The New Door for Mexico

In a little less than two decades, South Texas has catapulted itself into a prime position in produce trade with Mexico. In 2000, South Texas ports moved only about half the volume — a little more than 40,000 loads — of Arizona, according to USDA trade statistics. By 2011, according to the Texas International Produce Association (TIPA) in Mission, TX, South Texas crossing volumes had more than doubled and surpassed Nogales, AZ, as the leading region for produce crossings (see “Fresh Produce Import Volumes” on next page).

“In the last eight years, the volume of imports of fresh fruits and vegetables coming out of Mexico through Texas ports of entry has grown by about 107 percent,” says Bret Erickson, president and chief executive of TIPA. “In 2015, Texas crossed approximately 215,000 loads of fresh produce. In contrast, Nogales grew by 31 percent. Texas accounted for 49 percent of fresh produce import crossings in 2015, with Arizona accounting for 34 percent, with California and New Mexico also importing.”

The change is likened to South Texas receiving a major makeover from a top plastic surgeon, describes Luis A. Bazán, bridge director for Pharr International Bridge a department within the City of Pharr in Pharr, TX. “In 1985, the outskirts of these border towns were mostly agriculture and landscape. Now, they’ve changed to more developed spaces. They call this area the RioPlex because of the development taking place on the Rio Grande River — so many cities are enjoying positive expansion.”

The region continues to experience growth in volume, diversity and company involvement. “Every year volume through Texas ports grows, as do companies handling this increased volume,” says Dan Edmeier of Huron Produce in Edinburg, TX. “The variety of commodities being offered, as well as the timeframe they occupy, keeps increasing.”

Importers, retailers and foodservice buyers alike share the benefit of these new entry points. “Markon’s purchases from South Texas have increased exponentially over the past three years, with this year shaping up to be our biggest growth year-to-date,” says Mark Shaw, vice president of operations for Markon in Salinas, CA.

Farmer’s Best in Nogales imports via McAllen, TX, and has reported an increase in volume every year for the past eight to 10 years. “We see distribution through the Texas ports increasing in the immediate future,” says Steve Yubeta, vice president of sales.

Jose Robles, president and chief executive for Diversified Distributors Inc. in Vernon, CA, notices more emphasis on importing product through Texas. “Many distributors are opening operations in that part of the country,” he says. “This is a result of major national retailers expressing interest in sourcing product from Texas, believing Texas provides a central distribution point for all fresh produce from Mexico. It makes sense.”

Lance Jungmeyer, president of the Fresh Produce Association of the Americas (FPAA) in Nogales, AZ, points out Nogales is still a major player in Mexican imports. He says Nogales continues to be the No. 1 port of entry wih more than 6.3 billion pounds imported during the last season year (Sept. 2015 – August 2016).

“This is a 6 percent increase from the previous season,” says Jungmeyer. “Improvements in seed varieties and the expansion into new growing microclimates should further fuel the increase in coming years.”

Growing Investment

Texas boasts four primary ports of entry for fresh produce from Mexico. “Pharr moves the lion’s share of produce with approximately 65 percent of the volume of all of Texas crossings,” says Erickson. “Laredo is second, crossing about 23 percent. Then comes Rio Grande City and Progreso, each crossing between 6 to 7 percent. Laredo primarily crosses tomatoes and avocados, with a majority of shipments being direct — meaning they’re crossing and going on to San Antonio or Dallas, or some other distribution hub.”

Development of facilities to support produce imports plays a fundamental role in the increase in volume. “Six or seven years ago, when we really started to feel this shift in the growth of Mexican produce crossing, people didn’t think Texas would have the infrastructure to handle it,” says Erickson. “Now we’ve seen tremendous growth and expansion in infrastructure and facilities.”

Ronnie Cohen, vice president of sales for Vision Import Group in Hackensack, NJ, cites the expansion in the border towns as a key indicator of Texas’ future. “A tremendous amount of new cold storage facilities has been developed and are now open for business.”

Since the completion of the Sinaloa-Durango Highway, Markon’s Shaw has witnessed increased investment into South Texas due to the viability of the loading location. “Suppliers have been purchasing and refurbishing dated cooling facilities and building new construction rivaling state-of-the-art facilities in both Nogales and Florida,” he says.

Product crossing in Pharr and most of the other Texas ports makes its way to facilities near these crossing points. “In Texas, companies are expanding their footprint and building the necessary infrastructure to handle the increased volumes,” says Erickson. “The Greater McAllen area is now starting to look and operate more like Nogales — a one-stop shop for a wide variety of commodities.”

Mutually Inclusive

While the region experiences explosive growth, importers view Texas and Arizona as mutually inclusive. Huron’s Edmeier considers Texas complementary to Arizona and California ports. “If it were competition, Arizona companies would not be flocking here to expand,” he points out. “It really is no different than technology; when there are good or better options you have to explore them.”

Erickson cites an increasing number of Arizona companies operating in Texas as evidence of collaboration. “We’ve seen many companies with operations in Arizona slowly expanding their presence in Texas because it’s a matter of what makes sense,” he says.

Farmer’s Best represents a good example of one of those companies. “We are adapting to our customers’ needs and providing more value to them by making our fresh produce available out of both areas,” says Yubeta. “In the summer months, most of the produce we sell is grown close to the Texas border, so McAllen becomes our only distribution point for that period. Yet, Nogales’s volume and demand is also increasing. Increased production in Sonora, just south of Arizona, makes Nogales the primary port of entry for many of those items. We continue to see increases in volume through both ports of entry.”

“In our business you always have to consider alternatives,” says Alfonso Cano, produce director for Northgate Gonzalez Markets in Anaheim, CA, with 41 stores. “The Mexican and U.S. border is so big, we cannot expect to not have alternatives. It is not about competition; it’s about logistics and securing deliveries. The U.S. domestic market benefits from Mexican products crossing as soon as possible. Therefore, the U.S. distribution network can plan and prepare accurately.”

TIPA’s extraordinary growth in association membership punctuates the continued climb in international business. “We have nearly tripled our membership in the past five years,” says TIPA’s Erickson. “This growth has primarily been importers who have come into the Association, along with service providers for the import industry.”

Why The Shift‭?‬

Multiple factors, including geography and infrastructure improvements, have intersected, resulting in Texas’ rising position for Mexican imports. The state’s strategic location between Mexico and the eastern United States provides a natural advantage for import efficiencies.

“The most perishable item in the world is time, and Texas can cut one to two days of transport into the United States,” says Cano. “Mexican growers benefit by reaching States faster and having their sales people give accurate information to their end customer.”

Vision’s Cohen sees use of Texas ports as an additional distribution opportunity. “It is a benefit for buyers, especially those in the middle of the United States and the East Coast when purchasing from Mexico,” he says.

Farmer’s Best moves product from Texas for customers in the Midwest, Northeast and Southeast. “One of the biggest benefits for these buyers is that our fresh produce is available to them from a closer shipping point,” says Yubeta. “Our consistent supply of quality produce makes for a more reliable program for buyers.”

Sourcing product from South Texas allows Markon several advantages. “One is the convenience of sourcing from another area — in addition to the Southeast and Arizona —during the fall, winter, and spring months,” says Shaw. “We also find freight savings since moving product [to certain destinations] from South Texas is much more economical than from Nogales.”

Shaw also notes benefit in more competitive prices. “Leveraging the southeastern United States, South Texas and Nogales products against each other allows Markon to achieve the most competitive delivered price into our Midwestern and Northeastern markets.”

The proliferation of production areas throughout Mexico has also added to Texas’ import volume. “Increasing production in eastern and southern Mexico provides an opportunity to ship via Texas,” says TIPA’s Erickson. “The expansion of production areas in Mexico leads to increased opportunity for new ports of entry.”

Robles of Diversified says importers and their clients benefit from this expansion, particularly as more product becomes available for the eastern part of the United States. “The western part of the nation has always benefited from established and consistent crossings in California and Arizona,” he adds.

One of the largest contributing factors to the increase in Texas crossings, according to Erickson, is the completion of major infrastructure projects in Mexico. “Of primary importance is the SuperVia Highway, connecting the west coast of Mexico to Texas,” he says. “It’s basically a pipeline linking Sinaloa to South Texas. With the completion of the new highway system and new bridges in Mexico, produce companies delivering product to the Midwest or the East Coast find it more efficient and faster to get product to market via Texas and for less cost.”

The infrastructure changes have opened the door to new options. “The now completed Mazatlan-Durango Highway from western Mexico to the Texas ports has made the trip shorter and more cost-effective, so more product is crossing to Texas versus the Arizona or California ports,” says Vision’s Cohen.

These major road improvements have significantly impacted Farmers Best’s production grown and packed in central, eastern and western Mexico. “The opening of this new highway has helped with logistics challenges we had faced for years,” says Yubeta.

Increasing Product Diversity

Products and production areas continue to evolve along with the infrastructure to support increased volume in Mexico-Texas crossings. Texas has long been a primary port for limes, mangos, onions, pineapples and lemons, according to Cohen. “Limes are sourced primarily from Veracruz,” he says. “Mangos are grown in all Mexican states. Pineapples come principally from Veracruz and Tabasco, and onions and lemons from Tamaulipas.”

Edmeier recalls when Texas catered more to eastern Mexico production, but now sees areas widening. “Products come from nearly every state in Mexico,” he says. “Items include tomatoes, bell peppers, limes, chili peppers, squash, melons — and the list goes on.”

Erickson notes among the Top 10 items shipped via Texas, the No. 1 item in 2015 was tomatoes. “Tomatoes accounted for about 64,000 loads,” he reports. “These were mostly from western Mexico. Avocados were second and accounted for about 44,000 loads — all from Michoacán. The remainder of the Top 10 includes cucumbers, watermelon, chili peppers, limes, bell peppers, squash, mangos and other miscellaneous tropicals.”

With the increasing potential in Texas, both sides of the border look to take advantage. “Since there is more focus on crossing product in Texas, many growers in Mexico are taking the risk of exporting more product from different areas,” reports Robles. “Even from as far as Chiapas, the southern tip of Mexico.”

Diversified Distributors is partnering with a grower in Mexico, with a distribution facility in Texas. Farmer’s Best recently added a growing facility in San Luis Potosí, Mexico, allowing the company to increase the volume it ships through McAllen. “This includes year-round supplies of cucumbers, green peppers and Roma tomatoes,” says Yubeta.

Forging Ahead

Though Texas has posted some significant volume increases in the past decade, industry members look to even greater progress in the future. “The future for Texas’ border ports is limited only by the infrastructure to cross the type of numbers we will see in the future,” says Huron’s Edmeier.

To ensure adequate resource and infrastructure investment continues, TIPA and the Texas industry have been very active in lobbying agencies to provide additional resources for the ports. “We still have some growing to do in terms of filling the capacity, but we are light-years ahead of where we were years ago,” says Erickson.

To get a better handle on the future potential for Texas, TIPA requested that the Center for North American Studies at Texas A&M University extrapolate the state’s growth for the future. “They concluded that by 2023, Texas should have between 330,000 and half-a-million truckloads coming through its ports of entry,” reports Erickson.

Local and state agencies are also support development. “Within our cities there is a tremendous amount of work going on with the Texas Department of Transportation to expand roads to handle truck traffic,” says Erickson. “Our government and companies are investing in infrastructure and facilities.”

Industry has already taken steps with government to pave the way for even greater future possibilities. In 2013, the industry successfully pushed for the development of an overweight corridor to operate in South Texas. “This allows us to cross an overweight load within a designated corridor stretching through Mission,” says Erickson. “It’s similar to what Arizona has and is significant to allow for efficiency in shipping.”

While the future for Texas’ ports looks bright, it likely will not be at the expense of other already established import strongholds. “Texas will be an important state for imports,” says Robles. “The state holds a necessary location for the importation of product from Mexico. However, all entry points continue to be important. It is highly doubtful Texas will be able to provide specialized items attained in the California market, such as cactus pears, cactus leaf, epazote, huauzontle, xoconostle, habaneros, red fresnos, jícama, fresh garbanzo and others.”