HORTICULTURAL TRADE AND U.S. EXPORT OPPORTUNITIES

July 1997

This report draws on information from USDA's global network of agricultural attaches and counselors, official statistics of foreign governments, other foreign source materials, and results of office analysis.

This report is based on unrounded data; numbers may not add to totals because of rounding.

Further information may be obtained by writing to the division or calling Horticultural and Tropical Products Division, AG Box 1049, Washington, DC 20250-1049. Telephone: 202-720-6590 Fax: 202-720-3799

The next issue of WORLD HORTICULTURAL TRADE AND U.S. EXPORT OPPORTUNITIES will be available electronically after 3:30 pm on August 1, 1997.

EXPORT SUMMARY

U.S. exports of horticultural products to all countries in April totaled $832.2 million, down 1 percent from the same month a year earlier. Seven out of 15 categories registered decreases. Categories with the most significant decreases in April were tree nuts (down $23.9 million or 27 percent), fresh citrus (down $5.8 million or 6 percent), and fruit and vegetable juices (down $3.4 million or 5 percent). Categories with the most significant increases were canned vegetables (up $10.9 million or 21 percent), wine (up $5.2 million or 19 percent), and dehydrated vegetables (up $4.3 million or 23 percent). During the first 7 months (October-April) of fiscal year 1997, the total value of U.S. horticultural exports was $6.1 billion--7 percent above the same period last year.

EXPORT NEWS AND OPPORTUNITIES

GSM-102 Program: USDA increases operational credit guarantees to Egypt, Indonesia and Russia

Since the last publication, the United States Department of Agriculture (USDA) has increased by $50 million the amount of operational credit guarantees available to U.S. exporters for sales of previously announced U.S. agricultural commodities to Egypt for fiscal year 1997. This action completes the allocation of the entire $200 million in program coverage authorized for sales to Egypt in fiscal year 1997. All other terms and conditions previously announced remain the same.

On May 28, USDA increased by $100 million the amount of credit guarantees available to U.S. exporters for sales of U.S. agricultural commodities to Indonesia under the GSM-102 program for fiscal year 1997. This action increases the fiscal year 1997 allocation for Indonesia from $160 million to $260 million. All other terms and conditions previously announced remain the same.

On June 10, USDA increased by $25 million the allocation of credit guarantees for sales of U.S. agricultural commodities to Russia under the GSM-102 program for fiscal year 1997. This action increases the total fiscal year 1997 allocation for sales to Russia from $95 million to $120 million. All other terms and conditions previously announced remain the same.

The GSM-102 program makes available financing for the sales of U.S. agricultural commodities overseas. USDA does not provide financing, but guarantees payments due from foreign banks. USDA typically guarantees 98 percent of the principal and a portion of the interest. The GSM-102 program covers credit terms from 90 days to three years. Under the program, once a firm sale exists, the qualified U.S. exporter applies for a payment guarantee before the date of export. The U.S. exporter pays a fee calculated on the dollar amount guaranteed, based on a schedule of rates applicable to different lengths of credit periods. The CCC-approved foreign bank issues a dollar-denominated, irrevocable letter of credit in favor of the U.S. exporter, ordinarily advised or confirmed by the financial institution in the United States agreeing to extend credit to the foreign bank. The U.S. exporter may negotiate an arrangement to be paid as exports occur by assigning the U.S. financial institution the right to proceeds that may become payable under the guarantee, and later presenting required documents to that financial institution. Such documents normally include a copy of the export report. If a foreign bank fails to make any payment as agreed, the exporter or the assignee may file a claim with USDA for the amounts due and covered by the guarantee. USDA will pay the U.S. bank and will take on the responsibility of collecting the overdue amount from the foreign bank.

The tables on pages 9 and 10 present FY 1997 allocations by country and product along with registrations through June 6, 1997, for various horticultural commodities and products. Repayment terms vary under the program, from 90 days to 3 years.

Cautionary information for use of the accompanying table: The table reflects only exporter applications for guarantees that have been entered into the GSM 102 computerized system. At any given time, exporter applications are in process, and not all of those received have been entered into the system. Moreover, all applications are initially entered into the system on a provisional basis until price reviews have been completed, the guarantee fee has been received, and the written guarantee has been issued. Thus, some applications now in the system may in the future be removed, and the commodity balances correspondingly increased. For details on terms and authorizations, see the footnotes to the table.

Note: The GSM will consider requests to establish a GSM-102 program for a country or region or amend an authorized program to include horticultural commodities and products which are currently not eligible. (For further information on the GSM-102 program for horticultural commodities, contact Yvette Wedderburn Bomersheim, 202-720-9903).

Supplier Credit Guarantee Program: no activity since last publication

The SCGP is unique because it covers short-term financing extended directly by U.S. exporters to foreign buyers and requires that the importers sign a promissory note in case of default on the CCC-backed payment guarantee. The SCGP emphasizes high-value and value-added products, but may include commodities or products that also have been programmed under the GSM-102 program.

The tables on pages 11 and 12 present FY 1997 allocations by country and product along with registrations through June 6, 1997, for various horticultural commodities and products.

Cautionary information for use of the accompanying table: The table reflects only exporter applications for guarantees that have been entered into the SCGP computerized system. At any given time, exporter applications are in process, and not all of those received have been entered into the system. Moreover, all applications are initially entered into the system on a provisional basis until price reviews have been completed, the guarantee fee has been received, and the written guarantee has been issued. Thus, some applications now in the system may in the future be removed, and the commodity balances correspondingly increased. </blockquote>

Note: The GSM will consider requests to establish a SCGP for a country or region or amend an authorized program to include horticultural commodities and products which are currently not eligible. (For further information on the SCGP for horticultural commodities, contact Yvette Wedderburn Bomersheim, 202-720-9903).

EXPORT NEWS & OPPORTUNITIES

First direct shipment of U.S. sweet cherries arrives in China

The first official shipment of sweet cherries from Washington state arrived in Shanghai on June 19. This first-time shipment follows the recent signing of a modified work plan governing export shipments of Washington state cherries. The previous work plan had effectively precluded shipments by requiring that the entire program be suspended in the event of a Western cherry fruit fly detection in a shipment. Under the revised work plan, such a detection will require that the lot of cherries be either fumigated, reexported or destroyed, but just the packing facility from which the cherries originated would be suspended from the program until an investigation and corrective measures could be undertaken.

The Northwest Cherry Growers, representing 2,500 sweet cherry growers from Washington state, estimates the initial Chinese market could be worth $2 to $4 million annually, with long-term potential even higher. The U.S. cherry industry will likely now turn its attention to addressing China's trade restrictive import duty, currently set at 48 percent ad valorem, plus a 17 percent VAT. The ongoing WTO accession process provides an opportunity for bringing this duty, and others, down to trade facilitating levels. Efforts to expand the cherry agreement to include other production areas, notably California, Oregon, and Idaho, are ongoing.

WORLD TRADE SITUATION AND POLICY UPDATES

EU'S 1997/98 program in compliance with U.S. - EC Canned Fruit Accord

FAS has determined that the European Union's proposed canned fruit program for 1997/98 complies with the U.S.-EC Canned Fruit Accord (CFA). The net cost of canning peaches to EU processors, after processing aid payments from Brussels are deducted from the minimum price paid to growers for raw fruit, is estimated at $203.57, above the agreed-upon world price of $199.84 per metric ton. For canned pears, processing aids were reduced by 25 percent due to the EU having exceeded its production threshold during the last 3 years. The penalty brings the 1997/98 net cost to processors up to $268.25 per metric ton of canning pears, versus a calculated world price of $189.06.

The CFA is a long standing bilateral agreement between the US and the EU to review and agree upon a representative world price for fresh peaches and pears used for canning. The CFA also sets out procedures to ensure that the EU processing aid is contained to a level that keeps the net cost of canning fruit for EU processors at or above the world price level. In recent years, the U.S. share of world canned peach markets has continued to decline, due to factors beyond the scope of the CFA, including the lucrative withdrawal program which has boosted EU peach production to twice the level required for canning purposes. The EU Commission forwarded on June 20 data on the withdrawal program and other canned fruit programs that was requested last February by a G-6 group of countries (United States, Australia, Argentina, Chile, Brazil and South Africa) that expressed concern with losses of export market share to subsidized EU competition.

Mexico initiates anti-dumping duty investigation on canned peaches

On May 26 the Secretariat of Commerce announced acceptance of a petition to investigate a subsidy and dumping claim against exports to Mexico of Greek canned peaches in halves with syrup. The petition was made by the processing company "Conservas la Torre" alleging export subsidies, price discrimination and injury to the Mexican industry. The investigation will be based on actions taking place between April-December 1996. All interested parties have 30 working days from May 26 to provide comments.

Poland reduces tariffs slightly for some horticultural product imports

Poland's Council of Ministers has approved new tariffs and tariff regulations for 1997, which will somewhat reduce import tariffs for many horticultural products. The new tariff levels become effective July 1, 1997. The tariff reductions reflect Poland's World Trade Organization (WTO) commitments to reduce import tariffs over time. In accordance with WTO agreements, Poland updates its customs schedule every 6 months to reflect adjustments to import tariffs or new trade agreements. Some agricultural products for which applied tariffs were slightly reduced include fresh fruits (dates, figs, avocados), fresh vegetables, raisins, coffee, tea, pepper, vanilla, cocoa beans, selected processed fruits and vegetables, and selected wines and liquors. Poland also liquidated an across-the-board border tax, which in 1996 was 3 percent for all imports.

In an unusual development, not connected with Poland's WTO commitments, the Polish government reduced the value add tax (VAT) applied to fresh citrus from 22 percent to 7 percent. The change will become effective on January 1, 1998.

EU Commission targets new fruits for import licensing

On Friday, June 13, the EU Commission published a regulation establishing a modified list of fresh fruits that require import licenses. After reviewing the trigger volumes set forth under the Uruguay Round special safeguards for fruit and vegetables, the Commission decided to eliminate the import license requirement for apples, pears, and clementines. Import volumes of these products reportedly never reached the trigger levels. However, the Commission added table grapes and cherries to the list of products for which import licenses are required during their respective entry price periods. The Commission also changed the periods for which licenses are necessary for lemons and cucumbers. For lemons, the new period is September 1 through May 30, rather than all year. For cucumbers, the new period is November 1 through April 30, rather than May 1 through October 31.

The EU Commission uses the import license requirement ostensibly to monitor import volumes for the special agricultural safeguard, provided under the Uruguay Round agriculture agreement. Should actual imports of a covered product during the entry price period exceed the trigger volume, the EU can temporarily invoke the special safeguard and raise the import tariff on the product. The EU special safeguard scheme calls for a duty increase equal to one third of both, the applied ad valorem duty and any additional tariffs (some fruits and vegetables are subject to both, an ad valorem duty plus additional tariffs, which vary according to the entry price and entry period). For example, in the event imports of cherries between May 21 and August 10 of this year exceed 35,721 metric tons, the EU can raise the tariff during the entry price period by one third of the applied ad valorem duty plus one third of any additional tariff.

WORLD FRESH CITRUS SITUATION

Citrus production in selected countries in 1996/97 is forecast at a record 68.1 million metric tons, 3 percent above the previous year's output. Oranges account for most of this increase. The amount of oranges expected to be processed in 1996/97 is forecast at a record 28.9 million tons, 8 percent above the previous year's level. More citrus is expected to be processed because of record orange harvests in Florida and Sao Paulo. Selected country fresh citrus exports, however, are forecast to decrease 6 percent due mainly to a smaller harvest in Spain, the world's largest fresh citrus exporter. The United States and South Africa are expected to expand fresh citrus exports in 1996/97, due partly to a forecast 14 percent drop in Spain's exports.

Summary

Total citrus production in 1996/97 in major producing countries is estimated at a record 68 million tons, up 3 percent from the 1995/96 crop. Larger crops in Brazil and the United States, in addition to moderate gains in Greece and South Africa, account for most of this increase. Orange production in 1996/97 in selected countries is forecast at a record 45.6 million tons, up 4 percent from last year, and up 17 percent since 1991/92. A 12 percent increase in Brazil and a 6 percent increase in the United States account for most of the higher orange output. Grapefruit production is forecast to increase 7 percent based on a record U.S. harvest. The production of tangerines and lemons in selected countries in 1996/97 is forecast unchanged from the previous year.

Citrus exports for selected countries in 1996/97 are forecast at 7.6 million tons, down 6 percent from the previous year's volume. An expected 14 percent decrease in Spain's citrus exports is expected to more than offset higher shipments from the United States and South Africa. Spain's exports are forecast to decrease due to a smaller citrus harvest.

Citrus processing in 1996/97 is forecast at a record 28.9 million tons, 7 percent above last year's level. The United States and Brazil account for the most of the increase in processing, due to larger orange harvests.

Southern Hemisphere

Total citrus production in 1997 (corresponds to the 1996/97 in the tables in the statistical section) in selected countries in the Southern Hemisphere is forecast at 23.4 million metric tons, up 9 percent from 1996. A forecast 8 percent increase in Brazil's orange crop accounts for most of the production upturn. Brazilian orange production accounts for more than 80 percent of total Southern Hemisphere citrus output.

Fresh citrus exports by selected Southern Hemisphere countries in 1997 are forecast at 1.3 million tons, up 4 percent from the previous year's shipments. South Africa is expected to account for the bulk of the increase in Southern Hemisphere exports. The devaluation of the Rand against other major international currencies has helped South African exports to be more price competitive in international markets.

Brazil

The total Brazilian citrus crop in 1997 (harvested June through December 1997) is forecast at 19.7 million tons, up 12 percent from the 1996 estimate. Total fresh orange production in 1997 is forecast at a record 18.3 million tons, 8 percent above last year's revised estimate. In Sao Paulo, the main producing region of fresh oranges, production is expected to increase 9 percent, to 400 million 40.8 kilogram boxes. Production in other citrus producing regions is forecast to remain stable. The increase in the Sao Paulo is largely attributed to more trees coming into production, expected higher box/tree yields based on favorable weather during the flowering period and an increasing number of trees in the higher yielding age groups. Producer and trade source orange production forecasts for Sao Paulo range from 380 to 405 million boxes.

The number of citrus growers in Sao Paulo has recently been decreasing, with the inefficient ones being forced out of business. However, the number of citrus trees owned by large producers as a percentage of total trees has been increasing vis-a-vis small producers. Grove care, particularly by small producers, has decreased in comparison to previous crops as a result of increased financial difficulties due to higher chemical product and fertilizer prices and disease problems. The outbreak of the disease Citrus Chlorosis Variegated (CVC or "amarelinho") has sharply increased the costs of grove management, and many of the producers cannot afford the costs of pruning the infected branches or having to eradicate trees with the disease. Moreover, the end of the master contract in recent years has resulted in another burden on producers, since they are not used to picking and hauling fruit to the processing plant.

The Sao Paulo State Secretariat of Agriculture has proposed the creation of a Citrus Commission, comprised of representatives of different sectors of the citrus industry and subordinated to the Sao Paulo State Secretariat of Agriculture to establish a citrus policy and to respond to citrus related issues. The setting of an orange reference price for producers, in addition to the establishment of future measures for monitoring and controlling citrus canker, would be the responsibilities for the commission.

Domestic orange consumption in Brazil in 1997 is forecast at 5.9 million tons, up 6 percent from the previous year's revised estimate. Consumption has been increasing since the implementation of the economic stabilization plan (Real Plan), in July 1994, which increased the purchasing power of the lower and lower-middle classes. Orange prices have also decreased in the domestic market in the past 4 years, making oranges more affordable to the consumer. In addition, the consumption of not-from-concentrate orange juice (fresh or pasteurized) continues to rise. Also, the shift in marketing oranges from units (price per dozen) to weight (price per kilogram) and the presence of juicers, who process orange juice and sell it in the informal economy, have contributed to a higher consumption of oranges.

Fresh orange exports in 1997 are forecast unchanged from the previous year. The majority of the fruit is shipped to the Netherlands. The amount of oranges for processing in 1997 is forecast at a record 12.6 million tons, 16 percent above the previous year. More oranges are expected to be processed based on the record harvest. Sao Paulo is expected to increase its processing volume, while processing in other regions remains constant.

Argentina

Argentina's total citrus production in 1997 is forecast at 1.9 million tons, 2 percent below the previous year. A 4-percent increase in the lemon crop is not enough to offset slight decreases in other citrus fruits due to drought in other citrus producing areas. Argentina's lemon production is forecast at a record 750,000 tons. This increase is due mainly to very good weather condition and more trees coming into production. The orange crop in 1997 is forecast to decrease 5 percent to 670,000 tons. The forecast drop is attributed to the trees entering a rest phase following very good output last year. Both the tangerine and grapefruit crops are forecast to be smaller than last year, yielding 320,000 and 200,000 tons, respectively. This drop in production is mainly due to poor weather conditions.

Domestic consumption of fresh citrus in 1997 is forecast to decrease by 5 percent, reflecting the slight decrease in supplies in the most popular citrus fruits. In addition, the purchasing power of the Argentine consumer is deteriorating.

Total citrus exports in 1997 are forecast to decrease 8 percent to 298,000 tons in 1997. This drop is due mainly to the devaluation of the European currency versus the U.S. dollar. Since all Argentine citrus exports are priced in U.S. dollars, the fruit is more expensive overseas and therefore harder to sell. In the case of lemons, Argentine exports to Spain are forecast to drop due to improved weather conditions which increased the size of Spain's lemon crop. Orange, tangerine, and grapefruit exports are also forecast to decrease, due to the expected smaller harvests. Argentina's citrus imports in 1997 are forecast unchanged at 8,000 tons, which are comprised completely of grapefruit.

Processing in Argentina is forecast to increase 6 percent in 1997. This increase is the result of a record lemon harvest, expected lower fresh exports, and more damaged oranges not fit for domestic consumption.

South Africa

Total South Africa citrus production is forecast in 1997 to reach a record 1.22 million tons. Orange production, which accounts for up to 75 percent of the total citrus crop, is forecast to increase 2 percent over last season. The main orange variety produced is Valencia, followed by Navel.

Total citrus exports in 1997 are forecast to increase 8 percent to a record 817,000 tons. In 1996, approximately 65 percent of South Africa's orange exports went to the European Union, the Middle East, Far East, and Southern African countries. For most of 1996, the South African currency depreciated against major international currencies such as the U.S. Dollar, British Pound, and the Japanese Yen. The depreciating Rand resulted in South African citrus exports being more price competitive against other exporters. Increased market development activities overseas also contributed to the higher exports.

Australia

Total citrus production in 1997 is forecast at 579,000 tons, about the same as the previous year's output. Production of individual orange varieties has continued to change in recent years. In 1997, Valencia production is forecast to fall by 31,000 tons, while Navel production is forecast to increase by 32,000 tons. Industry sources believe that as many as 600,000 Valencia trees may have been removed. This trend has been partially a result of the wide fluctuations in processing returns for Valencia oranges.

Total citrus exports in 1997 are forecast to reach 120,000 tons, an increase of 11 percent over the 1996 season. Most of the increase is expected to be in oranges. Increased shipments to South East Asian markets are also expected. Last year exports to Malaysia, Singapore, Hong Kong, Indonesia, and Japan accounted for close to 80 percent of Australia's total orange exports. Exports to the U.S. also increased.

Citrus for processing in 1997 is forecast at 235,000 tons, 9 percent less than the amount processed in 1996. Oranges account for 94 percent of all fresh citrus processed. Some lemons are also processed into juice.

Revised Northern Hemisphere

Production

Data for the Northern Hemisphere have been revised since the February issue of the World Horticultural Trade & U.S. Export Opportunities. However, total citrus production in the Northern Hemisphere for 1996/97 is forecast unchanged from the February estimate.

Greece's lemon and orange production in 1996/97 were increased 11 and 6 percent, respectively, due to more trees in production than earlier expected. The tangerine production forecast was reduced 8 percent to 2.4 million tons.

Korea's tangerine production was reduced 13 percent to 480,000 tons. This drop is due mainly to more trees in production.

Citrus production estimates for Italy, Spain, and Mexico were revised slightly.

Exports

The total Northern Hemisphere citrus export forecast for 1996/97 is unchanged from the February estimate, but down 8 percent from last year's shipments.

Processing

The total Northern Hemisphere citrus processing forecast for 1996/97 was reduced 2 percent to 15 million tons. A reduction in the U.S. grapefruit processing estimate accounts for most of the decrease.

U.S. consumption of grapefruit is forecast to increase 12 percent from the February estimate. This higher apparent consumption estimate includes fruit that may be left unharvested on the trees. The record 1996/97 grapefruit crop, combined with lower fresh exports than initially expected, large grapefruit juice stocks, and low producer prices could result in 3 million boxes of grapefruit being abandoned on the trees.

The Korean citrus processing forecast for 1996/97 is down 60 percent from the February estimate to 12,000 tons. A sharp drop in citrus production accounts for this decrease. Smaller crops in Italy, Mexico, and Morocco also account for reduced processing estimates for Italy, Mexico, and Morocco.

For information on production, supply, and trade contact Debbie Seidband at 202-720-6877. For information on marketing contact Ted Goldammer at 202-720-8498.

Processed Tomato Products Situation and Outlook in Selected Countries

Canned tomato and tomato paste production in selected countries in 1997/98 are forecast at 1.6 and 1.3 million metric tons, down 21 and 10 percent from the previous season, respectively. The production decline in canned tomatoes is due largely to lower output in Italy, which accounts for over 80 percent of selected country production. Production was down in Italy due to reduced planted area, a severe frost last spring, and large carry-in stocks. Lower tomato paste production in 1997/98 is expected in most European countries, with the exception of France, where production remained the same. Despite the expected sharp decrease in canned tomato production, exports in 1997/98 are forecast to decrease only 1 percent as Italy is expected to reduce stocks in order to meet export demand. Tomato paste exports in 1997/98 are forecast to increase 5 percent to 937,000 tons despite lower production. All selected countries are expected to expand tomato paste exports except for Chile, Greece and France. U.S. tomato paste exports for the first 9 months of marketing year (July-June) 1996/97 have already reached a record 98,472 tons, 12 percent above the previous year's complete marketing year total.

Summary

Production of processing tomatoes in 11 major producing countries in 1997 is forecast at 20.28 million metric tons, down 7 percent from 1996, due largely to lower prices and high carryover stocks. This decline is expected to be somewhat offset with moderate production increases in Brazil, Mexico, Portugal and France. In Italy, a large draw-down of stocks in 1997 is expected to lower the Italian production this season.

Production downswings for canned tomatoes and tomato paste in selected countries in 1997/98 occurred mainly from large carry-in stocks. Tomato paste exports in marketing year 1997/98 in selected countries forecast at 937,000 tons are expected to increase about 5 percent above the previous year's level despite lower production. Italy, Mexico, Portugal and Greece accounted for most of the increase. During the first 9 months of marketing year (July-June) 1996/97, U.S. tomato paste exports totaled 98,472 tons, up 49 percent from the same time the previous year. In 1995/96, U.S. exports totaled 88,000 tons, with Canada and Asian countries taking the bulk of all shipments.

United States

Large U.S. carryover reduces U.S. processing output

Production of tomatoes for processing under contract in the United States in 1997 is forecast at 9.34 million tons, down 10 percent from the previous year. This decline is due largely to lower wholesale prices received for tomato products over the past year, and record carryover stocks resulting from large packs the last few years. Also, domestic use has apparently slowed with most of the growth in use coming from export demand. According to USDA's Economic Research Service (ERS), exports now account for about 6 percent of total domestic supply (production plus imports plus beginning stocks). The area contracted to be planted in 1997 is estimated at 121,500 hectares, down 13 percent from 1996. California accounted for 92 percent of the processing tomato acreage in the United States in 1996.

The United States is the world's largest producer of processed tomato products, with tomato concentrates (especially tomato paste, sauces and catsup) accounting for the majority of the products. Statistics for U.S. tomato paste production are not available.

Wholesale prices for tomato products down

Continued low prices, new product introductions, and recent health claims associated with lycopene in tomatoes (with processing tomatoes singled out as strong carriers), could help jump-start domestic demand in the coming year.

According to ERS, the California Tomato Growers Association (representing the majority of processing tomato growers) and tomato processors have agreed upon an average field price of $51 per short ton ($56.22 per mertic ton) for ripe tomatoes for the 1997 season. This price is down from $53 per short ton ($58.42 per metric ton) average negotiated last year but is about the same as 2 years ago.

The lower price for the coming crop reflects the soft wholesale prices that have been prevalent in the market since last fall. For example, reported prices for fancy 31 percent tomato paste in 55 gallon drums averaged $0.30 per pound during the first quarter of 1997, down 17 percent from a year earlier and the third consecutive annual decline.

Strong export demand fuels U.S. tomato market with record year-to-date mark

During the first 9 months of marketing year 1996/97 (July-March), U.S. exports of tomato products-- canned tomatoes, tomato paste, tomato sauce and ketchup totaled 216,000 tons valued at $171 million, up 25 percent in volume and 16 percent in value from the same period a year earlier. Canada, Japan, Chile (a big buyer for the first time), Mexico (buying record volumes), Italy, Dominican Republic, Haiti and the United Kingdom were the most important export markets during this period. Accounting for the strongest export performance of the tomato products were tomato paste (19 percent) and tomato sauce (18 percent). Exports of canned tomatoes and ketchup during the same period accounted for increases of 8 and 2 percent, respectively.

U.S. imports from EU up dramatically

During the first 9 months of marketing year 1996/97 (July-March), U.S. imports of canned tomatoes from the EU totaled 36,000 tons, up 85 percent from the same period the previous year. Imports from Italy totaling 32,000 tons accounted for 86 percent of total EU shipments to the U.S. during this period. The United States' removal of the 100 percent punitive duty on imports of Italian, Spanish and other EU canned tomatoes in July 1996 was the primary factor for this increase. This duty had been originally imposed in response to the EU/U.S. beef hormone dispute. During the same period, imports from Spain totaling over 4,000 tons, rose 105 percent above the year earlier.

Mexico

Mexico's processing production up

Production of processing tomatoes, consisting mostly of tomato paste, in Mexico in 1997 is estimated at 200,000 tons, up 43 percent from 1996. This increase is attributed primarily to an increase in harvested area and an increase in export demand for tomato paste.

In Mexico, there are seven tomato paste processing plants in operation. The majority of these plants are located in the state of Sinaloa, and operate from March to June. These plants are controlled by both Mexican and multi-national firms who produce paste under their own labels and for use in other products such as catsup, sauce, hot sauce, sardines, and other paste products.

Most of the tomatoes for processing are contracted by the processors directly with local growers. Tomato paste is made at different concentrations depending on the use: 29, 31, 36 and 44 degrees brix. Domestic consumption of tomato paste in Mexico in 1997/98 is estimated to remain unchanged at about 10,000 tons.

Brazil

Tomatoes for processing up significantly

Production of tomatoes for processing in Brazil in 1997 is estimated at 1.0 million tons, up 47 percent from the revised 1996 volume, due mostly to an increase in harvested area and greater demand for processed tomato products.

Tomatoes are produced in all states of Brazil, mainly for fresh consumption. In Brazil, about 70 to 75 percent of processing tomatoes go into tomato paste and extracts. The majority of the paste is used in further processing into consumer-ready sauces and other such products. Production of tomato paste in Brazil in 1997 is estimated at 107,000 tons, up 47 percent from 1996, due mostly to increased domestic consumption. Production of canned tomatoes in 1997 is estimated at 1,200 tons, up 50 percent from the year earlier, also due to a stronger domestic demand. Planting of tomatoes in Brazil begins in February and ends around June, while harvesting starts in June and runs through October and November.

Change in consumer preference

Reflecting similar changes throughout South America, a shift in Brazilian consumption patterns toward consumer-ready tomato products will continue to rise in the near term and beyond. As urbanization becomes a real fact of life, fewer people have time to go home for lunch. Increasing consumption of fast foods, less time to go shopping for fresh produce, more women entering the work force, and more people moving to the cities have all contributed to a dietary shift in Brazil toward foods that contain processed tomato products.

Trade situation

Most Brazilian imports of tomato products are paste (imported in 28-32 degrees brix), which is further processed in Brazil into consumer-ready sauces and other similar products. Approximately, 80 percent of Brazil's tomato product imports come from Chile. The European Union and Argentina account for most of the remaining total. In 1995, Brazil imported 32,000 tons of tomato paste, 18,000 tons of other tomatoes, and 8,000 tons of tomatoes whole peeled and pieces. U.S. exports of other tomato products to Brazil were zero in 1994, and rose to 3,000 tons in 1995. With an apparent short crop in 1996, Brazilian imports of tomato and tomato products are estimated to approximate 1995 levels.

Chile

Processed tomato production down

Production of tomatoes for processing in Chile in 1997 is estimated at 886,000 tons, down 12 percent from 1996 due to severe drought in major producing regions of the country (La Serena and Talca). In the coming years, the expansion of planted area to tomatoes can be expected to occur at a slower pace than in the past, as a result of dwindling labor availability and the fact that the tomato industry in Chile is operating almost at full capacity. Tomatoes for processing are planted from mid-September through early December and harvested from January 10 through April 15. For the planting season, frosts are an important limiting factor.

Chile's processing industry

The current annual installed capacity for processing tomatoes in Chile is about 120,000 to 140,000 tons. Chile's processing tomato industry produces mostly tomato paste and canned tomatoes (whole-peeled, diced-peeled and crushed). Tomato paste in Chile is produced in 30 to 32 degrees brix. However, a 28 to 30 degree brix is produced for exports to Japan.

In 1997, tomato paste production in Chile totaled slightly over 100,000 tons, down 17 percent from 1996, due to a reduction in planted area caused by severe drought. Production of canned tomatoes during the same time period totaled 27,000 tons, down 7 percent from 1996, also due to drought problems.

Tomato paste exports up

Tomato paste exports in 1997 are estimated at 90,000 tons, down 20 percent from 1996, due mostly to a lower output. Industry contacts in Chile indicate that in the short term, a much slower rate of export growth for tomato paste can be expected to occur due to increased competition from nearby countries, particularly Peru. In 1995, Brazil, Japan, Italy, Venezuela and the United States were Chile's best tomato paste customers.

Mediterranean Area

European Union

The 1997 harvest of tomatoes for processing in the major producing countries of the European Union (EU) is estimated at 7.16 million metric tons, down 9 percent from 1996. The EU's 1996/97 minimum grower prices for processing tomatoes, in ECU terms, remain unchanged at 9.549 ECU per 100 kilograms for tomatoes to be processed into paste, juice, or non-whole products; 15.807 ECU per 100 kilograms for whole San Marzano variety tomatoes; and 12.161 ECU for whole Roma variety tomatoes and tomatoes for producing flakes. See the FHORT March 1997 article for more details on the EU reformed Common Organization of the Market for Fruits and Vegetables.

Italy

Production down significantly

Production of tomatoes for processing in Italy in 1997 is estimated at 3.5 million tons, down 16 percent from 1996, due to a decline in planted area and a severe frost last spring (1997) which affected the entire Italian tomato crop. The EU approved production quota for Italy in 1997 is 3.47 million tons, which is broken down as follows: 1.76 million tons for tomato paste; 1.09 million tons for whole canned tomatoes; and 0.62 million tons for other canned tomatoes.

Area planted to tomatoes for processing in 1997 is currently estimated at 85,000 hectares, up 6 percent from the previous year. The bulk of Italy's processing season is concentrated in August and September, but in some years continues to October.

Tomato sauce production

The trend for tomato sauce production in Italy continues to grow. In 1997, tomato sauce production is estimated at 44,000 tons, up 2 percent from 1996. Exports accounted for 39 percent of total production in 1996, with the EU countries, primarily Germany, France and the United Kingdom being the largest customers.

In the FHORT March 1997 circular report, the U.S. elimination of the 100 percent punitive duty on Italian canned tomato imports into the United States was discussed.

Portugal

Production up slightly

Production of tomatoes for processing in Portugal in 1997 is estimated at 910,000 tons, up slightly from last year's record. Tomato paste, which accounts for the bulk of Portugal's processed production, is estimated at 150,000 tons, down 8 percent from 1996. Production of other tomato products consists mostly of diced tomatoes (peeled or unpeeled), and crushed tomatoes.

About 80 percent of the tomatoes for processing are grown in the "Ribatejo", and the remainder are produced in the "Alentejo" region. Most of these tomatoes are produced by small farmers on 5 to 10 hectare units. However, the structure of the industry is changing, and an estimated 30 percent of all tomato areas (about 4,350 hectares) now consist of larger-scale units with new direct-seeding technologies, using drip irrigation systems and mechanical harvesting.

Paste exports up dramatically

Portugal's exports of tomato paste in 1997 are estimated at 115,000 tons, up 74 percent from the previous year, due mostly to increased sales to the EU--the main export market, Japan, and other Far and Middle Eastern countries. Exports to the United States are small, remaining confined to specific market opportunities.

Greece

Processing output down

Production of processing tomatoes in Greece in 1997 is estimated at 1.12 million tons, down 16 percent from 1996, due mainly to larger carryover stocks. Tomato paste production accounts for the bulk of Greek tomatoes slated for processing. In 1997, tomato paste production totaled 192,000 tons, down 18 percent from 1996. Other processed tomato products are included in passata and juice. In 1997, the actual tonnage of fresh tomatoes utilized for the production of tomato juice (5-7 percent TSS) and passata (7-12 percent TSS) were 4,500 tons and 20,500 tons, respectively. Production of canned tomatoes in 1997 totaled slightly above 25,000 tons, about the same as the previous year.

In Greece, tomato processing starts in Peloponnesos around mid-July and ends about mid-September, while in Macedonia, processing starts on August 1 and ends about the first week of October.

For additional details on the EU minimum grower and processing aids to canners for canned whole tomatoes, peeled and unpeeled, and crushed tomatoes see the FHORT March 1997 circular report.

Spain

Processed production down

Production of tomatoes for processing in Spain in 1997 is estimated at 1.1 million tons, down 12 percent from the previous year. The lower output is mainly due to reduced demand by canners, who are holding huge carry-in stocks. Area planted to tomatoes for processing is forecast at 24,300 hectares, up about 14 percent from the previous year.

Production of canned tomatoes in 1997 in Spain is estimated at 210,000 tons, down 10 percent from 1996. The lower production volume is expected to be replaced by a significant drawdown in stocks, allowing exports and consumption to remain relatively stable. Due to high carry-in stocks, tomato paste production is forecast to decline about 20 percent to 116,000 tons.

Although tomatoes are widely grown in Spain, the east coast (from Murcia to Almeria), Estremadura, the Canary Islands and the Ebro River basin (Navarra, Rioja and Aragon) accounts for about 80 percent of the Spanish crop. About 20 percent of the tomato crop is harvested from January to May, 60 percent from June to September and the remaining 20 percent from October to December. The bulk of Spain's tomato crop is irrigated, with some 8,000 hectares grown in greenhouses.

Consumption remains flat

In 1997, domestic consumption of canned tomatoes is estimated at 175,000 tons and tomato paste at 81,000 tons, about the same as the previous year. Consumption of canned tomatoes and tomato paste account for about 77 and 51 percent of total utilization, respectively.

Tomato paste is generally used in Spain for the production of high value tomato products such as "tomate frito", other sauces and ketchup. In addition, between 35,000 and 45,000 tons of paste are annually converted into tomato powder, which is generally exported.

Trade Situation

Traditionally, exports of canned tomato products from Spain account for about 20-25 percent of total production, while tomato paste exports account for about 50-60 percent of total production. EU countries purchase the bulk of Spain's tomato product exports.

Since Spain is a net exporter of fresh, canned tomatoes, and tomato products, there is little potential for U.S. exports of these products to Spain.

Turkey

Processing production down

Production of tomatoes for processing in Turkey in 1997 is estimated at 1.7 million tons, down 8 percent from the previous year. The downswing in production reflects a decrease in planted area, high carryover stocks, and unusually cold weather in April that caused tomato seedlings to freeze.

Approximately 25 percent of Turkey's total tomato crop is for processing, with the balance slated for the fresh market. Of the processed output, about 80 percent is used for tomato paste, 15 percent for canned tomatoes, and the remainder is used for catsup, juice and other tomato products. In 1997, tomato paste production is estimated at 275,000 tons, down 8 percent from the previous year. High carryover stocks and unfavorable weather during the planting season were the primary causes for the reduction in production this year.

Tomatoes are grown throughout Turkey but the bulk of production is concentrated in the Marmara region (western Turkey) and the Aegean region (southern Turkey) where climatic conditions are nearly ideal.

Turkey has an annual tomato paste capacity of 375,000 tons, the second largest in Europe after Italy with 400,000 tons capacity.

Tomato trade outlook

Turkey's tomato paste industry continues to depend on exports. In recent years, exports to traditional markets, particularly Algeria and Libya, have declined sharply as a result of chronic problems in these importing countries.

France

Processing production up slightly

Production of processing tomatoes in France in 1997 is estimated at 295,000 tons, up 2 percent from 1996. Tomato paste production estimated at 37,500 tons accounted for the bulk of total processing tomato use in France in 1997. Production of canned tomatoes during the same period totaled 30,000 tons, up slightly from the previous year.

The EU quota for French production of processed tomatoes in 1997 and 1998 has been set at 392,406 tons and 369,608 tons, respectively.

Trade

French imports of canned tomatoes and tomato paste account for the bulk of total supply. In 1996, canned tomato imports totaled 88,000 tons, down slightly from the year earlier. Italy and Spain supplied over 90 percent of canned tomato imports for the period. Imports of tomato paste by France in 1996 totaled 48,500 tons, about the same as the previous year. Imports from Italy accounted for about 58 percent of the total, with the other EU countries accounting for most of the balance.

Israel

Closure of three processing plants lowers outturn

Production of processing tomatoes in 1997 in Israel is estimated at 220,000 tons, down 14 percent from 1996, due to additional closings of processing plants resulting from low profits and weak international prices for tomato products. In 1993, ten processing plants were in operation while in 1997, only 5 plants remain. The lycopene plant, which processed 23,000 tons of tomatoes in 1996, and is scheduled to process 50,000 tons this year, will not process any tomatoes in 1997, due to large accumulation of lycopene stocks from 1996.

In Israel, canned processing products include: whole and diced peeled tomatoes, tomato paste and puree, tomato juice, ketchup and pizza sauces. Most Israeli tomato processors produce the whole range of tomato products. Tomato product consumption in Israel accounts for about 80,000 tons annually in raw terms, with the rest going to exports.

For information on production and trade, please contact Emanuel McNeil at (202) 720-2083.

Last modified: Tuesday, May 08, 2001

  Last modified: Thursday, July 10, 1997 

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  Last modified: Thursday, July 10, 1997 

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