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Agricultural Marketing Resource Center


By Hayley Boriss and Henrich Brunke, Agricultural Issues Center, University of California.

Revised January 2011 by Diane Huntrods, AgMRC, Iowa State University.

For more information or specific inquiries, please contact Linda Naeve, content specialist, AgMRC, Iowa State University, lnaeve@iastate.edu.
 

Overview
The early history of the tomato in the United States was characterized by the colonialist belief that the brightly colored fruit was poisonous. By the time commercial production began in the mid-1800s, the tomato was well established as a popular produce item in the American diet.

In 2010, more than 28.9 million cwt of commercial fresh-market tomatoes were produced in the United States. California was the largest producer by far, harvesting nearly 12 million cwt of fresh tomatoes, followed by Florida, which harvested 8.7 million cwt of fresh tomatoes. These two states together comprise nearly two-thirds of total U.S. fresh-tomato acreage. Tennessee and Ohio are also leading producers of fresh tomatoes.  (NASS 2011)

In this country, the fresh-market tomato industry is distinctly separate from the processing tomato industry. Fresh-market tomatoes are responsible for a larger share of U.S. total crop value than processed tomatoes because they command comparatively higher prices, and they are juicier and harvested when immature. The majority of fresh tomatoes are handpicked and sold on the open market.

Industry Characteristics
In California, fresh tomatoes are grown in several counties during all seasons except winter. Conversely, tomato production in Florida lasts from October to June with predominant periods of production in April and May and again from November to January (ERS). During the winter season, California’s off-season, fresh tomatoes from Mexico are imported to provide the western United States with fresh tomatoes. The majority of Florida’s winter crop is shipped and consumed in the eastern United States. Today, imports complement seasonal production differences within the United States, enabling fresh-market tomatoes to be sold in grocery stores year-round.

The fresh tomato market is oligopolistic, meaning that the relatively small number of firms competing in the market has enabled these individual firms to affect prices. In 1997, fewer than 1,000 farms were in production and fewer than 50 shippers controlled the movement of fresh tomatoes into wholesale, retail and food service sectors (Thompson and Wilson). In addition, much of the industry is vertically integrated, with companies owning the entire line of grower, packer and shipping firms (Strange, Schrader and Hartz).

Demand
Per capita consumption of fresh tomatoes has been increasing in recent years. Average annual per capita consumption in 1981 was 12.3 pounds and has steadily increased to 18.5 pounds in 2008 (ERS). Part of the increase in consumption has been due to the increasing popularity of fresh-market tomato use in salads and sandwiches, improved varieties and a growing population of immigrants with preferences for high vegetable diets. Tomatoes have also been marketed as a nutritional food, being promoted as a good source of vitamin C, vitamin A and antioxidants. Tomatoes have also been promoted as a possible preventative against specific cancers (California Tomato Commission).

Production
According to the National Agriculture Statistics Service (NASS), U.S. fresh-market tomato production in 2010 was valued at $1.4 billion, the highest ranked fresh-market vegetable. California outpaced Florida fresh-market tomato production in terms of area harvested, yield per acre, and cwt produced. In 2010, California harvested 38,000 acres, had average yields of 315 cwt per acre and produced nearly 12.0 million cwt, accounting for 41 percent of U.S. production.

Florida harvested 29,000 acres, had average yields of 300 cwt per acre and produced nearly 8.7 million cwt, accounting for 30 percent of U.S. production. NASS also reported 14 additional states producing a commercial fresh-tomato crop in 2010, including Ohio, Tennessee and Virginia—the only three with more than 4,000 acres in production.

Despite the fact that yield statistics have been confounded by the practice of producers not fully harvesting fields in years when prices are low, fresh-tomato yields in the United States have increased over time, from less than 118 cwt per planted acre in 1960 to 277 cwt per acre in 2010, down from 306 cwt in 2009. The sharpest increase in yields occurred in the 1980s with the adoption of higher-yield varieties and drip irrigation systems (ERS 2008).

Prices for fresh tomatoes are especially sensitive to surplus and shortages of supply, causing variability in prices over the past decade. Typically, the Florida price per cwt has been higher than the California price because Florida’s winter production receives elevated prices due to low supply. In 2010, Florida's average price for fresh tomatoes was $72.50, while California's average price was $33.10 (NASS 2011).  

Exports
The United States has remained a net importer of fresh tomatoes for decades, but total U.S. fresh-tomato exports were increasing until 2010, when they dropped to less than 120,000 metric tons (MT). The North American Free Trade Agreement (NAFTA) partners, Canada and Mexico, are the largest export destinations for U.S. fresh tomatoes. In value, over 66 percent of U.S. fresh-tomato exports were shipped to Canada alone in 2009. Combined with Mexico, exports to these U.S. northern and southern neighbors accounted for 98 percent of total exports.  (FAS)

The majority of U.S. exports to Mexico occur during the summer and fall. The value of shipments to Mexico has been variable throughout the years, but exports in 2010 increased from the previous year, reaching more than $70 million (FAS). The majority of U.S. fresh-tomato exports to Mexico originate in California, and the majority of fresh-tomato shipments are round, field-grown tomatoes, although smaller percentages of cherry tomatoes and Roma tomatoes are also shipped internationally.

Imports
Imports have made up a large portion of U.S. fresh-tomato consumption for many years. Imported tomatoes account for about one-third of U.S. tomato consumption, up from one-fifth in the early 1990s. Because U.S. field-grown fresh-tomato production is seasonal, Mexico is the predominant importer to the United States in the spring, fall and winter, with Canada providing the bulk of imports during summer months.  

U.S. imports of fresh tomatoes reached nearly 1.5 million MT in 2010. Mexico and Canada, in that order, were the main sources. Mexican imports increased to $1.1 billion in 2009, while Canadian imports increased to $255.5 million.  (FAS) 

Value-Added Market for Greenhouse Tomatoes
The emergence of greenhouse tomato production has begun to change the shape of the U.S. fresh-market tomato industry. Greenhouse tomato production allows producers to grow fresh tomatoes in structures, sometimes using methods of climate control and alternative soils. Advantages of greenhouse production include uniform appearance and quality, consistency in production, increased yields per acre and enhanced grower capability to sustain year-round production (Cook and Calvin).

The United States is the largest market in North America for greenhouse tomatoes. The European Union, Mexico and Canada have all become large exporters of greenhouse tomatoes, much of which enters the United States. In 2005 U.S. imports of greenhouse tomatoes were larger than total domestic production of greenhouse tomatoes. Greenhouse tomatoes were also the leading type of import in 2004. ERS has also attributed much of the general increase in imports over the past decade to a niche market for high-quality greenhouse tomatoes in the United States, especially those of tomatoes-on-the-vine, which are only grown in greenhouses and have gained in popularity.

In recent years, U.S. and Canadian greenhouse production has begun to stabilize, and as the niche becomes more conventional, premiums have begun to decrease. It has been estimated that 90 percent of Canadian production is greenhouse. Mexican greenhouse production, however, continues to increase, with greenhouse tomatoes accounting for an 8 percent share of total Mexican production. Although Mexican production has a comparative advantage given lower labor cost and favorable weather for winter production, the high capital investment and inexperienced management have prevented Mexico from capturing a larger share of production (Cook and Calvin).

The rise of the greenhouse industry with its intensive initial capital investment and heterogeneity among production methods has also prompted trade disputes between the United States, Canada and Mexico, where the definition of greenhouse tomatoes has become an issue. Compared to the Mexican industry, U.S. and Canadian greenhouses typically employ higher, more costly technology, including the use of climate control and hydroponics, which uses alternatives to soil. Higher-cost producers wish to differentiate between lower-cost and higher-cost production and redefine greenhouse tomatoes to denote production differences, although some critics suggest this is an attempt at protectionist policies for higher-cost producers. For more information on the North American greenhouse industry, see the (online) Cook and Calvin report cited below.


Sources
California Tomato Commission.

Florida Tomato Committee.

Fresh & Processing Tomatoes: World Markets & Trade, Foreign Ag Service (FAS), USDA, 2008.

Global Agricultural Trade System (GATS), FAS, USDA.

Greenhouse Tomatoes Change the Dynamics of the North American Greenhouse Tomato Industry, Economic Research Service (ERS), USDA, 2005 - The North American greenhouse tomato industry has grown rapidly since the early 1990s and now plays a major role in the fresh tomato industry.

High tunnel tomatoes, University of Kentucky Cooperative Extension Service, 2009.

North American Fresh-Tomato Market, ERS, USDA, March 2013.

Protected-Culture Technology Transforms the Fresh-Tomato Market, Amber Waves, ERS, USDA, 2013 - Protected culture tomatoes now dominate the retail industry and are becoming more common in foodservice. They made up 40 percent of U.S. tomato shipments, up from less than 10 percent in 2004.

Strange, M., W. Schrader, and T. Hartz, Fresh-Market Tomato Production in California, University of California Vegetable Research and Information Center, 2000.

Tomatoes, Vegetables and Pulses, ERS, USDA.

Vegetables, National Agricultural Statistics Service (NASS), USDA - This report provides data on tomatoes, including area harvested, prospective area, yield and production for major states.

Vegetables and Pulses Outlook, ERS, USDA.

Vegetables Annual Summary, NASS, USDA.

 
Created October 2005 and  links checked January 2013.
 

 

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