Tomatoes prices have followed in the footsteps of many other foodstock commodities such as
wheat and
corn for many of the same reasons: increasing prices for
energy,
farming chemicals,
water, and labor have all contributed. A key trend driving the overall price hike for farmed commodities is the rise in corn production for
ethanol; as farmers get paid
higher prices for corn, many switch their land use to produce this energy feedstock, thus lowering the supply of other crops.
As a result, the price per ton of tomatoes has gone up from about $50 per ton from 2001-2005 to $63 per ton for the 2007 summer crop. [1]
[edit] Companies Hurt
- H.J. Heinz Company (HNZ) sells 650 million bottles of ketchup a year and tomatoes are a key ingredient. Heinz's overall input costs--including corn syrup, another major ingredient--have been rising, and the company has not passed on the entire increased cost to consumers (i.e., Heinz's gross margins are shrinking)
[edit] Companies Benefiting
- Monsanto Company (MON) purchased the then-biggest seed company in the world for $1 billion in 2005. Semini controlled about 23% of worldwide tomato seed market in 2005. Since then, tomato seed costs have tripled, from $300 to $900 per 100,000 seeds. Monsanto benefits from the increased prices of almost all farmed commodities, as the company produces a range of farming related products, including seeds, fertilizer and agri-chemicals.
- Deere & Company (DE) is another company that benefits from a rise all agricultural commodity prices. The company produces machines used in the agricultural business.
[edit] References
- ↑ California Tomato Growers Association
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