Playing ketchup: Tomato industry concentration

Tomato season is over for most of the United States, so it's time to start shifting our tomato thoughts to canned, dried, and jarred tomatoes. Although tomatoes can be grown in all 50 states of the union, odds are 10-to-1 that a tomato found in a can, jar, or processed product was grown in California. An article in the San Francisco Chronicle presented some incredible statistics about the level of concentration in the processed tomato industry.

Before World War II, there were commercial growers and canners in many states — including Delaware, Virginia, Utah, New Jersey and New York — and California produced only 20% of the nation's tomatoes. Thanks to the development of both mechanical harvesting equipment and tomato varieties that can be picked by machine, the number rose to 50% in 1953, and reached 95% in 2007. (The 20% and 50% figures are from the "Oxford Companion to American Food," the 95% figure is from the Chronicle.) There are several reasons for California's dominance in the processed tomato business, with the biggest one being a climate that allows a far longer harvest period (90 days vs. 45 days) and is less hospitable to disease because of its low humidity and lack of summer rain.

Concentration in the tomato industry goes beyond the farm, into the seed business, where just three companies — Heinz, Bayer CropScience and Monsanto — control 90% of the market.

Running a huge tomato farm — the average size is about 1,000 acres — is expensive.  After the cost of equipping yourself with the necessary harvesting, spraying, and irrigation equipment (or paying rental fees), add annual expenses for diesel fuel, seed, water, chemicals, and labor, which run about $2,700 per acre. Plenty of volatility in the diesel and water markets make things exciting. The payoff for this investment?  An average price of 3.5 cents per pound.

Another, probably minor, reason for California's dominance is USDA regulations that stifle vegetable growers in the Midwest and Great Plains. During the Farm Bill debate, Philip Brasher at the Des Moines Register (via FarmPolicy.com) and Minnesota farmer Jack Hedin (in the New York Times) wrote about rules that penalize those who currently receive commodity subsidies if they plant "specialty crops" (fruits, nuts, vegetables, and flowers) with fines and a ban on receiving future subsidies for crops grown on the land. Despite vigorous opposition from specialty crop growers in California, Florida, and other temperate states, Congress is slowly chipping away at the restrictions. The latest Food and Farm Bill authorized a pilot program in seven Midwestern states that lets farmers plant tomatoes and six other crops on "base acres" (i.e., land used for "program crops" like corn and soy in the past) without penalty. This provision and many others are summarized in a report on the 2008 Food and Farm Bill from the Congressional Research Service.

Today's processed tomato industry exemplifies a few features of our food system. First, it shows how much it has changed in just a few decades: not too long ago, there were tomato processors all over the nation. Second, it highlights the role of national policies on local food systems. Farmers in Indiana or Iowa — especially those who lease their land — face significant obstacles in meeting demand for locally grown produce.  Although it can be tough to inspire grassroots activity around slogans like "Eliminate the penalty for planting specialty crops on base acres," I'm hopeful that the change in leadership in Washington will inspire new efforts to chip away at the distrubing level of concentration and centralization of much of this nation's food system.

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