The Tomato market has been a recent center of focus by the media in the United States. One thing that is worth noting is that the United States is a member of NAFTA and organizations that opens a free market for countries in North America (Chambers and Smith 37). The common market created by NAFTA has created competition between tomato producers in the United States and those in Mexico. Tomato products from both countries compete for the same consumer base. However, Mexico tends to have a comparative advantage in the production of tomatoes compared to the United States (Strom 3). This has created a situation whereby Mexico has flocked the NAFTA tomato market with cheap tomatoes. In order to favorably compete with the lower prices that are offered by their counterparts, US farmers have been forced to reduce their prices so that they can keep up with Mexico.
However, this is not advantageous to farmers in the United States. This is because the low prices cause farmers in the United States to produce less because they would not like to operate at a loss. NAFTA as a common market has created a pure competitive market such that only the countries that have the comparative advantage in the production of a given product are able to maintain a steady supply in the market. One important thing to note is that if a pure competitive market is going to remain in the tomato market, the United States should not introduces protectionist measures which would jeopardize the provisions which NAFTA seeks to enhance. A pure competitive market works best when the state rarely intervenes in the market but instead allows the invisible hand of capitalism to dictate market dynamics.
Works Cited
Chambers, Edward J., and Peter H. Smith. NAFTA in the new millennium. La Jolla, CA: Center for U.S.-Mexican Studies, University of California, San Diego, 2002. Print.
Strom, Stephanie. "United States and Mexico Reach Tomato Deal, Averting a Trade War ." The New York Times. Business, 3 Feb. 2013. Web. 6 Feb. 2013.
