Giant mechanical tomato harvesters are lumbering through more than a quarter million acres of California processing tomatoes, gathering vines and separating green tomatoes from red ones.
When the final gondola truck is pulled from the field this fall, the crop should total about 10 million tons of tomatoes to be processed into everything from canned diced tomatoes to ketchup to Marinara sauce in your favorite Italian restaurant.
Evidence is accumulating California’s 2005 processing tomato harvest is well under way. Roadsides from Bakersfield to Woodland between now and October will be littered with thousands of tomatoes that made it to the gondolas from the harvesters only to roll off en route to the cannery.
Unfortunately, there is very little cause for optimism as this year’s tomato harvest gears up. Prices remain flat like those tomatoes that rolled into the roadway to be flattened by passing cars and trucks. Adding to the pain is added expenses growers have incurred growing this year’s crop. Weed and disease control costs have been excessive.
For two decades until the turn of the century, a cannery tomato contract was a license to print money. You could not pry a tomato contract away from a grower who had one. A lot of money was made on tomatoes in the 1980s and 90s. Today cannery tomato contracts go begging for takers because there is little or no profit in growing processing tomatoes. The industry’s ability to grow and process massive tons has created a situation where supply can be limitless and demand limited. Plus, there are so few buyers of raw products, there is little price competition in the wholesale market. It is the same buyer consolidation issue that is facing most California commodities. This adds up to perpetually low prices.
Tomato contracts have been stuck on $50 per ton for so long it has become like a recorded telephone message that never changes. Growers are tired of hearing it.
Even during the good times, contract prices were not really much higher than today’s price. However, producers have made huge strides in increasing yields with one innovation and one new variety after another. Ten years ago a 30-ton per acre crop was something to brag about at the coffee shop. Today 30 tons is a disappointment. Yields of 50 to 60 tons are not uncommon in specific fields.
Costs eat tonnage
Growers admit there is still room at the top for more yield, but costs are eating away at added tonnage faster than producers can add extra pounds per acre.
The 265,000 acres planted this year are the third lowest planted in the past 15 years, an indication that growers are giving up on a crop that once represented a solid return on investment. Only 1992 and 2001 acreages were lower.
California’s annual 10 million tons represents 95 percent of the processed tomato products produced in the U.S. However, the chairman of the California Tomato Growers Association (CTGA), Fresno County producer Don Cameron, says unless the economics for growers change soon, tonnage will fall sharply, and there may not be enough tomatoes grown to support the state’s canneries.
The processing tomato industry could go the way of the state’s garlic industry, virtually defaulted to China and other offshore low cost producers, unless something changes.
"That would be a sad state of affairs," admits Cameron. "We produce a healthy, high quality food product in California that is good for the American consumer. If the U.S. looses it and is forced to rely on other countries for tomato products, that raises concerns about food safety and food security."
Cameron said "we produce the finest tomato product in the world. It is unfortunate we cannot receive enough to keep our product economically viable.
"We’ve done just about everything we can to cut costs. We cannot always have a big production year like last year to absorb some of the costs. This year is a good example of costs exceeding income," said Cameron.
The tomato growers association, for years a bargaining association, has shifted its focus from negotiating price to generate support and funds to create demand-increasing promotions for tomato products. Growers believe that is the only way out of the economic malaise. The association has made it clear it wants canneries and growers to join together and create demand for tomato products like almond growers have done for their commodity.
CTGA president Ross Siragusa said most growers are in favor of spending money to promote the health aspects of tomato products. However, the "brand" processors are reluctant to spend while other bulk processors are taking a wait and see attitude. It is a familiar story. Many commodity groups have faced the same dilemma in difficult economic times.
Processors Conagra, Ingomar, Los Gatos, Morningstar and Pacific Coast Producers "have indicated their interest in supporting an industry wide effort," said Siragusa, who continues to pound doors for more support.
Same leaky boat
He acknowledges that processors are in the same leaky economic boat as producers. No one is getting rich growing, processing or marketing processing tomatoes.
"Some may argue that economics are so tough that no one can afford to contribute towards promotion," Siragusa said. "That is the same argument some almond growers used in the ‘90s." The almond industry leadership moved forward anyway and almond demand has soared along with grower prices.
"We have even more going for us now with a positive health message than the almond industry did when it started promoting," said Siragusa.
Long term promotion is a long term solution, believes Cameron and Siragusa.
However, there is a more immediate economic crisis; the 2005 crop. Diseases, primarily bacterial speck, forced growers to repeatedly treat with fungicides in the wake of a prolonged wet spring. Those who did not treat aggressively have lost tonnage. Disease control expense has been compounded by a big weed control cost year.
"Some years are buggy years. Others are weedy years. This is the weedy year," said Kevin Lehar of Woolf Enterprises, Huron, Calif.
"We saw nightshade blooming in January. We do not typically see that until early March."
When Lehar would tackle the weed problem on the 5,600 acres of tomatoes he managed with an herbicide application, there would be more showers and more weed flushes.
"The rain pattern was ideal for the weeds," he said.
Compounding the issue is growing weed resistance to herbicides. Marestail is now officially resistant to glyphosate. Lehar believes lambsquarter will soon be added to the resistance list. It is not just glyphosate resistance that has Lehar concerned. Pigweed is getting harder to control with preplant dinitroanalines. "We used to get lambsquarter with dinitroanaline. That is no longer the case," he said.
The same cool, wet spring that spawned the weeds, also caused disease problems. Lehar treated an average of four times for bacterial speck. He normally treats once or maybe twice.
"We plant resistant varieties, but there is a new race of speck that is causing a lot of problems," said Lehar. "We treated more aggressively than in the past. We have been hurt badly by speck in the past. If we error, we want it to be on the side of caution."
Some growers operated on the assumption that the rains would eventually stop and held off preventive fungicide treatments. Rain did not stop until May. Yield was lost in many fields due to bacterial speck.
Another, growing problem is tomato spotted wilt, a thrips-vectored disease for which there is no control. An estimated 1,000 to 2,000 acres were disked under early in the San Joaquin Valley due to tomato spotted wilt.
"Yields will definitely be lower this year. We will be lucky to have a normal year," said Cameron. The cool, wet spring delayed planting for many. Processing tomatoes are still mostly contracted and planted on a schedule to meet cannery delivery dates. Those dates are met, regardless of the tonnage from the field.
The May 30 crop estimate was for 10.4 million tons. Siragusa called 10.3 "optimistic." The California Agricultural Statistics Service estimated crop tonnage yield is based on an average of 39.5 tons per acre, which would be the second highest average. Siragusa expects the August crop estimate to be lower.
Gene Miyao, UC Cooperative Extension farm advisor in Yolo County, said foliar diseases caused by spring rains "took away tons from early plantings" in the Southern Sacramento Valley.
"I cannot recall a year during my career when bacterial speck was as bad as this year. It is not in every field, but it was pretty widespread," said the veteran farm advisor.
Early-planted fields were hit hardest with diseases and other problems. Later-planted fields look better. However, the better fields ran head long into a string of 100-degree days in mid-July that cause sunburn and may push fields "over the hill" said Cameron.
"Some fields look decent, but there is no bumper crop overall," said Siragusa.
Lehar considers Woolf fortunate. He believes the farm’s tomato acreage is better than most. "However we are a full season grower, and we will be harvesting well into the fall. The season is a long way from over," he said. The biggest challenge is to maintain yield for late harvest tomatoes which have to face excessive heat during fruit set and powdery mildew problems.
He dodged spray drift that was a widespread problem in the valley this season and aggressive bacterial speck treatments prevented major disease problems. Overall, his crop is only about 10 days late. That is not bad considering the lousy spring conditions.
"Fortunately, we have some sandy ground we were able to get in and plant on a timely schedule," he said. He started planting the third week of January.
"We doubled our transplant acreage and we will add more next year," he said.
It costs about $45 per acre more to use transplants, but Lehar gets a stand. It takes 15 to 20 days to get a stand with direct seeding under ideal conditions. Rain and wet weather can set that back.
Plus, seed for open pollinated varieties is becoming increasingly more expensive.
More use of transplants is part of Woolf’s efforts to meet the challenge of making a profit from $50 per ton tomatoes by continually striving for higher yields. Woolf also has reduced tomato acreage to maximize yield. "We have been as high as 10,000 acres of tomatoes, but we pared that down to do a better job of managing tomatoes without being overextended."
Like many SJV farmers, Lehar is cutting costs by reducing tillage operations. Woolf has also joined the drip irrigation parade. Drip is nothing new, but there is a growing trend toward above ground drip systems rather than buried drip.
For one thing it costs less; $250 to $350 per acre versus $1,000.
Above ground systems also gives producers more flexibility in irrigating the crop and managing equipment over different row configurations.
"We jumped in with both feet going from 15 acres to 45 acres to 3,000 acres to 7,000 acres of drip this season," It is mostly in tomatoes, although he has gone from 45 acres of drip irrigated garlic last year to 150 this year. If garlic yields pan out like he expects there will be more drip-irrigated garlic. "We are trying it on 450-acres of cotton this year. Last year we had it on 60-acres of cotton," he said.
Lehar has not seen real water savings with drip versus sprinklers or other forms of irrigation, but there is a definite yield advantage with the uniformity of drip.
Cotton, garlic and tomatoes are the row crop mainstays for Woolf. The family farming operation also has small lettuce acreage each year.
The above ground drip tape is only 6 mil, however, Lehar said it has proven to be a tough, lightweight irrigation system. "We had to run a tractor over some of it and it held up well."
Use two years
It is designed to be disposable and recyclable each season. "We are trying some this year to see how it does over two years of use," he said.
"Above ground drip has really exploded on the West Side," he added.
Woolf is locked into the tomato business due the family’s partnership in Los Gatos.
However, tomatoes have long been part of the Woolf row crop rotation before the cannery partnership was formed. "If you do not grow tomatoes, what do you grow?" he said.
Some growers have answered that question by planting alfalfa. Others have switched to permanent crops like vines and trees, specifically almonds and pistachios.
Miyao acknowledges that there is growing interest in switching from tomatoes to alfalfa or trees and vines in his area. However, many tomato growers remain committed to the crop because if offers at least an opportunity to significantly increase income through efficiency and innovation.
"If you grow 3-ton wheat and with closer management become a 4-ton wheat grower, you are talking about an added $100 in gross income," said Miyao.
On the other hand, if a producer is getting 40 tons of tomatoes per acre and can elevate that to 45 tons with new technology or other advances the five extra tons represents a $200 per acre increase in revenue.
And, if growers can protect that added income by cutting costs through reduced tillage, precision agriculture, drip irrigation or other new technologies, he can be part of what Miyao believes will be a strong core industry that will survive in the long term.
"Committed growers are making investments in technology to try and squeeze out extra dollars from already thin profit margins. They are gearing up for now as well as the future and banking on a improve efficiency and increase yields to capture the benefits of tomatoes over the longer term," he said.
Lehar and Woolf are among those growers. It has been a tough season so far, but the extra effort leads Lehar to say: "I am satisfied where we are at this point in the season."
With the reduced acreage and production problems, it is unlikely the 10.3-million-ton cannery contract intentions will be met.
Overall demand for paste products is up 12 percent and with a projected total disappearance projected at 11.75 million tons, this will put ending inventory under 4.1 million tons, below the past five year average.
That would seem to be a good omen for a turnaround in prices. However, there is resistance in the marketplace to accept higher prices, and there are reports of paste sales for 2006 not much better than this season.
One short tonnage season does not make a turnaround in prices. Grower leaders of the industry believe only dramatic increases in consumption will raise income level for growers and processors.