Shortages of field-grown tomatoes leaves greenhouse product in high demand
by Christina DiMartino | March 10, 2010
Supply gaps in field-grown tomatoes resulting from freeze conditions in
Florida have caused a spike in demand for greenhouse-grown product that is
expected to last at least another 30 days.
"The demand on greenhouse tomatoes has increased due to the shortages in
Florida," Jim DiMenna, president of Jem-D International in Leamington, ON,
told The Produce News March 9. "But we have felt an increase since last
November because of the earlier weather problems Florida experienced.
Greenhouse producers are fortunate in that we have consistent outstanding
supplies because we're not subject to these types of environmental issues."
Mr. DiMenna noted that a substantial amount of greenhouse product finds its
way into the market even when field tomatoes are moving well. Increasing
consumer acceptance and consistent pricing has resulted in continuous
growth for the greenhouse industry.
The spike in demand for greenhouse tomatoes that began the last week of
February is specifically related to the freeze that occurred in Florida in
"Mexico has been in full production and is filling the void at relatively
reasonable prices, although compared to a normal, non-eventful year, they
are up by 25 percent and more," said Mr. DiMenna. "Gassed green tomatoes
have a specific place in the market. They play a major role in foodservice,
especially quick-serve and chain restaurants. This is why the demand is so
strong on Mexico's product. Mexico starts in early December and continues
through spring, which overlaps Florida's production, so this, too, is affecting
the increased demand on Mexico."
Fried De Schouwer, president of Greenhouse Produce Co. LLC, headquartered
in Vero Beach, FL, concurred that the greenhouse industry is feeling an
increase in demand.
"Many grower-shippers work with retailers on a program basis," said Mr. De
Schouwer. "Those programs are honored, of course, regardless of what is
happening in the market. We have seen a strong market on greenhouse
tomatoes for about four straight months. As to whether there an additional
demand due to Florida's shortage, there is no clear-cut answer. There has
been a significant increase in protective [shadehouse and greenhouse]
production out of Mexico this year, and that production is making up for the
lower Florida volumes."
Mr. De Schouwer said that prices on some tomato items have jumped close to
100 percent this year. Retail prices on tomatoes-on-the-vine at this time last
year were 70 cents per pound. On March 9, they were about $1.20.
"It's been a yo-yo tomato market this season," he added. "Prices jump up and
then drop back down every 10 days or so. We do anticipate a considerable
drop in greenhouse demand when Florida comes back on, but who knows
what will happen between now and then? It's early March, and we're still
getting near-freezing temperatures here in Florida. We won't see Florida field
tomatoes moving again until late April or early May, and then it might be 90
degrees, which can also play havoc on a crop."
Chris Veillon, marketing manager for Mastronardi Produce Ltd.,
headquartered in Leamington, ON, said that the company has also felt an
increase in demand for tomatoes since late February.
"The foodservice industry is experiencing the biggest shortage," said Mr.
Veillon. "Mastronardi has long-term contracts with all of our retail partners.
These are planned well in advance. Consequently, we don't have a lot of
excess product from which foodservice operators can draw. Florida is back in
the ground now, so the demand and price increases will likely continue for
another 30 days - or until growers there are shipping again."
Mr. Veillon added that the price increases he is seeing range from 25 percent
to 50 percent higher than in a typical year.
Mr. DiMenna noted a serious issue related to when one sector of an industry
feels strong demand because of problems in another sector, such as what is
currently happening with tomatoes.
"It's important to not take an opportunistic approach to these situations," said
Mr. DiMenna. "Smart suppliers won't push their prices up in an attempt to
take advantage. Hopefully, our industry is mature enough to not get into
Mr. DiMenna agreed that Florida will likely be shipping again in about 30
days, but he said there is a risk of a "perfect storm" at that time.
"There will be extra production out of Florida, and at the same time, every
greenhouse in Canada will be hitting peak production," he said. "There is a
good possibility that we'll see a real downward pressure [on prices] when this
He also said that retail prices cannot drop back down as quickly as wholesale
"In defense of retailers, it's not that they are not willing to reduce retail prices
immediately when their prices drop," he said. "You might, for example, tell a
retail customer that your prices have dropped to $10, and he responds by
saying, 'You sold me tomatoes last week for $25, and that product is still in
my system.' Retailers cannot make changes that quickly. It takes time for the
adjustment to work itself out."
It will be a normal scenario to see prices spike, dip and then level off when
volumes are back to normal, Mr. DiMenna said.
"If you're a gouge marketer, you can't help but get into a yo-yo situation," he
said. "If you shoot for the moon but it doesn't fly, you end up in the dumps."
Mr. DiMenna added, "As a company, we try to take markets up slowly and
steadily. When we see a decline, we don't drop through the floor. We try to
keep things moving steadily and with caution. A long, extended average is
always better than a distressed, radical move."