California Tomato Growers Association

The California Tomato Growers Association engaged ERA Economics to prepare a market economic analysis of the processing tomato industry costs, returns, markets, and market potential. The analysis was commissioned in 2018-19, in response to increasing cost pressures and several years of stagnant industry returns. The economic assessment was developed to provide the industry with an understanding of current baseline conditions, trends, and economic outlook for costs and returns.

ERA prepared a comprehensive evaluation of the market for California processing tomatoes. This included establishing supply and demand in domestic and international markets, industry costs, and trends for primary and derived tomato products. ERA worked with growers and industry representatives to develop baseline conditions and prepare the economic assessment.

ERA’s economic analysis illustrated the current pain points and industry trends. At that time, this included a substantial oversupply in carry-over tomato inventory as well as processor overinvestment in capacity across the state. We worked with CTGA and stakeholders to clearly illustrate the drivers of market supply, demand, and how those interact at different points in the tomato supply chain.

A concurrent economic analysis was developed to evaluate the impact of important regulatory pressures in California and how those ultimately affect farm-level production costs. Regulatory pressures included, at that time, implementation of minimum wage laws, SB 3 and AB 1066, as well as increasing costs for materials. A detailed assessment of Sustainable Groundwater Management Act (SGMA) implementation was developed to identify regions with water supply limits and increasing water cost pressures.

ERA worked closely with growers and the industry to develop and present results of the market economic analysis. Results were presented in a detailed economic report and short executive summary developed for a general audience. ERA principals presented results at the 2020 CTGA annual conference and board meeting.