Overproduction forces California tomato growers to mull cutbacks
California tomato growers face a market shakedown that could result in a decline in their numbers, or in a drop in the number of acres planted -- or both.
Cause of the impending shakedown is a leveling off of national demand for processed tomato products.
Since the 1960s the market for canned tomato products has steadily climbed -- partly due to Americans' enlarging appetite for fast foods using tomato products , such as pizzas and hamburgers -- and California growers have exploited their state's natural advantages to dominate the flourishing industry.
Golden State growers do not depend on the vagaries of the weather as their Midwest and Eastern counterparts do. Instead they rely on irrigation to control the timing and amount of water their fields receive.
Growers have also invested heavily in mechanized harvesting equipment and dramatically increased their yields through breeding research.
All of this has allowed canners to double their output in the last 15 years and expand their stranglehold on the national market from 70 percent in the mid- 1960s to 90 percent now.
In 1979, the last year for which figures are available, California canners packed 6 million of the nation's 7 million tons of tomato products.
But the farmers grew 10 million tons.
Consequently the prices canners offered growers the next year plummeted and the canners accepted less tomatoes, resulting in about 30 percent fewer acres planted in 1980.
With escalating energy and equipment costs, growers made little money last year, a signal they will be forced to adjust to market conditions in coming years, says Eric Thor, an agricultural economist with the Giannini Foundation at the University of California, Berkeley.
"They need to go down 25 to 30 percent in growers and that is going to be slow."
Other crops - wheat, corn, beans -- earn as much as tomatoes, he says. But those crops require specialized machinery.
"You just hate to invest that money when you already have money invested in your tomato machinery, so you hang in there a little longer hoping the guy down the road gets out," Mr. Thor said.
Some of the growers' troubles have been of their own making. Breeding advances have skyrocketed the yield per acre, contributing to the oversupply.
"As little as five years ago growers felt they were doing great if they got 20 tons to an acre," Thor says. "Now some growers are getting 50 tons to an acre while test plots are coming in at 70 tons to an acre."
Growers are not getting out yet. They are just planting fewer acres.
"What we're trying to do is get our supply in a situation so that we're not oversupplying," says Peter Thomas, executive vice-president of the Tomato Growers Association. Association members raise 65 percent of California's tomatoes.
Meanwhile, the association is looking into overseas markets to absorb the extra tomatoes but faces stiff competition from growers in Italy, Spain, and Portugal, who are subsidized by their governments, Mr. Thomas says.
While Bank of America economist Gene Conatser applauds the industry's first steps in searching for new markets, he emphasizes the growers' need to adapt to modern marketing techniques.
"It's not enough for them to grow their tomatoes and say, 'Here they are' and expect people to buy them," he says.
"They have to create a demand for their product, then market to that demand.
"There has been strong competition between the United States and Mexico for fresh tomatoes. We import a great many fresh tomatoes.As the same time there might be a market for processed tomatoes in Mexico.
"Japan is one of the largest markets for California fruits and vegetables. Almonds have come on strong in Japan through creative marketing.
"What I am concerned about is that tomato people recognize their markets."