Processed tomato prices will rise slightly in 2002

Feb. 24, 2002

Record high temperatures-including four 100-plus-F readings days in a row-were blamed for an estimated 7 percent loss of the 2001 crop.

Prior to May, the California Tomato Growers Association (CTGA), based in Stockton, Calif., predicted the 2001 crop would weigh in at 9.2 million tons. But following the brief heat wave, that estimate was reduced to 8.6 million tons.

Cost to producers-including growers, packers and manufacturers-is expected to be $25 million. But due to large canned tomato inventories in warehouses, pizzeria operators likely won't suffer large price increases in 2002.

Seasons' Cycles

To ensure packers receive a scheduled, steady stream of ripe tomatoes at their factories, tomato planting in California begins in February, is staggered through March and April, and then finished in May. A 100-day harvest follows from July to September.

The staggered schedule allowed this spring's high heat to damage tomato plants at every growth stage, making accurate damage predictions difficult.

"We knew were going to have some production problems, but we didn't want to cry wolf early in the year," said John Welty, executive vice president of CTGA. "We started off estimating on a conservative basis, guessing a 3 to 5 percent loss. But by August, people were talking 10 percent."

Fortunately such dire predictions weren't realized, but Welty noted that even a 7 percent loss is significant to a community operating within already-tight margins.

"This kind of a shortage is enough to move many growers into the red," Welty added.

Greg Pruett, managing partner at Ingomar Packing in Los Banos, Calif., said that even the 7 percent figure is a little deceptive, because it shows just an average loss.

"Northern processors were a bit more fortunate because they pretty much got their crop," Pruett said. "But southern processors were as much as 15 percent short. The impact of the heat was much greater there."

The Price is What?

This year Welty estimates case prices will rise only as much as 50 cents, but Dan Milazzo, product manager for Escalon Premier Brands, a tomato packer in Escalon, Calif., believes that's just the minimum they'll increase; a dollar-per-case jump would not surprise him.

"I'd say 50 cents a case would on be the low end," said Milazzo.

Ron Peters, founder and president of Paradise Tomato Kitchens in Louisville, Ky., said prices will increase only slightly, if at all, for his customers. Paradise, which makes signature sauces from paste, contracts for its paste early in the growing season. That advance purchase, said Peters, allows the company to lock in to a set price for the entire season.

California Tomato Stats

Acreage devoted to processing tomatoes: 275,000 in 2001.
Growers: 350, approx.
Tonnage harvested in '01: 8.6 million
Crop value in '01: $416 million, est. 
Est. case price incr. in '01: 50 cents to $1
Recent poor harvests:1989, 1998
Product in reserve: 2.5 million tons, est.
* California produces 95 percent of America's tomato crop, and 40 percent of the world's crop.
* On average, a one-acre field yields 35 tons of fruit.
* Six pounds of tomatoes are needed to make one pound of paste.

Still, when those products make it to market, prices are more likely to blip than spike. Welty estimates that packers have some 2.5 million tons of canned tomato product -- whole fruit, diced, strips, filets and paste -- warehoused. Such inventory is amassed to ensure both year-round supply and provide a cushion when harvests aren't optimal. Reduced harvests have driven up prices in the past. A September deluge claimed 5 percent of the California crop in 1989, and in 1998, El Niño claimed a similar-size share. To make matters worse, Welty said canned reserves weren't as ample in those years compared to now.

"We contract in May and June for the whole next year," said Peters. "That better pricing keeps us consistent all year round."

Pruett said since Ingomar sells paste in large quantities, a per-case increase was impossible to estimate. But he did say that as of late October, prices for paste were up 5-7 percent.

"I also anticipate prices will continue to (rise), and that we'll have substantially reduced inventories going in to the '02 season," Pruett said. "It's not a shortage by any means, it's just a more balanced level compared to the last couple of years when inventories have been excessive."

Both Milazzo and Peters noted that damage to raw materials is only one factor that can drive price increases. Californians especially were hit hard with higher utilities and shipping costs. Milazzo also said that many producers "invested a lot of money in back-up power generators to protect (themselves). The energy situation has impacted the whole channel."

The foul-weather effects aren't limited to price, either. Restaurateurs could see reduced-quality product if manufacturers don't sort out damaged or unripe fruit.

"If you look back in July and August, the crop was a couple of weeks behind," said Milazzo, pointing out that running late causes overlaps in the harvest schedule. "Chances are good that you're not going to be able to take in all those tomatoes ... (and) that meant there were more green and yellow tomatoes coming in."

Hand sorting, he explained, is the best way to remove poor-quality fruit, but that not every packer will spend the money on labor to do that.

As variances in grape harvests affect wine vintages year to year, does the same hold true for tomato harvests? It can, said Milazzo, but packers and producers are skilled at compensating for taste differences found in each crop. Sauces and pastes are tasted multiple times each day during production and typically compared to the prior year's "run." Peters said removing product variance is a mark of high quality.

"Our jobs are to take the curves out of road and smooth out the process for operators," said Peters. "If we're doing that right, they shouldn't be able tell difference."

Topics: Pizza Sauce

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