By Tyler Durden
Days ago, we said the next food insecurity problem that may impact Americans’ eating habits could be an emerging potato shortage. Now there appears to be another issue: Tomatoes are getting squeezed, and risks of a ketchup shortage rise as a severe drought batter California’s farmland.
“We desperately need rain … and are getting to a point where we don’t have inventory left to keep fulfilling the market demand,” Mike Montna, head of the California Tomato Growers Association, told Bloomberg.
“It’s real tough to grow a tomato crop right now,” Montna continued, adding, “on one side you have the drought impacting costs because you don’t have enough water to grow all your acres, and then you have the farm inflation side of it with fuel and fertilizer costs shooting up.”
The lack of water and the soaring cost of farming appears to be a “perfect storm” in the making that could result in a shortage of all sorts of tomato-based products, including ketchup, salsa, and spaghetti sauce.
Rick Blankenship, Chairman of the Board at California Tomato Research Institute, warned crop yields are “way off this year … and coupled with drought, we’ve had high temperatures and that in itself creates an issue where the tomatoes are so hot that they just don’t size properly — so you have a lot of tomatoes on a plant, but they are smaller.”
Bloomberg said the value for a ton of tomatoes reached an all-time high this year of $105 due to higher input prices, such as diesel and fertilizer, compounded with the drought.
“You would think that it was a home run for growers, but in reality the input costs have gone up so much that the potential profit was all gobbled up,” Blankenship said.
R. Greg Pruett, sales and energy manager for Ingomar Packing Co., one of the world’s largest tomato processors, said not all customers will get their processed products. The company sells to some of the largest food brands. He said inventories are plunging to critically low levels.
“If you are looking for a significant amount of tomato paste and you haven’t already contracted it then you aren’t going to get it no matter what the price is,” Pruett said, adding, “it’s just not there.”
Market research firm IRI shows the price of tomato sauce in the last four weeks ended July 10 surged 17% from a year ago, while ketchup jumped 23%.
Besides tomatoes, french fries could be in short supply as the potato crop has suffered from a heatwave. And worse, most of the US beer imports come from northern Mexico, where the region is running out of water.
Ketchup, french fries, and beer could soon be in short supply or experience price hikes due to tightening supply.
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