The Tomato Magazine

The Tomato Magazine
October 2006

California Processed Growers Seek Higher Contract Offerings

By Lisa Lieberman

Record heat waves in California earlier this summer have reduced what was already projected to be a very short processed tomato crop by at least an extra 10 percent. Because of that, growers are hoping the short fall will translate into higher contract offerings from canners next year.

“The tomatoes just cooked in the fi eld,” said Don Cameron, general manager for Terranova in Helm in Fresno County, Calif. “We can take a few days of 100 to 105 degree temperatures without any real issues. But this was record heat. We had about a week of over 110-degree weather, and the plants just collapsed.”

Cameron, who grows about 1,500 acres of processing tomatoes, said that his yields were down by fi ve to 10 tons per acre on fields that normally produce 38 tons per acre. It may be too soon to tell exactly how much damage the heat wave caused, since the tomatoes were at all different stages of growth when the high temperatures hit.

“The plants in the fi eld were affected one way or another. Either the fruit that was ready to be picked turned to mush and rotted in the fields or the plants with blossoms that were getting ready to set fruit were aborted,” Cameron reported.

There’s a good chance that the plants with aborted blossoms will have reduced fruit supply in October when the tomatoes are normally harvested, Cameron said. Overall fruit harvest had been projected to be about 11 million tons.

Reduced Supply Expected
“We’ll be fortunate to end up with 10 million tons, and it could be as low as 9 million tons by the time we fi nish,” Cameron said.

California produces 90 to 95 percent of the U.S. processed tomato crop and about 45 percent of the world-wide processed tomato supply. Canners will also be feeling the affects of lower yields this year, since last year’s carryover is only 50 percent of normal, said Tom Braner of Tanimura & Antle in Five Points, Calif.

“Inventories are at the lowest point they’ve been in 15 to 20 years,” Braner said. “Going from one crop to another, we usually have 4 million tons on hand. Right now, we’ve only got 2 million tons. The crop’s going in one door and out the back at the canneries as fast as they can move through the processing facility.”

In a sense, that’s good news for the processors, he noted. They’re able to charge more for processed tomatoes due to reduced supply and high, world-wide demand for the product. Meanwhile, growers are receiving less money than they should because they are locked into fixed contract prices. And since they already have had two bad years in a row, many are saying they might not grow tomatoes next year unless processors agree to bumping up contract offerings, Braner said.

Last year, prices were $55 a ton. The year before that, they averaged $52 per ton.

“This year, they shot up to $57,” he said. “Next year, growers are asking for $65 a ton. Canners are selling for higher prices, and growers just want their fair share.”

Out of 8,000 acres, T & A, grows about 900 acres of processing tomatoes, Braner said. If the price isn’t right next year, T & A and other growers in the area are expected to switch out of tomatoes into more profitable alternatives.

Switching to Alternative Crops
“A lot of growers don’t want to put all their eggs in one basket with crops like tomatoes, so some have been switching to permanent crops such as almonds,” he said. “That causes a problem for canners because there’s less acreage out there available for growing tomatoes.

“So, if canners want to keep tomatoes in California, they’re going to have to do something about it,” Braner warned.

Right now, there is real danger of more California tomato growers switching to other crops, added Bret Ferguson, who is on the board of directors for the California Tomato Growers’ Association in Stockton. About 30,000 to 40,000 acres of tomatoes and other row crops (cotton, vegetables, etc.) are being switched out to more permanent plantings each year.

“Processors have shown they’re concerned about the supply of tomatoes, but they’re not showing as much concern as they should,” Ferguson chided.

While prices to growers went up 10 to 11 percent this year compared to the year before, processors raised their wholesale prices by almost 35 percent – from 29 cents per pound of paste last year to 38 cents this year, Ferguson said.

This year, producers are hoping for at least $65 a ton and that processors will come out with a price earlier in the season so that producers can make plans for next year, Ferguson said.

“Last year, we got prices in November and December. This year we’re hoping to hear something by October or November. Historically, contracts don’t come out until anywhere between February and April,” Ferguson said.

Ross Siragusa, president and CEO of CTCA, said the industry also hopes to see changes in green grass deductions, so growers lose less money for green fruit.

“We want to make the contracts more consistent,” Siragusa said. “The deductions for green grass tomatoes should be less punitive to growers, since processors don’t cull all of these tomatoes; they use them in the processing to add viscosity to the paste.”

Ultimately, if growers and processors work together, it can benefit the tomato industry as a whole, Ferguson said.

“We’ve got to promote our product better,” Ferguson said.

In the past few years, there’s been a lot in the media about all of the health benefi ts of lycopene in fresh tomatoes. Processed tomatoes, however, have much higher percentages of lycopene, shown to prevent different types of cancer, he said.

“We’re working on getting a promotional program together with the processors and growers that will help grow the overall market,” Ferguson said.

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