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Domestic tomato processing industry sees overcapacity


Domestic tomato processing industry sees continuous gloom mainly owing to overcapacity and slack sales in overseas market.

Domestic tomato processing industry sees continuous gloom mainly owing to overcapacity and slack sales in overseas market.

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  • 1. Domestic Tomato Processing Industry Sees OvercapacitySummary: Domestic tomato processing industry sees continuous gloom mainly owing toovercapacity and slack sales in overseas market.Tags: seed, tomato processing, tomato, COFCO Tunhe, tomato paste, overcapacity, output,tomato processing industryChina, a worlds leading tomato paste producer, apart from the U.S. and Italy, witnessedcontinuous gloom of tomato processing industry in 2011, mainly caused by domestic overcapacityand slack sales in overseas market. The sluggish tomato processing industry would probablyreduce the operating rate of tomato processing enterprises and lower farmers enthusiasm forplanting processing tomato in 2012, according to CCM International’s April Issue of Seed ChinaNews.For tomato processing enterprises, 2011 was a tough year, with operating results inferior toprevious years.For example, Xinjiang Chalkis Co., Ltd. (Chalkis), a listed company specialized in tomato pasteproducing and marketing, predicted on 31 Jan. 2011 that it would have an unbelievably poorperformance in 2011, with net loss hitting USD136.25 million (RMB880 million). Chalkis mainlycontributes its heavy loss to the depressed export price of tomato paste and the soaringproduction cost.COFCO Tunhe Co., Ltd. (COFCO Tunhe), the largest tomato processor in China, also sufferedunsatisfactory performance in tomato processing business, with the operating profit margindecreasing from 20.31% in 2010 to 14.55% in 2011. The company blames its decreased profit intomato paste to continuous price downturn, increasing cost and sluggish overseas market. In2011, COFCO Tunhe totally achieved net profit of USD5.01 million (RMB32.38 million), thanks toconsiderable government subsidies and investment returns.Gansu Dunhuang Seed Co., Ltd. (Gansu Dunhuang), a dominant seed company, also witnesseddeficit in tomato paste business in 2011. Revealed by Gansu Dunhuang, its subsidiary engagedin tomato paste processing presents a net loss of USD1.28 million (RMB8.27 million) in 2011,heavier over the previous year, mainly owing to domestic overcapacity and decreased export.
  • 2. Leading tomato processors were so depressed in 2011, not to mention small and medium oneswhich generally suffered serious deficits in 2011, even facing business failures.According to industry insiders, tomato processing companies have made rapid capacityexpansion during the past few years, causing the current overcapacity and intense competition.Since most tomato paste produced by domestic companies is sold abroad, the sluggish tomatopaste market in Europe and the U.S. has made their performance even worse in 2011. Moreover,the depressed price and the soaring cost have posed greater challenges to domestic tomatoprocessors.In view of the slack sales and oversupply, tomato processing companies would significantly cuttheir production capacity in 2012. It is expected that most tomato paste manufacturers wouldhave to deal with large stocks to return funds.It is released that at present COFCO Tunhe Co., Ltd. (COFCO Tunhe) whose capacity of tomatopaste is over 350,000t/a, still has a large number of stocks of tomato paste, with constantdownturn in export. Actually, COFCO Tunhe has planned to put more efforts to enhance its sugarprocessing business in future.As for Gansu Dunhuang Seed Co., Ltd. (Gansu Dunhuang), it has already transferred most of theinvestment originally in tomato processing project into corn seed business at the end of2011.strong resistance and high quality will be continuously promoted for the protection of foodsecurity in China.The gloomy tomato processing industry would seriously affect farmers enthusiasm for plantingprocessing tomato. It can be predicted that the planting area of processing tomato in 2012 wouldkeep declining, following the significant decrease in 2011.In China, processing tomato planting is mainly concentrated in Xinjiang, Gansu and InnerMongolia. Xinjiang, as the largest production base of processing tomato at home, owns plantingarea of processing tomato of around 64,000 ha. In 2011, the output of processing tomato reached4.35 million tonnes in Xinjiang, accounting for 15% of the worlds total yield. With more than 110tomato processing companies, Xinjiang annually exports over 700,000 tonnes of tomato paste toover 100 countries and regions in the world.Source: Seed China News 1204
  • 3. Content of Seed China News 1204:Winall Hi-tech vigorously expands business 2011Shandong Denghai: both revenue and net profit increase in 2011Hefei Fengles net profit down 39.21% in 2011WanXiang Doneed: sharp growth in net profit 2011Domestic tomato processing industry sees overcapacityCorn single-grain sowing technology promoted rapidly in Huang-Huai-Hai PlainLongping High-tech suspends listing for asset restructuringGrand Agriseeds to control a large rice seed companyVegetable seed technological innovation incubator opened in Shouguang, ShandongDomestic scientists successfully transplant oil palm plantletSeed China News, a monthly publication issued by CCM International on 30th of every month,offers timely update and close follow-up of China’s seed industry dynamics, analyzes market dataand finds out factors influencing market developmentAbout CCM InternationalCCM International is dedicated to market research in China, Asia-Pacific Rim and global market.With a staff of more than 150 dedicated highly-educated professionals. CCM International offersMarket Data, Analysis, Reports, Newsletters, Buyer-Trader Information, Import/Export Analysis allthrough its new proprietary product ValoTracer.For more information, please visit International Ltd.Guangzhou CCM Information Science & Technology Co., Ltd.17th Floor, Huihua Commercial & Trade Mansion, No.80 Xianlie Zhong Road, Guangzhou510070, ChinaTel: 86-20-37616606Email: econtact@cnchemicals.comSource: