July 26, 2002

CTGA Signs Remaining Canners at $49.50

The California Tomato Growers Association is pleased to announce that it has signed Master Agreements with San Benito Foods, Escalon Premier Brands, Heinz U.S.A., Colusa County Canning Co., Stanislaus Food Products, Pacific Coast Producers, and Los Gatos Tomato Products valued at $49.50 per net ton for the 2002 season. Summaries of the agreements are as follows:

San Benito Foods will be utilizing a contract structured similar to those in the past, building on a Base Price of $48.00 with incentives for Limited Use and MOT.  Grower can earn a high of $50.50 under the contract.  Late Season Premiums will be paid on a weekly basis starting at $5.00 for deliveries from September 15 through September 21, $7.50 for deliveries from September 22 through September 28 and $10.00 for deliveries from September 29 through the end of the season.

Escalon Premier Brands will again use a broad range of incentives that include Soluble Solids, MOT, Agtron in combination with Limited Use and Grass Green to build on a Base Price of $46.50.  The contract has a potential of  $54.95 while the three year average of deliveries to the plant will return $49.50 per net ton.  The Late Season Premiums under the contract call for $3.00 for deliveries starting on September 15 – September 21, $6.00 for deliveries from September 22 – September 28, $8.00 for deliveries from September 29 – October 6 and $10.00 for deliveries from October 7 through the end of the season. 

Heinz U.S.A., Colusa County Canning Co. and Pacific Coast Producers will all use cash contracts at $49.50 per net ton with the new CTGA standard Late Season Premiums (on a ten-day basis) of $5.00 for deliveries from September 15 through September 24, $7.50 for deliveries from September 25 through October 4 and $10.00 for deliveries from October 5 through the end of the season.

Please note:  Late Season Premiums of $3, $6, $8 & $10 paid on a weekly basis hold the same value as Late Season Premium of $5, $7.50 & $10 paid on a ten-day basis.  In contrast, LSP of $5, $7.50 & $10 paid on a weekly basis hold a 22¢ credit against the contract.

Colusa County Canning Co. has also signed a three-year contract that locks in a minimum grower tonnage over the term of the agreement.  Year one calls for a price of $48.50 per net ton while the agreement in year two and three provides that the parties shall agree to a price of not less than $48.50 and not more than $51.50 per net ton.  The agreement calls for standard Late Season Premiums for the term of the contract to be paid on a scheduled basis before the season begins.

Stanislaus Food Products will again utilize their FOB Cannery pricing in conjunction with the Company’s long-standing VIP payment program.  After comprehensive review of all CTGA member delivery schedules it has been determined that: the $55.00 Base Price, $3.00 early season premium, $1.25 - $2.25 pear premium less the growers Hauling Allowance; the weighted average price paid to growers meets the $49.50 per net ton level established by the Association.  The VIP program is a type of pooling arrangement whereby growers put in $6.00 and are paid in accordance to their ranking over several quality factors with $3.00 being a guaranteed minimum payout. The contract holds slightly stricter Limited Use and Mold deducts but also conforms to Late Season Premiums of $5.00, $7.50 & $10.00 paid on a weekly basis starting on September 15.

Los Gatos Tomato Products will be utilizing a Soluble Solids incentive program that moves up and down the scale at approximately $1.00 per one tenth of SS depending on variety.  The Base Price is $49.12 with relaxed Grass Green Deducts and Late Season Premiums of $5, $7.50 & $10 paid on a weekly basis starting on September 15. 

CORRECTION: The summary of the ConAgra Foods contract in the June 3 Tomato Bulletin should read that the Company will utilize a cash contract with a Base Price of $49.50 with deducts for Grass Green (not MOT) of 1X through the entire range.

Budget Threatens Williamson Act

CTGA is lending its support to rescue $39 million set to be axed from Williamson Act funds in the proposed 2002-03 state budget.

Last month, Governor Gray Davis did a balancing act with the budget, dealing with a $23.6 billion deficit.  But farmers and ranchers could lose significant funding for the Williamson Act, a program that has protected agricultural and open space land since the 1960’s.

“The ag community, rural legislators and the Sierra Club are working the issue very hard,” said John Gamper, spokesman for the California Farm Bureau Federation.  “We’re trying to convince the governor that he should reconsider this proposed cut.”

The Williamson Act allows local governments to contract with private landowners who are willing to restrict land use for agricultural or open space purposes.  In return, landowners earn lower property tax assessments – based on the land’s value as a ranch or open space instead of its full market value.  The state then reimburses the county for lost tax revenues.

In addition to the $39 million proposed to be cut away from the Williamson Act, more than $162 million will be taken from the University of California system.  While school officials will have to decide what to cut, agricultural programs are likely to feel the impact.
 

The California tomato paste-for-sale inventory on June 1, 2002 was 1 million tons, raw product equivalent basis.
Total tomato paste stocks, including inventory held for remanufacture was estimated to total 2.2 million tons (raw product equivalent).
 

This report is an estimate of total U.S. supply and demand for processed tomato products. Reports are based on voluntary pack and inventory reports furnished by participating U.S. processors.

2000-2001 pack year statistics based on reports from processors handling 95% of U.S. tonnage.

2001-2002 pack year statistics based on reports from processors handling 91% of U.S. tonnage.

All positions are stated on a "raw product tons" equivalent basis.
 

John C. Welty
Executive Vice President