CTGA Tomato Bulletin

August 13, 2004

Dear CTGA Member:

2004 Harvest:

This is what we’re seeing:

Plants are running at capacity at approximately 960,000 tons per week.
PTAB projects that 5,235,000 tons will be processed by week’s end.
Crop is on track to far exceed 11,000,000 ton estimate.
Yields continue high with a few fields being disked due to delayed harvest and growers being over-contract.
Harvest in the north is running smoothly. The Delta is looking normal
Solids are running 0.1 % below last year with a current state average of 5.2%. Limited use is far higher at 3.1% vs. 2.3% at this time last year. The higher limited use is attributed to a few canners starting late, a truck shortage early in the season, difficulty in harvesting the larger than expected crop.
The reduced solids and higher limited use are affecting processor economics.

Contract Issues:

The CTGA is providing legal guidance for growers that face contractual problems with canners. A couple points for consideration:

Clearly read the canner’s contract to see if there is a breach
Document the harvest fully including pictures and communication with the canner.
If you work with more than one canner, detail the comparative performance
Seek outlets for surplus fruit to minimize loss
Contact your canner’s management and discuss your concerns.

2004 Tomato Harvest and Projected Production in Other Countries:

§ Amitom reports late harvest in Spain and poor yields has reduced the production estimate from 2.4 to 2.35 million metric tons.

§ Italian harvest started a week late, but it’s still on track to reach 5.6 million metric tons.

§ The rest of Europe is likely to meet their estimates – additional 2.22 million metric tons

§ Chinese harvest is underway, but status of Tunhe its #2 processor is up in the air. Crop estimates are still between 3.2 – 3.8 million metric tons, but due to the unsettled state of Tunhe, total production is likely to be at the lower end of the range. Chinese offers are at $0.23/lb for 36 brix paste FOB China. On a delivered US West Coast and standardized basis, this is competitive with Californian Paste.

§ Assuming no further weather disruptions, World Production will top 31 million metric tons vs. 28.5 last year and 25.1 in 2002. Inventories on a worldwide basis were tight, but the large crops will impact export opportunities for US processors.

§ If there ever was a time to promote processed tomato consumption, it is now.

Trade:

The dust has settled from the recent Doha Round for WTO discussions. Despite the positive pronouncements from our negotiators, there is little guaranteeing that California Tomato Growers will see any true benefit. A few items to ponder:

§ The agreement will cut program crop supports which will reduce cotton production

§ EU program reductions will be made in aggregate so there is no guarantee that minimum tomato price supports EUR34.50 per MT ($42.10 basis current exchange rate) will be reduced.

§ Since there are no US price supports for processed tomatoes, no harmonization would be required.

§ Unofficial support, such as non-repayment of Chinese State loans by Chinese processors which serves as free operating capital is not addressed.

Bottom line is that our industry needs to fight to make our issues known so they will be addressed. If we sit idly by, we will be hurt. Just take a look at what’s happened to asparagus, apples, garlic, etc.

2005 Negotiations:

Several processors agreed to begin preliminary contract negotiations in September. Against the backdrop of surplus production, sluggish demand and poor grower & processor economics we need to approach negotiations with realistic expectations. A few suggestions:

§ Growers need to have a strategy to reduce tomato acreage. This also means deciding at what point you will walk away.

§ Growers need to work together and stand firm on fair terms and pricing levels. This involves talking with your neighbors and meeting with other growers in your district.

§ The CTGA received valuable feedback from many of you over the past few months and we will continue to solicit your sincere input.

§ Please discuss CTGA membership with your neighbors. Working together, growers have an opportunity to affect changes in pricing, regulations, trade policy and demand.

Olympic Athlete:

Alison Cox, daughter of Past CTGA Chairman Chuck Cox from Patterson, is a member of the Women’s 8 Rowing Team. Please join us in rooting for her success.

Comments/ questions (209) 478-1761 or rdsiragusa@ctga.org

Ross Siragusa