CTGA Tomato Bulletin - Dec 18 2007

December 18, 2007

Dear Tomato Growers:

· $70 price agreement reached with ConAgra, Del Monte, Ingomar, Morning Star, SK, Stanislaus and Tomatek/San Benito. Los Gatos agreed during the week of December 3.

· Escalon is working on a proposal.

· Unilever will meet in early January, but does not anticipate being an obstacle.

· After leading the past 2 years, Campbell’s is on the sidelines with concern over cannery harvest rates and whether they put Campbell’s at a disadvantage. Feedback to the CTGA from growers, processors and harvest companies indicate that at proposed rates, harvest operations are not highly profitable.

The Agreements:

· Base Price

o $70.00

· Deductions

o Per the 2007 CTGA Master Agreement with each respective processor

· Solids Program

o Subject CTGA approval for Ingomar and Morning Star

o Del Monte, SK & Tomatek/San Benito have no solids programs

· Late Season Premiums

o Sep 15-21 $ 5.00

o Sep 22-28 $ 7.50

o Sep 29-Oct 5 $10.00

o Oct 6 – harvest completion $15.00

o All late season premiums are based on when the fruit is delivered, not scheduled

· Early Season Premiums

o To be negotiated on a local basis

· Harvest Rates:

o Increases from last year $0.50/ton or less, which reflects labor a fuel increases

The CTGA Board reviewed the offers and recommended that it’s growers accept them for the same reasons cited for acceptance of the Los Gatos offer the previous week:

· The offers met key grower conditions; base price and improved late season premiums

· Growers wanted an agreement prior to December 15

· Harvest rate indications are acceptable to most growers.

Will some growers be disappointed? Yes.

· October growers wanted $15 for the entire month, not commencing October 6

· A number of growers wanted an in-field price of $60 not $59.50

· Several Westside growers wanted Stanislaus’ water supplement to apply to all processors

· Some growers viewed the early agreement as a sign that money was left on the table (a few of these growers also said that we wouldn’t get higher than $68…)

The vast majority of growers that the CTGA has been in contact with, however, are very pleased to have an acceptable price before committing to a contract.

Why was an agreement with the majority of the industry secured by an unprecedented December 15?

There were several factors in play:

External:

· Demand for tomato acreage exceeded supply; especially in the south

· Water uncertainty forced growers to look towards crops with lower water requirements

· Alternative crops were bidding for acres with an especially sharp run up for wheat and safflower

· Boswell’s new plant disrupted traditional supply relationships

Internal:

· CTGA’s proposal has broad grower support because it is based on market factors and grower costs; it’s not unreasonable

· CTGA worked to communicate its position to both the grower and processor communities

· Membership in the CTGA is > 50% with broad distribution across regions of the state

· A significant number of growers were not willing to commit acres without a price

· Growers communicated with one another and worked together, this was key.

Processor Leadership:

No processor wants to pay $70. This was especially evident with initial price indications at $61 to $65.

However, once it became clear that growers were actively reducing tomato acres in order to plant other crops and growers were firm on $70, Los Gatos, followed by SK and Ingomar, provided the necessary leadership to get the majority of the industry to move. We also appreciate Morning Star’s, Stanislaus’, Tomatek’s, Del Monte’s and ConAgra’s quick response to the other offers.

Next Steps:

For growers with processors that have not agreed to the terms please give them a call and ask them when they’ll be coming to the table. A call from a grower carries a lot more weight than you might think.

Comments or questions please call Ross Siragusa at 916-925-0225 or email rdsiragusa@sbcglobal.net

The CTGA Staff and Board of Directors

Wish You A

Safe and Happy Holiday!