Optimism and Caution in Nogales

Trade shifts, tariffs, and innovation shape the future of Mexican produce imports.

As the single largest source of imported fruits and vegetables, Mexico’s produce industry is vital to the U.S. supply chain. Nogales, AZ, has long accounted for an outsize share of this import trade — the official City of Nogales site puts the figure at over 37% of annual trade — but lately the region’s close-knit produce community has faced some challenges, not the least of which has been the termination of the long-standing Tomato Suspension Agreement in July 2025.

Lance Jungmeyer, president of the Fresh Produce Association of the Americas (FPAA), a group that lobbies on behalf of importers and is headquartered in Nogales, says the end of the Suspension Agreement and the imposition of anti-dumping duties have had major consequences for many companies in the region.

Some importers, Jungmeyer says, have had to put business plans on pause with any extra money needed to pay the duties, a process that has required a lot of readjustment. “Most business is based on predictability, but it’s been unpredictable, so it’s been a tough year,” he admits.

“Whether you are an importer, a distributor, or a retailer, you might have planned for a certain amount of tomatoes this season, but that all changed in July when the duties were put in place. It’s really causing some companies to think about getting out of the tomato business and moving into other commodities.

“It has caused everybody to press pause on every aspect of business development. If you are in the tomato business, you have to be retaining monies to pay the duties, which is a whole different calculation for people.”

At the same time, Jungmeyer says the current precarious state of the economy has led to less demand in grocery stores and less economic activity, as shoppers prioritize the essential over what might be considered non-essential purchases. The result, he continues, has been a 5% to 10% reduction in demand, which has caused “huge problems” for many in the industry.

“In stores in the U.S., whether it’s meat or dairy, a lot of prices have gone up and people’s wages haven’t kept pace with that, so they are making tough choices,” says Jungmeyer. “We see less demand in grocery stores and less economic activity. Companies had planned for a regular season, and that’s not what we’re seeing. It’s making them a lot more cautious.”

Despite this, Jungmeyer says demand for products, like vine-ripe tomatoes, continues to grow, and he says the FPAA remains optimistic about the negotiation of a new deal between the Mexican and U.S. governments.

THE NEW REALITY

Produce House, a Nogales-based company specializing in tomatoes, bell peppers, cucumbers, citrus and other products, experienced the disruption caused by the abolition of the Suspension Agreement firsthand.

Produce House’s director of sales and marketing, Raquel Espinoza, says the business had to undergo restructuring as a result of the change, with a view of accommodating new regulations, some of which are yet to be determined.

“It’s a new world for us and a new challenge that we’re going to be stepping into as we step into our tomato business,” she says. “There’s no way around it, prices are going to rise, because the moment we need to pay anti-dumping duty against that product, not only will we probably see less production coming in, but the duties will impact pricing. The Anti-Dumping Duty is a quota we need to pay. It’s not just a one-time tariff; it’s a quota that will determine a future outcome for the tomato industry.”

At a consumer level, Espinoza agrees with Jungmeyer that shoppers are buying what they need rather than what they want. “They are just buying the basic, staple items that they need, and not as open to buying other items because of the cost of inflation, and all the ripple effects down the supply chain that makes those prices rise so high.”

As a business, Produce House’s range of products runs from slicing cucumbers to different varieties of hardshell, melons and watermelons. The company has also recently introduced a citrus program, encompassing grapefruit and oranges. “Produce House is already diversified, meeting the needs of our buyers. It’s also been our policy to be diverse. Not because of what’s happening in tomatoes; it’s just good business to be able to have different offerings.”

Still in its infancy, Produce House’s citrus program is expected to grow, and Espinoza anticipates it will become a staple item, drawing on the company’s own orchards in Hermosillo, Sonora. “We’re still not ready. We’re building those programs for the future, probably within the next two years.”

Another Nogales-based business with strong ties to Mexico is IPR Fresh, which specializes exclusively in bell peppers and European cucumbers imported year-round through strong partnerships with Mexican growers.

According to IPR President José Luis Obregon, demand has remained solid, but tariff uncertainty has become a major factor. “Even though tariffs were only applied for three days in March 2025, the risk of sudden implementation affects planning and pricing,” he says. “Weather shifts also impacted early supplies, and we’ve focused on strengthening grower relationships to maintain consistency.”

Likewise, based in Nogales, Splendid by Porvenir is the U.S. import arm of major Mexican grower Grupo Splendid, focusing on mangos and sweet corn, among other products.

Splendid by Porvenir’s Cindy Schwing says the temporary imposition of tariffs made produce trading “more tenuous and harder to plan long-term.” Despite their subsequent removal, she believes the 2026 negotiation of bilateral agreements between Mexico and the U.S. will be “very telling” for future business.

Although headquartered further along the border in McAllen, TX, GR Fresh is similarly a major importer of a range of Mexican-grown products, including bell peppers, eggplant, cucumber, zucchini, yellow squash and tomatoes. GR’s vice president of sales and marketing, Tony Incaviglia, says their tomato season is now in full swing with a good rhythm of production from Sonora and Sinaloa, which is expected to increase into the spring.

Saying that, he believes duties “and other restraints” on tomatoes are likely to have an impact, citing projections which forecast a decrease in plantings by as much as 35-38% during 2026. Another contributing factor, Incaviglia continues, is the expected rise in growing costs on top of the new tomato import duties.

THE EVOLUTION OF IMPORTS

In such trade conditions, Alan Aguirre, chief marketing officer for Divine Flavor, argues the first people to lose are the consumers, followed by growers, and then the retailers. However, he says Divine Flavor’s retail clients are doing a good job to help the company and others like it to endure until the situation stabilizes.

Divine Flavor has focused on weathering the uncertain times by strengthening its production resources and grower base. As well as drawing on volumes from Jalisco between March and May, followed by Sonora from May to July, the company works with growers in Peru (November-January), Chile (January-March), and California (August-October/November).

The effect, says Aguirre, is that Divine Flavor can guarantee 12-month supplies of red, green and black grapes, which include premium varieties such as Candy Hearts, Candy Snaps and Candy Dreams.

The company is also expanding its central Mexican production — in the states of Querétaro and Guanajuato — to increase its supplies of hothouse cocktail tomatoes and snacking cucumbers during the summer.

Over at Splendid, Schwing says overall business has been steady and growing as the company gains new ground in different markets. “I believe the Splendid brand has strengthened as we’ve increased our supply base and had consistent deliveries,” she says. “Splendid has had more traction with the chains in promotions as well.”

Schwing says Splendid has benefited from “unprecedented growth” in the global mango industry, with new markets opening up. “We’ve seen an increase in consumer demand, expanded e-commerce channels and an explosion of the processed mango product market.”

“The consumer expects to have just about every item in the produce department year-round, which keeps all of us in the industry jumping to be able to provide it,” she adds. “With every year, positive changes are implemented and streamlining/improving margins become more and more important.”

To this end, Schwing says Splendid is continuing to grow its organic mango plantings, viewing mangos as a lucrative segment that is worth pursuing. “Organically certified mangoes continue to show growth as they command premium prices in the U.S. and Europe.”

MAXIMIZING MEXICAN PRODUCE SALES

To make the most out of sales opportunities for Mexican produce, Schwing recommends “regular, consistent communication” to make sure growers and suppliers time the arrival of volumes to coincide with potential gaps in U.S. production.

“When importing Mexican produce, buyers must become accustomed to growers who are becoming more and more sophisticated and professional about doing business,” she advises. “The advances in Mexico have been tremendous, so true partnerships are being sought after to make business transactions more equitable.”

“The advances in Mexico have been tremendous, so true partnerships are being sought after to make business transactions more equitable.”
— Cindy Schwing, Splendid by Porvenir, Nogales, AZ

Based in Mission, TX, La Bonanza Avocados is the U.S. branch of Aguacates La Bonanza, a company headquartered in Mexico’s avocado heartland of Michoacán. Now in its third generation under the management of the Villaseñor family, La Bonanza has been directly exporting avocados to the U.S. for over 25 years, according to director of retail sales Patrick McGinnis.

Although previously focused largely on retail, McGinnis says the company has developed its foodservice business over the last six years to leading restaurant chains, including Chipotle and Taco Bell. “You’ve probably had our product without even knowing it.”

During the past 12 months, La Bonanza has also moved into what McGinnis describes as the “front-facing retail side,” working directly with some of the country’s biggest grocers. Part of this business includes a range of snacking guacamole-based dips — including Avocado Hummus and Avocado Jalapeño Dip — which has taken the La Bonanza brand onto supermarket shelves.

“Avocados and guacamole have been around a long time, but our biggest opportunity comes from innovation,” he says. “We pride ourselves on being diverse and pushing the envelope. It gets buyers excited because these are innovations they haven’t seen before.”

McGinnis believes that innovation is the most effective way of maximizing the potential of Mexican produce in the U.S. “People are looking for new ways to bring avocados and guacamole into the market,” he says. “We are going to see a lot of companies playing around with these innovations, and I think we will continue to see avocados in different places around the store, like delis and desserts.”

“People are looking for new ways to bring avocados and guacamole into the market. We are going to see a lot of companies playing around with these innovations, and I think we will continue to see avocados in different places around the store, like delis and desserts.”
— Patrick McGinnis, La Bonanza Avocados, Mission, TX

Located in Rio Rico, AZ, Fresh Farms is the U.S. arm of its Hermosillo, Mexico, parent company of the same name. The business produces, distributes and markets a wide range of products, including table grapes, vegetables and tomatoes. Grapes, in particular, are a well-known item for the company, according to marketing coordinator Ana Romero, who says Fresh Farms is continuing to increase supplies out of Jalisco and Sonora, including new varieties.

Producing Bloom Fresh and Sun World varieties, the company recently introduced a line of frozen grapes, including premium Cotton Candy and Candy Hearts. It will also be offering Mexican-grown tomatoes on a year-round basis.

“Retailers are well-versed in sourcing these items, and we see opportunities only getting better,” predicts Romero. “Retailers should consider advertising the winter vegetable items as often as they can during the season, as there is ample supply available most weeks. The quality and condition of the winter vegetable items is excellent and provides a great way to set the departments apart from retailers who don’t focus on it.”

RISING COSTS

According to Schwing, drought and water scarcity continue to be factors when sourcing from Mexico, meaning it is highly affected by the weather, market price fluctuations and availability.

While IPR’s Obregon acknowledges that tariff unpredictability, rising labor and freight costs, and weather-driven supply changes all form significant challenges, he believes these are tempered by growing opportunities from Mexico’s expanding protected agriculture, which is improving on quality, uniformity and season length.

“Growth in greenhouse production has led to more consistent supply, smoother seasonal transitions, and improved shelf life and appearance for both peppers and European cucumbers,” says Obregon.
Obregon expects modest price increases are likely over the next 12-24 months as a result of high labor and transportation costs, although he believes careful planning can help manage the impact.

As a company that receives imports daily from Mexico, Incaviglia says GR Fresh has to deal with a number of ongoing challenges, from exchange rates, which can impact pricing and availability, to the migration of skilled labor to other industries.

New regulations and changes in product standards are also a concern, as is the imposition of tomato import duties and rising production costs.

Despite this, Incaviglia says GR and other importers are benefiting from increasing demand for year-round availability and improved skill levels when it comes to growing technologies. “Mexican growth has increased consumption in the tomato category in this country overall due to those innovative technologies and consumer preferences.”

WHAT’S NEXT?

Viewed as a whole, Nogales’ importers benefit from being part of a vibrant business where there is a real interest in the produce arriving from Mexico, says Jungmeyer.

He says the FPAA is also excited about the possibilities offered by the review of the U.S.-Mexico-Canada Agreement (USMCA). “We went to a public hearing where our chief executive spoke,” he says. “There are some groups in the U.S. who want to put in place protectionist measures, but we point out the great opportunities to be gained through more cooperation between the U.S., Mexico and Canada.”
Daniel Ibarra, president of Splendid, predicts continued growth of specific commodities and companies, along with additional mergers and acquisitions.

He believes AI will be at the forefront, driving many of the changes, as well as increasingly common forward contracts and contract production with a view to locking in prices and securing stable revenue.

Obregon predicts continued expansion of protected agriculture in Mexico, given stronger demand for program-driven sourcing, and steady consumption of peppers and European cucumbers. At the same time, he says tariff uncertainty is likely to remain a key variable for the industry.