As the season winds down, the surplus tomato market is akin to a feeding frenzy, only the sharks aren’t all that interested. As a reward for growing such a good crop, growers are pulling in about $30 a ton for their expertise on producing above and beyond a contract.
“Thirty dollars a ton is a very attractive deal for processors,” says Ross Siragusa, president of California Tomato Growers Association. “They will be paid $10 per ton for harvesting which is very profitable in a high yielding year. Plus, they will receive tomatoes at $20 per ton, less discounts, which helps bring down the overall costs. For the grower that has already filled a contract, it’s better than a poke in the eye since they’ll have to clean up the field anyway. For the overall market it’s a negative since it adds to inventory and creates pressure in the paste market for lower prices. Lastly it irritates many growers because they cannot fully benefit from a large crop since they cannot sell their surplus at full value.”
In an increasingly global market, the focus is always on the future once the present is satisfied. Stockpiling $30-a-ton tomatoes while they’re available can be an attractive proposition for processors.
“Processors will stock up to take some pressure off next year,” Siragusa says. “In addition, there are attractive export opportunities this year, so the extras help them expand their marketing efforts. For the brands that buy paste from third parties, it allows them to reduce those purchases while maximizing throughput. This, of course, is predicated on having surplus capacity and finding fruit that meets quality requirements.”
Finally, the question is how will this year’s scenario play into next year for California’s processing tomato growers and their planting intentions?
“The larger carryover in inventory will have an impact, but water concerns and attractive alternative crops should more than counterbalance that,” Siragusa says. “Growers should be in the driver’s seat.”