First, farmers have more incentive to grow tomatoes. The world is experiencing inflation. Commodity prices, including those of tomato products, are increasing. The Federal Reserve raises interest rates to curb inflation. The appreciation of the U.S. dollar and the depreciation of the currencies of developing countries have increased the earnings of exported goods. In 2023, extreme weather in May caused a decline in tomato planting area production, and continuous rains in August and September prevented processing plants from operating at full capacity. This has caused producers to push up the price of tomato raw materials. On the other hand, farmers grow other cash crops with lower returns. Eventually higher incomes motivated farmers to grow tomatoes.
Secondly, the demand structure has changed. Domestic consumer demand in China has increased. Since the COVID-19 epidemic in the past few years, people have become accustomed to cooking at home, which has led to a surge in demand. Generally speaking, China consumes more fresh tomatoes than processed tomatoes. However, in recent years, manufacturers have applied processed tomato products to Chinese dishes, typified by tomato hot pot. Through continuous research and development, innovation and publicity, the Chinese began to shift their interest from fresh tomatoes to processed tomatoes, which resulted in a rapid increase in demand for processed tomato products. China’s processed tomato industry is shifting from complete reliance on exports in the past to meeting domestic consumer demand, and the product structure is also changing from pure bulk tomato paste raw materials to diced tomatoes, tomato paste, etc.
Overall, China’s 2022 crop production is slightly below demand and 2023 crop production is balanced. If predictions are made based on consumption for the entire year of 2023, it can be predicted that the entire production of 2023 will be consumed by the end of September 2024. From the perspective of the stability of the entire tomato industry chain, it is not safe to completely match supply and demand, especially in the current international transportation situation full of uncertainty. Therefore, maintaining a two-month safety stock is essential. Therefore, the increase in production in the 2024 season is partly to make up for the lack of demand in the past two years, and partly to maintain safety stock and make the supply chain more stable and orderly.
Last but not least, the current assessment is based on seed sales and the production capacity of processing plants, which can theoretically meet the demand of 11 million tons. However, weather factors and actual planting conditions are uncertain. Only rough estimates can be made at this time. A more accurate prediction will have to wait until transplanting is complete.
Post time: Mar-06-2024
