Production and international trade of red tomato

Tomato production worldwide has shown a significant growth of around 22% per year during the period from 2003 to 2017. The main producing countries are China (23%), Mainland China (22%) and to a lesser extent India (7%), the United States of America (7%) and Turkey (6%) (Figure 1). This group of countries concentrates 64% of the world tomato production. For its part, Mexico contributes 2% of world production and ranks 11th among tomato-producing countries.

Figure 1 Main producers of red tomato 2003-2017 (tons). Elaboration with data from FAOSTAT. 

Trusts Instituted in Relation to Agriculture (FIRA, for its acronym in Spanish), mentions that China and India stand out for their dynamism in world production, and this is partly due to the increase in China’s productivity, while in India, a greater part of the area sown was allocated to this vegetable (^{FIRA, 2017}).

World tomato exports have grown, on average, by 4% per year. Mexico ranks as the world’s leading exporter of tomatoes, participating with about 19% of the export volume during the period 2003-2017. Behind, Spain and the Netherlands export approximately 13% each (Table 1).

However, when estimating the average annual growth rate, it is observed that Morocco and Turkey grew above the world average of tomato exports (4%). The first had a growth rate of 7% and Turkey 6%. For its part, Mexico grew at the same rate as world exports; while Spain showed a 1% decrease in tomato exports (^{FAOSTAT, 2020}).

The main importers of tomatoes during the analysis period were the United States of America (21%), Germany (11%), the Russian Federation (9%), France (8%) and the United Kingdom of Great Britain (6%). While the Russian Federation and the United States of America grew by an annual average of 6% and 4%, respectively (^{FAOSTAT, 2020}). Although the United States of America stands out as one of the main producers worldwide, its demand is higher, so it requires complementing apparent consumption with imports.

Red tomato production in Mexico

In Mexico, most of the states produce red tomatoes, however, eight states concentrate 72.02% of the national production (^{SIAP, 2020}). The main producer is Sinaloa, which, during the period 2003-2017, contributed with more than 32% nationwide (Table 2). Behind, Baja California (8.25%), Michoacán (7.05%), San Luis Potosí (6.62%), Jalisco (5.43%), Zacatecas (4.73%), Baja California Sur (4.54%) and with lower participation Sonora (3.12%) (^{SIACON, 2020}).

Although the main producer is Sinaloa, it maintains a less significant growth compared to Zacatecas and Jalisco, which had an average annual growth of 8% and 5%. According to ^{Macías (2010}), the loss of productivity in Sinaloa is mainly due to water scarcity and pest growth. While Zacatecas has intensified the use of production systems under protected agriculture in an expansive manner (^{Padilla et al., 2008}). Similarly, Sonora, Michoacán and San Luis Potosí grew in a smaller proportion than the national average.

While the states of Baja California and Baja California Sur had negative growth rates of 2.21% and 1.36% during the period from 2003 to 2017. These last two states, located in arid zones, have limitations of water resources due to the overexploitation of their aquifers and low rainfall, which cause the availability and quality of water to be insufficient for agricultural production, essential elements for the development of the activity (^{Velasco et al., 2019}). Some states such as Baja California, Baja California Sur, Jalisco and Michoacán were established as an operation of Sinaloa’s companies that sought to complement the offer, deseasonalize production and greater access of exports to take advantage of the growing North American market (^{Avendaño, 2008}; ^{FIRA, 2019}).

During the period from 2003 to 2017, it was found that these same states showed a growth in the value of production of approximately 6% and maintained a price paid to the producer above the national average ($6 281.00 t^-1), with Baja California standing out, with a price above 50% of the national (Figure 2).

Figure 2 Mexico: average rural price of red tomato, 2003-2017 (pesos per ton). Elaboration with data from SIAP. 

Relative export advantage (RXA) index

The RXA index proposed by Vollrath is actually a rethinking of the index proposed by Ballasa, called revealed comparative advantage (RCA) (^{Laursen, 1998}). The index (RXA) reflects that a given country has a relative export advantage in a product if (RXA) is positive or greater than 1, while if (RXA) is negative or less than 1, it indicates a relative export disadvantage. In general terms, the (RXA) indicates that as its value increases, a country is considered more specialized and more competitive. The RXA index is defined as follows: RXAai= (Xai/Xni)/(Xar/Xnr). Where: RXAai= is the relative advantage of exports of the product a in country i. Xai= is the value of exports of the product a in country i. Xni= is the value of total exports in country I excluding product a. Xar= is the value of the total exports of the product a in the world, excluding country i. Xnr= is the value of total exports in the world excluding product a and country i.

Constant market share (CMS) analysis

The CMS method allows explaining the change in the exports of a given product from its structural and competitiveness components. This method was proposed by Leamer and Stern, later adapted to expand the analysis of export growth (^{Avendaño, 2008}). ^{Ahmadi-Esfahani (1995}) decomposes the change in exports into two levels: the first level of decomposition is carried out according to the following equality: Δq= Sj0ΔQj + ΔSjQj0 + ΔSjΔQj. Sj0ΔQj= structural effect, it reflects the expected change in exports if the country’s initial share of the world market and in the destination country remains constant.

If this component is positive, it means that the increase in demand for the product favors the increase in exports. ΔSjQj0= competitiveness effect or residual, it reflects the part of the change in exports that can be attributed to an increase in competitiveness in the analysis period. If this component is positive, it means that competitiveness has increased, while if the sign is negative then it is interpreted as a loss of competitiveness. ΔSjΔQj= interaction or second-order effect, it reflects the effect of a change in both market share and demand on the change of exports.

The second level of decomposition is performed by obtaining six additional effects from the components described in the first level of decomposition. In this case the equality is as follows: Δq= St0ΔQj + (Sj0ΔQj - St0ΔQj) + ΔStQj0 + (ΔSjQj0 - ΔStQj0) + (QtI / Qt0-I) (ΔSjQj0) + (ΔSjΔQj - QtI / Qt0-I) (ΔSjQj0)). St0ΔQj= growth effect, it reflects the part of the increase in exports that is due to an increase in world demand while the share of the exporting country in the world market remains constant.

(Sj0ΔQj - St0ΔQj) = market effect, it measures the additional change in exports, while the exporter maintains its share of the target market constant. If the sign is positive, it implies a concentration of exports in each market. ΔStQj0= pure residual effect, it reflects the change in exports that would occur due to a change in overall competitiveness. ΔSjQj0 - ΔStQj0= static structural residual effect, it reflects the change in exports that is attributed to a change in competitiveness in each market. QtI/Qt0-I (ΔSjQj0)= pure second-order effect as it measures the interaction between the change in the exporter’s share of the target market and the change in world demand. ΔSjΔQj - (QtI / Qt0-I) (ΔSjQj0)= dynamic structural residual effect, it reflects the interaction between the change in the exporter’s share of the target market and the change in the demand of that market.

Constant market share (CMS)

The CMS shows the competitiveness and behavior of exports in the destination market. The first and second order of decomposition were estimated for the main exporting countries of red tomato in the market of the United States of America, where Mexico concentrates about 89%. Canada exports approximately 10% and with a smaller share, but during the period, the Dominican Republic, Guatemala and the Netherlands have maintained their exports (Figure 4).

Figure 4 Main tomato-exporting countries to the United States of America, 2003-2017 (metric tons). Elaboration with data from ERS-USDA. 

The results of the application of the CMS method are shown in Table 3. The first aspect that stands out is that the change in the volume of exports was positive for Mexico, Canada, the Dominican Republic and Guatemala, while for the Netherlands it is negative.

At the first level of decomposition, the structural effect is positive for all countries, reflecting growth in tomato demand that favors exports, mainly for Mexico. ^{Crespo and Plzákova (2018}) conducted a study selecting the same countries, obtaining that the structural effect is positive for all countries, where Mexico has the greatest advantage given its geographical proximity to the U.S. market. In another study, ^{Avendaño and Acosta (2009}) found that the structural effect is positive for tomato-exporting countries that were selected for the U S market (Canada, Spain, Israel, Mexico and the Netherlands) and they point out a positive impact on world tomato demand.

In the case of the competitiveness effect, the sign is positive, mainly for Mexico and in less impact for the Dominican Republic and Guatemala, showing a loss for Canada and the Netherlands. The second-order effect shows the influence of market share and changes in demand for red tomato exports, it is positive for Mexico, the Dominican Republic and Guatemala, derived from the behavior in competitiveness. The increase in world demand for red tomatoes grew on average 4% per year of the volume of imports (^{FAOSTAT, 2020}), causing a positive impact on the growth effect for all countries during this analysis period.

^{Avendaño and Acosta (2009}) indicate similar results, finding that the growth effect is positive for all countries, mainly favoring the Netherlands; however, exports its exports and Mexico’s exports have been displaced by Canada. The market effect is positive for Mexico and Canada, which shows that both concentrate their exports toward a single market. In the specific case of Mexico, it exports about 98% of the volume of red tomatoes to that destination. While, for Guatemala, the Dominican Republic and the Netherlands, the sign is negative, related to market diversification; for instance, Guatemala, in 2017, exported to El Salvador 44 073 tons and only 6 221 tons to the United States of America. More than 90% of exports to the US. market are concentrated in Mexico, generating vulnerability to Mexican producers when subjected to the market conditions of the United States of America, changes in purchasing and consumption patterns and the country's economic situation.

The pure residual effect is positive for Mexico, Guatemala and the Dominican Republic, showing an increase in competitiveness. Despite this, the static structural residual effect shows a positive sign for the Dominican Republic and the Netherlands, indicating an improvement in their competitiveness, generating greater participation in the world market. Finally, the pure second-order effect and the dynamic structural residual effect show a positive sign for Mexico, the Dominican Republic and Guatemala, which means that tomato-exporting countries have been able to increase their share of the U S market, at the same rate as world demand and demand in the destination market were growing.