TOMATO PRODUCTS TRADING

Transcription

1 TOMATO PRODUCTS TRADING by Mr. Yanik MEZZADRI TOMATOLAND SA Melbourne, Australia - 15/18 November 2004

2 1) What s a processed tomato product? 2) Competitions and trade 3) The future risks and opportunities

3 The processed tomato products Industrial tomato products : processed from fresh tomatoes, not consumed as it is, reprocessed in finished products (ex. pizzas) packed in large volume (min. 10 Kg. up to 25 MT. tanks) ex : tomato paste in 250Kg. aseptic bag in drum «First stage» retail and food service tomato products : directly made from fresh tomatoes or exclusively containing tomatoes, consumed as it is, ex. : whole peeled tomatoes in 1Kg. Can «Second stage» retail and food service tomato products : with tomatoes as the main ingredient consumed as it is ex. : ketchup in glass bottle

4 Are we talking about the same thing? No uniform product definition : what s a pizza sauce? a passata or even a hot break paste? solutions : Codex, Industry guide? No uniform product specification : dry content? colour measurement? Shelf life? uniform grade or customer requirements? No uniform product legislation : no differentiation between made out of fresh and repacked tomato content of ketchup? EU or US legislation as a start?

5 Can tomato paste be called a «commodity»? USA : Yes as growers and processors are using similar techniques all over California! Yes as more than 80 % of the fresh tomatoes are processed into a standard 30/32 % hot break paste packed in bins. Europe / Turkey / China : No as techniques vary widely from place to place No as a large share of the production is made upon customers specific requirements No as most factories are often processing 5 to 50 different products Conclusion : Tomato paste (as well as other tomato products) is not (yet) a commodity! Global trading and industry concentration could help moving into that direction but the risk of losing quality or specificity becomes then real!

6 2 : Competition and trade

7 2 A : Comparative processing costs

8 Comparative processing costs : The Subsidies : a. European Union : 34.5 Euros (43.8 US$) per MT. or abt. 30 % of total farmers revenues. Penalisations. Little competition from other crops. Decoupling after 2006? b. Other regions : USA : no subsidy today or tomorrow! Competition from cotton, almonds, raisins China : facilitated access to credits, unofficial subsidies to reduce train inland transportation. Competition from cotton. Others : export subsidies in Tunisia, subsidies on sea freight for Chile,

9 Fresh tomato prices crop : COUNTRY ZONE PRICE EX FIELD PRICE / MT. SUBSIDY OR FARMER FARM. REV. TRANSP. DELIVERED DEL. PRICE % OF TOTAL PER MT. IN US$ AID REVENUE IN US$ COSTS PRICE IN US$ COSTS (local currency) (loc. currency) (loc. currency) (loc. currency) (loc. currency) (Est.) ALGERIA ANNABA DZD $95,71 0,00 DZD DZD $95,71 300,00 DZD 7 000,00 DZD $100,00 unknown AUSTRALIA MELBOURNE 100,00 AUD $72,99 0,00 AUD 100,00 AUD $72,99 20,00 AUD 120,00 AUD $87,59 unknown CHILE CLP $55,00 0,00 CLP CLP $55, CLP CLP $59,03 62% CHINA GANSU 265,00 $32,00 $0,00 265,00 $32,00 20,00 285,00 $34,42 59% CHINA INNER MONGOLIA 270,00 $32,61 $0,00 270,00 $32,61 20,00 290,00 $35,02 59% CHINA XINJIANG 260,00 $31,40 $0,00 260,00 $31,40 20,00 280,00 $33,82 59% FRANCE PROVENCE 50,00 $60,00 34,50 84,50 $101,40 8,00 58,00 $69,60 64% ITALY NAPOLI 62,00 $74,40 34,50 96,50 $115,80 15,00 77,00 $92,40 70% ITALY PARMA / PIACENZA 50,50 $60,60 34,50 85,00 $102,00 7,00 57,50 $69,00 63% PORTUGAL 50,00 $60,00 34,50 84,50 $101,40 7,00 57,00 $68,40 62% SPAIN (1) EXTRAMADURA 50,35 $60,42 29,36 79,71 $95,65 3,50 53,85 $64,62 59% SPAIN (1) NAVARRA 60,00 $72,00 29,36 89,36 $107,23 10,00 70,00 $84,00 72% TUNISIA 92,00 TND $73,60 0,00 TND 92,00 TND $73,60 5,00 TND 97,00 TND $77,60 unknown TURKEY (2) KARACABEY 85 TRL $59,44 0,00 TRL 85 TRL $59,44 5,00 TRL 90 TRL $62,94 63% USA CALIFORNIA $56,00 $56,00 $0,00 $56,00 $56,00 $6,00 $62,00 $62,00 65% (1) : REDUCED SUBSIDY IN PENALTY FOR EXCEEDING EU THRESHOLD (2) : IN MILLIONS OF TURKISH LIRAS EX-FIELD PRICE VARY DEPENDING ON PAYMENT TERM - $75.00 FOR MARCH 2005 PAYMENT NOTES : ECHANGE RATES AS OF MAY 1ST. 2004

10 Other processing costs (industrial products) capital expenses : 7 to 10 % - uniform price of equipments and low interest rates everywhere with a special advantage for China and some extra costs in Turkey packaging : 8 to 12 % - only slightly sensible to / $ exchange rate overheads : 7 to 10 % with the highest costs in Europe energy : 6 to 8 % - up but tend to be also quite uniform with an edge for US and China compared to Europe operating interests : 4 to 6 % - again quite uniform thanks to low interest rates other costs (marketing ) : 2 to 5 % depends more on company policy

11 Comparative logistic costs WORLD TRANSPORT COSTS SEPT TOM ATOLAND COUNTRY PORT INLAND INLAND SEA FREIGHT TOTAL TRANSP. TRANSP. IN US $ ENGLAND (3) IN US $ SO EUR. (1) NO EUR. (2) JAPAN MELBOURN E RUSSIA IN US $ CHILE VALPARAISO $30 $30 $85 $80 $55 $60 $85 $162 CHINA TIANJIN $50 $50 $70 $75 $3 0 $65 $85 $177 FRANCE M ARSEILLE 30 $39 $0 $0 $60 $85 $60 $99 GREECE PIREUS 20 $26 $28 $3 1 $55 $75 $55 $108 ITALY NORTH LA SPEZIA 30 $39 $0 $39 $60 $80 $60 $129 ITALY SOUTH NAPOLI 25 $32 $0 $39 $60 $80 $60 $123 IRAN B. ABBAS $25 $25 $52 $56 $50 $70 $65 $133 PORTUGA L LISBON 15 $19 $0 $32 $60 $80 $55 $103 SPAIN LISBON 25 $32 $0 $32 $60 $80 $55 $116 TURKEY IZM IR $20 $14 $26 $32 $50 $70 $50 $98 USA OAKLAND $30 $30 $100 $100 $70 unknown $105 $182 NOTES : (1) : PRICES GIVEN PER M T. BASED ON 19M T. NW PER 20FEET CONT. OR 22.5M T. NW PER TRUCK SOUTHERN EUROPE INCLUDES France, Spain, Italy (2) : NORTHERN EUROPE INCLUDES Germany, UK, Danemark (3) : INCLUDES INLAND TRANSPORTATION FROM FELIXSTOWE PORT OR TRUCK TRANSPORT FROM ORIGIN

12 Duty rates for tomato products Europe : 14.4 % on industrial products for all origins with 2 exceptions - Chile with a gradual reduction of tariffs on a 4 (industrial products) to 7 (finished products) year period & Turkey with a duty free quota of MT. for diced tomatoes 10.2 % on finished tomato products except from Turkey (0 %) and some other origins USA : 11.6 % for most origins, 12.5 % on peeled tomatoes, 6 % on ketchup and sauces plus duty free trade between NAFTA countries and South America Russia : 15 % for all origins except Uzbekistan

13 Duty rates for tomato products (2) Japan : 9.6 % for peeled tomatoes 20 % for tomato paste with duty free periods for specific industrial usage (ex. Ketchup) 25 % for ketchup and juices South East Asia : between 10 to 40 % for tomato paste, uniform for all origins South America : Brazil : 20 to 25 % Free trade between MERCOSUR countries (Brazil Chile, Argentina, Colombia, Peru, Venezuela, Paraguay, Uruguay Western Africa : 20 to 35 % but uniform for any sources, reported frauds and smuggling cases (Senegal)

14 Non tariff trade barriers USA : very strict FDA import rules (Hmc ) bioterrorism act 2002 measures Europe : food safety and tracability guarantees to be requested from food suppliers label origin of ingredients

15 Euro / US$ exchange rate last 2 years China is heavily benefiting from the drop of the US $ Europe finds it difficult to sell its extra stock outside EU borders; this also affects repacking costs in Europe California hopes for further reduction of US $ to possibly sell paste into Europe

16 2 B : Trade flows

17 Main products flows (outside USA and EU) Main exchanges - industrial tomato products CALIFORNIA South America U.E. Africa Russia / Eastern Europe Turkey Central Asia Middle East CHINA Japan South East Asia CHILE Total exchanges : 10.1 Mil. MT. fresh tomatoes or 1,010 Billion US$

18 Main products flows / Volumes & values TOMATO EXPORTS FRESH TOM. SHARE PRODUCTS ORIGIN TONNAGE TYPE TONNAGE EST. VALUE SHARE CHINA ,65% PASTE $ ,32% EUROPE ,84% PASTE $ ,01% TURKEY ,88%PASTE / DICED $ ,30% ITALY (REPACKED) ,88% PASTE $ ,89% OTHERS ,92% PASTE $ ,18% USA ,93% PASTE $ ,75% CHILE ,94% PASTE $ ,94% EUROPE ,95% PEELED $ ,60% TOTAL $ TOTAL (OUT REPACK.) $

19 Main products flows (3) China / Italy / Africa is the largest single flow (more than 1 million MT. of fresh tomatoes) but could be modified in coming years by direct shipment from China (in aseptic bag or even in cans). China facing difficulties to penetrate EU markets and almost absent of US market Europe (5 countries) is second largest seller with 20 % of the total volume (paste + peeled) but 33 % of total value Turkey s role is declining on international markets because of Chinese competition Chile s sales are stagnant and could suffer from Brazilian growth.

20 Main selling zones on international markets China (35%) South Italy (17%) European Union (16 %) Turkey (12 %) USA (7 %) Chile (6%)

21 Main buying zones in the world : USA / Canada * :10.6 mil. MT. (39%) EU * : 7.8 mil. MT. (29%) West., Cent. & East. Africa : 0.95 mil. MT. (3.5 %) Russia : 0.9 mil. MT. (3.5 %) Japan : 0.7 mil. MT. (2.6 %) South East Asia : 0.6 mil. MT. (2.5 %) Libya : 0.36 mil. MT. (1.3%) Middle East : 0.25 mil. MT. (0.9 %) (*) : self sufficient zones

22 EU consumption observations : The EU consumption has enjoyed a strong growth, from 4.3 millions MT. in 1990 up to 7.5 millions MT. in This is a 6.8 % per annum growth. Paste consumption (paste + products made with paste such as ketchup) is almost not growing since 1995! Peeled tomatoes consumption is even declining the past 3 years! But Other products, mainly low concentration items (passata, polpa fine ) primarily developed in North Italy, are growing significantly over the same period. As said by Sophie yesterday, the EU enlargement could push the consumption up by almost a million MT. within the next 10 years.

23 US consumption observations : Stability or even slight decrease over the last 10 years but the per capita consumption is 50 % higher than in Europe! The consumption was mainly driven by 3 products categories : ketchup, pasta sauce and pizzas. The salsa family now starts to play a significant role. More than 90 % of the consumption is made with tomato paste. The share of peeled tomatoes is very small, below 3 %. The recent (but serious) drop in pasta consumption (search for low carbohydrate foods) has a negative impact on tomato products consumption, at least in the short run.

24 Consumption in the rest of the world : Japan and South East Asia (0.7 and 0.6 millions MT.) are the only 2 large users in Asia but their consumption is stagnating. Both are buying high quality paste and increasing volumes of diced in Japan. Russia is already the largest single market outside EU and USA, just below 1 million MT. and keeps on growing at a rapid rate. More consumption of tomato juice, ketchup and pizzas are driving the market up. Market is made of low grade 36/38 % paste for ketchup and high quality 28/30 % paste for juice. Western, Central and Eastern Africa is also a large buying zone with a total consumption of almost a million MT., Nigeria with a population of more than 100 millions people is the leading buyer. The demand is more price elastic than anywhere else. Demand is for cheap canned tomato paste. North Africa has very high per capita consumption but well covered by local processors except for Libya!

25 3 : The future risks and opportunities

26 Risks and opportunities U.E. : the CAP reform (decoupling, subsidy reduction) in coming years will have a negative effect on EU production. Bulk paste production will be reduced and local food processors will have to buy more outside Europe. USA : the weak situation of the industry should lead to some structural changes in coming years but, thanks to cost efficient growing and processing, the Californian tomato growers and processors should keep on supplying the bulk of the demand in coming years. Exports could only grow through market opportunities (shortage in other regions, favourable currencu exchange rate, free trade agreements )

27 Risks and opportunities (2) China : thanks to virtually endless land and cheap labour, the tomato industry should keep on growing despite some severe growth crisis. But cheaper prices will not be sufficient for Chinese sellers to conquer the EU markets; only quality and food security oriented processors will grab some significant market share. New players should come join the game in coming years and keep the local competition very active. Chinese processors will also move to more finished products, canned paste already today (and then compete with South Italian repackers), and possibly ketchup and sauces in coming years to cover local demand.

28 Risks and opportunities (3) Turkey : Chinese competition will become harder and harder in coming years! Only a free trade agreement with EU could help keep the current export level. If not, Turkish processors may have to concentrate on local market and neighboring markets (Irak ). Chile : Despite clever cooperation between the only 2 left processors, Chile will face stiff competition from various origins - China (like everybody), Brazil, California. The counter season advantage and the quality of the local products could still help them to keep a large enough customer base? Others : At this stage, we do not see any possibility for any other origin to play a significant role on international markets, except for Brazil?

29 Thank you! Grazie! Merci! Danke schön! Obrigado! Gracias! Bedankt!