Tough trading, but organics have potential.
The tomato paste sector is expected to suffer the effect of sluggish demand and high level of inventories during the 2017 season which opened with a downturn trend for raw material prices. In spite of the projected difficult economic background, the canned tomato sector should go through the coming season unscathed thanks to low inventories and stable demand. Several sources in Portugal, Greece and Italy (among the main producers of canned tomato in Europe) claimed to be sold out or able to cover the orders just until the beginning of the new season.
Organic food is having its moment of glory both in the fresh and processed market. Also the tomato sector has earmarked a growing share of raw material to organic, in particular in the US and Italy, respectively first and second largest producers of tomato for processing in the world. However, a substantial shift toward this kind of production is yet to come, because it is not seen as the solution to some of the main problems of the tomato industry: low prices and flat demand, in particular in the Western countries.
Some processors are looking beyond the present crisis, studying solutions that could help their growers to cut production costs while helping the environment. A tomato processor in the south of Italy will launch a project to study a more efficient use of water in agriculture in order to tackle the risk of desertification of the area.
In other canned foods, the problem areas include pineapple, where Thailand’s traditional boom-and-bust cycle is now entering a severe ‘bust’ phase, with raw material prices at break-even level for the farmers (or below, if the farmers’ protestations are to be believed).
European peach harvests are not far away, and Greece should bounce back happily with an excellent harvest this year. However, weather incidents have spoiled all manner of European fruit forecasts already this year, and nobody is going to feel 100% safe until maybe the middle of June.
Finally, we urge you to read John Nutting’s article on development of the new plastic can. We doubt that it will ever replace the conventional steel can, but for premium products it is an interesting proposition, and would add value to a traditionally low-margin category. Read more by downloading the full report below.