Although tomato exports increased in 2017 thanks to government support around the world, it is precisely governmental forces that pose the greatest threat and uncertainty in the global tomato market.
Trade wars and retaliations, a growing acceptance of isolationist and protectionist policies, and geopolitical instability are all threats to production and trade, and negatively impact prices for consumers.
It is hard to find a metric or industry standard to appropriately analyze the worldwide tomato market, mostly due to its complexity and decentralized nature, which spans a range of industries from chemicals to agriculture, logistics, technology and international trade. Nonetheless, one figure captures its astonishing growth: an increase in tomato production of 49 percent between 2000 and 2013, encompassing its many varieties.
An estimated 130 million tons of tomatoes are grown annually, with 88 million tons produced for commercialization as fresh produce, and 42 million destined for processing into a wide range of products. More than 60 percent of worldwide tomato production are centered in 5 countries and groups: China, the European Union (EU), India, the United States and Turkey.
Tomatoes are in the ranking of the most consumed vegetables worldwide. Approximately five million hectares of tomatoes are actively being planted all over the Earth. On average, 3.7 kilos per square meter are harvested from that acreage. The largest producers are China and India, although the yield in India is low and stands below 2.5 kg per square meter. This contrasts sharply with the yields that growers achieve in the US (9.03 kg/m2), Spain (8.62 kg/m2) and Morocco (8.08 kg/m2). Holland’s yield stands head and shoulders above the rest of the world, with an average of 50.7 kg/m2.
Mexico is the world’s largest tomato exporter with over 1.5 million tons. Indeed, over half (52 percent) of the tomatoes consumed in the U.S. come from Mexico. Benefits include a continuous supply during winter and low labor costs. Since 2005, the cultivation area has almost tripled, reaching more than 12,000 hectares in 2015. About 80 percent of investments focus on export to the U.S.
The USDA reported that imports from Mexico accounted for 85% of the value and 90 percent of the volume of tomato imports. Value of all fresh tomato imports in 2017 totaled $2.177 billion in 2017, down four from 2016. Volume of total U.S. tomato imports was 1.78 million metric tons, unchanged from 2016, according to U.S. Department of Agriculture statistics.
U.S. fresh tomato exports in 2017 were unchanged in value and up one percent in volume, according to the USDA. Exports of U.S. tomatoes pale in comparison to imports, with 2017 U.S. fresh tomato exports just five percent of total U.S. tomato imports by value and volume. U.S. tomato exports were valued at $116.8 million in 2017, unchanged from 2016. Volume of U.S. tomato exports totaled 85,400 metric tons in 2017, up one percent from year-ago numbers.
Led by dominant supplies from Mexico but accelerating supply from Canada, volume of U.S. tomato imports was unchanged in 2017. There is however an increase in the varieties planted, from traditional Roma or plum tomatoes, vine ripened, miniature cherry and grape tomatoes specialized for use in salads, and the return of heirloom tomato varieties that pose significant challenges for large scale production.
On the flipside, the rising prices in some countries could lead to them opening up their borders to imports. The Turkish government said last month that this option was on the table. Following the boycott, Russia reopened the door. This year, Turkey will be able to export 50,000 tons to what was once its most important export destination. Due to the strict requirements that Russia sets, only the premium tomatoes can be shipped to that market. Nonetheless, political turmoil with Russia, and the expulsion of diplomats from a range of EU countries may prove this to be a fragile state of affairs.
It is imperative for the health of the worldwide tomato industry to have smooth transitions between governmental plans and interactions amongst states and commercial blocks. A return to protectionist policies could spell disaster for a burgeoning industry that employs millions of people around the world. In the absence of a global consensus on trade and tariffs, tomato farmers, brokers and sellers should focus on continuing the upward trend of higher yields, optimizing water usage while increasing the use of cutting edge technology in order to ensure the health of the industry as a whole.
Editor’s Note: The main image accompanying the above guest column is from Weis-Buy, Inc.