Despite the prospects of the largest base price for processing tomatoes in the industry's history, growers planted only slightly more acres than last year.
Most of the state's packers have agreed to a $63 per ton price. One of the state's largest, Morning Star, has not agreed to the flat $63 price, but according to Ross Siragusa, president of the California Tomato Growers Association. "Growers are pleased to be getting closer (with Morning Star), but still expect to be paid $63."
(Western Farm Press incorrectly reported last issue that CTGA was holding out for $65 per ton.)
The $63 price compares with the $58 base paid in 2006 and approximately $50 over the previous four years.
The final 2007 price will be higher than that because the crop was so short — just 10.1 million tons — which depleted inventory and set the scene for growers to ask for more money this season.
Last year's average price was $58 per ton, with an average yield of 36.4 tons per acre. Processing plant door price was $67 per ton, which included premiums.
In January, California's tomato processors indicated they intend to contract 12.0 million tons, 20 percent more than the 2006 contracted production reported in September, 2006.
At that time, processors estimated the contracted production for 2007 would come from 305,000 acres, producing an average of 39.34 tons per acre.
The next acreage report is due at the end of May and Siragusa says the industry expects it to be somewhat surprisingly less than 300,000 acres, likely 280,000 to 290,000 acres.
There are several reasons for that: alternative crops are more attractive, particularly corn; alfalfa is offering some of the most attractive prices in years; and the cost and availability of irrigation water.
“Other crops provide legitimate alternatives to tomatoes, so losing acreage is not as big a concern for growers,” says Siragusa. “We certainly would have seen more tomatoes if other row crops hadn't been so strong."
Don Cameron, Terranova Ranch Manager. Helm, Calif., says, “With the dry weather we’ve had this year, the main problem is the lack of moisture in beds at planting. Water had to be applied pretty quickly after planting due to the extremely dry conditions.
“The dry weather is producing ideal conditions for the new plants, as opposed to last year when wet weather brought a lot of disease problems. Water is the key to the crop this year. With water already being traded at $230 per acre foot, we are positioned for an interesting year.”
Indeed, water could very well be the Achilles heel as the season moves forward, even though the production situation now is favorable.
“The crop should be early, and we have the potential for above average yields,” Siragusa says. “There is a great deal of concern regarding the water situation out into 2008. Unlike previous dry years, the amount of permanent crops has increased dramatically — and permanent crops will get the water first. Row crops can't afford to pay $200 plus for supplemental water.”
The $63 per ton sounds good on the surface, says Cameron, “but with the increased production costs we’ve seen, a grower will need a good crop to make money."