An Of Economic Mexico

An Of Economic Mexico
October 1968
Technical Bulletin 179
An Economic
Study
of the
Winter Vegetable Export Industry
Of Northwest Mexico
Agricultural Experiment Station
The University of Arizona
TABLE OF CONTENTS
Page
LIST OF TABLES
LIST OF ILLUSTRATIONS
L INTRODUCTION
Objectives and Plan of the Report
IL BACKGROUND
ENVIRONMENT, RESOURCES,
AND INSTITUTIONS
2
3
5
9
-
11
Natural Environment
Climate
Soils
Productive Resources
Government Influence
Land
Land Tenure
Water
Government Policy
Water Price
Labor
Composition of the Agricultural Labor Force
Farm Wages
Credit
Producer's Associations
Public Information Services
Extension and Research
Marketing Information
Communications and Transportation
III. PRODUCTION AND SUPPLY OF MEXICAN
FRESH WINTER VEGETABLES
Farm Organization and Technology
Influence of United States Technology
Management
Size and Organization
Cropping Program
Production Costs
Harvesting and Packing Costs
Costs of Exportation and Marketing
United States Department of Agriculture
Inspection Service
Customs Brokers
Distributors
Distributor's Commissions
Mexican Export Duties
United States Import Duties
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12
12
12
12
12
13
13
14
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15
15
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19
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25
25
25
26
26
27
27
28
TABLE OF CONTENTS -- Continued
Page
Peppers
Cucumbers
Eggplant
Squash
Tomatoes
Cantaloups
Watermelons
Cost and Returns
Conclusion
IV. EXPORT DEMAND FOR MEXICAN
FRESH WINTER VEGETABLES
Data
Prices
Quantities
Other Data
Analysis of the Demand for Tomatoes
Analysis of the Demand for the Other Vegetables
Summary
V.
SUMMARY AND CONCLUSION
Summary
Environment and Resources
Production and Supply
Demand
Conclusion
APPENDIX
REFERENCES CITED
28
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29
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29
29
31
33
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34
34
34
37
41
42
42
42
42
43
43
44
55
LIST OF TABLES
Table
Value and Quantity of Fresh Vegetable Exports From
Mexico to the United States, 1959-63
2. Average Areas and Values for Major Cultivated Crops in the
State of Sinaloa for the Period 1963-64 to 1965-66 3. Timing of Operations for Eight Vegetables Grown in the
Culiacan Valley, Sinaloa, Mexico
- 4. Mexican Exportation Duties on Vegetables (1964) 5. Estimated Costs and Returns per Acre for Vegetables and
Other Major Crops, Sinaloa, Mexico
6. Regression Estimates from Single Equation
Model
Other Vegetables
Other Vegetables 7. Demand in the Total Market
8. Comparison of Estimates of Price Flexibility and
Elasticity Obtained From Two Methods
1.
-
-
2
7
11
24
28
30
39
40
41
APPENDIX TABLES
Page
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Imports of Vegetables from Mexico, 1936 -65 (pounds) Estimated Preharvest Cost of Producing One Acre of
Staked Tomatoes, Culiacan Valley
Estimated Preharvest Cost of Producing One Acre of
Ground Tomatoes, Culiacan Valley
Estimated Preharvest Cost of Producing One Acre of
Green Peppers, Culiacan Valley
Estimated Preharvest Cost of Producing One Acre of
Cantaloups, Culiacan Valley
Estimated Preharvest Cost of Producing One Acre of
Watermelon, Culiacan Valley
Estimated Preharvest Cost of Producing One Acre of
Cucumbers, Culiacan Valley
Estimated Preharvest Cost of Producing One Acre of
Summer Squash, Culiacan Valley
Estimated Preharvest Cost of Producing One Acre of
Green Beans, Culiacan Valley
Summary of Harvesting and Packing Costs for Fresh
Winter Vegetables, Culiacan Valley
Exportation Costs for Fresh Winter Vegetables,
Culiacan Valley
44
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45
46
47
48
49
50
51
52
53
54
ILLUSTRATIONS
Figure
1.
2.
Vegetable Exporting Areas of the West Coast of Mexico United States Imports of Seven Vegetables From Mexico,
1936 -1965
-
6
8
3
ACKNOWLEDGMENTS
This publication presents information on the historical development, institutional background,
and the economic structure of the
fresh winter vegetable export industry of the Northwest Coast of
Mexico. Economic influences on
the production, packing, and exporting of the more important
vegetable crops are examined and
future developments are projected.
The research reported here was
financed by a grant from the
Agricultural Development Coun-
project. Edgar Ariza and Robert
Gehring, former graduate research assistants, each spent several weeks in the study area and
collected and analyzed much of
the basic data, and helped to
translate references published in
Spanish.
Special thanks are due to the
Confederacion de Asociaciones
Agricolas del Estado de Sinaloa
(Confederation of Agricultural
Associations of the State of Sinaloa, henceforth abbreviated to
CAADES) and its member organizations of Culiacan, Sinaloa,
Mexico, and to the West Coast
of Mexico Vegetable Distributors
Association, Nogales, Arizona/
Sonora, for providing data and
cooperation. Finally, the assistance and cooperation of many
growers, packers, shippers, and
others from all phases of the
industry are gratefully acknowledged.
cil, Inc., New York, New York,
and by the Arizona Agricultural
Experiment Station. Our appreciation is extended to Dr. Clifton
R. Wharton, Jr., of the Agricultural Development Council, and
to Dr. Jimmye S. Hillman, Head,
Department of Agricultural Eco nomics, The University of Arizona, for their advice and assistance throughout the course of the
4
An Economic Study of the
Winter Vegetable Export Industry
Of Northwest Mexico
By
Robert S. Firch and Robert A. Young1
CHAPTE'R I
INTRODUCT'ION
Some exports of fresh vegetables to the United States from
Mexico are reported to have occurred about the beginning of this
century (Smith, 1947). A major
foothold in the North American
market was established during
World War II, and the late 1950's
saw the beginning of an era of
extremely rapid growth of exports of fresh winter vegetables
to the United States and Canada.
The value of fresh winter vegetable exports from Mexico had
reached 34 million dollars by 1960
(Cook, 1966) and was expected to
be more than double this figure
by the 1967-68 season.
Vegetables are exported from
Mexico primarily from November
through June, during the period
when the seasonal climatic advantage in Mexico is the greatest. Most of the crops. are planted
in the fall and harvested from
December to early June. The peak
export period is in February,
March, and April.
Vegetables are produced in
many areas in Mexico. However,
the present study was confined
to the Northwest Coast region,
and covers the states of Sinaloa
and Sonora. The vegetable pro-
'The authors are Associate Professors of Agricultural Economics, The University of Arizona,
Tucson.
5
10
u
N
I
T
E D
S
T
A
T
E S
TUCSON
NOGALES
NOGALES
S
O
N
O
R A
C H
I
H
U A
H U A
HERMOSILLO
E
0
GUAYMAS
-ZS'
Ó
I
O
NORTHWEST
\-\
MEXICO
A FRESH
VEGETABLE
PRODUCING DISTRICTS
o
----- INTERNATIONAL
--- -STATE
1
Pq `
o
9
BOUNDARY
BOUNDARY
ßÌ0
MILES
MA2ATl.ÁN
\
110'
119'
Figure
1.
Vegetable Exporting Areas of the West Coast of Mexico
duction of this area is concentrated in the coastal valleys near
the Gulf of California (Figure 1,
above) .
The most important vegetables2
produced for export in the study
area include tomatoes, cantaloups, watermelons, chilis (pep pers), eggplant, squash, peas,
string beans, and cucumbers (Table 1, page 7). The vegetables
are shipped into the United States
via refrigerated railcar or truck.
The primary port of entry is Nogales, Arizona, where the vege-
'The products studied here include melons as
well as vegetables. For the sake of brevity,
these commodities are referred to under the
generic term "vegetables" throughout this report.
6
Table L Value and Quantity of Fresh Vegetable Exports From
Mexico to the United States, 1959 -63.
Vegetable
Value
87,923
21,495
16,909
9,616
7,754
7,424
5,870
4,586
4,044
1,720
977
491
168,824
I
Percent
I
(Thousand
Dollars)
Tomatoes
Cantaloups
Strawberries
Peppers
Onions
Watermelons
Garlic
String Beans
Cucumbers
Peas
Eggplant
Squash
Totals
Quantity
Percent
I
I
(Metric
Tons)
52.1
12.7
10.0
5.7
4.6
4.4
3.5
2.7
2.4
1.0
0.6
0.3
100.0
206,320
60,635
39,452
58,156
132,351
19,771
15,532
26,508
10,181
4,669
2,865
1,078,876
46.6
19.1
5.6
3.7
5.4
12.3
1.8
1.4
2.5
0.9
0.4
0.3
100.0
= 2,204.6 pounds
Source: Mexican Fruit and Vegetable Exportation, UNPH Bulletin No. 7, Culiacan, Sinaloa,
Mexico, 1964, p. 4.
*1 metric ton
tables are inspected, marketed,
and forwarded to various destinations in the United States and
Canada.
The rapid growth in exports
(Figure 2, page 8) has been associated with a number of important changes in the region which
have affected the production of
vegetables. Large publicly financed irrigation projects have
been put into operation in the
area, adding greatly to the land
area adapted to vegetable production.
The capital investment and the
technology necessary for rapid
and efficient delivery of these
highly perishable products to
markets in the United States
became available. In particular,
better rail and highway transportation has been developed, and
communications between produc-
ing areas and markets were improved. These developments have
permitted the center of vegetable
production to shift southward to
areas where freezes are rare.
There has been a tendency for
production and distribution of the
produce to be concentrated into
fewer, but larger and more efficient enterprises. The great advances in agricultural and marketing technology developed in
the United States have been
quickly adopted by Mexican producers. American capital to finance these relatively risky ventures has been made available.
With these changes and developments, problems of managing the
seasonal and total supplies (and
thereby the prices) of various of
the commodities have arisen, and
new institutions and marketing
arrangements have been created
7
0
100
a 400
O
Z
tn
600
700
2.
50-51
51-52 52-53 53-54 54-55 55-56 56-57 57-58 58-59 59-60 60-61
1,
page 44.
1936 -1965
United States Imports of Seven Vegetables from Mexico,
Source: Appendix Table
Figure
41-42 42-43 43-44 44-45 45-46 46-47 47-48 48-49 49-50
1..1
36-37 37-38 38-39 39-40 40-41
61-62 62-63
63-64 64-65 60-66 66-67
the industry is important to Mexico and also will have impacts on
United States vegetable producers, distributors, transportation
to cope with such situations.
The vegetable export industry
is an important source of income,
employment, and export earnings
for Mexico. The future course of
firms, and consumers.
Objectives and Plan of the Report
The purpose of this report is to
present information which will
assist affected individuals and
organizations in both nations in
understanding these effects. We
approach this objective by presenting a description and an analysis of the economic relationships
important in the production,
packing, exportation, and distribution of fresh winter vegetables
from the Northwest Coast of Mexico, and by indicating the probable future impact of changes in
these factors on the industry.
The remainder of the report is
organized as follows:
Chapter II presents background
information on the vegetable in-
dustry of Northwest Mexico concentrating on the environment,
resources, and the institutional
framework within which it functions.
Chapter III covers the factors
influencing the supply of vegetables including technology and
procedures of production, packing, and export.
Chapter IV presents a statistical analysis of the United States
demand for winter vegetables.
In Chapter V a summary of the
fiindings is presented, and inferences concerning future trends
are drawn.
9
10
CHAPTER II
BACKGROUND -- ENVIRONMENT,
RESOURCES, AND INSTITUTIONS
Most of the employment and
economic activity in Mexico's
Northwest Coast region are in the
primary industries, agriculture
and to a lesser extent, commercial fisheries. Though vegetables
are the most significant export
crops, Sinaloa and Sonora are important exporters of cotton, sugar
and recently, wheat. The vegetable industry, though small in
terms of area cultivated is a relatively important employer of labor in the region. Tomatoes are
the most important single source
of income among agricultural
crops in Sinaloa (Table 2, see
below)
.
Table 2. Average Areas and Values for Major Cultivated Crops in
the State of Sinaloa for the Period 1963-64 to 1965 -66.
Crop
Area
I
Percent
I
Rank
I
Value
Percent
I
(Hectares) *
10,602
Tomatoes
60,199
Cotton
29,889
Sugar Cane
51,850
Wheat
31,597
Rice
37,583
Safflower
22,399
Sorghum
Edible Dry Beans 21,612
9,328
Soybeans
12,059
Corn
Sesame
8,687
Chick Peas
1,754
35,953
Other Crops
Totals
333,512
*1 Hectare
11.
Peso
=
=
Rank
f
(Million
Pesos) t
3.2
18.0
9.0
15.5
9.5
11.3
6.7
6.5
2.8
3.6
2.6
9
1
5
2
4
3
6
7
10
8
11
12
.5
10.8
100.0
468,376
308,346
157,194
139,104
72,165
69,567
45,126
36,107
24,847
19,261
18,556
2,767
166,415
1,527,831
30.7
20.2
10.3
9.1
4.7
4.6
3.0
2.4
1.6
1.3
1.2
.2
1
2
3
4
5
6
7
8
9
10
11
12
10.7
100.0
2.471 acres
12.5 U. S. cents
Source: Confederation de Asociaciones Agricolas del Estado de Sinaloa, La Agricultura Sinaloense,
Base Fundamental Para la Industrialization, Culiacan, Sinaloa, Mexico, April 1967.
11
Natural Environment
Climate
The valleys in the study area
receive 15 to 25 inches of rain annually, which occurs mainly in
the summer an dearly fall. June
July, August, and October are the
rainy months. Irrigation is required in order to carry the crops
through the dry period.
In the main production area on
the West Coast the annual temperature usually averages about
75 to 80 degrees Fahrenheit. The
annual extreme temperatures
range from a maximum of about
110 degrees and a minimum of
about 40 degrees. During the
period of highest temperatures in
the late spring and early summer
months it is considered too hot
for vegetables to grow well. During the fall, winter, and early
spring months, when vegetables
are produced and harvested, the
average temperature is from 65
to 70 degrees. The daily maximum temperature varies from 80
to 90 degrees. The daily minimum
temperature is between 50 and 60
degrees.
Frosts are quite rare in most
of these river valleys, but in the
northernmost portion of the region, such as in the Mayo River
Valley and the Guaymas area,
frosts are more frequent, making
vegetable production somewhat
more hazardous. The subtropical
climate makes the effective control of insects and diseases both
expensive and difficult. Insecticides and fungicides must be
applied frequently (Cook, 1966,
P. 1)-
Soils
The soils vary from valley to
valley, but are predominantly
heavy alluvial types (CAADES,
1964a, p. 43). Nitrogen and phosphorous are the only nutrient
elements to which significant production response is observed.
These heavy soils have advantages of better retention of moisture, less leaching, and consequently allow efficient use of fertilizers. On the other hand, such
soils make both machinery and
labor operations difficult, facilitate development of diseases, and
require special breaking of the
surface after irrigation to facilitate air movement.
Productive Resources
-
transportation, and medical services as well as operating certain marketing, credit, and technical assistance programs. The
large irrigation projects of the
West Coast are a direct result of
this government activity.
The influence of the government in determining the institutional framework within which
Government Influence
Though Mexico is a federal republic comprised of independent
states, the central government
takes a major role in economic
and development policy. The government has undertaken programs of investment in social
overhead, including education,
12
the vegetable industry has to
operate will be brought out
throughout the subsequent discussion. There is a very close
association between the farmers'
groups and government agencies.
The National Union of Vegetable
Growers, for example, collects
some of the taxes of the State of
Sinaloa at the port of Nogales,
Sonora, and the government collects some fees for the Union at
Culiacan.
There are, however, many
fields in which government activity is limited. In the provision of
some public services, such as
marketing information, the government not only lacks the
agency for this, purpose, but relies
on data collected by associations
of farmers and the irrigation districts. Public support for research
in agriculture and public extension services for the farmers have
only recently been initiated.
Land
The Federal Government of
Mexico has pursued a vigorous
policy of irrigation development
in Sinaloa and Sonora during the
past two decades. A recent pro-
jection indicates that the total
area of irrigated land will reach
a level in excess of 1.5 million
acres in Sinaloa alone by 1975 -76
(CAADES, 1968). Since vegetables are the most profitable crops
in the area (as will be shown in
the following chapter), they can
easily bid land away from other
crops. Land resources, therefore,
are not considered to be a constraining factor on future development of the industry.
Land Tenure. After the Mexican Revolution of 1917, redistribution of the land became one of
the first reform programs to be
adopted. The hacienda system
was ended and the private ownership of the land was restricted
by law to 100 hectares (247
acres). The rest of the expropriated haciendas were distributed among the peons in a collective form called the "ejido."
(An ejido is an agrarian community consisting of 20 or more
eligible individuals to whom the
government has given limited
ownership of land. The land may
be owned and worked either individually or collectively.) Nearly
half of the irrigated land in Sonora and Sinaloa is operated under the ejido system at present.
The production of vegetables
for export on the Northwest
Coast of Mexico takes place
almost exclusively on private
farms. Certain characteristics of
the vegetable industry inhibit the
entry of ejidatarios.
First, the high degree of technical skills necessary for the production and marketing of vegetables is not often found among
ejidatarios.
Second, their capital resources
are not sufficient to operate on
an efficient scale, nor to absorb
the price and income fluctuations
characteristic of the vegetable
market.
Third, their credit capacity is
limited since neither the government credit agency for the ejidos
nor any of the commercial banks
lend money to finance vegetable
production.
There is no active land market,
since very little private land is
ever offered for sale. (Members of
ejidos are not permitted to sell
or rent their land.) The price of
one hectare of land runs between
13
three and six thousand pesos
($250 to $500 per acre), according to the distance from the main
transportation arteries, the quality of the land, and other factors.
Renting land is not a common
practice. Land lease contracts are
customarily limited to one year's
duration. The rent paid for a
hectare of land for vegetable production runs from 500 to 1,000
pesos a year ($40 to $80 per
acre), depending on the location
of the plot, the quality of the
land, and who pays the water
charges.
Water
Extensive areas have been
brought into cultivation along
the coast via public investment
in water development, but there
are still large areas of land and
available water that could result
in expansion of the existing irrigation districts or opening of new
ones.
Government Policy. The government policy backing the development of irrigation projects
rests on the high priority that the
Mexican Government places on
the self-sufficiency of the country
in agricultural products, on the
development of new land for distribution to landless farmers, and
on the improvement of the diet
of the population (Fernandez y
Acosta, 1961, pp. 75 -77). The government does not expect direct
recovery of the investment in irrigation projects, but anticipates
indirect benefits from increasing
agricultural production, from new
jobs for a growing population,
and from external economies
which will stimulate new invest-
gated by public development are
supplied with an abundance of
water at minimal expense. The
only costs to the farmer are the
quota paid for maintenance of
the irrigation system (about $8
a year per hectare) and the quota
of the same value for the use of
the water. These quotas are in
effect fixed costs for the farmers
since their payments are not related to quantity of water delivered. The farmers receive other
services besides the water supply
from irrigation districts, such as
advice on proper irrigation practices, meteorological information,
soil analysis, and fertilizer and
soil conservation recommendations.
In the Guaymas area where
the water is pumped from underground, no government subsidy
exists and the cost of water for
farmers is high. For vegetable
growers in Guaymas this disadvantage is partially offset by the
savings in lower transportation
cost to the border.
Salinity of the water is not a
particular problem in the districts
utilizing water diverted from rivers, but this factor has become
very acute around Guaymas
where underground pumped water is used. Some areas have been
forced out of cultivation from the
intrusion of sea water on the
groundwater supply (CAADES,
1964a, p. 46).
Salinity of the soil has become
a problem in recent years, due to
poor drainage and excessive irrigation. The salinity problem is
particularly acute in the area of
Los Mochis, Sinaloa. The government has initiated a program of
land reclamation by improving
the drainage system and regulat-
ment.
Water Price. The lands irri14
ing the irrigation practices of the
farmers very closely. Preventive
practices are being undertaken in
the other districts to avoid this
problem.
Labor
ral Labor Force. Although most
of the agricultural labor force is
comprised of males, the vegetable
industry utilizes female workers
extensively. The vegetable growers hire men for heavy work such
as land preparation, planting and
transplanting, irrigation, harvesting, and shipping.
Women are employed for many
of the activities that require more
dexterity than strength, such as
knitting the vines to the trellises
in the pole tomato fields, or
packing and selecting in the packing sheds. Since these activities
are among the most labor consuming operations, women account for about half of the total
labor used.
Women are especially preferred
for many tasks in the packinghouses, where the most skillful
achieve salaries of US $10 a day,
a level hardly ever reached by
men. The vegetable industry also
uses many teenage boys for light
work, because they usually accept lower salaries since they are
not subject to the minimum wage
Agricultural workers can be
classified into three categories.
One group is made up of highland peasants who work on farms
in the valleys during the late
winter and early spring, when the
demands for labor in the sugarcane, the vegetable, and the tourist industries are at their peaks
(CAADES, 1964a, pp. 58 -60). The
second group is comprised of ejidatarios and small farmers who
supplement their income by employment on larger neighboring
farms. The third group consists
of migrant farm workers who
move according to the needs of
different regions and crops. In
periods of slack demand they return to their families in the congested slums of the population
centers. The former "Bracero program" in the United States drew
law.
mostly on this third group.
Farm Wages. The income of
The pattern of agricultural activity in the region requires a agricultural workers is difficult
basic supply of labor rather con- to specify because of the seasontinuously throughout the year, ality of the working period, the
since different crops have differ- outside jobs maintained, the prient peaks in their labor require- vate plots owned by some workments. The cotton harvest season, ers, the product consumed by the
for example, takes place in the worker and his family, and fringe
fall, while the vegetable harvest- benefits received by the workers
ing season occurs in the spring. (CAADES, 1964a, pp. 73 -77) . The
However, the peak demand for abundance of underemployed and
labor in the sugar cane industry unemployed workers keeps the
coincides with that of the vege- wage rates close to the legal mintable industry. It is thus possible imum wage. For the vegetable infor part of the agricultural labor dustry, this salary in 1965 was
force to stay in the region, shift- 16.5 pesos a day ($1.32) and
115.50 pesos for a 48 -hour week
ing from one crop to another.
Composition of the Agricultu- ($9.25).
15
This minimum salary is most
commonly received by the farm
workers on the vegetable farms.
Higher wages are paid on the
basis of experience of skill and
when a piecework rate is applied.
Due to the seasonal character of
the work and the consequent
migratory work force, only a
small percentage have been organized into unions.
Credit
Vegetable production requires
relatively large financial commitments. Agricultural enterprises in
Mexico have access to both private and public credit sources.
However, none of the formal
banking institutions will lend
money to finance vegetable production, due to the high production risks and the absence of government insurance to banks for
vegetable production loans.
The vegetable grower must
either finance his operations internally or obtain funds from private sources. The only private
lenders with the financial capacity and willingness to make these
loans are the vegetable distributing firms mostly headquartered
at Nogales, Arizona (Cook,
p. 2).
1966,
The growers and the distributors enter into contracts in which
the distributors supply the funds
to finance the production of the
vegetables, and the grower in return agrees to utilize that distributor as his sales agent in the
United States. The distributor
may share in the profits and take
an active part in production management, such as by providing
expert advice on fertilizer application and on disease and pest
control.
In this agreement no explicit
interest rates are charged for the
loan. The dealer's return on the
loan is achieved through his commission for the sale of the product, and from his share in the
profits of the grower. The commission ranges from 6 to 12 percent of the price f.o.b. in Nogales, Arizona, and the participation in the profits was as high as
50 percent in earlier years and
between 25 and 33 percent in the
more recent seasons. There has
been the opinion among the producers that such arrangements
are undesirable, but no alternatives are available for those lacking their own capital.
Producer's Associations
All of the vegetable growers of
the West Coast are members of
the Union Nacional de Productores de Hortalizas (UNPH, National Union of Vegetable Growers). Although its headquarters
are in Culiacan, Sinaloa, its mem-
out some agreements on controlling export quantities and setting
quality standards with the Mexican Government in order to protect its members from extreme
price fluctuations.
In each one of the municipalibership comes from all vegetable - ties (counties) of the West Coast,
exporting areas in the country. and principally in the irrigation
The Union has been able to work districts, the farmers have formed
16
local growers' associations. In
Culiacan, for example, the Aso ciacion de Agricultores del Rio
Culiacan (AARC) is composed of
all private farmers and some of
the ejidatarios. The local associations of farmers in Sinaloa have
associated to form the Confederacion de Asociaciones Agricolas
del Estado de Sinaloa (CAADES),
which is also based in Culiacan.
In general, UNPH works at the
national level and CAADES at
the state level, although their
activities often overlap. CAADES
and UNPH both have aggressive
programs for production and marketing. Their members pay dues
to maintain common offices in
Culiacan and in Nogales.
These organizations collect information on acreage and production, translate and distribute
technical publications, support research and other interests of the
growers, and act as the producers'
representative with the government. The vegetable growers in
less important areas elsewhere in
Mexico usually conform to the
policies adopted by CAADES and
UNPH.
Public Information Services
Extension and Research
The government is promoting
improved agricultural production
technology. The Servicio Cooperativo de Extension Agricola was
started in 1963 as a cooperative
program supported by state, government, and association funds.
The extension service has been
especially active in the ejidos,
where the need for improvement
is greatest. The general policy is
to emphasize credit to the private
farmers and technological advice
to the ejidos.
Assistance on technical problems is also available from other
public agencies, such as the Department of Water Resources, on
soils and water management and
from farmers' associations on
fertilizer practices. Most of the
vegetable growers, however, use
the services of United States based laboratories to make their
decisions on fertilizer use. The
17
distributors usually have an
American technician that visits
the fields of the growers they
finance and makes recommendations concerning the crop.
A number of public and private
crop research stations are located
in the region. The most notable
is that supported by the Rockefeller Foundation in the Yaqui
River Valley in Sonora which is
famed for its development of
wheat varieties. Research on vegetables is negligible. The farmers
depend mostly on progress in the
United States for improvements.
Some pest and disease problems
could be alleviated by research
to develop locally adapted varieties. Those now used were selected for United States conditions.
There are other deficiencies in
technological information for the
farmer. Meteorological information is inadequate. Records of
temperatures and rainfall were
started only with the irrigation
districts. No weather forecasts
are made. Vegetable growers, for
whom this information is especially important, have to rely on
information from southern Arizona to form their own weather
by trade associations of both pro-
predictions.
Marketing Information. Mar keting information is essential
for both the dealer and the producer and it is an important
factor in determining the efficiency of resource use. The dealer
needs information about the market in order to sell the product,
and the producer needs market
information as a basis for his
decisions on what, how, and how
much to produce and when to
harvest.
For a private firm, the market
information collected will pay
when benefits derived are greater
than the costs. In the United
States the generation and transmission of agricultural marketing
information has been largely a
function of public agencies. The
public generation and dissemination of marketing information
seems to be one of the more obvious examples of public investment that is justified because the
social product is much greater
than its cost while it is impossible
for a private firm to capture
enough of the social product to
allow it to offer the same services.
No Mexican Government agency performs the function of collecting and rapidly disseminating
market news. Although the Department of Statistics keeps a
record of shipments and values,
the reports are published only
annually.
Market information for Mexican vegetables is compiled mostly
-
18
ducers (agricultural associations
at the local level, the confederation of these associations in the
State of Sinaloa, CAADES, and
the National Union of Vegetable
Growers), distributors (West
Mexico Vegetable Distributors
Association), and by some United
States Government agencies (the
Departments of Agriculture and
Commerce) The gathering and
processing of market information
by the agricultural associations
and their confederation is a relatively new function of these
organizations.
One of the most important
agencies of the market information system for the Mexican vegetable industry is the West Mexico
Vegetable Distributors Association. This association disseminates to its members (distributors) information generated by
the United States Department of
Agriculture on vegetable production, shipments, and prices. Also
information on the destination of
the vegetables shipped from United States producing areas and
imported from Mexico the previous day is distributed. The information released by the associations of vegetable distributors is
used mostly by their members.
The joint office of CAADES and
UNPH, at Nogales, Sonora, is the
main source of market information for Mexico. The information
includes daily shipments and
prices paid for each of the vegetables and each of the sizes and
types. This office keeps a very
accurate record of the product,
its origin, the transportation system used, and other important
details of the industry.
Local daily newspapers in all
.
producing areas give primary im- their distributor at Nogales are
portance to the vegetable market also an important channel of
news. Radio communications with information for the growers.
Communications and Transportation
An exchange economy of the
type found in the irrigated areas
of the West Coast depends on the
existence of a transportation system to facilitate the movement of
the products and resources. There
are two main arteries of transportation that run along the West
Coast. One is the International
Highway from Nogales, passing
through Hermosillo, Guaymas,
Ciudad Obregon, Navajoa, Los
Mochis, Guasave, Culiacan, Ma-.
zatlan, and continuing southward
to Guadalajara and Mexico City.
The other is the railroad, which
serves the same towns as the
highway. Connecting roads run
from the highway to smaller
population centers off the main
artery.
For the vegetable industry in
particular these two arteries are
of major importance since they
connect the producing centers
with the importers at Nogales
and with the domestic market
centers to the south. Only two
lines directly connect the region
with the eastern part of the country, a railroad line from Los Mochis to Chihuahua, and a highway from Mazatlan to Torreon.
The development of the high-
way system was coincident with
the introduction of the irrigation
projects over a decade ago. The
irrigation districts are now
crossed by an extensive network
of paved and secondary roads.
The railroad also has sidings for
the packinghouses located within
the main producing centers. From
Culiacan, the most distant producing center to Nogales is 605
miles, and from Guaymas, the
nearest, 259 miles.
Culiacan is the only center with
regular airline service, although
short runways for smaller planes
are found in the other important
centers. Transportation of vegetables by air has been tested but
so far it has not been economically feasible.
The need for close contact with
the market at Nogales; has induced the growers to keep a large
network of radio communications
with their respective dealers in
Nogales, the growers' associations in their respective towns,
and among themselves. Nearly
every packinghouse has its own
radio transmitter and telephone
communications, with units installed in automobiles as the
latest innovation.
19
20
CHAPTER III
PRODUCTION AND SUPPLY OF
MEXICAN FRESH WINTER VEGETABLES
interviews with firms in the industry and their suppliers (Ariza,
1966; Gehring, 1968).
Eighteen producers and 17
packinghouse operators were interviewed, and custom rates for
land preparation operations were
obtained from three contractors
in May 1966. Information on procedures and costs of exporting
vegetables was obtained from
government agencies, grower and
distributor organizations, and interviews with individuals in Nogales, Sonora, and Arizona.
All data, unless otherwise
noted, are expressed in units most
commonly used in the United
States. Thus, land areas have
been converted to acres, monetary values to United States dollars (using the official exchange
rate), and weights to pounds.
Aspects of production and supply are considered in this chapter. On the basis of field trips
into the study area, detailed descriptions were developed of the
procedures of growing, packing,
and exporting vegetables.
Costs and returns estimates
were developed for the eight most
important vegetables tomatoes
(for both staked and ground growing techniques), cantaloups,
green peppers, watermelons, cu-
-
cumbers, eggplants, summer
squash, and green beans -for the
most important of the vegetable
producing areas, the Culiacan
Valley, Sinaloa, Mexico. Some 80
percent of the tomatoes and substantial portions of the other
crops are shipped from Culiacan.
The data presented here were obtained from CAADES and from
Farm Organization and Technology
developed earlier in the United
States. The original transmission
of production technology was by
managers who acquired know how in the United States before
migrating to the West Coast of
Mexico. Today this information
is mainly acquired from United
Influence of
United States
Technology
The production and marketing
system of the vegetable export
industry of the West Coast appears to be quite similar to that
21
States technicians and consultants and from publications of universities in the United States and
the Department of Agriculture.
Many of these publications are
translated and published by the
growers' association.
Many of those at the management level in the vegetable industry have traveled to United States
producing areas or have received
advanced training in the United
States. Production technology for
vegetables is comparable to that
used in the United States even
though the relative prices of capital and labor are quite different
in the two countries.
Production technology has undergone a rapid shift in the most
important crop, tomatoes, over
the past decade or so. Tomatoes
had been typically grown "on the
ground" and picked while they
were still green. The improvements in transportation facilities
permitted harvest of tomatoes at
a more mature stage, resulting in
a more desirable consumer prod-
ally live in the city and have a
resident foreman supervising the
operations. During the export
season, the owners make daily
trips to their farms to supervise
the work, but many remain in the
city the rest of the year.
Each farmer normally has two
or three permanent workers, but
much of the labor force is hired
only during the harvesting season. The permanent workers usually have their homes and live
with their families on the property, but the temporary workers
often live in provisional shelters
in poor conditions.
Size and. Organization
Vegetable farms are as a rule
about 200 -250 acres and very
rarely under 120 acres. The larger
farms are, legally speaking, several individual plots jointly oper-
ated. Vegetable production occupies only one -third or one- fourth
of the total cropped area on the
larger farms. Most grow several
vegetables in order to spread the
risks. Generally there is specialization in either ground or staked
tomatoes; rarely are both found
on the same farm.
Farms larger than 200 acres
usually have their own packinghouses. Diversification in vegetable production helps to maintain
the packinghouses in continuous
operation. The smaller growers
send their products to be selected,
graded and packed at the packinghouses of larger producers.
When growers are large enough,
they usually have their own
trademarks, providing some product differentiation.
In the Valley of Culiacan there
were about 62 exporters of tomatoes during the 1962 -63 season;
uct.
Quality problems are more
likely from ground tomatoes
picked at the pink stage. As a result, producers have switched to
growing tomatoes with the vines
trained to trellises made of poles
or stakes connected by heavy
twine. While a better quality
"vine -ripe" product results from
staked tomato production, this is
a much more intensive process
than ground tomatoes. It requires
considerable labor in establishing
and removing the trellises and in
training the vines.
Management
Most of the farms are administered by their owners who usu22
of them exported more than
100,000 boxes. Only 1 out of the
top 20 and 5 out of the other 42
specialized exclusively in toma20
is possible to grow crops during
the entire year. The cycle of vegtables lasts only five months, but
the vegetable land tends to retoes; the rest also shipped other main idle for a large part of the
vegetables such as peppers, peas, year. This probably occurs becantaloups, and cucumbers.
cause the more profitable alternative crops, such as cotton or
rice, require a longer growing
Cropping Program
season than allowed by the vegeSince the land is under irriga- table season if they are to be
tion and the winters are mild, it grown on the same land.
Production Costs
Typical production schedules,
techniques, and input-output relations were obtained from the
field survey and from secondary
sources. Tables of operations and
unit cost budgets were developed
for the eight vegetable crops.
Table 3 (page 24), shows the
usual ranges of planting and harvesting dates for these crops. The
unit cost budgets are in Appendix
Tables 2 through 10 (pages 45
to 53).
Since it was not possible to
obtain satisfactory estimates of
machinery and equipment costs
in Mexico, Arizona data (Young,
Martin, and Shaw, 1968) were adjusted to adapt them to conditions in Sinaloa. It was assumed
that machinery performance rates
are similar in the two areas.
The additional cost of transportation and Mexican import
duties was assumed to add 25 percent to the original cost of all
machinery and equipment items.
Fixed cost estimates were based
on the assumption that annual
use was 600 hours, a somewhat
lower figure than that used in
Arizona. Finally, the interest rate
23
was adjusted to 12 percent, the
rate commonly used in Mexico,
as compared to 6 percent in Arizona.
The results were compared with
custom rates to check four of the
operations of land preparation.
The calculated rates for plowing
and subsoiling were nearly equal
to the custom rates. The calculated rates for leveling and harrowing were less than the custom
rates for these operations.
Labor costs were determined
by interview. A rate of 30 pesos
($2.40) per eight -hour day was
used for all tractor labor and
22.75 pesos ($1.82) the minimum
wage for other agricultural labor.
Some farmers indicated paying
slightly more, but the figures
quoted above were the most common rates. Productivity of hand
labor and the amount and price
of materials used were determined from the interviews.
The budgets represent typical
farm situations rather than the
average of the interviews, since
the average in some cases was
distorted by one or more exceptional figures.
Days Between
Planting and
Harvest
Duration of
Harvest (Days)
Direct Planting or
Transplanting
Beginning of
Harvest
End of Harvest
Seedbed Planting
I
Apr. 15May 20
May 5-
July 10
1-
10
June 10
125
21
100
90
1-
Feb.
1
1
Dec. 10-
Aug.
Feb.
Dec.
Apr.
Mar.
20-
July 20Jan. 1
Sept.
Aug.
1
10-
70
35
30
30
Apr.
1
Jan. 15-
140
June 30
May 1-
1
70
Jan. 10June 1
June
Apr. 1-
Dec. 10May 1
1-
90
75
Apr. 1May 1
Mar. 15
Jan.
Oct. 15Dec. 31
20
1-
Oct.
Dec.
Dec.
Mar.
Nov. 10-
Jan. 10
Sept.
Sept. 10Nov. 25
Sept.
June-
June-
I
Eggplant
Nov.
I
bers
Cucum-
June-
Oct. 1-
I
Watermelons
Feb. 20
Aug. 20Jan. 10
June-
Nov.
J
Peppers
June-
I
Cantaloups
June-
Tomatoes
f
60
50
35
70
Dec. 25Apr. 1
Feb. 10Apr. 1
June Sept.
Sept. 10Dec. 15
Nov. 20Feb. 25
I
Green
Beans
Oct. 20Jan. 20
Dec. 10Feb. 1
Oct.
June-
Summer
Squash
Timing of Operations for Eight Vegetables Grown in the Culiacan Valley, Sinaloa, Mexico.
Operation
3.
Land Preparation
Table
I
Harvesting and Packing Costs
Seventeen packinghouse operators were interviewed to determine the cost per export box -for
packing the eight vegetables. Vhe
operations performed, the number of people required for each
operation, and the wage rate were
determined from the interviews.
The capacity of the packinghouse
stated for each type of vegetable
represents a medium size plant.
To determine the charge per
export box for transportation
from field to packing shed, a rate
for a rented truck was used. The
cost was divided by the number
of export -box equivalents a truck
can carry. For example, for tomatoes, a rented truck with a capacity of 600 field boxes costs 200
pesos per load, including a driver
and crew.
For packing labor, the total
wage paid for an operation was
divided by the number of boxes
packed to arrive at a per -box
figure, unless piecework wages
were paid. A 10 -hour day was
assumed.
For example, 10 men are required to carry the field boxes of
tomatoes from the unloading
dock and dump them onto the
packinghouse production lines.
They receive 3 pesos per hour for
a 10 -hour day. Multiplying 10
men times 3 pesos per hour per
man, times 10 hours per day, divided by 2,400 boxes per day,
gives .12 pesos per box.
Costs of materials and overhead charges were taken from
estimates made by the packinghouse owners. (See Appendix
Table 11, page 54.)
Costs of Exportation and Marketing
The availability of refrigerated livery of the product to the distrucks and better roads led to tributors in Nogales, Arizona.
rapid increase in the use of trucks
for transporting vegetables. United States Department
Trucks can reach Nogales from Of Agriculture
Culiacan in about 18 hours, com-
Inspection Service
pared to about 40 hours for railroad service. The railroad has
moved to improve its service with
special trains and piggyback
trailers which reach the border
in about the same elapsed time
as trucks.
The process of crossing the
border at Nogales involves the
following steps: United States
Government inspection, clearance
for export by Mexican authorities, clearance for import by
United States authorities, and de-
All shipments of vegetables and
melons entering the United States
from the West Coast of Mexico
are required to pass certain specifications set by the United States
Department of Agriculture. The
inspection is carried out in an
area five miles south of the border in the outskirts of Nogales,
Sonora, Mexico.
A car is checked by two inspectors. One is in charge of preventing the passing of diseases. The
25
other is in charge of making the
quality classification of the product according to the uniformity
of the fruit, its coloring, size, etc.
The United States Department of
Agriculture inspection certificate
given by the inspectors specifies,
among other information, the
percentage of containers con forming to the United States
grade and number of containers
in the car.
Trailers may cross the border
as soon as the permits are issued,
but rail cars must wait until the
afternoon hours to cross. This
flexibility in border crossing is
one of the advantages that some
producers find in sending their
product by trailer.
The inspection is paid for by
the car, at a rate of $4 per carload. The labor involved in the
loading and unloading of the car
for inspection is paid by the Mexican customs brokers since they
are the most interested in speeding the operation. Sales and
claims by buyers and sellers are
based almost entirely on the inspection certificates. The Mexican Customs House does not permit the export of any horticultural product which is not accompanied by this certificate.
ping procedures in the United
States.
The Mexican customs broker
hires and pays the labor needed
in the loading and unloading during the inspection, and sometimes
he pays certain fees and duties
that later are passed to the shipper or dealer. United States and
Mexican brokers work closely together in facilitating the movement of the produce across the
border. When they have all the
papers cleared, they order the
carlot across.
After the crossing, the produce
is unloaded in the distributor's
warehouse where it awaits reshipment to the buyer. The fees
for the Mexican broker are $.32
per ton and for the United States
broker about $12.50 per car on
all vegetables.
Distributors
The Mexican growers have financial and marketing arrangements with the United States distributing firms, most of which
have their headquarters in Nogales, Arizona. These firms (often
called dealers) receive the product from the grower after it
passes the border requirements,
and they in turn sell the product
to buyers from the United States
and Canada. Most growers have
the same broker and the same
distributor handle all their produce, and seldom change.
Transportation regulations of
the United States do not permit
Mexican trucks to travel within
the United States. Consequently,
the product has to be transferred
from one truck to the other at the
distributor's warehouse. Truck
cargoes are usually sold f.o.b.
Nogales, Arizona, with the duty,
Customs Brokers
There are two customs brokers
involved in the passage of the
shipment across the border: the
Mexican broker who takes charge
of the exportation procedures,
and the United States broker who
takes charge of the importation.
These customs brokers are intermediaries between the Mexican
producer and the distributor who
will handle the selling and ship26
crossing and other charges paid
by the Mexican producer, directly
or through the Mexican broker.
The distributors have their own
warehouses where the trucks are
unloaded. Sales may be made to
buyers' agents in Nogales or by
telephone. The distributors then
make the shipping arrangements
according to the wishes of the
buyer. Usually, the product remains in the warehouse only a
few hours before it is reloaded for
shipment to a buyer. The unloading, storage, and reloading is paid
for by the distributor.
For vegetables sent by railroad,
the sale is usually made before
the product leaves the producing
areas, so that unloading and reloading are not necessary at Nogales. The shipment may then
continue directly to the buyer. In
this case, the Nogales distributor
invoices the buyer for the price
of the product f.o.b. Mexican
shipping point plus the United
States import duty, plus the distributor's commission and crossing charges.
Since the sale operation is carried out between the distributor
and the buyer, the distributor
takes care of the accounting rec-
ord. He may pay for all the expenses of duties, taxes, customs
broker's commission, and for
transportation. After he deducts
his own expenses and commission, the remainder is sent to the
grower.
Distributor's Commissions. The
distributor's sales commission is
charged as a percentage of the
price obtained or on a fixed rate
per container. For railroad ship-
ments, including green tomatoes,
cantaloups, peas, and peppers, the
firms work on a regular commission basis at the usual charge of
10 to 15 cents per container, plus
an additional flat charge of $60
per carload of 608 boxes. Most of
the truck shipments, and therefore most of the exported ripe
tomatoes, peppers, and cucumbers, are charged on a percentage
of the price f.o.b. Nogales, Arizona, and this ranges from 6 to
12 percent.
Larger producers have better
arrangements and may enjoy
commissions as low as 8 percent.
Some growers are important
shareholders in a distributing
company. Most of the small growers consign their product to one
of the distributing companies
located at the border.
Mexican Export Duties
The Mexican Government im- government during exportation.
poses export duties in addition to
Table 4 (page 28) gives the
state production taxes on exported vegetables. The export charges for each vegetable. Both
duties are large enough to cover specific and ad valorem rates are
only the services provided by the applied.
27
Table 4. Mexican Exportation Duties on Vegetables (1964).
Vegetable
Specific Rate
per Pound
I
Ad valorem
Official Price
per Pound*
(Percent)
Tomatoes
Cantaloups
Watermelons
Peppers
Cucumbers
Peas
Eggplant
Squash
2.0
7.0
7.0
8.0
10.0
10.0
.00036
Exempted
Exempted
Exempted
Exempted
Exempted
Exempted
Exempted
Exempted
Exempted
I
Total
per Pound
(Dollars)
.044
.073
.036
.024
.029
.027
-
.00123
.00508
.00254
.00189
.00290
.00272
-
*The `official price" is arbitrarily set by the Government of Mexico in order to calculate export
duties. It is nearly always below the actual market price for the product.
Source: CAADES, Departmento de Estudios Economia y Estadistica, Unpublished data.
United States Import Duties
The United States tariffs on
Mexican vegetables normally are
the general rates established by
the Tariff Act of 1930 for all foreign countries, with the exception
of Cuba (U.S. Tariff Commission,
1961, p. 7). A special agreement
reduced the duties on Mexican
vegetables during the Second
World War, but this agreement
was ended in January 1, 1951, and
the general duties were again
applied.
are shown in the following tabulation:
Imports entered in Rate of duty
January, February,
and December
2.2v per lb.
March -June and
SeptemberNovember
3.0¢ per lb.
July to August
1.5¢ per lb.
Eggplant
The general rate of 1.1 cents
per pound is used for eggplant in
-March and December,
The general rate of duty is 2.5 January
and
the
general rate is 1.5 cents
cents per pound for peppers in per pound
April -November
their natural state. Based on the (U.S. Tariff inCommission,
1961,
value of imports in 1960, this was p. 197).
equivalent to 24.1 percent ad
valorem (U.S. Tariff Commission,
Peppers
Squash
1961, p. 210) .
The general rate is 1.1 cents
per pound throughout the entire
The applicable rates of duty for year (U.S. Tariff Commission,
cucumbers in their natural state 1961, p. 223).
Cucumbers
28
Tomatoes
The tariff rate for fresh tomatoes varies according to the time
of the importation, with the highest rates for the months of heavy
United States domestic production. The duties for Mexican tomatoes, either green or ripe, are
shown below (U.S. Tariff Com-
not especially provided for" (U.S.
Tariff Commission, 1961, p. 39) .
Watermelons
Watermelons are also not specially provided for in the Tariff
Act of 1930, but receive a reduced
general rate of duty of 20 percent
ad valorem, by virtue of the obligation under Article 1 of the Genmission, 1961, p. 150) :
Agreement on Tariffs and
Imports entered in Rate of duty eral
Trade
not to increase the absoSeptember to
lute
margin
existing on April 10,
November 14
2.1st per lb.
1947 (U.S. Tariff Commission,
November 15 to
p. 58).
February 28 (29) 1.50 per lb. 1961,
The
vegetable export industry
March 1 to July 14 2.1I per lb. is an important
source of foreign
July 15 to August 31 1.5¢ per lb. exchange for Mexico,
but also a
source of revenue for the United
Cantaloups
States government. The tariff is
Cantaloups were not especially sometimes higher than the net
provided for in the Tariff Act of revenue to the growers (CAADES,
1930 but in the past few years 1964b, pp. 15 -20). This situation
virtually all United States im- induces the growers' association
ports have been dutiable at 35 and the Mexican Government to
percent ad valorem, the statutory press for decreases in the United
rate, under the provision for ".. . States tariffs. Such efforts have
fruits in their natural state, .. . been unsuccessful to date.
Costs and Returns
The per-acre costs of producing,
packing, and exporting vegetables given in Appendix Tables 2
through 11 (pages 45 to 54) are
summarized in Table 5 (page 30),
together with yields, prices, and
total returns from these commodities. The net revenues per acre
given in the last column of the
table suggest that expected returns for these commodities are
relatively favorable. (The net
revenue figures are calculated for
prices and costs f.o.b. buyers
transportation, Nogales, Arizona) .
In order to provide some basis
for comparison of the profitabil-
ity of vegetables with alternative
crops common in the region, net
revenue figures for several such
other crops are also shown in the
table. These figures were obtained from CAADES (as reported by Ariza, 1966)
The reader is cautioned that it
is not known that these budgets
were developed under similar
definitions, and procedures as
those presented here for export
vegetables, and therefore there is
no assurance that they are
.
29
ó
*Summarized from Appendix Tables 2 -11
tSource: CAADES
Sugarcane (Los Mochis)
Sugarcane (Culiacan)
Wheat
Rice
Other Crops/.
Cotton
Green Beans
325
Fresh Vegetables for Export*
Staked Tomatoes
700
Ground Tomatoes
180
Green Peppers
120
80
Cantaloup
Watermelon
6.0
Cucumbers
160
Summer Squash
325
Acre
per
Yield
$100.00
$ 6.98
$ 4.56
$ 5.68
boxes
boxes
tons
boxes
$ 3.86
$ 3.86
$ 7.77
$ 10.08
I
per
Unit
Price
boxes
boxes
boxes
boxes
I
Unit
Revenue
Production
(
168
89
269
116
75
1,117
1,482
1,846
695
932
806
600
2,702
355
186
181
138
134
143
152
211
612
157
170
164
53
186
424
412
500
320
785
931
239
85
336
325
and
Exportation
Packing
Harvesting
(Dollars per Acre)
Total
Cost
200
101
68
68
125
1,898
582
436
638
512
829
896
1,408
Total
f
43
21
69
15
7
88
288
586
438
496
168
804
113
Net
Revenue
Table 5. Estimated Costs and Returns per Acre for Vegetables and Other Major Crops, Sinaloa. Mexico.
more, in view of the relative
abundance of productive resources (land, labor, water, etc.)
adapted to vegetable production,
it may be concluded that the demand for vegetables in North
America could expand to much
higher levels than have previously been experienced without
taxing the capacity of the region.
closely comparable. Nevertheless,
the differences exhibited are of
such magnitude that it seems
safe to observe that vegetables,
on the average, are the most profitable crop alternatives available
in the region for those with the
capital, technical knowledge, and
temperament to exploit this
highly variable market. Further-
Conclusion
tions, to shift the supply relation
for fresh vegetables in Mexico.
North America has been due to This situation had the effect of
a combination of changes in the forcing some American producers
share of the market and changes out of business, thereby claiming
in total demand. Changes in pro- for Mexico a larger share of the
duction, transportation, market- winter market for fresh vegetaing technology, and cost com- bles in North America.
bined with increased supplies of
In the next chapter, the factors
land and water resources, and influencing demand are examexisting favorable climatic condi- ined.
The rapid growth in the sales
of Mexican fresh vegetables in
31
32
CHAPTER IV
EXPORT DEMAND FOR MEXICAN
FRESH WINTER VEGETABLES
production, harvesting, and packing techniques.
Some of these variables are
susceptible to quantitative expression; others are quite difficult
to measure. In the present study
even price and quantity data
were hard to obtain. The time
span covered by the available
data was short and the data series
was sometimes incomplete and
observations of questionable accuracy. In this chapter we report
on analysis of the demand for
seven of the most important vegetables.
It is usually expected that demand (the relation between price
and quantity) will be shifted by
changes in supplies of competing
products, consumer tastes, income, and population. It is also
very possible in the present instance, that improvement in the
quality of the product is responsible for some of the rapid increase in consumption. Improved
quality is due to the increased
speed and care in transportation,
change to shipment of vine ripened products, and improved
Data
Data on prices and quantities
were collected for seven export
vegetables. These data included
the wholesale price at Nogales,
Arizona, the quantity of vegetables imported from West Mexico
during the weeks for which price
information was available, and
the quantity of vegetables offered
in the United States market from
all other sources besides West
Mexico in those same weeks.
33
Prices
The prices of tomatoes were
taken from the bulletin published
daily by the West Mexico Vegetable Distributors Association.
The bulletin publishes USDA
wholesale price quotations for
vine -ripe and green tomatoes sold
in Nogales, Arizona. Prices for
vine-ripes have been published
since 1961.
The size 6 x 7 (a box containing tomatoes packed in six rows
of seven tomatoes, three layers
deep) was selected as representative because larger quantities of
this size are sold than any other
size. Daily prices were recorded
from the range quoted as "mostly," or the range at which "most"
tomatoes were sold. A weekly
price was determined as the simple mean of the daily observations for the week.
Prices, for other vegetables
were taken from statistics kept
by the Department of Economic
Studies and Statistics of
CAADES. A CAADES representative has been employed in Nogales since 1964 to report prices.
Again, weekly prices were calculated as the simple mean of the
daily observations.
For cantaloups, the price represents an average between the
two sizes, 36 and 45 per box. Pepper prices represent a box which
holds approximately 41 pounds
net of peppers. Watermelon prices
are quoted by the ton. A squash
box holds approximately 28.2
pounds (CAADES 1965, p. 26).
publication summarizing the reports of the United States Department of Agriculture's Weekly Shipment -Unload Summaries_
The data for cantaloups and
squash were taken directly from
the USDA Weekly Shipment Unload Summaries (1964-1966),
The data for the first four vegetables and cantaloups represent
rail and truck shipments. Truck
shipments are reported in carlot
equivalents.
Shipments of squash were not
reported in the USDA summaries,
but data on unloads in 41 cities
were given. These data are less
complete, but unloads should be
highly correlated with shipments.
Unload data would, however, lag
shipment data by varying time
periods in cities located in different parts of the country.
Other Data
Since six years of data were
available for tomatoes, it appeared necessary to include the
consideration of variables which
would shift demand from year to
year; namely, United States population and income. Data on population and personal disposable
income were taken from the "SurQuantities
vey of Current Business" (1961Quantity data for tomatoes, 1966). The figures used were an
peppers, watermelons, and cu- average of the first and second
cumbers were taken from the quarters for the years 1961 -66.
publication, Florida Truck Crop Both the quantity data and inCompetition, by Donald Brooke come were divided by population
(1961- 1966). This is an annual to give per- capita figures.
Analysis of the Demand for Tomatoes
Single equation models were
used to estimate the relationships
between price, quantity, and in-
come and to determine the price
flexibility and income elasticities
of U. S. demand for tomatoes
34
to determine the significant variables affecting the wholesale
prices of tomatoes in Nogales,
Arizona. The first relationship
specified was.:
from West Mexico (Ezekiel and
Fox, 1959).
Several functional relationships were specified in an attempt
where P
Q1
P = y (Q1, Q2)
= Price in Nogales, Arizona
= Shipments per capita (U.S.) of tomatoes
from West
Mexico
= Shipments
per capita (U.S.) of tomatoes from all other
sources.
The least -squares regression equation
P = bo + b3Q1 + b2Q2 + e
(1)
Q2
was used for each of the six years form of a sine curve. The average
of data.
value of the residual was added
as a variable. A significant coSignificant results were ob- efficient for the residual variable
tained only for 1963. The average would suggest that demand varof the residuals for each week ied by the week of the season.
during the six years was calcu- United States personal disposable
lated. They seemed to vary over income per capita was also added,
the season approximately in the giving the functional relationship:
P = F(Q1, Q2, I, R)
where I = United States personal disposable income per capita
R = The average of the residuals from equation (1).
The least-squares regression was run on the equation
P = bo + b3Q1 + b2Q2 + b4I + 1,3511. + e
(2)
with the data from the six years combined.
The results of the regression were:
P = 2.0585 0.1682 Ql 0.1106* Q2 + 0.00111 I + 1.0210--R
-(0.1136) -(0.0557)
(0.0004)
(0.2339) t
with an adjusted R2 = 0.1711, and the implied income elasticity of
demand for tomatoes from West Mexico was 5.5.3
An income elasticity of 5.5 indicates that the
quantity of Mexican tomatoes taken in the U.S.
market with no change in price of Mexican or
U.S. tomatoes would increase 5.5 percent for
each one percent increase in U.S. personal disposable income per capita.
*T test significant at the five percent level
tT test significant at the one percent level
*Numbers in parentheses represent the standard
error of the regression coefficient above them.
35
tended to vary inversely with
those from West Mexico. The partial correlation coefficient between Ql and Q2 was -0.27.
To determine if demand had
shifted from year to year, 0-1 variables were added to represent the
years 1961, 1962, 1963, 1965, and
1966. The year 1964 was used as
the base year and, therefore, was
not represented by a variable.
The income variable was omitted
in this case because it was too
closely correlated with the variables representing years. The regression equation was:
The values of the coefficients
for income and the residuals were
highly significant. The quantity
of shipments from other sources
was significant. The income elasticity of demand for tomatoes
from West Mexico was highly
elastic. The significant value for
the residual variable indicated
that a seasonal influence upon
price existed. However, the R2
obtained was low and multicollinearity arose between the two
quantity variables. The quantities
of shipments from other sources
P=bo+biQi+b2Q3+b5R+
+ b3T4 + bioTS + e
The results were:
P 5.2547 -- 0.2818-i- Qi
-
+b,T2+bsT3
(3)
-
-
0.1438f QZ + 1.1126i- R
1.3259-i- T,
(0.1028)
(0.0503)
(0.2124)
(0.2482)
0.4428 T2
0.2908 T3
0.0836 T4
0.4168 T5
(0.2371)
(0.2366)
(0.2333)
(0.2330)
-
-
with an adjusted R2 = 0.3060.
Price flexibility with respect to
West Mexico exports was -0.181,
and price flexibility with respect
to exports from other sources was
-0.157.4 The implied price elasticity of demand for West Mexico
was -5.5, and the implied price
elasticity of demand from other
sources was -6.4.5
price flexibility of -0.181 indicates that the
price of Mexican tomatoes will decline 1.81
percent for each 10 percent increase in quantity of Mexican tomatoes if the quantity of
U.S. produced tomatoes remains unchanged.
`A price elasticity of demand of -5.5 indicates
that the quantity of Mexican tomatoes taken in
the U.S. market will increase 5.5 percent for
each one percent decline in the Mexican price
if there is no change in the price of tomatoes
produced in the U.S.
4.A
36
-
The regression coefficients
were highly significant for both
quantity variables, the residuals,
and 1961. The other years were
not significantly different from
1964, but all had negative values.
The price flexibility for tomatoes
from both sources was well below
unity. The adjusted R2 was still
low, indicating that other variables not included in the analysis
had considerable influence on
prices. The partial correlation between the two quantity variables
was -0.38.
In order to determine the price
flexibility for the total market,
total shipments were included as
a variable along with residuals
and years. The equation was:
P
where
-++
bo
b3Q3
b10T5 +
+ b5R +
b6T1
+
b7T2
+
b$T3
+ b,T4
(4)
e
Q3 = total shipments of tomatoes to United States markets.
The results were:
P = 5.0394 0.1606t Q3 + 1.0439t R = 1.2655- T1 0.4716* T2
-(0.0499) (0.2043)
-(0.2369)
0.2958
-(0.2336)
0.0987
- (0.2335)
0.4733*
T3
T4
(0.2444)
-(0.2365)
T5
with an adjusted R2 = 0.3041, price flexibility for the total market
_ 0.278, and the implied price elasticity of demand for the total
-
market
= -3.6.
The coefficients for total quantity, the residuals, and 1961 were
highly significant; the coefficients
for 1962 and 1966 were significant. Again the R2 was low. The
elasticity for the total market
implied by this equation can be
used to test the elasticities implied in equation (3). The two
elasticities from equation (3)
were combined according to the
formula. (See top of column at
right.)
LS Q1
L
+
p Q2
P
P
P
_°"l
+Q,2
to estimate the elasticity of demand for the total market. The
result, -6.1, is higher than the
estimate of -3.6 made from
equation (4) If more confidence
is placed in the latter estimate,
then the price elasticities calculated for the two sectors of the
market are overestimates. However, all of the estimates are
highly elastic.
.
Analysis of the Demand
For the Other Vegetables
Single equation models were and to determine the elasticities
used to determine the relation- of demand for the other six vegships between price and quantity, etables. The functional relationship was:
P = F(Q1, Q2) where
P = Price in Nogales, Arizona
Ql = Shipments per capita (U.S.) of vegetables from West
Mexico.
Q2
= Shipments
sources.
per capita (U.S.) of vegetables from all other
The following three functional Nogales price and the quantities
forms of the relationship between from Mexico and other sources
37
were tested:
P=bo+biQ1+b2Q2+e
= bo + b1logeQ1 + b2logeQ2 + e
P = bo + bilogeQi + b2logeQ2 + e
Loge P
(5)
(6)
(7)
Equation (7) generally appeared ties. The results of that equation
to best represent the relation- are reported in this chapter.
ships between prices and quanti-
Table 6 (page 39) presents the
results of the regression of Mexican and other quantities on price,
using equation (7). For all except
peppers, significant coefficients
were obtained for the quantity of
vegetables imported from Mexico. For other sources, significant
coefficients were obtained only
for peppers, cucumbers, and eggplant. The best results were obtained for cucumbers. Both coefficients were highly significant
and the adjusted R2 was 0.64.
Price flexibility for Mexican
vegetables with respect to Mexican imports was calculated for
each of the vegetables except
peppers. All were inflexible or
below unity in absolute value,
ranging from -.087 for cantaloups to -0.306 for cucumbers
and implying price elasticity of
demand greater than one in absolute value for five of the vegetables. This suggests that by increasing the sales of these vegetables in the United States, Mexican growers would increase total
revenue.
The price flexibility for Mexican vegetables with respect to
where
P=
Q
b0
+ bllogQ3 + e
= Total shipments
the same vegetables from other
sources was calculated for peppers, cucumbers, and eggplant.
These, too, were well below unity.
Where price flexibilities for both
parts of the market could be calculated (for cucumbers and eggplant) the value for Mexican imports was lower than for other
sources. This result was expected
since Mexico supplies only about
one-fourth and one -fifth, respectively, of the United States winter
market for these vegetables.
The R2's, except for cucumbers,
were low. This suggests that
there are important factors affecting price which were not explicitly measured. Also, the number of observations was small,
especially for cantaloups, watermelons, and squash. Additional
observations might improve the
results.
The elasticities of demand obtained previously for the two
parts of the market were combined to estimate the elasticity
for the total market. This was
done using the same formula used
for tomatoes. A second estimate
for the total market was made
using the regression equation:
,
(8)
of each vegetable to United States
markets.
38
145.3294
30.8032
6.2107
13.4445
Watermelons
Cucumbers
Eggplant
Squash
Q2
Q,
Shipments
Shipments
'i T test significant
IT test significant
=
(0.1406)
0.9605t
(0.3610)
(0.9574)
-1.5400
(0.2639)
-0.8025t
(0.6255)
0.3620-¡-
-2.9089T.
2.34641:
(0.3302)
(1.8015)
-
-0.7223
(1.5063)
-5.22021:
(0.2563)
-0.2170
b,
(2.9204)
0.4907
(0.4742)
0.9082t
(0.3446)
bl
-10.5740:
-
of vegetables from West Mexico
of vegetables from all other sources.
at 5 percent level
at 1 percent level
=b0 +b, log Q,+ b1 log Q2 + e
where P = Price in Nogales, Arizona
37.6223
Peppers
*P
16.5806
ba
Cantaloups
Vegetable
-
0.1512
0.1805
0.6382
0.4553
0.1671
0.2960
110
I
-0.199
-0.131
-0.306
-0.113
-0.087
Q,
-0.292
-0.380
-0.653
Q2
Price Flexibility
Other Vegetables,*
Adjusted
Table 6, Regression Estimates from Single Equation Model
The results of the regression as "regression estimate." The
are given in Table 7 (below). combined estimate is considerAll of the coefficients obtained ably above the regression estiwere highly significant except mate.
If more confidence is placed in
those for squash. The price flexibilities were all less than one, the regression estimate, then the
implying price elasticities greater estimates of the price elasticity
of demand for the parts of the
than one.
In Table 8 (page 41), the elas- market are too high. Nevertheticity estimated by combining the less, since all the price elasticities
elasticities in the two parts of the are greater than one, it can be
market is shown as "combined concluded that an elastic demand
estimate." That determined as a probably exists for each of the
result of the regression is shown vegetables.
Table 7. Demand in the Total Market
Vegetable
I
Other Vegetables*
82
I
I
Cantaloups
b$
bo
-
16.7430
-1.0187$
i
Flexibility
0.2777
-0.098
0.2325
-0.820
0.3309
-0.080
0.3888
-0.685
0.1615
-0.408
(0.3382)
Peppers
44.2183
-6.5533_:
(1.7009)
Watermelons
140.2008
-7.05901
(1.8369)
Cucumbers
35.2157
-5.25461
(1.0344)
Eggplant
6.8600
-1.1238t
(0.3221)
Squash
12.9151
-1.8200
(1.1325)
*p= b0+b3Q2+e
where P = Price in Nogales, Arizona
Shipments of vegetables from all sources.
tT test significant at 5 percent level
rT test significant at 1 percent level
Q3
=
40
0.0445
Table 8. Comparison of Estimates of Price Flexibility and Elasticity
Obtained From Two Methods.
Vegetable
Estimates From Regression
Equation (3) or (7)
Mexico
Other
Combined
j
Tomatoes
Price
Flexibility
Elasticity
Cucumbers
Price
Flexibility
Elasticity
Eggplant
Price
Flexibility
Elasticity
Estimates From
Regression
Equation (4) or (8)
-0.181
-5.52
-0.157
-6.37
-0.164
-6.10
-0.278
-3.60
-0.306
-3.27
-0.380
-2.63
-2.79
0.358
-0.685
-1.46
-0.131
-7.61
-0.292
-3.43
-0.246
-0.408
-2.45
4.06
Summary
Analyses were made of six
years, of weekly price and quantity data to determine the price
flexibility, price elasticity, and
income elasticity of demand for
tomatoes from West Mexico.
Several single equation models were specified. The results
suggested that the demand with
respect to both price and income
is highly elastic. Demand was
also elastic with respect to price
in the total market. This means
that increases in quantity bring
less than proportionate declines
in price, and thus increases in
total revenue.
Analyses were made for three
years of weekly price and quantity data for the other six vege-
tables. Price flexibility calculated
from a single equation model was
less than unity in absolute value
wherever significant results were
obtained. This is equivalent to
elastic demand with respect to
price and implies increases in
total revenue with increases in
quantity.
Only for cucumbers and eggplant were significant results obtained for United States production. For the total market, significant results were obtained for all
vegetables except squash, and
price flexibilities were below
unity in absolute value.
Low R2's in all models suggested that other variables not
included in the model were important determinants of price.
41
CHAPTER V
SUMMARY AND CONCLUSION
Summary
Shipments of fresh winter vegtables (primarily tomatoes, and
also cantaloups, peppers, watermelon, squash, cucumbers, string
beans, eggplant) from Northwest
Mexico to the United States and
Canada have increased markedly
in recent years. The vegetable industry in Northwest Mexico is a
major source of income, employment, and export earnings for the
region. The future course of the
industry will have impacts on
vegetable producing and distributing organizations in the United
States, as well as on consumers
of vegetables.
The purpose of this study has
been to describe the industry and
the physical and institutional
environment within which it
operates, and to analyze the economic forces bearing on its
future.
projects have made available considerable additional adapted land
and water resources. Improved
transportation and communication networks have made possible
the rapid delivery of quality vegetables to United States markets.
Unemployment and underemployment of the work force assure
ample labor supplies, while private credit sources in the United
States have been tapped for
financing.
The existence of a profitable
market has uncovered able entrepreneurial resources in Mexico.
In the absence of public support
for information gathering, analysis, and dissemination, and for
research, private trade organizations have been established to
satisfy these needs.
Environment and
Resources
Production, harvesting, and
packing technology utilized in the
Mexican vegetable export industry is quite similar to that found
in the United States. Income is
quite variable, due to production
and price risks. Expected net return for the various vegetable
Production and Supply
The dry, warm winter climate
of the coastal valleys of Sinaloa
and Sonora is well suited for veg-
etable production. Government
investments in vast irrigation
42
crops is, however, substantially mand for various vegetables was
greater than that from alterna- performed. The results should be
tive crops in the area. This situa- interpreted with the usual pretion, combined with the ample cautions appropriate for such
supplies of productive resources analyses. The short time for
available for vegetable produc- which data were available tends
tion in the region suggest that to limit the reliability of the resupplies could be expanded s:ev- sults. Inadequate data and the
eralfold without significant in- existence of significant influencing factors which were not meascreases in unit costs.
Important components of the ured in the analysis resulted in
costs are those associated with large "unexplained" variations in
exporting and marketing, includ- prices.
ing commissions of customs brokIn general, demand was found
ers and distributors and export to be quite elastic with respect
and import duties levied by the to price. For tomatoes, the most
two governments. Indeed, the important crop, demand was
tariff on some commodities is quite elastic with respect to innearly as large as the net revenue come, although the estimate of
per acre.
this coefficient in the equation
may have reflected improving
Demand
quality of tomatoes as well as
A statistical analysis of the de- increases in income.
Conclusion
not certain that the rate of technological improvement recently
experienced in the production,
transportation, and distribution
of Mexican vegetables will condecade?
The analysis of the supply side tinue. Population growth rates
of the picture leads to the conclu- appear to be easing. Other possision that there are no serious ble stimuli, such as major reducbarriers to continued growth of tions of tariffs by the United
vegetable supplies in Mexico. The States, or deterioration of the
conclusion must rest with the competitive situation of other
character of changes in demand producing areas do not appear to
in North America. Mechanical be in the immediate offing. These
extrapolation of the equations re- considerations suggest a somelating consumption to income and what more cautious outlook. Nevpopulation leads to very optimis- ertheless, we expect considerable
tic forecasts.
growth over the next decade, and
However, the statistical analy- are somewhat more optimistic
sis indicates that some important than another recent analysis (Sefactors influencing demand were cretaria de Agriculture y Gana not included. Furthermore, it is deria, 1966.)
Will the fresh vegetable export
industry of Northwest Mexico be
able to maintain the rapid rate of
growth experienced over the past
.
43
rp
AI.
55,416,042
20,284,577
19,334,685
24,019,903
86,906,296
19,259,346
38,260,366
69,928,815
135,632,453
131,273,041
187,638,832
151, 939,114
204,572,663
134,182,000
134,716,000
167,730,243
187,963,184
138,946,307
74,224,268
57,418,030
103,389,402
232,777,818
211,253,032
250,567,482
180,238,5 78
237,518,416
254,956,087
264,397,804
287,923,383
384,621,002
411,229,072
Tomatoes
259,911
501,782
686,326
7,205
3,365
189,470
1,604,890
2,108,121
578,590
571,595
309,323
1,031,685
7,363,685
6,245,000
4,457,000
6,304,897
13,051,237
29,731,274
39,013,972
58,525,204
52,664,308
47,155,721
57,373,950
86,949,820
88,518,364
106,952,240
116,847,037
117,633,209
155,216,261
79,337,822
69,572,365
Other
Melons
i
5,509,650
5,595,038
2,824,611
5,325,550
8,534,400
2,012,316
3,829,939
4,688,501
13,895,832
13,201,904
16,505,406
12, 008,436
7,575,849
18,833,000
17,004,000
20,333,524
18,830,901
15,335,019
6,038,727
6,582,566
11,643,712
17,925,397
18,932,375
22,509,287
18,126,114
19,629,826
27,514,293
13,756,819
20,450,581
23,689,749
25,866,651
262,253
138,392
95,465
85,903
278,734
44,160
2,004,110
2,322,573
892,642
3,279,328
898,067
1,467,992
1,065,361
1,979,000
2,184,000
4,804,929
14, 505,979
16,881,438
21,417,620
48,646,355
27,903,552
42,147,565
61,454,140
73,244,053
45,710,494
54,819,895
74,537,006
57,006,373
65,631,686
64,480,359
64,064,070
(pounds)
Watermelons
1,167
48,334
74,398
39,519
122,554
76,128
133,346
71,803
170,000
517,000
401,734
393,059
654,252
832,524
912,826
2,222,044
3,255,421
5,099,705
8,765,808
12,262,367
14,519,793
21,390,813
17,862,500
39,903,837
34,732,587
58,587,830
46,659
38,020
5,202
917
Cucumbers
536,875
471,379
371,778
743,714
520,451
46,532
136,764
540,178
476,770
815,658
212,938
111,568
99,325
254,000
187,000
51,178
236,004
122,533
63,350
21,658
601,324
745,531
1,705,519
2,183,453
1,934,099
1,740,706
3,526,357
3,175,427
4,047,341
5,935,023
7,862,670
Eggplant
Imports of Vegetables from Mexico, 1936-65
Peppers
1.
91,077
82,842
52,232
30,299
21,946
32,554
251,640
242,483
243,949
99,382
153,322
239,691
240,458
368,000
412,000
314,224
488,658
449,940
542,036
312,884
881,331
1,131,824
1,852,267
1,550,566
1,098,661
3,651,033
1,797,880
3,121,943
6,313,950
4,795,243
14,394,640
Squash
162,031,000
159,477,000
199,940,729
235,469,022
202,120,763
142,132,497
172,419,523
199,305,673
345,139,277
357,670,988
445,770,469
347, 888, 677
438,830,909
500,569,473
476,954,075
569,487,039
597,592,685
651,577,298
220,989,1.44
62,122,467
27,112,030
23,371,299
30,213,491
96,265,192
21,585,545
46,136,043
79,905,069
151,759,755
149,363,462
205,794,016
166,931,832
Total Seven
Vegetables
Source: Foreign Agricultural Trade of the U.S., "Imports of Fruits and Vegetables under Quarantine, by Countries of Origin and Ports
of Entry," U. S. Department of Agriculture, Washington, D. C. (various annual issues).
1936-37
1937-38
1938-39
1939-40
1940-41
1941-42
1942-43
1943-44
1944-45
1945-46
1946-47
1947-48
1948-49
1949-50
1950-51
1951-52
1952-53
1953-54
1954-55
1955-56
1956-57
1957-58
1958-59
1959-60
1960-61
1961-62
1962-63
1963-64
1964-65
1965-66
1966-67
Year
Appendix Table
Appendix Table 2. Estimated Preharvest Cost of Producing One
Acre of Staked Tomatoes, Culiacan Valley.*
Labor and
Equipment
Operation
Cost
Land Preparation
Plowing
4.40
Harrowing
4.23
1.47
Subsoiling
Leveling
3.46
Furrowing
1.27
Preplanting Fertilizing
.58
Total
15.41
Sowing and Planting
Growing in Seedbed
2.74
Irrigation
.92
Transplanting
2.95
Total
6.61
Growing
Hand Application
of Insecticides
.64
Application of Insecticides
by Airplane
28.79
Irrigation
15.64
Fertilizing
2.30
Making and Removing Furrows 4.08
Hand Cultivation
2.95
Machine Cultivation
4.20
Pruning Vines
26.53
Hilling
.74
Placing Stakes
26.72
Threading
19.43
Removing Stakes
4.42
Total
136.44
Miscellaneous
Water Fee
Social Security Tax
Transportation
Land Rent
Interest on Investment
Other Costs
Total
Materials
Cost
Total
Cost
(Dollars)
9.72
4.40
4.23
1.47
3.46
1.27
10.30
9.72
25.13
3.04
5.78
.92
2.95
3.04
9.65
2.43
3.07
38.87
37.25
21.96
100.51
Total Production Cost
28.97
15.64
41.17
4.08
2.95
4.20
26.53
.74
63.97
41.39
4.42
236.95
6.48
.81
12.96
32.39
14.32
16.20
83.16
354.89
*To convert dollars per acre to pesos per hectare multiply dollar amounts by 30.875.
45
Appendix Table 3. Estimated Preharvest Cost of Producing One
Acre of Ground Tomatoes, Culiacan Valley.
Labor and
Operation
E ui
Cost
Total
Cost
4.40
4.23
1.47
3.46
1.27
.58
9.72
4.40
4.23
1.47
3.46
1.27
10.30
15.41
9.72
25.13
1.65
.92
2.95
1.82
3.47
.92
2.95
5.52
1.82
7.34
.64
2.43
3.07
Sowing and Planting
Growing in Seedbed
Irrigation
Transplanting
Total
Growing
Hand Application
of Insecticides
Application of Insecticides
by Airplane
28.76
9.20
2.30
Making and Removing Furrows 2.64
2.96
Hand Cultivation
Machine Cultivation
4.20
Irrigation
Fertilizing
Total
Materials
(Dollars)
Land Preparation
Plowing
Harrowing
Subsoiling
Leveling
Furrowing
Preplanting Fertilizing
Total
ment
Cost
50.69
Miscellaneous
Water Fee
Social Security Tax
8.87
41.30
28.76
9.20
41.17
2.64
2.96
4.20
92.00
6.48
.81
6.48
32.39
7.61
8.10
Transportation
Land Rent
Interest on Investment
Other Costs
Total
61.87
Total Production Cost
186.34
46
Appendix Table 4. Estimated Preharvest Cost of Producing One
Acre of Green Peppers, Culiacan Valley.
Labor and
Equipment
Operation
Land Preparation
Plowing
Harrowing
Subsoiling
Leveling
Furrowing
Preplanting Fertilizing
Total
Cost
Cost
Total
Cost
(Dollars)
4.40
4.23
1.47
3.46
1.27
.58
9.72
4.40
4.23
1.47
3.46
1.27
10.30
15.41
9.72
25.13
1.23
.92
2.95
3.29
4.52
.92
2.95
5.10
3.29
8.39
.64
2.43
3.07
Sowing and Planting
Growing in Seedbed
Irrigation
Transplanting
Total
Growing
Hand Application
of Insecticides
Application of Insecticides
by Airplane
23.97
8.28
2.30
Making and Removing Furrows 2.40
Hand Cultivation
2.95
Machine Cultivation
4.20
Irrigation
Fertilizing
Total
Miscellaneous
Water Fee
Social Security Tax
Transportation
Land Rent
Interest on Investment
Other Costs
Total
Materials
44.74
38.87
41.30
23.97
8.28
41.17
2.40
2.95
4.20
86.04
6.48
.81
6.48
32.39
6.96
8.10
61.22
Total Production Cost
180.78
47
Appendix Table 5. Estimated Preharvest Cost of Producing One
Acre of Cantaloups, Culiacan Valley.
Labor and
Equipment
Operation
Cost
4.40
4.23
1.47
3.46
1.27
Total
Cost
.58
9.72
4.40
4.23
1.47
3.46
1.27
10.30
15.41
9.72
25.13
.86
.92
3.64
4.50
1.78
3.64
5.42
.64
2.43
3.07
Sowing
Sowing Seeds
Irrigation
Total
Growing
Hand Application
of Insecticides
Application of Insecticides
by Airplane
Cost
(Dollars)
Land Preparation
Plowing
Harrowing
Subsoiling
Leveling
Furrowing
Preplanting Fertilizing
Total
Materials
.92
23.97
Irrigation
3.68
Fertilizing
.58
Making and Removing Furrows 1.20
Hand Cultivation
5.89
Machine Cultivation
1.71
Training Runners
2.21
Total
39.88
Miscellaneous
Water Fee
Social Security Tax
4.86
7.29
23.97
3.68
5.44
1.20
5.89
1.71
2.21
47.17
6.48
.81
6.48
32.39
6.48
8.10
Transportation
Land Rent
Interest on Investment
Other Costs
Total
60.74
Total Production Cost
138.46
48
Appendix Table 6. Estimated Preharvest Cost of Producing One
Acre of Watermelon, Culiacan Valley.
Labor and
Equipment
Operation
Cost
Land Preparation
Plowing
Harrowing
Subsoiling
Leveling
Furrowing
Preplanting Fertilizing
Total
Materials
Cost
Cost
(Dollars)
4.40
3.46
1.27
.58
9.72
4.40
4.23
1.47
3.46
1.27
10.30
15.41
9.72
25.13
.86
.92
3.55
4.41
1.78
3.55
5.33
.64
2.43
3.07
4.23
1.47
Sowing
Sowing Seeds
Irrigation
Total
Growing
Hand Application
of Insecticides
Application of Insecticides
by Airplane
.92
23.97
4.60
1.44
5.89
1.71
2.21
23.97
4.60
Irrigation
Making and Removing Furrows 1.44
5.89
Hand Cultivation
1.71
Machine Cultivation
2.21
Training Runners
Total
Total
40.46
Miscellaneous
Water Fee
Social Security Tax
2.43
42.89
6.48
.81
6.48
32.39
6.48
8.10
Transportation
Land Rent
Interest on Investment
Other Costs
Total
60.74
134.09
Total Production Cost
49
Appendix Table 7. Estimated Preharvest Cost of Producing One
Acre of Cucumbers, Culiacan Valley.
Labor and
Equipment
Operation
Cost
Cost
Total
Cost
(Dollars)
Land Preparation
Plowing
Harrowing
Subsoiling
Leveling
Furrowing
Preplanting Fertilizing
Total
Materials
4.41
4.23
1.47
3.46
1.27
.58
14.58
4.41
4.23
1.47
3.46
1.27
15.16
15.42
14.58
30.00
.86
.92
4.05
4.91
1.78
4.05
5.83
.64
2.43
3.07
9.72
11.98
9.20
2.64
10.30
5.89
1.71
1.47
12.15
46.26
Sowing
Sowing Seeds
Irrigation
Total
.92
Growing
Hand Application
of Insecticides
Application of Insecticides
by Airplane
11.98
9.20
Irrigation
Making and Removing Furrows 2.64
Fertilizing
.58
5.89
Hand Cultivation
1.71
Machine Cultivation
1.47
Training Runners
Total
34.11
Miscellaneous
Water Fee
Social Security Tax
6.48
.81
Transportation
Land Rent
Interest on Investment
Other Costs
Total
6.48
32.39
6.43
8.10
60.74
Total Production Cost
142.83
50
Appendix Table 8. Estimated Preharvest Cost of Producing One
Acre of Summer Squash. Culiacan Valley.
Labor and
Equipment
Operation
Land Preparation
Plowing
Harrowing
Subsoiling
Leveling
Furrowing
Preplanting Fertilizing
Total
Cost
Cost
Total
Cost
(Dollars)
4.40
4.23
1.47
3.46
1.27
.58
9.72
4.40
4.23
1.47
3.46
1.27
10.30
15.41
9.72
25.13
.86
.92
11.66
12.52
1.78
11.66
13.44
.64
2.43
3.07
Sowing
Sowing Seeds
Irrigation
Total
Growing
Hand Application
Of Insecticides
Application of Insecticides
by Airplane
Materials
.92
14.38
11.96
Irrigation
1.15
Fertilizing
Making and Removing Furrows 3.36
5.89
Hand Cultivation
3.42
Machine Cultivation
40.80
Total
Miscellaneous
Water Fee
Social Security Tax
9.72
12.15
14.38
11.96
10.87
3.36
5.89
3.42
52.95
6.48
.81
6.48
32.39
6.48
8.10
Transportation
Land Rent
Interest on Investment
Other Costs
Total
60.74
Total Production Cost
152.26
51
Appendix Table 9. Estimated Preharvest Cost of Producing One
Acre of Green Beans. Culiacan Valley.
Labor and
Equipment
Operation
Cost
Cost
Total
Cost
(Dollars)
Land Preparation
Plowing
Harrowing
Subsoiling
Leveling
Furrowing
Preplanting Fertilizing
Total
Materials
4.41
4.23
4.41
4.23
1.47
3.46
1.27
.58
14.58
3.43
1.27
15.16
15.42
14.58
30.00
.86
.92
8.10
8.96
.92
1.78
8.10
9.88
1.61
4.45
6.03
Sowing
Sowing Seeds
Irrigation
Total
Growing
Hand Application
of Insecticides
Application of Insecticides
by Airplane
1./7
9.59
9.59
8.28
Irrigation
1.15
Fertilizing
Making and Removing Furrows 2.40
2.95
Hand Cultivation
4.20
Machine Cultivation
11.40
Placing Stakes
7.77
Threading
3.89
Training Runners
4.42
Removing Stakes
57.66
Total
Miscellaneous
Water Fee
Social Security Tax
8 28
9.72
10,87
2.40
2 95
23.59
10.69
4.20
34,99
18.46
3.89
4.42
48.45
106.11
6.48
.81
Transportation
Land Rent
Interest on Investment
Other Costs
Total
6.48
32.39
10.53
8.10
64.79
Total Production Cost
210.78
52
Cucumbers I
.4400
.1520
.0624
.2144
.6480
.3200
.1560
.0600
.2160
.5600
.1000
.6600
.1600
.0800
.0336
.1136
.2600
.1200
.3800
.2200
.3720
2.0520
.2200
1.4160
.2200
.8736
1.1656
.5000
.4200
.0800
.1256
.0656
.0600
.3200
.1600
.1600
1.0256
.37763.
.2000
.2400
(Dollars per Box)
Cantaloup
.1600
.1600
Peppers
.0800
.0800
Tomatoes
1.2680
.2200
.5000
.4200
.0800
.1080
.0664
.0416
.4400
.3600
.0800
Green
Beans
I
1.3040
.2200
.4400
.3600
.0800
.1240
.0704
.0536
.5200
.3600
.1600
Squash
8.8500
/
.8700
.8700
/
1.8100
1.8100
/
6.1700
2.5400
3.6300°
(Dollars
per Ton)
Watermelons)
`Production per acre in boxes is 700, staked tomatoes; 180, ground tomatoes; 120, peppers; 80, cantaloup; 160, cucumbers; 325, green beans;
325, squash; watermelons, 6.0 ton.
iCapacity of packinghouse in boxes per day is 2,400, tomatoes; 500, peppers; 2,000, cantaloup; 500, cucumbers; 800, green beans; 500, squash.
*Includes ice.
°Watermelons are loaded directly on truck, therefore they do not go through packinghouse.
/Not applicable.
Picking and Transporting
Picking
Transport to Packinghouse
Total
Packinghouse Labor
Sorters and Packers
cn
Other Labor
w
Total
Materials
Boxes
Other Materials
Total
Packinghouse Fixed Costs
Total
I
Appendix Table 10. Summary of Harvesting and Packing Costs for Fresh Winter Vegetables. Culiacan
Valley. */.
en
Distributor
Total
Total Exportation Cost
Total
Duties
Mexican Production
Mexican Export
United States Import
Total
Commissions
Mexican Broker
United States Broker
CAADES
UNPH
Export Services
Transportation to Nogales
Custom House and Documentation
and Brokerage
Labor Nogales, Sonora and Arizona
USDA Inspection Service
Total
Association Fees
I
I
.0037
.0077
.0979
.1172
.0006
.0032
.4800
.4838
.7105
.6099
.0047
.0105
.2800
.2952
1.3301
.1066
.4062
.0320
.0347
.5432
.0170
.0034
.0024
.0137
.0089
.0076
.0029
.0838
.3760
.0188
dollars
per box
peppers
dollars
per box
Tomatoes
I
.6928
4.2006
.0128
.0400
.6400
2.5292
.0680
.4612
2.0000
.0682
.0490
.0192
.9104
.0448
.0400
.0256
.8000
dollars
per 89
lb. crate
loup
CantaI
.6044
3.1264
.0148
.0296
.5600
1.4928
.0576
.1608
1.2744
.0320
.0170
.0150
.9972
.0355
.0257
.0197
.9163
dollars
per 54.3
lb. crate
Cucumbers
I
.4834
2.4168
.0097
.0193
.4544
1.2555
.0368
.0986
1.1201
.0260
.0180
.0080
.6519
.0232
.0168
.0129
.5990
dollars
per 35.5
lb. basket
Green
Beans
I
.2871
.9839
.0090
.0181
.2600
.0630
.0310
.0320
-
.0242
.0170
.0072
.6096
.0217
.0157
.0120
.5602
lb. box
dollars
per 33.2
Squash
Appendix Table 11. Exportation Costs For Fresh Winter Vegetables, Culiacan Valley.
I
7.3612
44.6977
.2903
.8709
6.2000
15.1393
1.1757
5.1819
8.7817
1.1367
.8464
.2903
11.2217
.9072
1.0886
.7258
8.5001
dollars
per ton
Water melons
REFERENCES CITED
(1966) Survey of
Mexican Vegetable and Melon Production, FAS -M 178, Foreign Agricultural Service, U. S. Department of
Agriculture, Washington, D. C.
(1966) `Some Economic Aspects of the Northwest Mexico Vegetable Export Industry," Thesis
for the Master of Science Degree, The
University of Arizona, Tucson, Arizona (unpublished).
COOK, A. CLINTON.
ARIZA NINO, EDGAR.
EZEKIEL, MORDECAI and KARL A.
ASSOCIACION DE AGRICULTORES DEL RIO
CULIACAN. Boletin Agricola, (month-
Fox.
(1959) Methods of Correlation and
Regression Analysis, Third Edition,
New York, John Wiley and Sons, Inc.
ly), Culiacan, Sinaloa, Mexico.
(1961 to 1966)
Florida Truck Crop Competition,
Mimeo Report, University of Florida,
Gainesville, Florida, annual issues.
CECENA CERVANTES, JOSE LUIS. (1963)
BROOKE, DONALD L.
FERNANDEZ,
RAMON y RICARDO Aco-
(1961) Politica Agricola, Ensayo
Sobre Normas para Mexico, Fonda de
STA.
Cultura Economica, Mexico, D. F.
ROBERT ARTHUR. (1968)
"The United States Demand for Fresh
Winter Vegetable Imports from Mexico and Some Economic Implications
for the State of Sinaloa," Thesis for
the Master of Science Degree, The
University of Arizona, Tucson, Arizona (unpublished).
GEHRING,
"Aspectos Generales del Mercado Sinaloense," Temas Economicos, Ano 1,
No. 1, Universidad de Sinaloa, Culiacan, Sinaloa, Mexico.
CONFEDERACION DE ASOCIACIONES AGRIDE
SINALOA
COLAS
DEL ESTADO
(CAADES) . (monthly) Analisis de
la Situacion Agricola de Sinaloa, Culiacan, Sinaloa, Mexico.
(1964a) Departamento de
Estudios Economicos y Estadistica,
Sinaloa, Programa de Desarrollo Eco nomico y Social, Culiacan, Sinaloa,
Mexico.
(1964b) "El Mercado Exterior de las Hortalizas, Importancia,
Situacion y Tendencia." Typed paper,
Culiacan, Sinaloa, Mexico.
.
(1965) "Resultadas de la
Reglamentacion en la Production y
Exportation de Tomate en el Valle de
Culiacan." Typed paper, Culiacan,
Sinaloa, Mexico.
(1967) La Agricultura Sinaloense, Base Fundamental Para la
Industrialization, Culiacan, Mexico.
CAADES. (1968) Sinaloa's Agriculture,
Culiacan, Sinaloa, Mexico.
Departamento de Estudios
Economicos y Estadistica, Unpublished
data.
SECRETARIA DE AGRICULTURA Y GANADERIA and others. (1966) Projections
.
of Supply and Demand for Agriculture Products in Mexico to 1965,
1970, and 1975, published for Economic Research Service, U. S. Department of Agriculture.
.
(1947) The Mexican
Winter Vegetable Industry, Foreign
Agricultural Report No. 21, U. S. Department of Agriculture, Washington,
SMITH, MERVIN G.
D. C.
UNION NACIONAL
HORTALIZAS
DE PRODUCTORES DE
(UNPH) Mexican Fruit
.
and Vegetable Exportation, Culiacan,
Sinaloa, Mexico, various annual issues.
.
UNITED STATES DEPARTMENT OF AGRI-
(1964 to 1966) Consumer
and Marketing Service, Fresh Fruit
and Vegetable Market Neu's, Weekly
Unloads,
Summary, Shipments
Washington, D. C., several issues.
CULTURE.
-
.
55
REFERENCES CITED -- Continued
.
(1936 to 1965) Economic
Research Service, Foreign Agricultural
Trade of the United States, "Imports
of Fruit and Vegetables Under Quarantine by Countries of Origin and
Port of Entry," Washington, D. C.,
annual issues.
(1966) Economic Research
Service, Working Data For Demand
Analysis, Washington, D. C.
.
UNITED STATES DEPARTMENT OF COMMERCE. (1961 to 1966) Office of
Business Economics, Survey of Current Business, (monthly) Washington, D. C., various issues.
UNITED
TARIFF
COMMISSION.
Certain Fresh Fruits and
Vegetables, T. C. Publication 33,
Washington, D. C.
YOUNG, ROBERT A., WILLIAM E. MARTIN and DALE A. SHAW. (1968)
Data for Arizona Crop Farm Planning, College of Agriculture, The
University of Arizona, Tucson, Arizona.
56
STATES
(1961)
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