California growers of processing tomatoes are looking at offers this year in the low $60 range per ton, a sharp decline from last year’s $80 price, said Mike Montna, president and CEO of the California Tomato Growers Association.
Addressing the association’s 63rd annual meeting, Montna said the price being floated by processors would “take $800 per acre from last year’s bottom line.”
“Overall, costs of production are down slightly, but not enough to make those offers profitable,” Montna said.
Moreover, Montna told nearly 250 people who gathered for the annual meeting in Modesto he believes the target figure for canners this year – 12.6 million tons – would add to already high inventories, boosted by last year’s 13.3 million ton crop, which was a 12 percent increase from the previous year.
“We are seeing inventory being reported at record levels,” Montna said.
Montna is troubled by “reports from the field that some processors’ field representatives have been telling growers that in order to get a delivery schedule for the upcoming year you need to agree to a specific price. The CTGA takes these actions very seriously and believes growers should not be put in that position. We are committed to stopping these actions to protect your rights and interests.”
In 2009, Montna said, producers faced increasing cost of production and dramatic energy cost as well as expectation of a strong export market helped by a weak dollar. Product supply was short, but so was water.
He said energy and diesel prices have stabilized. “Unfortunately, for many in the state, not much has changed on the water front,” Montna said. “Hopefully the recent storms that we have had will continue long enough to make a difference.”
Montna said the association’s board sat down with each of the state’s processors over two days to talk about the upcoming year.
“It was during those meetings the CTGA proposed a mutual exchange of offers concept to each processor,” he said. “While we would have ultimately liked everyone to participate we are pleased with those who did and believe it was a good start to establishing a process for price negotiations.”
He said the association started with “an asking price for raw product at $75 a ton.”
Montna said CTGA membership has increased to 58 percent of the available tons in the industry, close to a record high.
He said the association played an important role in the wake of the bankruptcy filing last year of SK Foods.
“We collected over 15 letters from growers and impacted parties that were forwarded on to the courts,” he said. “This was important as we all can remember time was not on our side with harvest approaching.”
Montna said the association played a role in talks with Singapore-based Olam International in its purchase of SK Foods, meaning the contracted growers found a home for their product.
“The CTGA conducted meetings with the courts, the trustee and even potential buyers,” Montna said, “and was the voice of the situation that you – the growers – were in at that point.”
He said this year the association has formed a partnership with JG Parker Insurance Co. to provide reduced service fees, training and seminars.
The association also has hired the Sacramento law firm of Khan Soares and Conway to lobby lawmakers.
“Everyday decision makers in Sacramento are making laws or regulations that are becoming more burdensome for the California tomato farmer,” Montna said. “Instead of being on the sidelines complaining about the decisions they make, we need to be there at the start and let Sacramento know exactly what our growers are facing in this difficult climate.”
George Soares, a founder and managing partner in the firm, followed Montna to the podium and urged the association’s members to become active in trying to sway lawmakers on issues by telling the story of agriculture while connecting to the lawmakers on issues where those elected officials have concerns.
He said a “terrible instability” permeates the state’s capitol and its legislature is dysfunctional.
Soares said it is important to connect with people far removed from agriculture, like the lawmaker “who lives on the fifth floor of a building in Los Angeles.”
But that lawmaker, he said, is greatly interested in providing soccer fields in urban settings and his appreciation of land use could open the way to dialogue. He said another lawmaker who represents the San Francisco area will be taken up in a plane to understand the importance of crop dusting.
“Just as in your business, it all comes down to relationships,” Soares said. “People who know and trust you will help solve our problems.”
Soares said those in agriculture can also expect they will need to provide more “self help because the state of California is broke.” He expects more fees will be levied by the state to make up shortfalls.
“It will be in the form of ‘Let the farmers pay,’ even though they are the victims,” he said. “Self help will be an enormous part of our future. It will be a big deal for all California agriculture, including the tomato industry.”