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Canned Foods/Tomatoes 2013SPECIAL SUPPLEMENT

Canned Foods &Tomato Products 2013

•Cannedvegetables

•tomatoproduCts

•Cannedfish

•Cannedfruit

In-depth analysis and interviews covering:

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Canned Foods/Tomatoes 2013

The latest from the trenches

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FEW in the canned foods and tomato products industry have been bored over the past year. From rebels storming Philippine pineapple plantations to fraud allegations flying thick and fast off the coast of Liberia, it has been an eventful few months.

While drama such as this may have a limited impact on the markets, the trade has had plenty going on, too. Tuna was eye-wateringly expensive over the summer, and with a new record already reached this year, there is no reason it shouldn’t reach such dizzy heights again.

The thing is, until recently, the industry has been asking itself the wrong questions. When packers were asked why prices were so high, the talk last year was of poor catches. Yet at the tuna conference in Brussels, it was argued very convincingly that it is not a matter of supply, but of huge, macroeconomic factors that are starting to change the shape of the industry.

Pineapple canners, meanwhile, have had the opposite problem. This time last year, there was such a flood of fruit that underpaid growers were blocking motorways with it. Now, the fields have been left scorched and parched, to say nothing of the growers who have reportedly jumped ship in favour of other crops, and latest from the industry is that prices are rising again. Despite best efforts at finding the balance, we keep seeing the

familiar boom-bust scourge. At least, from canners’ perspectives, the movement has stimulated the market.

On the tomato side of things, the record number of people who attended the FOODNEWS Tomato Forum conference in Rome earlier this month – 140 or so delegates – is evidence of the strong uncertainty that still permeates the tomato market globally.

“Shortage” was one of the most frequent terms used by both speakers and delegates at the event. And it is fairly easy to understand why: after three long years of market stagnation, low prices and sluggish demand, the industry does look somewhat ‘thinner’.

It does take broad shoulders to move about unscathed in this crude, unforgiving tomato world. Now more than ever the players in the industry have come to

realise they live in a Highlander reality where, if you are not careful, your own head might be the next to roll.

FOODNEWS reckons that ‘survival of the fittest’ is probably the most appropriate expression to summarise what the tomato industry thinks of its own future right now.

On the table are many issues that the sector has to come to terms with: the decoupling of EU subsidies on one side, the question of getting supply and demand back on stable tracks on the other and, above all, the million-dollar question of what China’s wounded beast might do.

The challenge for all players in the sector will be to reduce costs, innovate their offer, strengthen every stage of the supply chain from field to processing, if they want to survive. For the world is getting smaller, crowded and more competitive by the day.

Sometimes, these markets feel like a pendulum – we speak of cycles and look at how prices, consumption and other metrics follow the same patterns over and over again. On the other hand, take a step back and you start to see some interesting macroeconomic trends crystallising from the numbers over the years. Should buyers and sellers try to buck the trend, or just ride with it? That’s for them to decide – but hopefully this supplement should help inform their decisions.

CONTENTSIn with the old, and with the new 4

Souperfoods 6

Life’s a peach 8

Dancing to a different tuna? 10

Tetra Recart: a green solution 12

Back to the fields 14

All aboard 16

Processing the tomato 18

The Chilean chronicles 19

The rise and fall of an empire 20

© Informa UK Ltd 2013 - FOODNEWS® May 20134 www.agra-net.com


In with the old, and with the newBY AMY BOOTH

ThErE have been relatively few concrete trends over the past couple of years, and the big players have remained the same – but that is still a situation worth examining.

There are a lot of customers, and who exactly buys what varies from year to year – but, in broad terms, Thailand, the Philippines and Indonesia export to the US, the EU and Japan.

What the trade as a whole must not forget, especially when assessing demand, is what a massive part the US plays in the

market. According to customs data, in 2012 it took more from Thailand alone than the sum total of Indonesia’s exports. This paper has said it before, but it bears repeating: even if market demand is down in all the major EU buy-ers, a small increase in demand from the US can counterbalance the lot.

Therefore, what the US market is doing should be a key playing card in supply-demand assess-ments. As this area chart shows, the US has been buying more from Thailand, less from the Philippines, and a fairly stable volume from Indonesia over the past decade or so. Thai supply does waver, but the trend is upwards – although, the US being a mature market, further explo-sions in demand are unlikely. Meanwhile, Philippine market share dropped 22% from 2007-09. Indonesia never quite recov-ered to the levels of 1999/2000.

Strangely, Vietnamese exports

to the US appear to be stable at relatively low volumes. According to the FAO, around 39 000 hectares are planted to pineapple there. Agri-exports are an important part of Vietnam’s economy, especially rice, tea and coffee, and it also exports shrimp. It has a population of 88.78 mil-lion, according to official esti-mates. Yet, there is little sign of it expanding.

In general, it can be said that new export destinations remain very much fledgling players – but that is by no means a reason to forget them. The single most promising of these is China. Chinese imports of canned pine-apple have exploded over the past decade, from just 925 tonnes in 2003 to 14 509 tonnes in 2012. This is a trend that has been seen among plenty of other food com-modities, such as almonds and canned peaches. The already widely-reported evolving tastes of the growing middle classes are

clearly an important factor here. And, given the size of the Chinese market, the potential is enormous.

Perhaps the most important threat to this burgeoning market for exports is the prospect of China supplying its own market. China already produces canned pineapple, but it uses the Queen variety, which is not favoured for processing. One Chinese trader explained: “Chinese pineapple is naturally at a disadvantage. The conical, bad yielding shape means a lot of the mass is wasted… The appreciating yuan has meant that it has become much more expen-sive. The quality is lower as the core part is bigger in order to keep the rings together. Taste is also lower versus Thai, and lastly there are gaps in the flesh. Most growers sell for the domestic fresh market.

“Pineapple juice has yet to really catch on as a domestic favourite. Also they can only

SOME countries are expressing more interest in canned pineapple – but they are still small fry compared with traditional markets.

“Even if market demand is down in all the major EU buyers, a small increase in demand from the US can counterbalance the lot. Therefore, what the US market is doing should be a key playing card in supply-demand assessments.”

ORIGINS OF US CANNED PINEAPPLE IMPORTS

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pack the lower grades… Only when there is a huge global short-age will they come into play.” The Chinese developing a taste for pineapple juice? That would be a Godsend at the moment!

For products such as cherries, industrial processors and export-ers run into problems because they cannot source large volumes of the same variety. However, pineapple is a cash crop, and new varieties can easily be planted. Several products are already see-ing development – traders have said that the quality of Chinese canned peaches has improved significantly in recent years. Moreover, China cans a huge variety of products, so it has the facilities to get into the business.

This seems unlikely, though. Chinese canned pineapple exports have been waning in recent years. They peaked at 80 900 tonnes in 2007, but this volume has shrunk to just 25 072 tonnes (2012). China’s planted area has dropped only slightly in the same timeframe; the FAO estimated the planted area at 60 300 hectares in 2011. Production was actually up slightly at around 1.55 million tonnes in 2011, compared with 1.38 million tonnes in 2007 – so, it is producing as much as ever, but there seems to have been lit-tle effort to develop the canning industry from this.

It is worth comparing with the canned peach industry here. Earlier this year, the USDA reported that with the exception of canned yellow peaches, Chinese consumers prefer their deciduous fruit fresh and still think that canned foods are full

of harmful preservatives. However, it added that canneries remain optimistic about the potential for expanding consump-tion, especially in the north east of the country. Many of them are pushing unusual new marketing channels such as karaoke bars (FOODNEWS 11 January). Will improved perception rub off on canned pineapple? Well, perhaps.

Even if China starts to supply its own demand, that demand is growing, as import figures show – and with a fifth of the world’s population but a planted area smaller than that of Thailand, it will be an important import mar-ket for several years to come.

The second-largest growing market is Algeria, and neighbour-ing Egypt is on the up, too. With populations of 37.90 million and 83.66 million respectively, this is a populous region with no domestic pineapple production. Egypt is an emerging market, having been recognised – along with Vietnam – as both a CIVETS and a Next 11 country. So, it is promising as a market. Strangely, neither country buys any significant volume from Kenya, even though it is far clos-er than Thailand.

However, the total imported volume of these emerging mar-kets in 2012 was just 26 340 tonnes – 8% of what the US imported, or 5% of Thailand’s total exports, in the same year.

These new markets have potential over the coming years, but for now, they are slow burn-ers, so it is important to market to both traditional customers and emerging markets alike.

Unfortunately, supply is far

from steady. For Thailand, at least, the industry has been faced with wildly variable supply for years, a fact which generally has a knock-on effect on prices. Many suppliers speak of the boom and bust cycle: at times of high prices and shortage, farmers plant pineapple, which is all ready at the same time, resulting in low prices and over-supply, causing farmers to pull their bushes and create a shortage, and so on.

The current market situation in Thailand is a good example of this. At the time of writing, pric-es are rapidly rebounding from levels described as “unsustain-able”. Following 2012’s massive crop and poor European demand, canned pineapple prices were flat for months on end, at around USD10.50 or less for 24x20oz pieces in light syrup fob. Now, as concrete details of a short crop emerge, prices are increasing again. This is due to drought and farmers abandoning ship, accord-ing to the industry. Packers are not offering, and when they hit the market again, they will cer-tainly not be selling for USD10.50. For foodservice sizes, prices quoted have already risen

by some 20% since the end of March.

How much of a problem are fluctuating prices for business? Are they putting off new busi-ness? After all, this is ultimately a commodity, and commodity markets do this. One Thai packer didn’t think so: “Not at all. The volatility is purely Thailand-specific… The demand in the market is still strong in many regions and weak in the US. When Thai supply is short, the customers buy from other origins to cover their needs; when there is over-supply in Thailand, all the customers pool their volume to Thai origin.”

Pineapple is a staple of the canned fruit range; it is not at the “take it or leave it stage” which canned asparagus is reportedly suffering in some markets. But it is not booming, either. Thai 2013 first-quarter exports were flat year-on-year. In 2012, the vast majority of large buyers posted a decrease in imports. So, business will rumble on for the time being. This instability is a fact of life for the industry. But improved stabil-ity would put it in better stead to be flexible, or meet a sudden surge in demand.

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GROwING CANNED PINEAPPLE IMPORT MARkETS

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SouperfoodsBY JOHN NUTTING

IN ThE face of competing flexible packaging, metal cans continue to meet the need for ambient food products, par-ticularly in the growing markets.

Faced with gloomy reports about the performance of the canned food sector in the mature markets, it would be unsurprising if observers thought the sector was in decline.

But they would be mistaken. Certainly poor weather dented the harvests for canned fruit and vegetables in North America and Europe, but food canners are adapting by expanding into the growing markets of Latin America, eastern Europe, China and Asia, where domestic demand for branded products is on the up.

And in the year that marks the 200th anniversary of the world’s first canned food manufacturer starting business, technology continues to meet changing consumer needs for safe, nutritious and keenly priced products.

There could be no better testament to confidence in packaged foods than the decision by an investment consortium led by Warren Buffett to buy H J Heinz, one of the most recognisable brands in the business with almost a third of its USD10 billion sales in canned products. The USD28 billion offer for Heinz is the biggest ever in the sector.

After buying the Foodstar soy sauce business in China for USD165 million in 2010 and Quero tomato sauce in Brazil in 2011 for USD365 million, the plan by Heinz chief executive William Johnson was to double sales in emerging markets to USD5 billion in the next five years.

“The Heinz brand is one of the most respected in the global food industry and this historic transaction provides tremendous value to Heinz shareholders,” said Johnson, who has been in the top job for 12 years and will be moving aside to allow Burger King chief executive Barnardo Hees to take over the helm of the Pittsburgh-based firm.

“Heinz is being acquired from a position of strength.”

Buffett, chief executive of Omaha-based Berkshire Hathaway, added: “Heinz has strong, sustainable growth potential based on high quality standards, continuous innovation, excellent management and great tasting products. We are very pleased to be a part of this partnership.”

This positive view of the global market’s potential is against patchy reports from North America. The biggest food can supplier is Silgan Containers, based in Los Angeles with more than two-thirds of the market. Reports were that can volumes were flat following the drought-hit harvest in 2012, compensated by at-home consumption rising because of falling spending patterns.

Cans for soup delivered to customers such as Campbell’s were said to be ‘sluggish’ because of price rises fed by tinplate input cost increases and higher market spend, although its sales picked up at the end of the year.

In response, Campbell decided

to reorganise

its west coast canning operations, including the closure of its massive plant at Sacramento in California. The move was attributed by the Camden, New Jersey canner to a decline in US canned soup sales resulting in over-capacity and “an increased focus on new packaging formats which are often produced under co-manufacturing agreements”.

With 700 employees, the Sacramento plant, built in 1947, is the oldest in the US network and has the highest production costs on a per-case basis, said Campbell’s. Plans are to shift the majority of Sacramento’s production of soups, sauces and beverages to its remaining three canning plants in Maxton, North Carolina; Napoleon, Ohio; and Paris, Texas.

Campbell’s, like Heinz, is shifting the emphasis to growing markets. In February, it signed a deal with two leading Mexico-based canned food and drinks firms that will enable the manufacture and distribution of its beverages, soups, broths and sauces in a growing market of more than 100 million.

Grupo Jumex, the largest producer of fruit juices and nectars in Mexico, will manufacture and distribute Campbell’s V8 drinks portfolio

TWO centuries on, canned foods go from strength to strength.

“There could be no better testament to confidence in packaged foods than the decision by an investment consortium led by Warren Buffett to buy H J Heinz, one of the most recognisable brands in the business.” Daniel Vielfaure



throughout the Mexican market. Conservas La Costeña, one of Mexico’s largest producers of prepared foods, will manufacture and distribute Campbell’s soups, broths and Italian sauces.

Chief executive Denise Morrison said: “Our arrangements with these new partners will increase our access to customers and enable us to reach new consumers for our products. We believe that they will redefine the scope of our business opportunities in Mexico.”

On an equally positive note, the California tomato canning business reported that customers had committed to purchasing 13 million (short) tons of processing tomatoes in 2013, the second largest crop in the state’s history after a record 13.3 million tons in 2009.

“I hear export opportunities for tomato products have improved with the weak dollar and the high quality of US products,” said Rob Neenan, chief executive of the California League of Food Processors.

The bonanza for California’s canners is partly because of poor

weather in China, whose tomato-rich Xinjiang province has experienced its worst drought in 40 years. The lack of rain is expected to cut the crop to 450 000 tonnes, half its usual output.

In Europe, more rain than usual hit the late harvest for fruit and vegetables, worse still than the previous year, and this depressed demand for food cans by “single digits”, according to Longbow Research, the three leading suppliers of tinplate cans being Crown, Ardagh and Mivisa. Can price increases had been passed through at the beginning of 2012, and the weakness in volumes is said to have forced Mivisa and Glud & Marstrand to cut prices for non-contracted business towards the end of 2012.

One of Europe’s largest vegetable canners, Bonduelle, had a busy 2012, with acquisitions in eastern Europe and North America, and a complete reorganisation of its management structure.

In January it bought the industrial and commercial assets of French cooperative CECAB in Russia and the former Soviet Union, including its canned

vegetables business, which includes the D’Aucy and Globus brands.

Currently, Bonduelle supplies its markets in the region from three facilities: two in Hungary, and one in Novotitarovskaia, Russia, although this site is currently operating at maximum capacity.

In Hungary it bought a third canning plant, from Kelet Foods at Nyiregyhaza, north-east of Budapest, which had capacity to produce around 30 000 tonnes of canned sweetcorn and peas a year, and had been placed into receivership. Bonduelle’s two other canning plants in Hungary – at Nagykörös and Békéscsaba – produce 130 000 tonnes a year.

In North America, Bonduelle bought the frozen food business of Allens Canning, based in Arkansas, adding to other acquisitions made a year earlier in Canada.

It enabled Allens, one of the largest of the independent vegetable canners, to concentrate

on its core business. Following the deal, David Brown, retail sales chief at Allens Vegetables, told Packaging Digest magazine that he “adores cans as packaging for vegetables”.

“There are many reasons to adore cans as the packaging for vegetables!” said Brown. “They are infinitely recyclable and lock in the flavour. Canned vegetables are nutritious, and just as good for you as frozen and even fresh vegetables.”

A recent key development in metal container technology has recently been launched by Bonduelle, which makes it possible to reduce the weight of its cans by 15%.

Developed in collaboration with canmaker Ardagh Group, the two-piece steel drawn and wall-ironed (D&I) cans are pressurised with nitrogen after filling to maintain their structural integrity, in the same way as some aluminium cans for fruit juices are.

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CONTINUED ON PAGE 22

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BY AMY BOOTH

How long has Greece been producing canned peaches for? How has production developed over time? why did canning, in particular, become such a big industry in Greece?Canned peach production has a long history in Greece. The peach itself is cultivated in Macedonia, according to tradition, since Alexander the Great’s era. The first factories were established in the late fifties.

Production at industrial levels appeared in the seventies and dramatically increased in the eighties, when Greece joined the European Union and its huge market.

The good quality of the raw material and the strong advantage

of the cost were the factors that led to big quantities of production. In addition, the distance from the markets of western Europe (compared with the other Mediterranean countries, Italy and Spain) worked in favour of the production of canned and against the production of fresh peaches.

what area is planted to peaches in Greece? Has this changed much in recent years?Greece’s entry into the EU brought a big increase in the area planted to cling peaches. At one point, the planted area, which is mainly situated in Imathia and Pella, reached almost 23 000 hectares. Consequently, in the beginning of the present century, the appearance of a new big producer, China, is pressing the situation. Subsequently we saw a gradual reduction in the acreage, which today extends to approximately 13 000 hectares. But the improvement of the cultivated varieties and the improved care of the producers keep production at high levels.

How does raw material purchasing work – do factories usually make contracts with farmers, or is it more of a spot market or auction system?The supply of peaches to the factories is done in various ways. Producers are usually organised into producers’ groups (PGs) or co-operatives. The factories usually receive raw material from the PG or the co-operatives and have no direct contact with the producers. So the provision of the production is organised under stable circumstances and big changes are avoided.

Recently, the discussion about contract agriculture has come to the fore. One of the most important factories of the industry

will this year receive raw material from a significant number of producers on conditions already set, introducing to the industry the practice of contract agriculture.

what are yields like, on average? Are you looking to improve this?It is reasonable that our producers are toiling towards two targets – to improve the quality of the fruit and, of course, to increase the yield of their trees.

Thus, they continually strive, choosing the best plants and the most productive varieties. As a result, we are maintaining around 400 000 tonnes of raw material per year (in normal weather conditions) despite the spectacular reduction of the production areas. On average and depending on variety, the yield amounts to 30-50 tonnes per hectare for farms that are in full production.

How do you see supply and demand for Greek peaches on the world market?It is known that Greece is one of the three biggest producers of canned peaches, together with China and the US. But as one might expect, because of our small population, almost all of our production is exported, so we are by far the biggest exporter. The prevailing destination of our products the EU, but we also export to a lot of other countries. We always try to offer products of the best quality at the most affordable prices.

Our target is to offer the international market the necessary quantities even in difficult years (due to the weather) as the present year is expected to be.

The market is also influenced by other factors such as unfair taxes and exchange rates.

How is the Greek economic situation affecting the industry? Could you give some detail on what Piraeus’s acquisition of ATEBank has meant for packers? It is natural that the extremely difficult financial situation our country has experienced in the last three years has influenced our industry. But the special feature of being export-oriented is what has provided critical support to the industry. The fact is that the weakness of the banking system created problems in some factories. The same thing happened with the state, which is unable to fulfill its obligations (e.g. the VAT refund). But it is also true that lately, things have been improving. The state gradually fulfils its obligations and the restructuring of the banking system will solve a lot of problems. The dynamic entrance of the Piraeus Bank into the agricultural economy, after the purchase of the healthy part of Bank of Agriculture, is an especially helpful factor. Today the Piraeus Bank is developing in one of the biggest banking holding companies of the EU, and its interest in our industry gives particularly positive messages.

what other challenges is the Greek industry facing?In the context of difficult global competition, you must always try in order to maintain and improve your position. Without constant pedalling you fall from the bike.

The research for better plants, improvement of the manner of tree cultivation, better varieties, modern technology machines in the factories, the improvement of the expert staff, better logistics, protecting the environment, keeping to health and safety rules, and social sensibility are

“Production at industrial levels appeared in the seventies and dramatically increased in the eighties, when Greece joined the European Union and its huge market. The distance from the markets of western Europe worked in favour of the production of canned and against the production of fresh peaches.”

Life’s a peachCOSTAS Apostolou is the president of the Greek Canners’ Association. He explained some of the projects in the pipeline in the world’s largest canned peach exporting industry.


the means but also the targets of our industry in order to correctly fulfill the reason for its existence.

Canned peaches are quite a commoditised product. Is this a problem for you?The large production volume – hundreds of thousands of tonnes – gives it the characteristics of a commodity. But we must remark that in general, big changes do not appear in our product – with the exception, of course, of periods of destruction due to the weather, like 2003. This fact, i.e the comparatively stable prices, weakens the features of a commodity and offers a relative stability that is a good basis for responsible trading politics.

How is the sector developing? Are you likely to move into new product areas or start to face serious competition from the fresh market?

The dominant product of our industry is always canned peaches. Of course, it is done in a lot of packaging, a lot of sizes, different content, slices, halves, dices etc., and can be in syrup, in juice, and so on.

Apart from these, the industry also produces other products, such as juices, products in plastic cups, and frozen peaches.

We always consider that canned product functions in parallel with fresh, providing solutions where the latter cannot for reasons of preservation, such as transport over long distances, for example. It also safeguards the health and safety of the consumer in better conditions.

Has there been much acquisition activity in the Greek industry? I know that the industries in many other producing countries are quite consolidated, but in Greece,

there are still a lot of independent producers. what does that say?The truth is that in Greece we have a different situation from other countries, perhaps with the exception of China. Today our industry comprises 16 companies (private and co-operative) that produce canned fruit and juices. There are also three or four companies that produce frozen products.

Almost all of them have a long history – the newest has at least 25 years of activity under its belt. The healthy competition among them is especially helpful in the improvement of production conditions, ensuring the quality of the product and the creation of better prices in the market, as well.

It is obvious that all these serve the demands of the consumers in the best possible way. That is our most important goal.

“We always consider that canned product functions

in parallel with fresh, providing solutions where the latter cannot for rea-

sons of preservation, such as transport over long

distances, for example. It also safeguards the

health and safety of the consumer in better

conditions.”

http://www.chbjuices.com



Dancing to a different tuna?BY AMY BOOTH

INSTEAD of blindly waiting for it to come down, the trade as a whole must readjust. This is a commodity market, so it all boils down to supply and demand. And supply, in the grand scheme of things, has maxed out.

Meanwhile, demand is growing with the global population. We are active in all the tuna regions of the world. We already have highly efficient and technologically advanced gear. We are writing more and more rules which incur costs to conserve stocks in the long run.

These were the arguments of Conservas Garavilla managing director Juan Corrales (FOODNEWS 23 April) and Pierre Commère of EUROTHON (FOODNEWS 30 April).

There are a number of risks to supply which will crop up over the next year or two. Perhaps the most obvious from a European perspective is the increased surveillance on the catch certificates of western African countries. It is still perfectly possible to buy legally-caught fish from Ghana, for example, but shipments might still be held up, and delays mean disruptions to the supply, which makes the origin unattractive.

Controls are happening in the first place because of concerns over illegal fishing in the region – but improving fisheries management is a long, complicated and expensive process. One of the conclusions of the European tuna conference was that regional fisheries management organisations (RFMOs) were not effectively achieving the task of monitoring and controlling their fisheries, and this is certainly not for want of trying. So improvements in this region will require investment, and that in turn raises costs.

The annual bugbear of those buying from the Far East is the FAD ban in the Western and Central Pacific. Even though everyone knows it’s coming, the ban is characterised every single year by a surge in raw material prices. Recently, this has been further confounded by uncertainty about whether the ban is for three or four months.

The reason for this confusion is that it is, in fact, both. Purse

seiners must stop setting on FADs from July to September, inclusive. They must also either continue this in October, or make fewer sets throughout the year. A well-placed source added that the PNA still has the Third Implementation Agreement, signed in 2008, which implemented the three-month closure.

This ban seems to be here to stay. Ditto the bans in Ecuador – and many voices in important places are calling for more, rather than fewer, controls.

Supply is not only limited by the supply of fish, but by the number of boats available to catch that fish – and here, too, the industry is being reined in. “Clearly no tolerance should be expected or hoped for further tuna fishing capacity extension,” Commère noted in his presentation.

Supply, in turn, is not the only factor affecting price. While the two are often linked because of economies of scale and market demands, there are many costs involved in creating what some might call a ‘cleaner’ product. As noted above, work such as that of RFMOs costs a lot of money – and they are just the start. We must also consider sustainability labeling schemes such as the MSC, and in the future, the SA8000 social accountability standard.

The industry attitude towards sustainability is a funny mixture of genuine enthusiasm, feigned enthusiasm, resentful enthusiasm and just plain resent. If the industry resents it, then it is because it makes life difficult – if it was easy to keep stocks pristine, we would all be doing it with gusto. Yet, the irony is that

overfishing, too, is a risk to supply – and if that threat seems too remote, take a look at the bad consumer press cod and mackerel have had when the industry, whatever the reason, has allowed stocks to deteriorate.

When it comes to price, it sometimes feels like the sky is the limit. There are certainly enough traders out there morosely speculating about what figure the fish traders will dream up next – USD2 500 per tonne? USD3 000? Yet, there are a few projects in the pipelines which should streamline the process, and may ease the market a bit.

PNG promiseThe most promising of these is probably the industry expansion in Papua New Guinea (PNG). Sylvester Pokajam, managing director of the PNG National Fisheries Authority (NFA), outlined these in a presentation at the European Tuna Conference. The Majestic Seafoods cannery, a joint project from Thai Union, Century Canning and Frabelle Fishing, is to be inaugurated on 10 June.

New operations from Niugini Tuna and Nambawan Seafoods have also been approved. Nambawan is a joint venture between Trans Pacific Journey Fishing Corporation and TSP Marine Industries of the Philippines to build a loining and canning plant in Lae. Niugini is what the NFA describes as a “tripartite joint venture” between RD Corporation, Fairwell Fishery Group, and Tri Marine International. Both of these plants are slated for construction during the second quarter of 2013.

Three further projects include

TUNA has been expensive for long enough now. The entire supply chain knows that skipjack is expensive.

“The industry attitude towards sustainability is a funny mixture of genuine enthusiasm, feigned enthusiasm, resentful enthusiasm and just plain resent. If the industry resents it, then it is because it makes life difficult – if it was easy to keep stocks pristine, we would all be doing it with gusto. Yet, the irony is that overfishing, too, is a risk to supply.”

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http://www.agra-net.com/portal2/home.jsp?template=newsarticle&artid=20018042091&pubid=ag005



Think about quality think MMP

canning and loining factories by Dongwon, Halisheng and Offshore Master Limited, as well as a fresh tuna products plant by the French Sapmer Group. However, these are still being negotiated with the state. PNG capacity would more than triple were all these plants to be completed, increasing capacity from the current 620 tonnes per day to 2 040 tonnes per day. Even if none of the plants under discussion materialises, the three which have already been approved would provide an added 750 tonnes per day of capacity.

From a trade perspective, there are three reasons these developments are so exciting. First of all, 14% of the world’s tuna catches are from PNG waters, so processing the fish there should represent a significant reduction in costs such as transport, as well as greater efficiency. Secondly, PNG tuna has duty-free access into the EU. Finally, the nation is a member of the PNA, meaning that it should soon be supplying MSC-certified tuna – a boon for many European supermarkets, whatever the trade may think of the scheme or its implementation.

Duties are the other main area where there is room for the price to relent – but this is a complex issue. The EU formally launched free trade agreement negotiations

with Thailand in March 2013. Reduced duties on canned tuna from Thailand would make the product substantially cheaper, but at the same time, the bloc has its own industry to protect.

Spanish tuna canners have already demanded that canned tuna be excluded from the trade agreement. Spain has form when it comes to trade defence: the battle over canned mandarins is a good example. A trade agreement could hardly fail to consider Spain’s stake in the matter. Indeed, Jérôme Broche of the European Commission Directorate General for Trade acknowledged at the European tuna conference that tuna was “a sensitive sector in FTA negotiations”. Spain is not the only European country with tuna processing capacity, either – France and Italy also can tuna. However, processed foods are a vital part of Thailand’s exports, so it seems likely that some compromises would be made – and competition would certainly heat up if Thailand got more of a foot in the door.

This said, it may be a question of “out with the old, in with the new”. Ecuador, which is the top supplier of canned tuna to the EU (under the code 160414), is at risk of losing its duty-free status. If Ecuador continues to be classed as an upper-middle

income country in 2013, it may no longer qualify for the Generalised Scheme of Preferences (GSP) through which it has is current duty advantage, since the GSP is aimed at supporting developing countries.

However, trade with Ecuador is a can of worms. It is negotiating a trade deal with the EU, but there have been plenty of hurdles along the way, and it is also looking to join Mercosur. Perhaps it will switch its attention to nearby burgeoning economies such as Brazil and Peru? With a population of 275.5 million, according to 2011 figures, and economies that look distinctly healthier than much of Europe at the moment, not to mention cultural ties, the Mercosur bloc must look appealing – but none of theseis a done deal yet. Still, it is worth asking whether there will be some shifts in which countries

have the most attractive duties.Aquaculture has so far been

focused largely on the valuable and endangered bluefin, but this species is not used for canning. There has been little headway farming skipjack because it is so highly migratory. The industry may yet find a way round this, but farmed tuna will not revolutionise the canned market any time soon.

In summary, there are risks and opportunities affecting both supply and price in the tuna market. But, the opportunities for price – factors that could bring about a real market change, not just fluctuations or temporary respite – remain to a great extent theoretical. They are works in progress, things that may or may not work out. Meanwhile, the pressures on price are all too tangible, and for now, they seem set to stay.

http://www.mmptuna.com



Advertising FeAture

BY AMY BOOTH

IN JUST ten years, Tetra Recart® has gone from strength to strength,

capturing remarkable market share in key areas and offering significant savings for retailers and numerous advantages for consumers.

Tetra Recart is a unique extension of the Tetra Pak business, which has been producing food packaging since the 1950s with a particular focus on liquids. In 2001, Tetra Pak revolutionised food packaging with the introduction of the Tetra Recart system. Truly innvative, Tetra Recart was the first retoortable carton package which enabled filled product to be sterilised within the package.

“We asked ourselves: how can we use our knowledge, our key technologies and our market presence to actually start the packaging of solid foods into paper-based packages?”

explained managing director, Peter Jhaveri.

Tetra Recart packaging offers a number of advantages for consumers and retailers alike. Its rectangular shape and low package weight brings direct cost savings to manufacturers and retailers while reducing environmental impact and conveying a fresh, natural product image to consumers.

Tetra Recart has taken a strategy of developing in the core categories of vegetables, beans, pasta sauces, tomatoes, soups and pet food. Customers also use it to pack ready meals, baked beans, fruits, olives, and fish. It has proved popular in southern Europe for packing tomatoes and vegetables; a lot of this is exported to northern Europe and Japan. The company does a lot of business in Brazil, and also Chile and Argentina, especially for vegetables and beans.

Different markets have different

needs, and Tetra Recart is in a good position to deal with this. In US, for instance, it has made significant headway in the soup category because of the popularity of broths. “Consumers are used to seeing broth in cartons, so there is a rather natural move towards accepting soups in cartons,” said Jhaveri.

Consumer research shows that the Tetra Recart package is perceived to be modern, fresh and handy. The package is perceived hygienic and associates to healthy food, it has no metallic taste. The package is convenient as it is easy to open (perforated on the top), it has no sharp edges and it is efficient to store and stack and one can store residual product in the package.

Consumers tend to buy either the content of the package or the brand. If a brand want to rejuvenate its image a new and environmental sound package is better than an “old” one.

Although the product is in early stages in most markets, it has made an impressive movement in some large sectors. It holds 18% of the bean market in Italy and 22% of the tomato market in Sweden. In total, 10% of all canned vegetables consumed in Brazil are packaged in Tetra Recart packages. Its Swedish tomato success has been quick to take on, emerging over the last four or five years.

There are a number of reasons for

Tetra Recart: a green solution

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this. Tetra Recart packaging is a particularly good format as far as sustainability is concerned – and this is a hot topic among many retailers. A can weighs 50-60 grams, but a Tetra Recart pack weighs just 18g. It is mainly made of wood fibre, a natural and renewable raw material – the cardboard fibre comes from forests certified by FSC – and has a carbon footprint 50-70% lower than for cans and glass jars. It is also fully recyclable: the package is ingeniously designed with thin layers of protective cardboard, plastic and aluminum. By separating the layers in the recycling process, all materials can be used for new applications.

Retailers also have to be aware of cost – shelf space savings are up to 40%. Jhaveri elaborated: “That’s a huge amount of money in terms of putting other products on the shelf, or even expanding the facings of the same product. Retailers want manufacturers to be able to deliver in Tetra Recart.”

When new customers start packing

in Tetra Recart packages, the company kits them out with the whole system. The main parts are a form and seal machine, fillers, handling system, heat treatment and distribution equipment. “We are certainly cost-competitive from an overall cost of operation view

compared with canning,” Jhaveri said. Tetra Recart is advantageous for

manufacturers both before and after filling. Cans have to be transported empty, which takes up space, but Tetra Recart packages arrives flat in folded blanks – 500 empty packages can be transported in a box so small that it fits under your arm. Once a Tetra Recart package is filled, there is no space between the products and it can be stacked seven to eleven layers high on a pallet.

More than 130 brands in 50 markets around the world are today using Tetra Recart to boost sales in several product categories and revitalise existing product ranges or launch new ones. Looking forward, Tetra Recart’s focus is on market development, although Jhaveri was intent that the company is constantly examining the potential to refine it. “We believe Tetra Recart has wings to fly high in many markets, and that is where we are looking at this point,” he said.

PETER JHAvERI, MANAGING DIRECTOR




Back to the fieldsBY JANICE LEBOEUF

AS ChINA begins its 2013 processing tomato growing season, let us have a look at the state of tomato production in one of their key growing regions.

Back in June last year, I toured the area around Urumqi in the Xinjiang Uighur Autonomous Region of north west China. The visit, organised in conjunction with the World Processing Tomato Congress, gave an interesting glimpse of the local processing tomato industry. This was my second visit to China, having been on an agricultural tour in the eastern part of the country in 2005.

Xinjiang is the largest

processing tomato production district in China, reportedly having around 160 tomato processing plants. Surprisingly to someone from Canada, it is also the largest cotton producing area of China, despite being even farther north than Canada’s processing tomato production. In North America, we think of cotton as a crop of the deep (US) south.

Far removed from marine influences due to distance and mountain ranges, Xinjiang has a dry, continental climate. Urumqi itself receives 140-185 frost free days per year. Annual precipitation in the area is 194-236 mm, but averages only 124 mm during the growing season of May to September. Urumqi lies just north of the Tian Shan mountain range, and agriculture in the area relies on snow and glacial meltwater from the mountains. An April 2013 USDA report indicated heavy snowfall in northern Xinjiang this past winter – a benefit to soil moisture and water reserves for the 2013 tomato crop.

The processing tomato fields in the Manas area, about 140 km northwest of Urumqi, are controlled and managed by COFCO Tunhe, China’s largest tomato processor, whose annual tomato processing capacity is estimated at 335 000 tonnes in 23 factories and 54 processing lines.

They were large fields for China, although the size would not be out of place in the Canadian processing industry, perhaps around 15-30 hectares. The average Chinese farm size is around 0.6 ha, typically smaller in eastern China and larger in the west.

The COFCO processing tomato production comes from both company fields and

smallholders. Although some of the company fields I saw were machine-transplanted, the smallholders’ acreage would essentially all be hand-transplanted. When I was in eastern China, it was clear that hand labour dominates in the small family farms, while large agribusinesses (often joint ventures with the government or foreign companies) focus on mechanised agriculture. This does not seem to have changed.

Transplanting in the Manas area took place from end of April to early May. They were using both Heinz and Tunhe varieties, planted at 34 500-45 000 plants per hectare in twin rows. These grow on raised beds that are made in the autumn and reshaped in the spring. The 2012 yield goal was 90 tonnes per hectare.

The fields I saw were drip irrigated. A 2011 article in China Daily reported that COFCO Tunhe had invested CNY168.0 million (USD27.3 million) in water-saving irrigation systems in Xinjiang, bringing 80-90% of their processing tomato acreage under drip. Flood irrigation had formerly been the standard practice. The move was prompted

in order to meet standards set by Unilever, one of its biggest tomato customers.

Although the COFCO acreage is 40-50% machine-harvested, all of the smallholder acreage is hand-harvested. This may give some idea of the percent of COFCO tomato acreage that is currently controlled by the company. At a 2009 World Processing Tomato Council meeting, COFCO officials reported that the company controlled about 30% (about 35 000 ha) of its processing tomato acreage, and planned to control more than 60% by 2012 in order to improve crop quality.

CANADIAN vegetable production specialist Janice LeBoeuf takes a closer look at processing tomato fields in China, assessing where the country is at and the challenges it still has to face.

“In my experiences across China I’ve found that, on an agricultural tour, you see the showcase operations at government-owned companies and joint ventures, but aren’t shown the smallholder operations.” Harvesters at a Chalkis plant



This was accomplished by leasing and purchasing land from farmers.

Interestingly, some of their machine-harvest acreage is produced on clear plastic mulch. As far as I could understand, the machine harvests right through the plastic. Indeed, it’s hard to see how it could possibly be removed before harvest, even with the abundance of workforce available. In any case, while visiting a Chalkis plant, I did see harvesters with bits of stray plastic caught in parts of the machine.

Although I visited a Chalkis tomato processing plant on this tour, I did not have the chance to see any of its fields. Chalkis’ acreage is 80% hand harvest. The firm is China’s second largest tomato processor, with an estimated processing capacity of 270 000 tonnes in 23 factories. Following severe financial problems in the company, a change in management in 2011 and the restructuring process that is currently under way, it has been reported that tomato production was cut by 50%.

In my experiences across China, I’ve found that, on an agricultural tour, you see the showcase operations at government-owned companies and joint ventures, but aren’t shown the smallholder operations, unless you manage to get only a quick glimpse from the car windows. It would be much more relevant to see what happens at some smallholder tomato farms, as that is where the real challenges in quality, traceability and food safety would occur.

Efforts are being made. At the 2012 World Processing Tomato Congress in Beijing, the president of COFCO Tunhe talked about grower schools that were held in two of their growing areas. He described a GAP system that was being established, encompassing integrated pest management, a chemical residue control system, a computerised traceability system and a standard growing brochure. Both classroom and in-field training were being

provided to growers. Still, when I compare the knowledge and experience of their growers to the very highly-skilled and experienced growers that I am familiar with in North America, it is hard to believe that these north-west China growers will be able to consistently and effectively manage their production challenges any time soon.

Speakers at the Congress highlighted some of the research efforts going into processing tomato production, so whether through locally-adapted variety development, improved pest management, better nutrient and soil management, efficient water use, effective drainage for storm events or other agronomic advances, improvement is likely to come.

Beyond production practices and recordkeeping on the farm, and dealing with hundreds of tiny fields and individual growers, there are clearly other potential food safety and traceability challenges for the Chinese processors. A contact who is with a multinational agricultural chemical manufacturer told me that while they do market their pesticides in small container sizes for the small Chinese farms, there are also instances of unauthorised repackaging of their product, or even counterfeit or adulterated product, into smaller containers bearing their company and product name.

Besides food safety and

traceability challenges, it would seem that consistency in production (yield and quality) is still going to be a major challenge for China’s processing tomato industry going forward. Strides will have to be made both in mitigation strategies for weather extremes and in avoidance of major disease outbreaks with improved pest management practices. The challenge of transferring new techniques and knowledge to the vast number of small growers means that progress will come slowly.

However, the economic challenges being experienced by several major Chinese tomato processors could easily derail progress. While struggling with financial problems, will the major companies be able to make changes on the tomato growing side in preparation for the 2013 season? Do they currently have the resources to focus on improving production practices to be better prepared for weather and pest challenges in 2013 and beyond? Will they be able to maintain or expand grower training for 2013 to improve food safety and traceability, as well as production and quality?

On top of this, reliably meeting tomato production targets in a northern climate where the changes of season are not moderated by oceans or great lakes will be an ongoing challenge for China’s industry.

Meeting production and food safety goals while struggling financially will make 2013 even more difficult for the major processors and the outcome may depend on favourable weather through the season. All in all, I think we will continue to see north-west China struggle with production challenges in the foreseeable future.

Close-up of a harvester

“Beyond production practices and

recordkeeping on the farm, and dealing with

hundreds of tiny fields and individual growers, there

are clearly other potential food safety and traceability

challenges for the Chinese processors.”Janice LeBoeuf



BY DAVIDE GHILOTTI

wHAT is the latest update on the California tomato crop? How is crop preparation coming along and is the forecast of 11.7 million tonnes still standing?The crop is coming along fine. We are maybe even seeing an early start. There has been some wind here in California, which is slowing plantings in many places, but there is always something every season. Overall, it’s another normal year.

Sources told us that water scarcity may be an issue affecting this year’s crop in California. what is your opinion on this?Not this year. A lot of our growers have wells for irrigation to supplement the water districts, so there shouldn’t be a problem this year in regards to water.

International demand for US tomato products has been increasing since the second half of 2012, and is thought to grow further for the whole of this year. what are the reasons behind this? will US exporters be able to cover the demand and supply the requested volumes?This mainly has got to do with

what has been happening in the global market outside of the US. California can definitely meet the demands of the international market place, but there is an educational process for customers who may not have purchased from California before. Those would need to learn and understand how our contracting and sales cycles work as it relates to available inventories. For example, to call us up in late October and look for tomatoes may not work in their favour; it may be very tough to get product. We just don’t have inventories sitting around and we try not to.

How does California manage its inventory?As I’ve explained at the FOODNEWS Tomato Forum in Rome, there is an element in the way the sales cycle occurs in California versus other countries. In the US, we begin contracting with our customer well before we buy tomatoes, before we buy

seeds. We do this in tandem. The majority of the seeds that are put in the ground are already spoken for by our customers. Generally speaking, in some export markets the practice has been the opposite. The processors forecast and produce all quantities with little or no commitment from the customers, and the buyers wait to see the inventories and then they buy from the available inventory. Countries like China produce and then try to sell, and if sales are not as expected, the result is they end up with excess inventory. In California, we don’t have that issue as much because even before the tomatoes are harvested, they are already contracted. There is a logic of long-term supply chain planning.

A number of growing African markets have been traditionally reliant on China for their imports of paste. Do you think US firms could step in and gain an edge in supply to those countries?

Yes, I do. And not just specifically to Africa, I think [this could work] globally. California is a viable supplier of tomato products. If you look at reasons behind increasing demand from the US, you have China’s smaller crop, but also economic changes in Europe in regards to agricultural subsidies.

As it relates to Europe, California is competitive in the EU region. Looking at export numbers out of California, we can see there is movement in Europe.

Prices of tomato products have been depressed for the last few years, mostly due to market oversupply. was Morning Star affected by this and how?Morning Star prides itself on being the most cost-effective producer in the world. That said, if you’re managing all of your resources and your input costs as much as you’re able to, then when there is slow pricing in the market you’re likely to be less affected than perhaps processors in other

All aboard

“To call us up in late October and look for tomatoes may not work in their favour; it may be very tough to get product. We just don’t have inventories sitting around and we try not to.”

FOODNEWS talks to Nick Kastle from Morning Star about the firm’s expansion plans and how to get international customers involved with Californian tomato processors.


regions. If you’re in a situation where you produce inventory and you don’t have customers that are going to buy said inventory, you’re going to end up in an a situation where you’ve effectively tied up your capital into product that hasn’t, or isn’t going to move. Furthermore, if product is aging, processors will need to move it and may have to sell it below cost. If processors find themselves in this situation, then of course they would be impacted. Fortunately, Morning Star is not.

In California we have a different sale cycle. We try to do a good job in managing inventories, and that’s our goal.

It’s a state of things, though, that countries do pile up inventories.Yes, but it doesn’t help anyone in the long run, because the processor is out of a lot of money that is tied up until he is able to move the product. In the short term, the customer may be able to buy product at a lower price. But in the long term, if the processor starts restructuring and closing down factories to compensate for excessive unsold inventories, that would result in a reduction of the overall supply available to the market. This permanent reduction would trigger a stretch on supply, and as a result prices go up.

In this scenario, who wins? Nobody, because there are swings in supply and demand and in

prices, and at the end of the day it’s not a win for companies to not be sustainable together. Processors need customers, and customers need processors.

However it’s done, all customers have to protect their brand equity and product line. One of the ways they do that is to manage risk. If I was a customer, I would feel unsure about depending on a processor that is constantly out of balance in inventory; overproducing one year and shorting new crop contracts the next year. If I was working with a producer that was in the habit of cancelling my contract because they are going to produce less to balance their inventory, I would seek an additional, secondary supplier, and make sure that I protect my brand. This uncertainty adds another dynamic into the processed tomato supply chain.

My answer to this is that the best way for a customer to manage risk is for the customer and the processor to work together on supply requirements early on, discussing the season and planning quantities together.

Lack of planning doesn’t help the customer. Planning helps the customer. And I believe this does pay in the long run.

Farmers in European countries have been facing the issue of increasing production costs related to tomato growing. Some growers in Italy have been severely hit by underselling. How is the situation for California growers? Is it still profitable to grow tomatoes there?California is economically the best place to grow tomatoes in terms of production, tonnage per acre and so forth. Our tomato tonnes per acre is higher than anywhere in

the world, our state average paid tonne per acre is about 48-49 tonnes. [This means that] our cost per tonne is reduced just by yields alone.

will Morning Star try to expand its export volumes? where to?Of course, wherever there is demand.If you look at historic trends of exports, you see that they’ve grown a lot. I’m not expecting a tremendous increase like we saw between 2006 and 2007, but I do think that exports will continue to grow.

Again, it’s important to note that if a customer wants product in November, we can’t guarantee that they will easily find supply. Sourcing product after the season is complete is not the best way to guarantee your supply or your price. That’s not how the US market operates. The best way to secure quantity and pricing is start contracting early before the crop.

California is a viable source for the global market; however, speculating on inventory is not something that California processors have done well in the past. So it may not be the best plan for international buyers to wait until the harvest is finished to then see who has product available to sell. Buyers should probably start talking to California processors if they’re not already talking to us now.

http://www.trisun.co.il



BY DAVIDE GHILOTTI

CAn you briefly present the company to our readers?Fenco Spa is an Italian company that was founded in Parma in 1984 by technicians specialised in designing and building processing facilities for the food industry. In almost 30 years of activity, we have built about 350 plants across all five continents for the processing of tomatoes, fruit and vegetables, and for the production of concentrates, juices, sauces, jams, frozen foods, dairies and related products.

who are your customers? what kind of services do you provide?We have two types of customers. The manufacturers of semi-finished products – such as tomato and fruit concentrates – who need high-capacity processing plants, able to process all fresh fruit during a harvest season. Then there are producers of finished products – so, fruit and vegetable preserves for the final consumer; those companies would purchase ‘ad hoc’ processing systems that are specifically designed to meet their needs.

Fenco provides technical assistance during the assembling and starting up of the lines, as well as training for the customer’s staff. Moreover, we also provide spare parts and assistance for plants maintenance to all our clients.

How would you classify Italy’s food processing industry on a global level?I believe that, over the years, the Italian processing industry has constantly kept itself up to date and has been improving its standards and performances following the progress of technological innovations.

How has tomato processing technology evolved over the last few years?The basic principles of processing are still the same and have not changed radically. The research for new techniques that can be applied to existing machinery has mainly followed the evolution of electronics applied to control systems and processing stages, as well as the need to manufacture products with certain characteristics given the raw material available. Technologies for the making of semi-finished products, then, can differ according to the quality of raw material and to the requirements of the final product.

How have requests from your customers, both domestic and international, evolved in recent years?We have noticed that customers are paying more attention to parameters related to energy consumption for the functioning of processing lines, and to make savings at a workforce level. Competition between our clients has increased, so it is paramount to offer solutions that go into reducing production costs and, at the same time, boost product quality. There is also more attention paid to protecting the environment; this is mainly due to recent environmental laws being implemented, regulating disposal of industries’ waste at a local level.

what is Fenco currently working on?At the moment, we are working on enhancing the reliability of our units as well as optimising energy consumption, so to offer a product that will give our clients a higher competitive edge.

With the market that is now

going more towards flexible packaging, we have also invested in this direction to provide additional technological solutions to our customers, such as pouch bags. Standard cans are expensive, bulky to store and difficult to dispose of as waste, while pouches can be flattened when empty, taking up less space, and are easier to use. Also, on the pouch bag you can have images and colours that are better for marketing.

Are you working on innovations, such as increasing processing capacity, improving energy efficiency or environmental sustainability?Of course we are, given that we have seen that these are primary interests for both our existing and new customers. We are designing lines that cut down on the use of steam, or at least optimise it. A practical example is using a steam turbine to operate a pump instead of having an electrical engine, or the application of mechanical compressors or thermal compressors. Then, there are also case studies that are specifically tailored to those who want higher reliance on electricity and less on steam, or the other way round.

The global tomato market has been lethargic for the last few years. Has your sector been affected? How?We’ve had a contraction of orders of new processing lines in our traditional markets, so we invested in identifying customers in new markets. This has led us to Iran, India, South Africa and central Africa. We have also started to look at Latin America, particularly Peru and Brazil. In the US, we have secured a number of contracts for ad hoc processing lines, for the production of highly-specialised products.

Starting from the back row, China has become a leading tomato producer in only a decade. To what extent has China looked at companies such as Fenco to develop its own processing industry?China only managed to become one of the world’s largest tomato producers thanks to our technology. Fenco, as well as all our competitors, sold many processing lines to China.

with China entering the processing sector, have you had issues with some of your technologies being copied, as it happened in other industries?Not really. Processing tomato is available only for a limited period of time, so the reliability of processing lines is a fundamental aspect. Chinese customers have always understood that we alone could guarantee such high level of reliability, given our many years of experience. There are local producers in China who have been “inspired” by us, but their offer still does not convince even the Chinese.

Two years after the opening of Cape Concentrate in South Africa – a site that was built in partnership with Fenco – what is your assessment of the project?Cape Concentrate has become a vertically integrated farming and processing company similar to Transa in Spain and Boswell in California. The company has secured 2 000 hectares of state or community land on irrigations schemes which provides the majority of their processing requirements. The company has achieved yields in excess of those in Europe, with brix levels over 36. This is the first real year of farming operations which has exceeded their expectations.

IN CONVERSATION with Italo Pozzi, area manager of Fenco Food Machinery, FOODNEWS discusses the evolution of the fruit and vegetable processing technologies and how the sector is evolving following new requests from customers.

Processing the tomato



The Chilean chroniclesBY FOODNEwS STAFF

ChILE has got plenty of aces up its sleeve, and is going to play them all. With its tomato season coming up a few months earlier than all producers in the northern hemisphere, and another good crop just finalised, the country is ready for the great tomato game.

FOODNEWS talked to Cristian Alemparte Rodriguez of Chilean tomato products group Empresas Carozzi SA about the current and future expectations of the country’s tomato manufacturers and exporters. While Latin America remains Chile’s core market as of now, Chilean product is becoming increasingly competitive on the international stage, and is now eyeing the European market.

The Chilean tomato crop has been finalised. Can you give us an update on the season?It has been an extremely good season, with a good [average] yield of 91 tonnes per hectare. The season is finished now and the final figure is 682 000 tonnes, and the tomato paste equivalent of that is about 11 200 tonnes at 30/32 brix.

How relevant is Chile and the Latin American tomato industry on the global stage at the moment? Considering that China and Europe are expecting to cut down crops this year, what can we expect from Chile?Chile’s total planted area is 7 500 hectares contracted for tomato in 2013. At an average of 91 tonnes/ha that makes a total production of 682 500 tonnes of industrial tomato. If you take a global production figure for processed tomato of 35 million tonnes, which is the new estimate, that is less that 2% of world production which means it is not really relevant, if you compare it with California or China.

How does Empresas Carozzi plan to achieve greater relevance for Chilean tomato products on the international market?The Chilean industry could grow but that depends on the global situation. China and California have very low prices on tomato paste. Tomato paste prices have been low for the last five or six years, and really it is not attractive. One advantage is that we are duty-free into Europe. And with the reduction of

European subsidies we have an opportunity in northern Europe. We compete with the European processors in terms of cost and also quality. Chile is a high-quality producer of tomato products, and we have excellent raw material and the latest Italian technology.

where does Empresas Carozzi currently export its tomatoes? Are you planning to expand exports, and where to?The main market for Chile is Latin America. Maybe 70% of exports go to Latin America, 15% to Asia, Japan and Korea, and the rest goes to the domestic market.

How have you been affected by the last few years of market stagnation and low prices?As usual, [every time] there are low prices. Chile has a lot of commercial agreements; we are duty-free in our shipments to certain countries. We can compete better than other origins. And a lot of Latin American customers prefer the product before they know the price. China is a little risky, also in terms of quality; you never know what China will ship in the end.

Argentina has stepped up its tomato production in recent years, and is forecast at 420 000 tonnes in 2013. At the same time, imports of paste have increased a lot since 2010. with its current economic issues, do you think demand will stay high?Yes, we do sell to Argentina. The country is one of the important markets for Chilean tomato paste. It has the same season as Chile and so we have to wait and ship in the second semester. Argentina produces a lot of canned peeled tomato, but not so much paste. Also, as you know, Argentina has some import restrictions and you have to get an import licence, and this is a mess.

Venezuela has been the top buyer of Chilean paste for many years until today. Are you worried this may change after the death of Chavez, by a hypothetical destabilisation or a change in the country’s view towards Chile?No, probably not because Venezuela has been the main buyer [of Chilean products]. Venezuela is an importer of food items; they don’t have the weather for tomatoes and [for them] it’s a basic product, so they have to import it. And we have a good relationship with Venezuela anyway. The only option for the Chilean tomato paste industry is to become stronger in exports to the EU. There we can see opportunities. There are opposite seasons, and we can have a special price.

Chilean exports increased almost 15% between 2007 and 2012. what can be expected in 2013 and in the coming years?If the Chinese situation remains the same, there are substantial opportunities for Chile, but only as long as Chinese volumes remain low.

LATIN America’s main tomato producer now sees Europe as the best option to boost its exports.

Cristian Alemparte



The rise and fall of an empireBY DAVIDE GHILOTTI

GUESSING what China’s tomato processing industry may be planning to do this and in the coming years was one of the big questions among delegates at the recent FooDnEwS Tomato Forum in rome.

Although delegates at the event confirmed they were aware of the relevant financial issues Chinese tomato processors are currently facing, what strategies they may have drawn up to get back on track was cause for much debate.

“China’s going down because it’s unreliable. Figures never cor-respond to the reality, production has been much higher than what they said. Quality has issues and, over there, a contract is not a

contract,” a trader in Rome told FOODNEWS.

“Clearly, in the end they also paid the lack of transparency of some parts of their businesses: how much of a company is pri-vately-owned, how much is supported or funded by the state, or the military. These are ques-tions that have to be answered on the market.”

In the course of its presentation on current production trends in Spain and Portugal, Martin Stil-well of Italagro said: “In China we should see some decrease in exports, because product is not going to be there to satisfy demand.”

Chinese tomato paste exports, as a matter of fact, have gone through some interesting evolu-tions during 2012 (see graph).

Exports to Italy plunged last year, from a 2011 record of 158 300 tonnes to just over 62 000 tonnes in 2012. Shipments to Russia also decreased by some 12 000 tonnes. At the same time, exports to other destinations increased throughout the year: this was the case for Nigeria, Japan, the UK. Nigerian off-take reached a record high.

Total exports did shrink, yes – by 5%, but stayed well over 1.0 million tonnes (see second graph).

All in all, the Chinese did move significant volumes but, as we reported in previous analysis, global prices have been so low since early 2010 (driven down by China’s need to sell product at all cost) that exporters ended up in a spiral of underselling followed by more underselling.

Add to this the fact that com-panies were sitting on important stock volumes they needed to

clear, and the result were revenues that were nowhere near enough to cover production costs.

The Rising Costs MachineThe Rising Costs Machine, which started to bite across Chinese growing districts in the past few years, is now in full swing. Some delegates at the Forum were adamant that the gap in production costs between China and other producing countries is now history.

This certainly has a lot to do with increasing labour costs on the one hand, since wages in agricul-ture as well as in a number of other sectors have increased a lot. China’s middle class is expanding by the day, with the urbanisation phenomenon playing a big part.

On the other hand, Chinese tomato producers have had to come to terms with existing issues on product quality. Product speci-fications and standards set by importing countries – buyers but also re-processors – put China’s industries in the position of having to step up quality controls across the board. While Chinese compa-nies worked hard in this direction,

the impact this had on their balance sheets was something they could have done without.

The weather issues of last summer, with heavy rains in Inner Mongolia and late blight in Xinji-ang, meant that growers in some regions lost at least half of their produce – and with it, of their investment for the year.

Companies’ bleeding financial statements, of course, were also among the many drivers of the stalling of the Chinese industry.

“All tomato processors lost money last year,” a source from China told us, adding empathi-cally: “They have no mood to speak publicly.

“Cofco Tunhe, Chalkis and Haohan, the three major tomato processors in China, faced a great loss last year. Cofco Tunhe cut down the proportion of its tomato business, and is now focusing more on sugar. Chalkis is under restructuring. Haohan’s debts became heavier.”

The appreciation of the yuan against the US dollar has affected exports tremendously, as sources also confirmed to FOODNEWS; according to an industry insider,

THE magnitude of China’s tomato industry is slowly crumbling under a pile of debts, while costs increase like there is no tomorrow. The country could make it, but some serious thinking is required.

“Some delegates at the Forum were adamant that the gap in production costs between China and other producing countries is now history.”

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LEADING CHINESE TOMATO PASTE EXPORT MARkETS (TONNES)



only this factor is behind the deci-sion of many factories to stop producing paste.

Of a rough total of 166 tomato processing plants in the country, FOODNEWS understands that one third – around 55-56 plants – will either shift production or stay closed during this year’s tomato crop and processing season, such is the extent of the problem.

“Maybe even more factories will shut down,” a source said. “As of now, it’s possible.”

Where do we go now?Were the last ten years of China’s booming tomato processing and exports a short-lived utopia? Was the huge tomato production of 2009 China’s tomato swansong?

Some believe the country has broken its nose against the crude reality. It is now hoped that what-ever will happen in the coming tomato crop will shed some light on the real extent of the existing issues.

“According to my observa-tions, processing tomato output in 2013 should be more than last

year, above 4.0 million tonnes. Now it is sowing and transplant-ing time in Xinjiang. A more accurate estimate will be clear in about a month,” said a source from the country.

The latest WPTC forecasts put Chinese production this year at 4.5 million tonnes. At this time last year, production had already been cut from 6.0 million to 5.0 million tonnes. Come the end of the harvest, and the actual figure was quite different: final produc-tion at 3.2 million tonnes, or 52% less than 2011.

After four consecutive crops of over 6.0 million tonnes

(2008-2011), the 2013 production – if current forecasts are anything to go by – would look more like that of 2004-06.

“China will go back to the status of a relevant but ‘normal’ player as many others in the world, without the abnormal mag-nitude that we’ve seen over the last few years,” was the view an Italian trader shared with FOOD-NEWS in Rome.

“At the moment, the Chinese will have to go back to grow fairly average crops, in the hope that domestic consumption will eventually rise, allowing them to increase production again to

supply the internal market and – most importantly – without making the same mistake of 2009.”

Here we go again: domestic market. The golden egg, the New Deal of China’s processing sector. There is no avoiding it: the potential of the Chinese market is enormous, and most people in the trade share the same opinion about the need to boost domestic consumption as a key move for the survival of China’s industry. So far, however, Chinese processors have seemed to be at a loss on how to go about this task.

“China needs time to develop the home market and consume more tomato products internally,” a source from the country added. “It will still be a big exporter of tomato paste in the next five years.”

The way seems set, then, but the country needs time.

Whether China effectively has the time it needs to go by before the plug is pulled, is another matter.

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CHINESE TOMATO PASTE EXPORTS TREND (TONNES)

http://www.kronos.com.gr


Bonduelle’s commercial and market chief Agnes Dion said: “Through close cooperation with Ardagh, we are delighted to continue Bonduelle’s track record of being first to market with new product innovations. This new concept contains so many benefits for the consumer, and is a true success story for sustainable metal packaging.”

Bisphenol ACanned foods might undoubtedly be above reproach for their nutritional and health benefits compared with the problems of handling fresh, but you’ll not convince the campaigners against the use of high-performance lacquers made from Bisphenol A, the controversial chemical that is still regarded by some as a potential source of health problems, particularly for pregnant women and babies – even though it has been tested and approved for more than three decades.

Taking a pragmatic view regardless of the scientific issues, manufacturers of coatings used by canmakers are pressing ahead with the development of alternatives. One of the issues that has been highlighted by Darex Packaging, a business unit of Grace, is that canmakers who are offering so-called ‘BPA-free’ and ‘BPA-non-intent’ containers to the food industry must ensure that coating systems using these and conventional lacquers are not mixed.

Ian Morrison, marketing manager for can coatings at Darex, explained that when canmakers use the new chemistry for internal lacquering, it will be impractical for them to use epoxy phenolics (made from BPA) on the same coating lines for external application because it will be virtually impossible to flush the systems free between production runs.

“The desire by customers to move forward with alternative materials not based on or containing BPA has resulted in the recent launch of a range of new products based on polyester resin technology,” said Morrison.

Despite the level of sophistication in matching can coatings to products in the past century or more, some markets still demonstrate that they have much to learn, as shown in the

saga earlier this year when Saudi Arabian authorities rejected several thousand tonnes of canned mango purée that had been shipped in containers from India.

As FOODNEWS reported (FOODNEWS 25 February), the Saudi authorities had started enforcing regulations on tin content in the product that were much tighter than those applied in India. With prices under pressure it’s said that the suppliers cut corners with the can specifications, leading to the use of poor tinplate.

Sanjay Bhatia, chief executive of Hindustan Tin Works Ltd, and a leading light in the Indian canmaking business, said: “I do not think it is right to say that the cans were out of specification. The industry is using the required specification of cans in terms of

thickness, tin coating, food lacquer, etc.

“Saudi authorities were earlier accepting some feathering in the cans which happens due to poor storage and handling conditions at the fillers, however they have become strict in not accepting such feathering although quality of the mango pulp as per understanding is still good.

“We had been discussing with our customers about the poor handling at their end and also helping them from time to time to improve such handling through training, but a lot has to be done. I am confident that each and every can maker who is supplying to mango pulp market is working closely with the filler in order to address the issue.”

Such issues are not unlike to those faced by the pioneering food canners who first started business in England two centuries ago this summer.

In May 1813, Donkin, Hall & Gamble started their business offering canned foods manufactured in a factory in south London, primarily for use by the Admiralty and expeditions.

Based on a patent filed in 1810 by Peter Durand, and using sterilising techniques developed by Frenchman Nicolas Appert, the products were presented to Royalty, the Prince Regent, later George IV no less, who wrote that they were “highly approved”.

No higher accolade could have been obtained, and canned foods went from strength to strength.

CONTINUED FROM PAGE 7

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