(Nov. 26) In the wake of a $3.4 million net loss for third quarter 2007, Eatontown, N.J.-based Village Farms LP is halting its production of bell peppers and cucumbers and in 2008 will concentrate on growing specialty produce.

Those commodities will include campari, roma and other varieties of tomatoes, said Michael DeGiglio, chief executive officer of Village Farms Income Fund.

The company’s quarterly report said higher costs and a lack of sunshine at the firm’s Vancouver, British Columbia, and Texas tomato hothouses were key reasons for the loss, which compares to a loss of $677,000 in the same quarter last year.

OVERSUPPLY

DeGiglio said oversupply was behind the company’s decision to halt production of peppers and cucumbers. But the move may not reduce the volume of those commodities in 2008. That production is being farmed out to supply partners in Mexico and Canada. Volume is expected to increase, DeGiglio said.

“It’s not a new supply,” he said. “It’s just growers’ changing with whom they market their commodities. So there are overcapacity issues, but we’re not dealing with new ranges, just existing ones.”

Prices for bell peppers and cucumbers have been soft this season. That makes it more difficult for some of the growers to make the capital injection necessary to convert, DeGiglio said.

Village Farms is selling its Abbotsford, British Columbia, greenhouse, a deal that is expected to close this quarter, but the company plans to continue to market the facility’s produce, he said.

Village Farms operations in Canada and Pennsylvania were scheduled to pull all of their crops by Nov. 23, but DeGiglio said its Texas facilities and its Mexican suppliers’ facilities were at maximum production.

The company’s third-quarter income was $24.5 million, compared to $7.8 million in same quarter 2006. The increase this year, DiGiglio said, was due to adding the income of Hot House Growers, the Vancouver, B.C. company that was merged into Village Farms in October 2006. The company reported only U.S. sales figures last year.