California's Central Valley(CNN) Take a summertime drive on Interstate 5 through the heart of the Golden State and it is nearly impossible to miss the truckloads of tomatoes being hauled straight from harvest to production.
This year, however, fewer tomatoes were grown as rising interest rates, inflation and the crushing drought squeezed farmers who saw their margins sliced and diced. While the cost of growing tomatoes continues to rise, it's ultimately hitting consumers in the wallet as well.
Typically beginning in July and stretching into October, farmers in California are busy picking tomatoes -- big machines scooping up the fruit and freeing them from most of its vines before quickly pouring them into the back of trucks. Those trucks immediately hit the road from the farm to processing plants like Ingomar Packaging Co. in Los Banos, California, where the loads are tested, cleaned and processed 24 hours a day and all within hours of leaving the field.
"Ninety-five percent of the processed tomato products consumed in the United States come right here from California's Central Valley," said Mike Montna, president and CEO of the California Tomato Growers Association, as he stood on a farm harvesting the last bounty this season. "Mainly the tomatoes from the growers that I represent ... go to your ketchups, pizza sauces, your retail sauces that you see at the supermarket."
California's tomato growers produced less than hoped this season. In January, CTGA was targeting the production of 12.2 million tons of tomatoes. In May, that number was revised down to 11.7 million tons and now, as the growing season is coming to an end, Montna said the true number will be less than that.
"We're going to end up ultimately somewhere around 10.5, 10.4 million tons," Montna told CNN, estimating that will be about 14% short of their early projections for the year. "We're not getting the yields that we expected or that we got historically seven or eight years ago. We're in a flat to declining yield situation and a lot of it's due to weather and how intensive it is to grow a tomato."
This is the fourth year in a row where CTGA said production numbers were lower than they would have liked, said Montna, who noted this is the lowest inventory the industry has ever had, spurred on after demand for their products shot up during the intense days of the Covid-19 pandemic. On top of that, Montna said inflation ate up most of the 24% price increase growers received this year for a ton of tomatoes compared to the year before.
Farmer Aaron Barcellos and his family have grown tomatoes for 25 years but cut back on the number of acres usually dedicated to tomatoes from 2,000 to just more than 500 acres. Those 2,000 acres instead were fallowed this season. Montna said every one of CTGA's farmers currently has some ground fallowed because there just isn't enough water for all the crops they would like to grow.
"It's just like owning a second home and trying to rent it out," Barcellos said of his fallowed land. "If you don't have a tenant in there, you still have all your fixed costs ... but you have no income coming from it."
But water is king for farmers and without enough of the resource, something had to give.
"We started off with lower acres because of our water supply with the drought," explained Barcellos, who is a partner in A-Bar AG Enterprises with his brother, son and nephew. "During the drought, our water triples and quadruples in price. I It costs you four times as much and you're still trying to put it on a crop that you're competing with the rest of the world in."
As droughts are happening more frequently in the West, Barcellos is facing years where they aren't getting any water allocations at all because there just isn't enough water to go around. The first time he faced a year without a water allocation was 2014. This year, he said they "had a zero allocation of water on our federal ground."
Barcellos comes from a family of farmers. He grew up in the Central Valley and has seen farming continually adapt to tougher conditions.
"We are seeing ... hotter streaks during the summer, more extremes between cool and warm and I don't know what an average year is anymore," he said, adding that the decline in yield is attributable to tomato plants getting disrupted by these temperature swings. "A lot of that is due to the climate change."
But it's not just water, which Barcellos called their "number one limiting resource." Farmers also are paying more for fuel and fertilizer, with those added costs then reflected in consumer prices. To grow a crop of tomatoes five years ago would have cost about $3,500 an acre, Barcellos said. Today, it would cost more than $5,000.
"There aren't any farmers making any money on tomatoes in California this year, even with a record price," Barcellos said. "All those inflationary prices that consumers are seeing in the store and food prices going up? Well, we're seeing the same thing happening to us at the farm level."
In fact, consumers are feeling that price hike bite into their wallets. According to the U.S. Department of Agriculture, prices for processed fruits and vegetables are predicted to rise between 10 percent and 11 percent in 2022 compared with 2021.
Barcellos said many farmers are being forced away from tomatoes as it's a hard-to-grow crop that takes a lot of labor, and while pricing pressures surge the risk-to-reward ratio isn't in farmers' favor -- especially since some of the other crops they are growing are making more money and are far less labor-intensive.
"We have this sentimental attachment to growing tomatoes because it's one of the first crops we ever grew," Barcellos said, adding that he sees tomatoes as a great product. "There is a sense of home to it. There's a sense of community and family to it."
At this point, his family operation is considering whether it is time to squash tomato from its lineup of produce.
"Right now, we don't have any acres scheduled for tomatoes next year," Barcellos said, adding, "unless tomato prices in the field get to a level where we think we have a chance of making money, we're going to go do something else with those open acres."
While this season is wrapping up, plans are already being made for the new crop year as farmers must soon decide if they plan to grow tomatoes again as the global economic forecast remains just as unclear as the weather.
"We start dropping seed in some cases for tomatoes in late December," Montna explained. "So, we have to start dropping seed and committing to plant tomatoes before we know the full rain picture."
Beyond the short-term needs, many of California's growers are calling on the state to find more ways to make the most of whatever rain does fall.
"We need more storage," said Montna. "Let's capture more when it's a little more wet so we can get through the periods when it's a lot more dry."
For Barcellos, the issue is even broader as he sees it getting harder for farmers to stay competitive on cost with produce coming out of other countries.
"The more we start relying on food that is not grown in the US, I think the more concerned we have to be," Barcellos said, adding that those sources may not always be available to the American market nor may those products be cultivated to the same standards consumers are used to finding in their grocery stores. "Until we start actually supporting those choices at the supermarket ... and start buying what it costs for us to produce that in California, we're going to drive businesses out of California, and it's not just farmers."