California canneries will pay a record price this year for processing tomatoes in the wake of high export demand and the challenge of drought and low water availability in some key growing regions in the Central Valley.
The higher prices are prompting some farmers to grow tomatoes outside regions that have led the state in recent years.
“There are some areas that have typically not grown tomatoes, but there’s water there and that has brought a lot of new growers into the mix,” said Don Cameron of Helm, Calif., a director of the California Tomato Growers Association.
Cameron, who farms on Fresno County’s west side, said he planted 2,200 acres of processing tomatoes this year, the most he has ever grown. He will rely on water from some of 40 deep wells to irrigate the crop.
“Some tomatoes are back in the Salinas Valley and the Hollister, Calif., area of San Benito County, further east in the San Joaquin Valley and also in the Delta area where water availability isn’t an issue,” Cameron said. He said some processing tomatoes are also being grown for the first time near Kingsburg and near Children’s Hospital Central California in Madera, Calif., across the San Joaquin River from Fresno.
There was once a thriving processing tomato industry in the Salinas Valley. “But, like garlic, everything moved to the (San Joaquin) Valley,” Cameron said.
Cameron said the crop can be a challenge for new growers. “It’s not an easy crop, there are landmines along the way,” he said. “Each piece of ground is different and getting them harvested at the right time is like trying to conduct an orchestra.”
In addition to pests and diseases, a couple of cold snaps this year have taken their toll on farms including his. “I lost 25 percent of the plants on 160 acres to an early March frost and will have to replant,” he said.
However, the frost damage is not believed to be widespread.
California accounts for more than 90 percent of U.S. production. It was a $953 million crop in California in 2008. Processing tomatoes are used in products that include ketchup and pizza sauce, and high quality California processed tomatoes are often used abroad to blend with domestically produced product.
Tomato processors in the state indicated they intend to contract for 13.3 million tons, which is 15 percent more than was produced in 2008. Processors estimate the contracted production for 2009 will come from 308,000 acres producing an average of 43.18 tons per acre.
Last year the average yield was slightly less than 42.5 tons per acre from 281,000 acres.
However, the third year of drought in California has many questioning whether processors will get all they want, even at record prices.
“That’s the million dollar question,” said Mike Montna, president and chief executive officer of the California Tomato Growers Association in Sacramento. “It’s hard to say. I know that a lot has been spent on the infrastructure, for example on wells. But it’s hard to say what the numbers will be.”
The association and canneries arrived at an $80 per ton figure in late March, a figure Montna said is aimed at “covering some of the risks involved.” In addition to water availability, he said, challenges to the crop can include the spring frosts, high shipping costs and the possibility of late season rains.
In addition to the expected increase in California production, Montna said, “there’s another 10 percent increase in world production.”
Among processors who expect production will be adequate is Chris Woolf, a partner in Los Gatos Tomato Products in Huron. Los Gatos handled about 7 percent of the crop last season.
“We’re covered for this season,” Woolf said. “Next year could be very different.”
The Huron plant sits in the huge Westlands Water District, which has been hit hard by the drought and anticipated zero deliveries of federal water. While some of its growers have come up with alternative sources for water to grow ample tomatoes, others have cut acreage considerably to keep alive permanent crops that include almonds.
Despite those cutbacks, Woolf said his plant will contract for “as many acres as in a normal year.” He added, however, that he thinks the initial crop estimate “may be a little high.”
High export demand in 2007 and 2008 helped contribute to the expansion in planting. For 2007, demand in Europe grew because of poor crop yields in most tomato growing regions outside California.
Last year, total exports more than doubled, thanks in part to a favorable exchange rate and because the phase-out of subsidies to the European canning tomato industry opened the market to lower-priced tomatoes from California. Again, yields in Europe were down.
“Today, it would appear the crop in Europe is falling into place,” Woolf said. “Growers have acreage lined up, and the exchange has changed, so that it’s less favorable. Though there is some demand, it’s not what it was the past two years.
In 2008, Woolf was deluged with e-mails and phone calls from buyers in Europe. “It was a true product shortage,” he said.
Woof said Los Gatos usually exports only to Canada and Mexico. “The freight is so expensive,” he said.
But last year, the plant exported some product to Italy and the Middle East.
At Morning Star, the world’s leading tomato processor, spokesman Nick Kastle agreed that export demand is likely to decline. Morning Star Packing processed almost 30 percent of the crop last season.
Kastle said the company, which has plants in Woodland and Los Banos, does not own tomato acreage. Because it can access tomatoes from multiple regions, he said, it is less affected by water shortages than grower-operators of a plant in water-short places.
Even in Westlands, the $80 price is proving to be an incentive to plant.
“At that price, the tomatoes are saying, ‘Plant me,’” said Westlands grower Dan Errotabere of Riverdale, Calif. “Water is so expensive, and with limited water we have to choose a crop that makes sense to grow.”
Where growers had plenty of water and applied it with drip irrigation, more than 50 tons per acre was common last season. At $80 per acre, 2009 tomato yields are approaching almond income from a ton of nuts per acre , seen in recent years when prices were in the $2 per pound range. This year almond prices are down considerably. Of course growers would not use water allocated to keep almonds alive to grow tomatoes, but $80 makes tomatoes the most attractive summer field crop this season.
Some other Westlands growers have cut back on processing tomato acreage, however. They include Mark Borba, who is growing about 300 fewer acres of the crop this year.
Borba said considerable acreage in the district, already equipped with drip systems for processing tomatoes, will lie fallow as growers struggle to keep alive permanent crops.
“The hierarchy starts with almonds, pistachios and grapes,” he said, while conceding “tomatoes are up near the top in terms of being economically attractive.”
Cotton has fallen out of favor, and wheat is not commanding the higher prices it once did.
Todd Diedrich, who farms in West Fresno County with his father, Jim, said he has fallowed 830 acres where he grew processing tomatoes last year. This year, he will grow only 130 acres on land that is in an exchange contractor’s district where the water allocation is sufficient to irrigate the crop.
Last year, Diedrich struck a deal with another farming operation to come up with water to salvage tomatoes on about 1,000 acres after it appeared he might have to leave the plants to wither in the Valley’s searing sun. Water rationing in the district had cut deliveries and he needed to keep 550 acres of almonds alive.
“I probably should have abandoned the tomatoes,” he said. “I lost a lot on a couple of fields. Our yields were normally about 50 tons per acre; I had some fields at 38 tons and others at 25 tons.”
He estimated his losses at hundreds of thousands of dollars.
Much of Westlands sits in Fresno County, the state’s leader by far in the production of processing tomatoes, with 4.3 million tons in 2008 compared to Sutter County at 1.5 million tons and Kings and San Joaquin counties at just over 1.2 million tons.
• California processing tomato prices:
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