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March 19, 2004
Dear Grower:
Market Update: $51.00 Base Price for 2004
Steady progress is being made in reaching agreements with processors for the 2004 season. At this stage, Campbell’s Soup Company, Del Monte Foods, ConAgra Grocery Products, Ingomar Packing Company, Los Gatos Tomato Products, The Morning Star Packing Company and SK Foods have all signed agreements at $51.00 per ton base price. We also have an agreement in principle with Stanislaus Food Products. Discussions are on-going with the remaining processors and we are optimistic about wrapping up the balance within the next few weeks. Solids programs will vary by processor so please consult with each of your processors.
 
Other Markets
Canadian growers and processors reached an agreement for ’04.

                o Tomatoes for paste -5% change from ’03
                o Tomatoes for whole peel -1% change from ’03
                o Tomatoes for juice -1% change from ’03

Canada projects to produce 660,000 short tons. Canadian processors consist of Heinz, Kraft and Sun Brite. The lower price is a reflection of a stronger Canadian dollar and competition from US tomato paste. Canadian processors also sell into the US northeast.
 
Weather
January and February were considerably wetter than normal as seen in the following data.
 

Rainfall

2004

2003

2002

Rainfall

2004

2003

2002
Sacramento

 

 

 
Fresno

 

 

 

   January

2.07

1.13

2.23
   January

0.87

0.39

0.76

   February

4.54

1.08

1.04
   February

1.69

1.20

0.41
Total:

6.91

2.21

3.27
Total:

2.56

1.59

1.17
Stockton

 

 

 
Hanford

 

 

 
   January

1.74

0.52

1.63
   January

0.97

0.25

0.80
   February

3.68

1.00

0.66
   February

2.32

1.13

0.26
Total:

5.42

1.52

2.29
Total:

3.29

1.38

1.06
 
Snow pack and water content as of March 1 was 125% of normal.  March temperatures through the 16th have been +15 degrees above normal, which helped dry wet fields and allowed planting to move forward. 
 
Market Indicators in 2004: Change from 2003 & 2002
 

 

Vs. March 2003

Vs. March 2002

Natural Gas:

+34.0%

+53.0%

Diesel:

-2.0%

+52.0%

Urea:

+7.0%

+44.0%

Tomato Paste Market
The market remains tight as processors work to fulfill contract obligations. The paste price is nominally $0.28 – 0.29/lb., with little uncommitted supply. Processors are reasonably optimistic that this higher pricing will stick through 2004. Both Chile and China are looking for higher pricing in ’04.
 
Worker’s Comp Reform
Governor Schwarzenegger’s victory on approval of propositions 57 and 58, plus the overwhelming defeat of 56, puts pressure on the legislature to enact meaningful worker’s compensation reform. At the same time, trial lawyers and unions will put up a strong fight to limit any change. A pro-business initiative is being circulated, which requires one million signatures by April 15. This is an issue that will require active support from the CTGA.
 
Trade (NAGPFT)
The CTGA and CLFP (members of the NAGPFT) have appointed Schramm, Williams and Associates to represent their interests in Washington. We thank Leonard Lobred for his 17 years of service to the entire processed tomato industry.
 

CTGA Objectives
In the coming months you will be seeing and hearing about the following, which are based on grower and processor inputs: 

Ø      Industry Promotion:  We will work with processors in promoting the health benefits of processing tomatoes and the food safety of California produced tomato products.

Ø      Advocacy:  We will fight for issues that affect your bottom line.  We will also work towards creating export opportunities.

Ø      Information Resource:  We will disseminate information which will help growers work with processors to reduce costs and improve returns.

Ø      Treat Processors as Customers:  Negotiate fair and reasonable contracts that help the overall industry move forward.  Work to meet growers and processors interests in more flexible contracts with delivery for one to multi-year periods.

In order to succeed we need the support of growers and processors alike.  The California tomato industry has tremendous potential to reward growers, processors and allied industries.  The key is working together and this is the direction being taken by the CTGA.

If you have any questions or comments, please give us a call at (209) 478-1761, or send us an email to ctga@sbcglobal.net.
 

Ross D. Siragusa
President/CEO

 

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