July 19, 2004

Dear CTGA Member:

2004 Harvest:

This is what we’re seeing:

• A number of growers maxing out their contracts and looking for a home for surplus. Some reports of $25 - $30/ton being traded.
• Yields in the south are running anywhere between 8 to 15 tons/acre above expectations.
• In the north fields are picking out up to 10% above average.
• Freight is tight in the south causing some canners to fall behind.
• Limited use is running high due to fruit sitting or being harvested late.

 Market:

Paste pricing continues in the doldrums with many buyers sitting on the sidelines. For those that are active, paste can be found paste @ $0.28/lb to $0.30/lb. Some large buyers indicate that sub $0.28/lb can be purchased. The diced tomato market is very sluggish. 

The Wall Street Journal reported in its July 12 edition that interest in the low carb diet is starting wane, with growth slowing sharply in the last quarter. Marketers, such as Unilever, have not been able to charge more for their low carb products and in some cases, American Italian Pasta, sales of the new products are far worse than expected.  

Promotion:

The CTGA hired the Wild West Gang (WWG) to help promote California Processed Tomatoes. The program will involve the following: 

• Public Service Announcements in conjunction with the California School Food Service Association with the theme of good nutrition starts at a young age with California Processed Tomatoes and School Lunch Programs.
• Articles for newspapers which will highlight the health benefits of processed tomatoes and include recipes.
• Celebrity chef Norman Van Aken will develop recipes which will be placed in major newspapers across the state. Chef Van Aken has received a number of awards for his restaurants in Florida and just opened one in LA. More information on Norman Van Aken can be found at www.normans.com

 Assuming that this program is successful we will be looking to expand it nationwide next year. A similar program was very successful for the Raisin Marketing Board. Growth of our program will be dependent on attracting new members and processor support. One thing for sure, the CTGA is not going to sit on its hands and do nothing.

Fuel Cost:

 We all know that fuel is more expensive, but what does 29.24% increase in diesel mean on a per ton basis.  The following is data from a Fresno County grower member.  The results show $0.55/ton assuming a 40/ton per acre yield.

 Comparing the average costs for Jul ’02 – Jun ’03 against Jul ’03 – Jun ’04 we show the following:

 In coming bulletins we will look at the effect of other input increases on both the grower and processor.

2005 Season:

 It’s not too early to start thinking about 2005 and begin to define what you need for next season. Based on grower feedback the CTGA will look to define the following over the next 45 – 60 days:

• Terms of trade – discounts, premiums.  Get solids programs and other quality discounts defined.
• Tomato varieties –Determine tomato varieties so growers can do a better job of budgeting for ’05.
• Regional differences – If canners truly want early fruit in the north a premium will need to be paid.  We also need to assess whether current late season premiums truly cover costs and risks.
• Term contracts – set terms with canners interested in a longer term commitment.  This should be viewed as an option for growers to lock up a portion of their acreage.
• Price – It will be difficult to determine a price at this early stage, but if demand doesn’t right itself nor Mother Nature intervene the industry will be faced with a large inventory position. It is important to get, at a minimum, a range of where pricing will be.

 Vapam Regulations:

 Thank you to the growers that responded to our questionnaire.  The CTGA collected the data and will be submitting final comments to the EPA next week.  We will be in contact with the DPR in August.

 Membership:

 It is very important that we continue to work on increasing membership.  Increased membership will assist to bargaining, but it will also make us much more effective in protecting grower interests; promoting processed tomatoes; supporting pro-agriculture legislation; being a resource on new technologies.  These non-bargaining areas can have a much bigger impact on your bottom line, but we need more grower support if we are going to be effective.  If you like the direction that the CTGA is heading, please let your neighbor know.  If you don’t, please let your regional Board Member or me know so we can address your concerns.

 Comments/ questions (209) 478-1961 or rdsiragusa@ctga.org    

                                                                                                            Ross Siragusa

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