Extended flat markets test tomato industry - The Packer

Extended flat markets test tomato industry

05/29/2012 02:19:00 PM
Doug Ohlemeier

Doug Ohlemeier, Eastern EditorThis year is one for the record books.

Tomato growers have been stuck with low markets since late November.

Prices of mature-green 5x6s from central and south Florida fell by nearly half from late November to early December, then remained in the $5.95-8.95 range through February. A brief burst in early March brought $13.95 but prices slumped to $5.95-7.95 by the end of the month.

They mostly remained there through mid-May, when they increased to $7.95-8.95, according to the U.S. Department of Agriculture.

“This season, something has to give,” one grower-shipper told me.

The prolonged flat and low markets kept prices lower than the cost of production and are prompting some to wonder if the price recession will lower acreage or push some grower-shippers out of the deal.

Those are valid concerns grower-shippers often express during low periods.

Others, however, point to overproduction and an increase in shadehouse and greenhouse-grown tomatoes plus the state of the economy keeping volume high and demand lower than normal.

“There are plenty of tomatoes coming out of Florida,” Jim Cathey, general manager and sales manager of Del Campo Supreme Inc., Nogales, Ariz., said in late May.

“They talk about how growers have gone out of business, but acreage remains the same. There isn’t any less than last year or years before.”

Cathey said the tomato deal foreshadows what’s really going on in the produce industry because everyone is looking at the tomato growers and asking what’s wrong.

He said growers point to receiving $6 a box while supermarkets merchandise tomatoes for $1.99-2.99 a pound. Cathey said retailers are trying to make up the margins they lost when tomato prices were high after the freezes.

Cathey said the industry substantially increased acreage in recent years. The 2010-11 freezes tempered the oversupply.

Higher production and regions starting earlier present a new dynamic.

“All the holes are gone,” Cathey said.

“There’s no fall deal to boost your average up. There’s no spring deal to catch your markets up. It’s just continuous supply.”

Though he said it’s difficult to market tomatoes this season, Bob Spencer, vice president and sales manager of Palmetto, Fla.-based West Coast Tomato Inc., remains a realist.

He doesn’t point fingers at Mexican competition and says the industry experienced tougher years.

“Let’s face it,” Spencer said. “If you’re in the tomato industry and farming in general, you’re a gambler. And gamblers don’t quit. As long as they have some chips, they will put them on the table.

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