On Friday, a week-long protest by Texas Governor Greg Abbott against President Biden’s recent immigration policy resulted in a resolution, but the stalemate it created resulted in the loss of hundreds of millions dollars and delays in shipments of everything from lawyers to auto parts that will have a longer-term impact.
On Friday, Abbott reversed course on an order he put in place last week that required longer “enhanced safety inspections” of commercial vehicles entering Texas. The efforts, he said, were aimed at stopping the flow of illegal smuggling and human trafficking.
Abbott’s decision, which Texas Agriculture Commissioner Sid Miller called “political theater,” ultimately created a truck jam between the United States and its biggest trading partner. Vegetable growers say their produce spoils in idling trucks and they lose hundreds of millions of dollars.
Mexico is a key supplier of vehicles, auto parts, electrical machinery, chemicals and agricultural products. Almost $9 billion worth of fresh produce crosses the Texas border from Mexico each year, said Dante L. Galeazzi, CEO and president of the Texas International Produce Association.
And for the past week, these products have been held hostage, with businesses and goods “being used as bargaining chips,” Galeazzi said.
What was once a routine border crossing has turned into a 30 hour wait for some trucks. Meanwhile, fruits and vegetables in those trucks spoiled, leaving some aisle shelves sparse or empty ahead of the holiday weekend, he said.
“It could take a week or more, up to probably three weeks, before the supply chain realigns,” Galeazzi said.
In recent days, Abbott possesses met with the governors of the four Mexican States that border Texas and have reached agreements to end the increased controls. Friday, after meeting the Governor of Tamaulipas, Abbott said trade controls would end immediately.
The “financial pain” was a necessary consequence to “get the public to insist that their government leaders” take action to curb illegal immigration, Abbott said.
Losses at fruit and vegetable growers are estimated at more than $240 million, said Lance Jungmeyer, president of the Fresh Produce Association of the Americas.
Consumers will also pay the price as producers seek to recoup some of their losses and supplies run out.
Americans can expect to spend more on strawberries, avocados and asparagus starting this weekend, with the impacts felt most in the Midwest and Northeast, Jungmeyer said.
“It’s not just a localized problem,” said Jerry Pacheco, president and CEO of the Border Industrial Association in New Mexico. “It will hit you in St. Louis or Seattle. We are connected to a global supply chain.
“It’s a bad time to add this to consumers’ pockets to pay their wallets,” says Jungmeyer.
At the El Corral supermarket, a specialty Mexican grocery store and meat market in Stephenville, Texas, co-owner Santos Avila was warned of shortages by his beer suppliers due to the delay in the entry of the glass into the United States in from Mexico.
“It’s just one thing after another,” Avila said, noting the price increases and product shortages that have occurred over the past two years due to food-induced supply chain disruptions. pandemic.
At places like Luna’s Mexican Restaurant in St. Francis, Wisconsin, which have yet to see price increases due to delayed shipments from Mexico, the mere prospect of delays or shortages of staples like avocados, tomatoes and limes is cause for concern, owner Jenny said. Bustillos, who runs the restaurant with her daughter, Brittanie Sacristain.
Luna’s has already seen prices triple due to pandemic-related supply chain challenges and inflation, Bustillos said. A case of limes that cost $30 a case pre-pandemic is now $90, and a case of avocados has gone from $40 to $120, Bustillos said.
“All [we make] contains some type of fresh vegetables, which is very concerning for a company like ours,” said Sexton, director of Luna. “Everyone who works here, we support our families with this. We are not a chain [restaurant]. It is our livelihood.
It could ultimately take several weeks for supply chains to recover from the week-long slowdown at the border, said Matthew Hockenberry, an assistant professor at Fordham University who studies supply chains and logistics.
“It’s also so hard to predict, because there’s so much supply instability right now,” he said, noting that the latest wave of lockdowns in China and the war in Ukraine are still causing more disturbances. “The degree of supply uncertainty is so high that adding another straw here on the camel’s back is a dangerous proposition.”
The dead end also has the potential to aggravate existing supply chain problems in manufacturing, said Conference Board senior economist Erik Lundh.
After the early stages of the pandemic, when lockdowns in China led to significant delays in shipments, it spurred renewed interest from U.S. companies to work with suppliers in Mexico, he said.
“What will companies think about it? ” he said. “What are they going to think when they see that Mexico, which has emerged as a potential alternative to China, can suffer these kinds of impacts in this American political sphere.”
These problems could further compound the inflationary woes that are already exacerbated by the war in Ukraine and the new wave of Covid that has hit China, he said.
“Coupled with the difficulty of getting across the border from Mexico,” he said, “it superimposes two different types of sources of inflationary pressure and makes things even more complicated.”