Dying on the Vine: Tomato Prices

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Dying on the Vine: Tomato Prices
Tomatoes Go From Shortage to Glut in a Matter of Weeks


Jeff Dolan's tomatoes in San Joaquin Valley are ripening and ready to pick this week. But that puts him in a pickle.

In California, harvest time is arriving just as tomato growers in other parts of the U.S. are reeling from a sudden supply glut that is pushing the price for fresh tomatoes sharply lower. Florida farmers who fetched more than $30 a few months ago for a 25-pound box of round, fresh field-grown tomatoes, also known as slicer tomatoes, are now getting $5 or less.

The abundant crop is rooted in last winter's cold weather in Florida, which delayed the development of tomato plants. The overdue harvest hit the market in May just as DiMare Co., where Mr. Dolan oversees California field operations, was picking tomatoes near Palm Springs.

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Ariel Zambelich for The Wall Street Journal

Jeff Dolan, field operations manager for DiMare Co. in California, looks for maturing Roma tomatoes on a recent day. Of the quick turn in the market, Mr. Dolan says 'the train wreck was apparent for quite a while.'
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"Prices dropped like a rock" after the harvest began, he says. As a result, at least 40% of the revenue that DiMare hoped to get from that part of California could vanish.

Now the impact is rippling across the country as the growing season moved to other regions, including Mr. Dolan's tomatoes in the San Joaquin Valley.

The tomato surplus also means that food banks are getting a mountain of the fruit, often cooked as a vegetable. Fast-food chains are reversing tomato-by-request rationing policies imposed during the shortage earlier this year. And supermarkets are pushing piles of discounted tomatoes at salad, spaghetti and gazpacho lovers.

Publix Super Markets Inc., a Lakeland, Fla., chain with 1,018 stores in five states, cut its price on fresh tomatoes to 99 cents a pound—a discount of 50 cents—through the end of Wednesday.

Del Mar Farms, of Westley, Calif., has agreed to donate 150,000 pounds of Roma tomatoes for a Reno, Nev., version of Spain's La Tomatina festival, where revelers have a massive tomato fight. "When there's an oversupply, it's a lot easier to donate," says Brian Wright, the farm's director of sales and marketing.

"I guess we caught a little bit of lucky break with the U.S. surplus of tomatoes," says Jeff Siri, organizer of the Aug. 29 event, expected to attract as many as 10,000 tomato tossers at $10 a person. All proceeds will go to the American Cancer Society.
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The U.S. Agriculture Department estimates that wholesale tomato prices fell to 25 cents a pound in June, down 78% since March. The current price is "the lowest number that I can remember seeing," says Gary Lucier, an agricultural economist and tomato expert at the USDA.

Worried about the impact of the plunge on farmers, the USDA is buying $6 million of tomatoes and distributing them to food banks. Agriculture Secretary Tom Vilsack said the purchase is designed to give Florida farmers "some relief."

The fresh-tomato market is different from the packaged-tomato business, where H.J. Heinz Co. and other large companies use long-term contracts to buy at a fixed price through established relationships with growers, says Eric Katzman, an analyst at Deutsche Bank.

Still, fresh tomatoes sold to restaurants and supermarkets are an important part of the overall market. The crop is highly perishable and generally needs to be sold less than two weeks after harvest.

January's freeze in Florida destroyed about two-thirds of the tomato crop in one major growing region, according to the USDA, citing industry estimates. As supplies withered, prices spiked, and some of the increase was passed on to consumers. In the first quarter, U.S. average retail tomato prices rose 24% to $2 a pound.

Florida farmers had difficulty taking advantage of the jump because cooler weather persisted after the freeze. Tomatoes planted after the thaw were slow to develop, so supplies remained scarce, prices stayed high and sales suffered.

Some fast-food restaurants told customers they had to ask for a tomato slice on burgers and other sandwiches. "The price wasn't the issue," says Denny Lynch, a spokesman for Wendy's International Inc., which operates about 6,000 restaurants in the U.S. "You couldn't get them," and those that were available often were poor in quality. The company recently abandoned the policy.

In May, the shortage turned into a glut as delayed tomato plants reached maturity and others ripened on schedule. "Basically, eight to nine weeks of plantings came on [to the market] in a four-week period," says Bob Spencer, co-owner of West Coast Tomato in Palmetto, Fla., which farms 4,000 acres around the state.

Tomato prices fell from $32 for a 25-pound box in late March to $22 by late April-and to $8 by mid-May, according to Agriculture Department data.

"We've probably lost $10 million this winter," says Batista Madonia Sr., chief executive of East Coast Growers & Packers in Mulberry, Fla., which farms about 3,000 acres. "We've had a rough year. We'll survive."

The losses are rippling through Florida's economy. "You just cut back on capital expenditures, and you really watch how many employees you have," Mr. Spencer says.

California growers could see the glut coming, but there was little they could do. Tomatoes need to be planted several weeks ahead of time, and harvested when they are ready. "The train wreck was apparent for quite a while," DiMare's Mr. Dolan says.

It isn't clear how much financial damage California growers will have to endure. Because Florida is wrapping up its harvest, the oversupply mightn't last for long, especially if consumers respond to low prices by eating more tomatoes.

The Florida Tomato Committee, a Maitland, Fla., group that promotes tomatoes grown in the state, is trying to "inspire people to cook with Florida's tomatoes," says Samantha Winters, director of education and promotion. This year's tomato-recipe contest winners were "tomato tartare" and "tomato sorbet," though the results haven't been announced yet.

"We just want people to get creative with it," she says.