CTGA Tomato Bulletin

November 1, 2007

Special Bulletin:

· Five Points – Huron agree to support minimum $70.00 price plus a water supplement: $400/acre if June 1 allocation is <29% and $200 if 29% to <39%

· CTGA Board Recommends same program for entire State

Growers at the meeting agreed not to commit acres to a processor unless the processor agrees to terms; attached pledge form will show level of commitment which all growers need to support
State survey of grower intentions shows 20% statewide cut with 60% responding
Processors don’t believe growers will stick together; its time to change that perception

Five – Points Growers Position:

35 growers representing the vast majority of the areas acreage met for 2 hours in Five Points in order to solidify the region’s position. Issues that played prominently in the discussion were:

· Price – Given the sharp escalation of costs and increased risk there was no support for a modest increase for 2008. Here’s how the proposed increase compares to other crops:

2005 Price 2008 Price % Increase

Wheat $115 $220 +93%

Corn $90 $160 +82%

Alfalfa $115 $200 +73%

Tomatoes $50 $70 +40%

· Timing – Growers are fed up committing to a crop with an uncertain price. This is especially true with rapidly increasing costs and processors indicating that there is little inclination to increase prices. Too many attractively priced alternatives exist, so there is no need to be backed into a risky, un-priced contract.

· Water Supplement – Given water costs breaching the $400/af level, questionable well output, and no certainty that allocations will even reach 30%, growers felt strongly that a water supplement was important.

· Although this region has the highest concentration of demand (12 processors purchase fruit), growers represented will cut 20 – 60% of their tomato acreage. In many cases the cuts run in ‘000s of acres, so concern of not getting a tomato contract is low.

· Import pressure: Based on the poor production in Europe and China plus the projected Euro 70/MT (US$92/ST) that EU processors will pay in ’08, there won’t be a flood of cheaper imports. Europeans are concerned actually about getting flooded with “cheap Californian” production.

· Impact of 2007 Crop: Growers recognize that inventories will be high, but there will be a sufficient cut in acreage in ’08 to offset any hangover.

Water Supplement Applicable to Whole State:

Some will ask, “Why should a water premium be paid to growers that farm in areas with less water concern?” Three reasons:

· If the tomatoes south of the Delta are worth more because of the water shortage, all tomatoes are worth more.

· Growers with land in many areas with water pay higher rents. Should they be paid less because they bought or leased land with water?

· The vast majority of processors across the region stated that they want a statewide price.

Growers Pledge:

The CTGA is requesting all growers to sign the attached pledge that will show you’re committed to the goal of receiving a fixed-price contract before committing seed and a higher price. This will show whether growers are serious about changing the way business is being done.

For the past 4 years while I’ve been involved in this business, I’ve heard almost weekly that the #1 goal is to get an early contract at an attractive price. If this is truly what you want, now is the opportunity.

If there is concern regarding losing a tomato contract, please review the following 2008 projected acreage data from growers representing 60% of 2007 production:

31% cut in Fresno

22% cut in San Joaquin

15% cut in Merced

12% cut in Colusa

5% cut in Yolo

20% Statewide

If this comes to fruition, 2008 production will struggle to reach 9 million tons.

So why should the industry believe that growers will stick together; they haven’t in the past.

The simple answer is, circumstances changed.

· In the past growers did not have the attractive alternative crops.

· Growers were also tied to tomatoes due to recent investment in tomato harvesters

· Tomato contracts were viewed as “gold”; 2000 – 2006 altered that perception

· In 2007 growers held firm at $63.00, showing they can stick together

· Growers have seen success working together on other crops, example garlic

Other considerations:

· Approximately 200 growers produce the crop statewide

· Average grower represents 50,000 tons, which is not large enough to carry much weight

· Combine several growers together they have significant regional leverage

· Coordinate between regions, the leverage becomes statewide

The ultimate end game is not to have a head butting contest every Nov/Dec, but rather create the framework for annual negotiations with specific dates for exchanging offers and a binder mechanism to settle price disputes. This would hopefully include both term and single year agreements.

For non-members, please give strong consideration to joining the CTGA.

Please become part of the CTGA so you get more leverage out your acres and be part of the dialogue.

Statewide Member Growers Meeting:

The CTGA would like to invite members to lunch meeting at Harris Ranch November 14. This will be an opportunity to discuss strategy and show support for an earlier contract. More details to follow.

Questions or comments, please call Ross Siragusa 916-925-0225 or email rdsiragusa@ctga.org

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2008 Grower Pledge

I hereby pledge not to commit any tomato acres or seed to a tomato processor without receiving a fixed-price at or above CTGA’s approved price.

Grower’s Name: ______________________

Ranch Name(s): ______________________

______________________

Signature: ______________________

Date: ______________________

Please fax to: (916) 925-0213

Questions or comments, please call Ross Siragusa 916-925-0225 or email rdsiragusa@ctga.org