line on the U.S.-Mexico border, Nogales, AZ, is a city that has been associated with the produce industry for generations. Sitting directly across from its Mexican sister city of the same name, Nogales has long played — and continues to play — a central role in the cross-border flow of Mexican-grown fruits and vegetables heading north.

According to the City of Nogales, the area’s Mariposa Port of Entry is the largest single border crossing for Mexican fresh produce, handling over 37% of all produce shipped from Mexico into the U.S. In monetary terms, almost $3.4 billion in fresh produce crossed into the country via Nogales in 2021, comprising $2.2 billion worth of vegetables and $1.2 billion in fruit, USA Trade data revealed.

In the opinion of José Luis Obregón, president of Nogales-based IPR Fresh, the city helps U.S. retailers stay competitive during the spring by offering a strategic location for importing fresh produce from Mexico.

This, he says, allows retailers to access a wide variety of high-quality fruits and vegetables quickly, reducing transportation costs and ensuring freshness for consumers.

J.C. Myers, vice president of sales and marketing for fellow importer SunFed, based in neighboring Rio Rico, AZ, agrees, emphasizing SunFed’s own ability to deliver high-quality new squash and cucumbers during the key months before the domestic season begins.

“This time of year, Mexico is right at its peak, which makes Nogales an extremely important port of entry,” says Michael DuPuis, quality assurance and public relations manager at Nogales-based Divine Flavor. “With only two days from Central Mexico, this is a very specific window for us to import the best-tasting products for our customers.”

“This time of year, Mexico is right at its peak, which makes Nogales an extremely important port of entry.”

— Michael DuPuis, Divine Flavor, Nogales, AZ

For Lance Jungmeyer, president of the Nogales-headquartered Fresh Produce Association of the Americas (FPAA), an organization that lobbies for importers of Mexican produce in the U.S., Nogales is a “hugely important” port of entry when vegetables are not being grown domestically. And it’s significance is only growing.

“Nogales, like other ports on the Southwest border, is really key in the spring, but it is becoming year-round,” he says.

“With truck rates these days, a lot of customers are coming back to Nogales versus Texas. Due to the way freight rates have behaved, Nogales to the East Coast is just a few hundred dollars more than McAllen, but with a lot less time within Mexico from, for example, Sinaloa.”

Customers also look at where is easiest to load, Jungmeyer adds. “Nogales has a built-in infrastructure, which is designed around moving trucks of fresh produce. During peak season, there are 1,200-1,500 trucks moving around Nogales, which is a sight to see.”

OUTSIDE FACTORS

However, Nogales is far from immune to outside factors. According to Divine Flavor’s DuPuis, the import picture over recent weeks and months has been “a little bit strange because of one of the most complicated seasons in recent memory.”

DuPuis believes some colder-than-expected weather — unusual for the time of year — can be traced back to the aftereffects of Hurricane Otis in October 2023.

“The hurricane affected veg out of Sinaloa, impacting coloring, production and resulting in less volume,” he says. “We’ve been seeing good quality, just not to the extent we are used to. Also, there’s a water crisis out of West Mexico; there’s not enough rain in the region.”

IPR’s Obregón agrees. “Challenges at the moment revolve around weather patterns, water shortages, border crossing issues, trade barriers, and regulatory compliance and exchange rates.”

“Retailers and wholesalers are addressing challenges, such as increasing costs and consumer uncertainty, by optimizing supply chain efficiency, negotiating contracts during the season to be able to offer competitive pricing, diversifying product offerings, and implementing targeted marketing strategies to boost sales.”

For the FPAA’s Jungmeyer, the climate isn’t the only outside factor impacting crossings at Nogales. The political issue of illegal migrants at the border is also affecting produce because the same agencies that run customs, also run border patrol. As a result, he says inspection hours are, at times, being curtailed and agents are being reassigned to deal with flashpoints.

“We can’t let migration issues affect legitimate trade and travel that makes sure America is well fed,” Jungmeyer argues. “Closing inspection lanes and limiting inspection hours reduces shelf-life and the value of fresh produce if that produce is delayed for a day or more.”

He says, however, Arizona hasn’t had the same level of problems they had two years ago in Texas when the governor shut down two inspection lanes. “This resulted in $300 million in damages to produce shipments and an eight- to 10-day delay.”

POSITIVE RESPONSE

The FPAA has continued its work to make sure trucks move faster and more efficiently through ports of entry. This approach has already paid dividends. Just two years ago, the federal government spent $125 million on improvements in Nogales.

“When you look at all the trucks and the efficiencies we can make, that’s a big deal,” says Jungmeyer. “We’ve seen continuous growth in warehouse construction in Nogales because of that. There is now up-to-date infrastructure and the ease of getting in and out of the town.”

In 2023, ground was also broken for new cold inspection rooms at the Mariposa Port of Entry, providing greater confidence for cold chain-dependent products such as berries, which are ill-suited to withstand the Arizona heat.

The government, says Jungmeyer, is looking to expand this service, not just in Nogales, but nationwide.
The FPAA has also evolved over recent years to formalize its structure as a national association representing all importers bringing in produce from Mexico.

“We have a national footprint and represent importers in Texas and California, as well as Arizona,” adds Jungmeyer. “We offer live office space and boots-on-the-ground support.

“We take a national approach to local issues. We are trying to get more cold inspection spaces and more customs officials at all ports of entry on the Southwest border.”

LOOKING AHEAD

Obregón says IPR Fresh plans to use the rest of 2024 to increase its line of colored bell peppers, both conventional and organic, alongside its existing offerings of sweet corn, European cucumbers, and watermelon imported through Nogales.

Other priorities for the months ahead, he says, include collaborations with new growers, an expanded distribution channel and a continued enhancement of product quality at the field level.

Obregón says IPR will also be focusing on maximizing procurement opportunities within Nogales by sourcing from diverse suppliers to ensure product availability, as well as exploring partnerships with additional growers that support its sustainability initiatives.

Closer to home, he says IPR will expand its facilities to include additional offices and warehouse space, in addition to leveraging technological advancements for improved supply chain management.

As the U.S. subsidiary of Hermosillo, Mexico-based Grupo Alta, Divine Flavor is able to draw on considerable amounts of its own production from diverse regions south of the border.

One example is the company’s melon program. Although the program has been a little delayed this year — starting in mid-April instead of late March — DuPuis expects volumes to pick up by May, after which they will run through to the first week of June.

However, he still has high hopes for this season. “We have a great grower in the Hermosillo region that specializes in conventional and organic Hami melons. This is a sweet melon with a cucumber crunch, which is like a cross between a honeydew and a cantaloupe,” says DuPuis.

Aside from melons, Divine Flavor is also a major importer and exporter of table grapes, with the company’s newest production site — the Don Mario vineyard in Tolimán, Jalisco — entering its second year of producing commercial volumes.

“This year, we’re expecting good quality out of Tolimán,” says Du Puis. “It’s one of the most unique vineyards in Mexico with the best grape growing technologies and a social program for workers — it’s got the works.”

Following the signing of a commercial agreement between Divine Flavor and Bakersfield, CA-based grape breeder and grower Sun World International in 2023, the Don Mario vineyard will be one of Divine Flavor’s key production sites for premium AUTUMNCRISP grapes.

“The industry has been struggling a little because of the situation in West Mexico — it’s been a very complicated season, but we’re all ready to focus on what lies ahead with our summer program,” DuPuis adds.