A cold, wet spring and a blistering summer hot spell reduced California processing tomato production by almost 17 percent from the first estimate to the final tonnage.
This is expected to drop cannery inventory to the lowest level in a decade and set the stage for significantly more acreage in 2007 at higher contract prices.
Inventories were the tightest since 1998 at the start of the 2006 season when the initial USDA forecast called for a crop of 11.4 million tons. After the wet spring and roughly two weeks of temperatures of more than 110 degrees, the California Tomato Growers Association is projecting a final crop of only 9.5 million tons, according to CTGA president Ross Siragusa.
In a report to the 25th annual Agribusiness Management Conference, Siragusa said to rebuild inventory, processors will need to contract for 5 percent to 10 percent more acres than the 288,000 acres grown in '06.
Growers say they need to be paid $7 to $12 more per ton than the minimum average price of $58 per ton received in 2006 because they have been losing money at current prices. Based on a 35-ton yield, this increase should up the gross income by $245 to more than $400 per acre.
Current paste market prices of 38 to 41 cents per pound equate to in-field prices of $67.46 to $72.80, well within the range of what growers want to produce a crop in 2007, which will start going into the ground next February.
Based on the state average yield, a $65 per ton price will gross about $2,400 per acre. It costs about $2,200 per acre to produce tomatoes for processing.
California produces more than 90 percent of the processing tomatoes grown in the United States.
Siragusa said the '06 crop planting was delayed two to five weeks by a wet spring, and the heat set it back another two weeks. The heat also precluded pollination, creating a split set and a high percentage of hollow tomatoes.
More fruit was sunburned during the heat, allowing mold to start. Fruit ready for harvest was rendered too soft in many cases.
Yields were off 10 percent to 20 percent. The crop was heavily discounted for a lack of quality. Growers used more fungicides to fight mold, and heavy worm infestations increased pesticide bills. And harvest productivity was poorer, according to Siragusa.
Processors also suffered from reduced daily throughput creating higher per unit costs. Processors could not meet customer contracts due to volume and quality problems. Hollow tomatoes reduced truckloads as much as 30 percent, increasing overall hauling costs.
No one won in 2006.
Worldwide paste and peeled inventories are tight, leading Siragusa to predict no significant import pressure into the U.S. of foreign imports.
“As a consequence of three of the past four years resulting in poor economic returns, growers are willing to work together (with processors) to achieve higher prices,” he added.