Exchange to bring growers closer together Market v ...

6/9/1997 12:00:00 AM

By Bureau

Exchange to bring growers closer together Market volatility, need to shareinformation given as reasons for forming group. Tough fresh tomato marketshave caused competitors in California's tomato deal to get a little cozy. InNovember, California's tomato growers began the groundwork to form theCalifornia Fresh Tomato Growers Exchange, a grower cooperative geared to allowmembers of the industry to share information including market prices andstrategies. By early May, the exchange had received verbal commitments fromabout 90 percent of industry members. ``We're getting it started for the samemotivations Florida has -- Mexico and market volatility,'' said Richard Keim,director of sales and marketing for Oceanside Produce Inc., Oceanside, Calif.``I think it behooves the industry to try to stabilize the market withoutgetting into a bloodbath when Mexico comes online,'' Keim said. Exchangepresident Jeff Dolan, field manager for The DiMare Co./Newman, Newman, Calif.,said the increase in competition from Baja California and sluggish marketreturns prompted the exchange's formation. ``In the last two years, priceshaven't been that great in the tomato business ... it hasn't been a goodbusiness to be in marketwise,'' he said. Dolan said exchange members havedecided to set a floor price for Roma, mature-green and vine-ripe tomatoesgrown in California at $3.88 per 25-pound carton. California's floor price isbelow Florida's $5 for No. 1 tomatoes. The California exchange also has agreedto ban the sale of small, size 77 fruit and No. 3 grade fruit. Shippers caughtselling the banned fruit will be fined $2 per carton, Dolan said. Exchangemembers also have banned sales to outside ``gunnysackers,'' or groups thattake fruit from cull bins or from the field and sell it on the terminalmarkets below market price. Shippers caught selling to gunnysackers are fined$1,000 for the first incident, and $3,000 and $5,000 for the second and thirdincidents, respectively, Dolan said. The exchange will also enforce a specificbilling week from Friday to Thursday. Setting the billing week will preventbuyers from asking for a new price two to three days after the purchasebecause the market price had changed, Dolan said. ``Once you hit thatThursday, you can't go back on the next Friday and re-bill that load,'' Dolansaid. ``We're following Florida's lead,'' Dolan said. ``Bottom line, we wantto keep our market (so) when it gets to the very bottom ... it doesn't staythere too long.'' Markets that hover at low levels have basically forcedformation of the exchange, said Dean Janssen, general manager for Ace TomatoCo. Inc., Manteca, Calif. ``We will be a signee,'' he said. ``It seems to haveworked in Florida, and there's no future in packing and selling tomatoes --including for the growers -- right now.'' Exchange president Kim Soaresdeclined to comment on most details of the exchange May 5 as the membershipdrive was ongoing. Commission president Ed Beckman said the exchange is not apart of the commission, although it shares office space with the commission.``We're separate, but we (the commission) were the catalyst to the formationof the exchange,'' he said. He said the exchange's primary duty is to monitorindustry concerns from the grower to the tomato repacker-wholesaler. Thecommission also is responsible for market and promotion issues, ranging fromthe repacker-wholesaler to the consumer. Beckman said the group's existence isnecessary to ensure California remains competitive. ``They're starting to talkabout repositioning and how are we going to sell tomatoes five years from now,not one year from now,'' Beckman said. Shippers of Baja California tomatoessaid formation of the exchange should help the overall deal. ``Anytime thereis more information conveyed between grower-shippers, the more benefits forthe entire deal,'' said John King, sales manager for Andrew & Williamson SalesCo. Inc., Chula Vista. ``With more information you should eliminate some ofthat roller coaster ride of prices.'' ``I don't think it's a bad idea,'' saidJim Cathey, president of Produce Kountry Inc., Nogales, Ariz. ``It justdepends on the motivation behind it. But anytime that you get a bunch ofpeople together where you're getting a lot of input to develop your business,more information is good.'' Butch Lavelle, tomato sales manager for MeyerTomatoes, King City, Calif., said the exchange probably won't set well withbuyers. ``From the standpoint of the buyer, they feel it takes a competitiveedge away from them,'' Lavelle said. Dolan said the exchange structure inCalifornia won't be anything new for buyers as they have already becomefamiliar with the Florida exchange. ``The main thing with this is you'll findone price throughout the state and that will keep things stable for the sellerand buyer,'' Dolan said. -- By Craig Moyle , Staff Writer