Chinese tomato paste exports spread

Chinese tomato paste exports spread    China's tomato paste exports are forecast to reach 800,000 tons in marketing year 2009-2010, a 6 percent increase over the year before, according to a report released this week by the U.S. Department of Agriculture's Foreign Agricultural Service.
   The agency said this increase is driven by a rise in domestic tomato production, which is expected to reach a record 39.5 million metric tons in the marketing year from July 1, 2009 to June 30, 2010.
   'The key phrase heard among China's tomato paste traders in 2008 is price,' the Foreign Agricultural Service said in its Global Agricultural Information Network report. 'Prices have soared as a result of production decline in Europe.'
   Acreage for tomato planting has been added, particularly in the Xinjiang and Inner Mongolia provinces. In response, about 40 new small tomato processing factories were built in Xinjiang, Inner Mongolia and Gansu provinces last year.
   'The industry is optimistic about processing tomato production in MY 2009-10, because farmers in Xinjiang are willing to expand tomato acreage in response to good returns from the 2008 crop,' the Foreign Agricultural Service said. 'Cotton and tomatoes are the two major cash crops in Xinjiang province. Strong tomato returns when compared with those from cotton in 2008 encouraged some cotton farmers to shift to tomato production in the new season.'
   China Customs statistics sourced in the USDA report found that the average price of China's exported tomato paste increased 69 percent to $1,130 per ton in the second half of 2008 over the same period in 2007, as a result of production decline in Europe. Many European processing tomato farmers shifted to other crops in response to lower EU tomato subsidies.
   'China's processing industry viewed this European policy change as an opportunity for increased export market share,' the Foreign Agricultural Service said. The three largest tomato paste producers are the United States, Europe (mainly Italy, Spain and Greece), and China.
   The current $1,100 per ton price for processed tomatoes could encourage some smaller EU factories to get back into the market, the agency said. However, Chinese producers are expected to maintain a reasonable profit margin at the $800 to $900 per ton price because of their lower production costs.
   The Foreign Agricultural Service report said Italy, Russia and Japan have historically been the top three buyers of China's tomato paste, although new emerging markets such as Nigeria, the Philippines and Ukraine, offer Chinese tomato paste producers new export opportunities.
   China's Tianjin is the largest export port for tomato paste. More than 80 percent of China's tomato paste exports were shipped from the port in 2008.
   The Foreign Agricultural Service said the United States couldn't compete with China's tomato products on price, but rather on quality and reputation. 'To increase market share of tomatoes and products in China, U.S. exporters and traders should focus on educating Chinese consumers on the health functions of tomato and tomato products, conducting seminars on how to include tomatoes in daily menus, and improving presentation and packaging designs that appeal to Chinese consumer taste,' the Foreign Agricultural Service said.
   The complete report is available on the Foreign Agricultural Service Web site.