Information for fruit and vegetables business in CIS
Ukraine: processors of tomatoes are concerned about lack of raw material on the market
Producers of juices, ketchup, canned products are in the struggle for raw material – this season, demand for tomatoes increased by the one third, when supply decreased, on the contrary. Shortage of vegetables has already caused rise in prices, in some regions they doubled in price. Those who can not outbid necessary lots will have to satisfy themselves with imported semi-processed materials, though supply of this product is limited too, Delovaya stolitsa informed.
The supply of tomatoes is not sufficient for the processors. According to Igor Baburin, the head of procurement department of the company Vitmark, tomato supply on the market satisfies the enterprises needs only by one third. At that, the quality of the vegetables is not so high - they are small, uneven ripe and have increased content of moisture.
Yekaterina Sudilovskaya, the director of the department of planning and deliveries of TM Biola, agreed with the colleague. According to her, scarcity of sunny days this season is the reason for that solids content in tomatoes is very low and therefore for each kilo of paste and puree they need more raw material than usually. According to Fedor Rybalko, the representative of International Financial Corporation, financing the project of vegetable-growing development in the south of Ukraine, needs in tomatoes from the side of processors (producers of juices, sauces and canned products) would total not less than 400.000 tonnes or up 20-30% compared to the last year. Besides, expansion of production by the existent companies, high demand for raw material is stirred up by new processors. Supply on the market decreased, on the contrary, and this has already caused rise in prices. According to the data of F. Rybalko, the farmers inform their prices at $0.26-0.39/kg, while traditionally raw material cost varies within $0.12-0.22/kg. I. Baburin noted that in Odessa region the prices for tomatoes are up twice from the last year, and in Nikolayev and Kherson oblasts – up by 30-40%. Ye. Sudilovskaya said that in the height of the season of active purchases the prices may rise by 15-20%, more affecting the cost of the output products. Because last year the harvest of tomatoes was low, this season many farmers refused from this crop, reorienting to prospective more profitable vegetables.
According to the data of “Fruit-Inform” project the sowing areas under tomatoes in Ukraine almost did not change compared to the last year. Many farmers name soaring prices for labor force as the most common reason for refusal from the areas expanding. Not every producer is able to acquire a tomato harvesting combine. At that, instability of the Ukrainian producers of canned tomatoes and annually increasing competition from the side of the imported tomato paste, the main volume of which arrives to the local market from China and Uzbekistan, remain the relevant problems for the sellers of the industrial tomatoes. These countries factually dictate the prices for the industrial tomatoes in the territory of Ukraine and affect world prices for tomato paste.
“If last year the investments per one ha totaled $5.000, then this year they increased to $7.000-8.000, and this even in the case of high yield (60 c/ha) allows only 20-30% profitability”,- F.Rybalko explained. According to him, during the last years, the framers evened unprofitability of tomatoes growing for processing by supplying the best tomatoes to the “fresh” market, and remainders – to the plants. In the recent time “plum” variety of tomatoes, on which the processors are orienting, no longer are in demand among customers. The Ukrainians prefer to buy tomatoes of salad varieties, and less desire to can them.
And the enterprises do not want to accept nonliquid produce, by which farmers supplied them for many years, and prefer to cooperate with the farms that are ready to guarantee industrial volumes and stable quality. Therefore, to date, the small farms are actively pressed out from the tomato segment of raw material market. They may find new distribution channels on the “fresh market”, but for this they need to double investments in cultivating of new varieties, storing and packing of tomatoes, and not many of them are ready for this.
“Processors will try to solve the problem of deficiency of raw material at the expense of the imported tomato paste and puree”,- F. Rybalko considers. However, according to I. Baburin, it is not easy to purchase required lots. Bad harvest of tomatoes in Italy, Spain and Portugal led to the sharp prices growth for paste with dynamics 150-200%, and, currently, the purchasing prices are not less $500-600 per ton. The producers of sauces and ketchup are in more favorable position as they can purchase required volumes of paste from China (puree offer for juices in this country is limited).
At the moment, the enterprises, specialized in holocarpous canning, have already started purchasing raw material, while juice producers wait for price-cutting. Nevertheless, these expectations may not come true because this season needs of processors substantially increased and domestic production will hardly satisfy them.
The prospects of the processing industry development in Ukraine and Russia will be discussed during the Third International Conference “Fruit & Vegetable Business of Russia – 2008” and the Fifth International Conference “Vegetables and Fruits of Ukraine 2008””. Detailed information about the forthcoming events is presented here.