Estimating import demand for fresh tomatoes into the United States and the European Union

Continuous talks and negotiations initiated by the World Trade Organization (WTO), in recent years, on globalization and trade liberalization have made international trade a key issue for all nations as it has expanded the global markets with enhanced competitiveness. There exist both opportunities and costs as it expands exports on one hand and poses threats of competition from importers on the other. Agriculture being the major player in international trade has to cope with this changing trend of the global market situation. The European Union (EU-15) being more and more open should be of especial interest to the growers, traders and policy makers of all nations including the United States (U.S.). This is a research project for the analysis of import demand for fresh tomatoes into the U.S. and the EU-15 for the assessment and evaluation of competitiveness to enable the specialty crop industry to compete successfully. The sources of data for this research are the United Nations Statistics Division- Commodity Trade Statistics Database website, Food and Agriculture Organization Statistics Database website and other websites maintained by the United States Department of Agriculture (USDA). Data for the period 1963-2005 have been used in this research.;A differential production approach has been used for estimating import demand for fresh tomatoes. Imports are considered as inputs to importing firms. The mode used in this research is derived from the basic principle of the theory of firm whereby the firm maximizes profit by determining a level of output and minimizing the cost of producing that level of output. The cost minimization stage is applied to get conditional factor demand equations in the estimation process. The differential production version of the Netherlands National Bureau of Research (NBR) specification is estimated by the iterative seemingly unrelated regression (SUR) method using the well known least square procedure (LSQ) in Time Series Processor (TSP).;Results show that Mexico is the prominent supplier of fresh tomatoes in the U.S. import market facing no close competitor. Canada and EU-15 compete with each other for the U.S. import market whereby Canada is losing its relative share and EU-15 is gaining its relative share. For the EU-15 import demand for fresh tomatoes, Morocco is the major supplier with no close competitor. Israel and Rest of the World (ROW) are competing with each other in the EU-15 import market. Albania, Bulgaria and ROW are losing their relative share in the EU-15 import market with an indication of some kind of structural changes.;Mexico and Morocco have significant influence and control over the U.S. and the EU-15 import markets. It is necessary for other participants to figure out the secrets and follow them to be competitive with these major players in their respective markets. Otherwise, the implications would be significant on both markets if there are some diseases or calamities in Mexico and Morocco.