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Greenhouse expansions in Canada, the U.S. and Mexico making for strong competition

Few if any produce professionals need a recap of how the North American greenhouse industry began and evolved in the past half-century. It began as a small industry in the Leamington, ON, area in the mid-1900s by a small group of immigrants from Italy.tomato-greenhouse---June-20

These savvy growers quickly learned that getting anything out of the ground during the winter was impossible in the cold north. But soon they learned about how produce was being grown for longer periods of time in northern European countries, such as Holland, inside of greenhouse structures.

Determined to make a living in farming, these growers learned from their European neighbors and began building greenhouses to sustain their crops for longer periods of time.

But the cost of heat to warm the Canadian greenhouses in winter made production prohibitive. Some began partnering with growers in Mexico, bringing their greenhouse technology with them, in order to expand their offerings to a more year-round basis.

In the past decade especially, greenhouses have also popped up in the U.S., and the number of them being built in Canada and Mexico continues to increase.

The result is a tremendous increase in supply, and some fierce competition.

Greenhouse vegetables have certainly enjoyed many fine days in the indoor sun. When field crops of tomatoes, Bell peppers and cucumbers are affected by inclement weather or other wraths of Mother Nature, greenhouse items flex their nearly flawless muscles and step in to save the day.

And, the days of bland, tasteless greenhouse tomatoes are long past. Today’s varieties boast outstanding flavor, good shelf life and a great food-safety reputation.

But the growth of the industry is resulting in increased competition, and things could get tough for greenhouse growers.

The U.S. Department of Agriculture Foreign Agriculture Service GAIN Report—an acronym for Global Agriculture Information Network—assesses commodity and trade issues. Its June 1, 2016 report, number, MX6021, on Mexico, Tomato Annual, is headlined “Mexico Continues to Expand Greenhouse Tomato Production.”

The report states that Mexican tomato production for marketing year 2016-17 is estimated at 2.9 million metric tons, or MMT, slightly higher than the previous marketing year.

Total planted area for tomatoes in Mexico had been declining for several years, but yields began increasing due to the establishment of protected agriculture, including greenhouse, shade-house and tunnel areas. The move away from open field tomato production is attributable to pest problems, high costs of production, swings in both international prices and exchange rates and limited water availability.

Today, Mexican producers continue to move from open field production to protected agriculture technologies, resulting in higher yields. Exports are expected to remain relatively stable at approximately 1.5 MMT.

Tomato planted area for fresh consumption for 2016-17 is forecast at only slight growth over 2015-16. Area planted is influenced by the behavior of the U.S. market, as growers try to plant only what the U.S. market will absorb besides supplying the domestic market.

The planting area estimate for fresh consumption for 2015-16 is 48,000 hectares, a slight increase compared to 2014-15 area of 47,530 hectares. The Roma variety now represents more than 62 percent of total Mexican tomato production as demand for this type of tomato has surpassed the round tomato.

During the October to May winter season, Sinaloa growers are the main producers and exporters of fresh tomatoes. Other significant producers include Michoacán, Jalisco, and Baja California Sur. Growers in Sinaloa are anticipating that the use of improved and extended shelf varieties, drip irrigation and plastic mulch will help maintain their high yields.

During the summer season—May to October—Baja California growers are the main producers and exporters of fresh tomatoes. As a result, U.S. California tomatoes face direct competition from Baja California tomatoes. The states of Michoacán, Jalisco, and Morelos follow Baja California’s production. Tomato growers in Jalisco bridge the summer-winter cycle and usually export in October, November and December, after Baja California.

Knowing how the future of the greenhouse industry, especially the tomato category, will unfold is akin to trusting a crystal ball. Tomatoes are an item that most households and restaurants have in ready supply, but they aren’t exactly the new kale. A sudden demand boost, especially one that matches increasing production, is questionable. The answer likely lies in the forces of competition, bearable market prices, consolidations and other produce industry ebbs and flows.