Pasta sauces under threat as water crisis slams tomatoes

California leads the world in the production of processed tomatoes – the tomatoes that are canned and used in commercial kitchens to make some of the most popular foods. The problem is that the worst drought in 1,200 years is forcing farmers to deal with a water crisis that is destroying crops, which could further push up prices for everything from salsa to pasta sauce.

“We desperately need rain,” Mike Montna, head of the California Tomato Growers Association, said in an interview. “We’ve gotten to the point where we don’t have inventory to continue to meet market demand.”

In a region that accounts for a quarter of the world’s production, water scarcity is reducing yields, which is having an impact on the price of tomato products.Ketchup and ketchup are growing faster than U.S. food inflation, the highest level in 43 years, blamed on drought and higher agricultural inputs. As California climate change forecasts call for hotter, drier weather, the outlook for farmers is uncertain.

“It’s really hard to grow a tomato crop right now,” Montna said. “On the one hand, drought affects costs because you don’t have enough water to grow all your acres, and then the inflation aspect of your farm causes fuel and fertilizer costs to skyrocket.”

Fifth-generation farmer Bruce Romenger cut his rice plantings by 90 percent to make room for tomatoes on his Winters, Calif., farm. (Source: Bloomberg)

California’s restrictions on groundwater use and soaring labor, fuel and fertilizer costs are already causing headaches for producers such as Woolf Farming. Today the Fresno County-based grower and processor costs about $4,800 per acre to grow and harvest tomato crops, compared with $2,800 a decade ago, according to Rick Blankenship, vice president of agricultural operations. Most of the growth has occurred in the past two years. Bounties cost more this season and deliver less.

“This year’s production has a long way to go,” Blankenship said in an interview. “Added to the drought, we had high heat, which itself created a problem, the tomatoes were so hot that they weren’t the right size — so you have a lot of tomatoes on your plants, but they’re smaller.”

Getting higher crop value from the field is often an incentive for farmers, but this season’s negotiated price of $105 a ton for tomatoes — an all-time high — may not be enough to overcome the industry’s challenges.

“You would think it’s a home run for growers, but in reality input costs have risen so much that potential profits are being eaten,” Blankenship said.

Water issues have led to crop shifts as growers try to gauge which commodity will bring the greatest return. Fifth-generation farmer Bruce Rominger reduced rice plantings by 90 percent to make room for tomatoes. He hopes to profit from the 800 acres of tomatoes that start harvesting in July — albeit a gamble.

“It’s a high-risk crop, and we’ve had below-average yields so far,” Roger said, noting that overheating, lack of water and frost in mid-April took a toll.

A tomato field in Winters, California, U.S., Friday, August 12, 2022. (Source: Bloomberg)

And it will only get worse. According to an academic study published in the journal Nature Foods, high temperatures will reduce the supply of processed tomatoes in key regions over the next few decades, with the supply of processed tomatoes expected to decline by 6% in the United States, Italy and China by 2050. The June report said increasing heat and water restrictions could make it difficult for California and Italy to maintain current production levels.

For the past six years, California crop production has been below the recent peak of 14.4 million tons in 2015, and 2022 will continue that trend, according to the U.S. Department of Agriculture. The industry expects this year’s harvest to fall short of the USDA estimate of 11.7 million tonnes.

“Despite low supplies and substantial price increases, contract production has declined significantly compared to early 2022,” the USDA said in its May report on California’s processed tomato crop, noting that water availability is a major factor for producers. main problems faced.

“There’s simply not enough acreage planted for processed tomatoes this year to ensure that everyone has an adequate supply,” said R. Greg Pruett, sales and energy manager at Ingomar Packing Co., one of the world’s largest tomato processors. “Water is either too expensive. , or get it at all costs.”

This pressure is being reflected in Ingomar’s processed products. The company, which sells to some of the largest food brands in the U.S., saw its customers get 80% more ketchup than a year ago. However, with inventories down to extremely low levels, not everyone has access to supplies.

“If you’re looking for a lot of ketchup and you haven’t signed up, you’re not going to get it, no matter the price,” Pruitt said in a phone interview. “It’s not there.”

As tomato products are difficult to substitute, demand is not particularly sensitive to price changes. However, this is an additional cost for consumers. In the four weeks to July 10, the price of ketchup was up 17% from a year ago, while the price of ketchup was up 23%, according to market research firm IRI.

“If the prices of frozen pizza, pasta sauce and other staples get to the point where the average consumer wants to decide to do something else, that relationship will clearly break down,” Pruett said.