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December 18, 2002 |
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| Dear Grower: | ||||||||||||||||||||||||
| Processor Signs Letter of Intent
to Pay $50 for 2003 Ingomar Packing Co. has signed a Letter of Intent with the Association to pay no less than $50.00 per net ton for the purchase of tomatoes for the 2003 season. This agreement calls for a not-less-than $50.00 weighted average price and promises to match the CTGA negotiated price if it is higher. This processor feels it is important to give their growers assurances of a fair price early in the process so that they may make the necessary commitments to produce a quality crop. The agreement specifies that payments will be cash-at-harvest and that premiums will be negotiated at a later date. Rio Bravo has offered its growers a $50.00 per net ton price to grow tomatoes for the 2003 season. The price includes cash-at-harvest and premiums adjusted to the area. In summary of existing term agreements: Campbell Soup Company will be in the third year of a term agreement in 2003 that is scheduled to pay $51.50 per net ton with standard terms and late season premiums. Del Monte has a substantial portion of its pack under a term agreement that is also in its third year for 2003. The base price under the term is $50.00 per net ton with an adjustment of one-half the difference between $50.00 and the CTGA annual price. This agreement includes standard terms and late season premiums.
ConAgra also is in the third year of a term contract that
calls for a base price of $50.00 per net ton with a market price adjustment
clause. The price includes cash at
harvest and standard late season premiums. |
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| MOT Research Study The Processing Tomato Advisory Board (PTAB) commissioned a study with the University of California at Davis Biological and Agricultural Engineering Department to assess the accuracy of the Material Other Than Tomato (MOT) grade. The study compared the actual quantity of MOT in a standard 25-pound sample to that determined using the standard PTAB MOT inspection method. The report quantifies three sources of error in assessing the true material other than tomatoes (MOT) score of a truckload of tomatoes. The three sources of error are: 1) MOT that is not scoreable because it disintegrates during grading or is in the form of mud smeared on the surface of the fruit and cannot be easily collected, 2) sampling error due to the variability in MOT from location to location within the gondola, and 3) errors in the MOT score associated with the assumption that the initial on table sample weighs 25 lbs.
In conclusion the study found that the total
MOT is highly correlated (r˛ = 0.91) to the graded MOT and the
relationship between the two is quite linear. More specifically the best
estimate of Total MOT is found by the following equation: |
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Total MOT = 1.21(Graded MOT) + 0.8 |
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Evidence would show that perhaps the three times (3X) deduct that is currently being used in the industry was not based on good science. The Association will be having discussions with processors regarding adjustments to the existing industry standard MOT deduct. |
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| US/Australia FTA The U.S. and Australia said they will begin talks intended to lead to a free-trade agreement. U.S. Trade Representative Bob Zoellick, with the surprise backing of the U.S. farm sector, said the White House and Canberra will seek a “comprehensive” agreement that includes agriculture and services. “We believe this can do a lot for both economies,” Mr. Zoellick said. Australian Prime Minister John Howard said greater access to the world’s biggest economy and Australia’s second-largest trading partner will deliver “very significant net benefits,” for Australia, citing estimates that a deal would boost gross domestic product by $2.24 billion a year. The U.S. imports are more than $1.7 billion worth of Australian agricultural and forestry products annually, of which more than 80% is meat and wine. Other imports include canned pears and macadamia nuts. Australia imports $600 million worth of agriculture and forestry products per year from the U.S., primarily fresh, and a number of processed food products. |
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| US/Chile FTA USTR announced December 11 that the United States and Chile have reached agreement on a U.S. – Chile Free Trade Area agreement. More than 85% of bilateral trade in consumer and industrial (nonagricultural) products will be tariff-free within four years, with all tariffs and quotas phased out within 12 years. Information on individual tariff lines was not announced. It must be assumed that products already duty-free for Chile under the GSP (dried tomatoes, tomato-based preparations for sauces, catsup) will be immediately duty-free under the FTA. Market access for U.S. products in Chile will be as good as or better than market access for Canadian and EU products. Canada and the EU already have concluded FTAs with Chile. The Administration must notify Congress 90 calendar days in advance before signing the agreement. USTR said it will continue to consult with Congress and expects to notify Congress early next year of its intent to sign the agreement. |
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| Unilever Net Increases by 68% Unilever posted a 68% increase in net profit for the third quarter and raised its full-year earnings forecast, citing the benefits of its emphasis on leading brands. Sales of Unilever’s leading brands grew 5.4% in the quarter, while the operating-profit margin rose a half a percentage to 16.2%. The results reflect Unilever’s success in implementing its five-year “Path to Growth” restructuring, which is meant to whittle its brands to 400 in 2004 from 1600 in 1999. By 2004, the disposal of lagging brands, stronger promotion of the more important brands and a restructuring of production and distribution systems are expected to raise annual revenue growth to between 5% and 6% and achieve operating-profit margin of at least 16%, according to the company. |
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| Prices Rise On World Shortage As reported in FOODNEWS
Italy
Chile
The price of tomato paste from the 2003 crop of
industrial tomatoes in Chile looks likely to rise due to a dearth of supplies
in both Brazil and the EU, according to sources industry-wide. The burning question is: by how much?
While admitting that these are early days yet, some global dealers put the price of good quality 30-32 brix paste from the forthcoming crop in Chile at over US$700/tonne fob Chile or 31.7 per pound.
China
Global industry sources reckon that China’s tomato
crop has been more like 1.7-1.8 million tons than the two million tons
predicted. As a result, China has
probably cut back 30-40% on its contracts.
It appears to have sold more than it has produced and so buyers are
reported to be getting nervous as prices are rising.
Asked how foreign customers perceived the quality
of Chinese tomato paste this year, one global industrialist replied: “The
general feeling is that the quality is improving. Of course, buyers are not happy having to renegotiate prices this
year but, on the other hand, are satisfied to find some product at all now that
Europe is sold out.” |
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| In Remembrance The Industry Has Lost Two Fellow Toilers Lou Souza (1937-2002) – Founder of Vaquero Farms and long-time Association member died Wednesday, December 11, 2002. Lou was also a member of the Stockton Country Club, Bermuda Dunes Country Club, Westlands Water District and the California State Fair Board. T. Jeffrey Boese (1954 – 2002) – President & CEO of the California League of Food Processors died on December 11, 2002. He also served as a member of many boards and associations including the California Agricultural Network, the World Processing Tomato Council, and the Agricultural Advisory Council for the California State Fair. |
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John C. Welty |
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| Please note that we have a new
e-mail address. It is:
ctga@sbcglobal.net |
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