A Terrain analysis found California's decrease in total processing tomato production is likely the result of industry stabilization following pandemic-era demand peaks.
Compared to other high-value crops, tomato paste prices doubled during the pandemic, leading to a record price of $138 per ton in 2023.
Larger production amounts over the last two years are leading to an increase in inventory.
But tomato processors are not letting inventories overfill, which Terrain analyst Matt Woolf suggests is due to higher interest rates raising the costs of holding inventory.
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Woolf added it’s unlikely for demand to fix increasing inventory levels due to a few factors, including high consumption rates across North America, global competition and the strong dollar.
He cited a U.S. Department of Agriculture report estimating that this year marks the smallest number of processed tomato acres since the 1970s, with only 10.2 million contracted tons.
