Free Trade and a Case of Local Tomato Production

 Budry Bayard, Lijun Chen and Henry Thompson

Abstract

This note looks at the time series evidence of the effect of NAFTA on Alabama tomato production using data up to the start of NAFTA to predict the trend in its absence.  The time series is stationary with a constant mean and variance.  An autoregressive model with one lag makes the forecast verified by impact analysis.  The average yearly production loss over the 8 NAFTA years is estimated to be 85 thousand cwt, worth over $2 million at the average price implying total lost revenue of over $17 million.  There is also evidence that imports and peso depreciation lower Alabama production.