March 15, 2007

Dear Tomato Grower:

 In the current Tomato Bulletin: 

• Ingomar and Stanislaus join Campbell’s and Los Gatos at a firm $63
• Hunt growers accept $63 favored nation offer
• San Benito / Tomatek offer $63
• Del Monte, Escalon and Unilever indicate that they will also be at $63
• Morning Star proposes $62.75 which includes $0.25 concession for green
• CTGA membership breaks 50% barrier

Ingomar and Stanislaus firm at $63: 

Patience and persistence was rewarded when Ingomar and Stanislaus agreed to $63/ton with the following late season premiums: 

·        Sep 17           $5

·        Sep 27           $7

·        Oct   7         $10

Stanislaus VIP program will have $4.00 upside and $2.00 downside. Ingomar will have a solids program and green program similar to last year’s. 

Hunt Growers Accept $63 Favored Nation Proposal: 

Hunt’s came to the table with a favored nation’s proposal which growers reluctantly agreed to. Growers were looking for a firm contract but were pleased that Hunt’s was willing to support the $63. Hunt’s will accept 1 X green to 4% plus have the same late season premiums detailed above. 

Smaller Processors will Support $63:

 San Benito / Tomatec offered $63 this week and growers are now reviewing terms.

 Del Monte, Escalon and Ragu will support $63. Firm offers will be forthcoming over the next 2 weeks.

Morning Star Proposal: 

Morning Star offered the following pricing formula: 

·        If crop < 10.5 million                          $63.85

·        If crop 10.5 – 11.5 million                 $62.85

·        If crop > 11.5 million                          $61.85 

Built into the proposal is a $0.15 concession for Morning Star’s green program – 1 X green with no cap.

 Grower reaction to the revised offer was as follows: 

·        It’s too late to accept a sliding scale proposal especially when > 50% of the industry will accept $63 regardless of the final crop size. A sliding scale could be a possibility for a term contract depending on the levels

 Morning Star responded with a $62.75 with $0.25 concession for their green program. They are also willing to adopt the $5, $7 and $10 LSP. 

·        Growers are not convinced that 1 X green with no cap warrants a concession especially since most processors will already accept 1 X green to 4%. Growers also expressed concern about the relationship between higher green and higher MOT. As the 2002 PTAB study showed if MOT is > 0.5% the 3 X deduct overstates the true amount of MOT. (The 2002 PTAB study showed that 1.2 X MOT + 0.8% is accurate)

·        Bottom Line – Growers are pleased to be getting closer but still expect to be paid market price - $63.00 

CTGA Membership clears 50% barrier: 

During the past 3 weeks, CTGA membership grew by > 10,000 acres. The bulk of the new members are from the Delta which traditionally has been a weak area for the CTGA. Why are growers joining? The answers are diverse but here are a few of the reasons: 

• Growers are tired of losing money on tomatoes. Many growers are starting to recognize that by being unwilling to work together they’ve become “price takers” with no negotiating leverage.
• Alternative crops provide legitimate alternatives to tomatoes so losing acreage is not as big a concern. 
• The CTGA is willing to listen to grower concerns and act accordingly.

Thank you for your support. 

Questions or comments please call.

Ross Siragusa

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