WORLD COUNCIL VISIT
Last week, members of the World Processing Tomato Council were in Melbourne for their semi-annual meeting. We were delighted to be able to host dinner for them on Monday evening. It was a great opportunity to renew acquaintances and make new friends. After the meeting the party spent two days visiting farms and factories in Northern Victoria and some visited our operation.

One of the visitors asked me questions about our export business. My research confirmed that we currently export to 15 countries including 5 major tomato-processing regions. Our total exports account for some 40% of sales.


NEW AT ENTAPACK
Our gland development to suit aseptic Intasept style filling equipment has been commercially released. It is pleasing when a new development becomes a commercial success as shown with repeat orders.

Another development being commercially released in March after some 18 months of development is the Entapack durOgland. This is a two-inch BSP screw gland with an integrally moulded thermoplastic rubber O ring. This gland is used in non-aseptic IBC containers. This gland makes redundant the previous system where the seal was part of the cap rather than the gland.

The main body of the durOgland is made from polyethylene and the O Ring is moulded from thermoplastic rubber to provide a seal. The two moulding operations are done within the one moulding cycle and in the same tool.

The durOgland provides a more sanitary seal compared to the use of a standard O ring seal. It also provides a seal at time of fill for the packer and eliminates the requirement to hand assemble the O ring onto the cap which benefits our process.


TOMATO INDUSTRY UPDATE
As usual I have requested Barry Horn of Barry Horn Consulting to draw on his knowledge and network to bring us up to date with what's happening within the processing tomato industry and to look into his crystal ball and discuss possible trends.

Australia
The crop report issued on behalf of the Australian Tomato Processing Industry Council (APTIC) indicates that 373,000 tonnes of fruit has been contracted for the current season, slightly less than last year's harvest.

Planted surface is 6% less than last year so that if the contracted tonnage is to be achieved, average field yield will have to reach a record 82 tonnes per hectare. Cool weather during the growing period and early harvest has resulted in a late start to picking and the off-take has already been interrupted by rain. A record yield now appears unlikely.

The Australian tomato industry continues to consolidate and improved its economy of scale. The number of processing tomato growers has reduced again and is now thirty three. Among processors, SPC and Ardmona have merged and Berri has exited primary processing.

Cedenco Foods, the New Zealand half of the Cedenco Australia joint venture, is now controlled by SK Foods of Lemoore, California. The industry is expecting that SK Foods and Cerebos will shortly announce a change in the Cedenco Australia partnership structure.

From our observation, the Australian industry is becoming more "professional". One of the World Council Visitors observed that, in proportion to its size, the Australian industry has the strongest research program in the world. Others remarked about the quality of the annual "Industry Survey" that provides researchers, growers, processors, investors and others with reliable and detailed information about the industry.

Drip irrigation has become more sophisticated and now accounts for 55% of plantings. The industry has also been moving from direct seeding to transplants, which now account for 34% of surface. Some of the new transplanters are a delight to watch.

Integrated Pest Management and other "Sustainable Agriculture" developments are widespread and crops are being grown on the same land for up to three years before rotation. There are a number of new state of the art harvesters.

Australia is still a net importer of tomato products but as the industry continues to develop, this is likely to change.

USA
The June to December "disappearance" of US tomato stocks was 700,000 (short) tons less than the average of the previous six years leading to a higher than anticipated December 1 inventory. Processors do not appear to have taken this into account in their planning of 2002 season as the total contract intention of 10.5 million tons appears to be too high.

The way we see the numbers is: -



History suggests that a June 1st stock of around 3.2 million tons (30% of average annual disappearance) might represent a balanced market. The June 2002 inventory is heading to be 0.5 million tons higher than this and the June 2003 number 0.9 higher.

US paste prices have hardly recovered at all following the 2001 production downturn and the above numbers suggest that unless California has a bad season, US paste prices are going to stay where they are for some time to come.

Some US processors may have another think and contract for less tons than they indicated in January.

China
It is still difficult to obtain reliable and objective information out of China. Current 2002 production estimates range from 2.0 to 2.4 million tonnes, a big leap from the estimated 1.0 million tonnes processed last year. Including the six new lines (at least) that we understand are being installed now, processing capacity in China is well in excess of 2.4 million tonnes. However, they still have to grow the tomatoes and manage the industry well. These are significant challenges for them. Finance seems to be available for expansion regardless of production and sales success.

Globally
2001 processing totalled 23.5 million tonnes, down 13.3% from the year before. This reduction was largely intentional but was exacerbated by poor seasonal conditions.

Global demand appears to have grown to around 26.5 million tonnes. This is based on theory that over a period of years, global consumption must equal global production.



If global inventory is (say) 0.5 million tonnes higher than balance following the 2001 season then a lift in production of some 2.5 million tonnes would be appropriate this year. If China lifts by 1.0-1.4 and California by 1.7 (metric) tonnes there is not too much room for big production increases elsewhere. This may not be a problem as the EU is constrained by its quota system, Turkey by its ability to finance a bigger crop there are limits to what other countries can do.


FINALLY
We are looking forward to The 5th World Congress on the Processing Tomato to be held in Istanbul in June 2002. A large contingent of Australians will be there and we hope to see as many as possible from other parts of the globe.

"News and Views" is available via e-mail. If you or any of your colleagues would like to be on the e-mailing list, please let us know name, company, position and e-mail address and it shall be done. Send to vincent@entapack.com.au. As always, we welcome your feed-back.

Best regards, Vincent


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