Dear Tomato Growers and Industry Participants:

The 2005 crop results are in, it's an ugly picture. Production fell short of 9,600,000 tons, which to add perspective, is 18 percent less than 2004 and 7 percent below the 10 year average. The poor production notwithstanding, the real story is the $1,800 per acre average revenue which came nowhere near covering production costs. Last year we reported that average fuly loaded production cost was $1,950 per acre and now if you consider cost increases during the past 12 months, the cost is approaching $2,100. It doesn't take a mathematical genius to realize that growers have a serious problem. It also highlights the main reason why a number of highly successful growers are leaving the business.

This issue of the Tomato Grower takes a look at cost increases and what's driving them. I would now, however, like to touch on the issue of revenue. The growers that remain in this business are very efficient and are quick to adopt new cost-saving technologies, so cost per se is not the problem. The problem is growers are willing to take too low a price with little regard for the risk. If we take the 2005 $50 base price and the 2000-2004 average yield of 37 tons per acre, there should be no surprise that 2005 was a problem - ($50 X 37 tons/acre = $1,850). Too many growers budgeted unrealistic yields and the price left no margin for error.

Growers blame processors, seed companies, oil companies, chemical companies, neighbors and, of course, the CTGA for the current situation. I think the real problem is too many growers have been eager to sell tomatoes without fully considering the cost and risk. Growers, also, have been too willing to commit to the crop without knowing the price which creates an almost perpetual buyer's market. How else can you explain that prices have declined 8 percent in the past 10 years while costs are up 30 percent? (Yields improved only 14 percent, so that's not the answer).

Bottom line:  It's up to growers to assess their costs, yield history and then work for a price that will pay them a fair return. Only after that's determined should they commit go grow for the next season.

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