Domestic tomato processing industry sees continuous gloom mainly owing to overcapacity and slack sales in overseas market.

1. Domestic Tomato Processing Industry Sees Overcapacity
Summary: Domestic tomato processing industry sees continuous gloom mainly owing to
overcapacity and slack sales in overseas market.
Tags: seed, tomato processing, tomato, COFCO Tunhe, tomato paste, overcapacity, output,
tomato processing industry
China, a world's leading tomato paste producer, apart from the U.S. and Italy, witnessed
continuous gloom of tomato processing industry in 2011, mainly caused by domestic overcapacity
and slack sales in overseas market. The sluggish tomato processing industry would probably
reduce the operating rate of tomato processing enterprises and lower farmers' enthusiasm for
planting processing tomato in 2012, according to CCM International’s April Issue of Seed China
News.
For tomato processing enterprises, 2011 was a tough year, with operating results inferior to
previous years.
For example, Xinjiang Chalkis Co., Ltd. (Chalkis), a listed company specialized in tomato paste
producing and marketing, predicted on 31 Jan. 2011 that it would have an unbelievably poor
performance in 2011, with net loss hitting USD136.25 million (RMB880 million). Chalkis mainly
contributes its heavy loss to the depressed export price of tomato paste and the soaring
production cost.
COFCO Tunhe Co., Ltd. (COFCO Tunhe), the largest tomato processor in China, also suffered
unsatisfactory performance in tomato processing business, with the operating profit margin
decreasing from 20.31% in 2010 to 14.55% in 2011. The company blames its decreased profit in
tomato paste to continuous price downturn, increasing cost and sluggish overseas market. In
2011, COFCO Tunhe totally achieved net profit of USD5.01 million (RMB32.38 million), thanks to
considerable government subsidies and investment returns.
Gansu Dunhuang Seed Co., Ltd. (Gansu Dunhuang), a dominant seed company, also witnessed
deficit in tomato paste business in 2011. Revealed by Gansu Dunhuang, its subsidiary engaged
in tomato paste processing presents a net loss of USD1.28 million (RMB8.27 million) in 2011,
heavier over the previous year, mainly owing to domestic overcapacity and decreased export.

2. Leading tomato processors were so depressed in 2011, not to mention small and medium ones
which generally suffered serious deficits in 2011, even facing business failures.
According to industry insiders, tomato processing companies have made rapid capacity
expansion during the past few years, causing the current overcapacity and intense competition.
Since most tomato paste produced by domestic companies is sold abroad, the sluggish tomato
paste market in Europe and the U.S. has made their performance even worse in 2011. Moreover,
the depressed price and the soaring cost have posed greater challenges to domestic tomato
processors.
In view of the slack sales and oversupply, tomato processing companies would significantly cut
their production capacity in 2012. It is expected that most tomato paste manufacturers would
have to deal with large stocks to return funds.
It is released that at present COFCO Tunhe Co., Ltd. (COFCO Tunhe) whose capacity of tomato
paste is over 350,000t/a, still has a large number of stocks of tomato paste, with constant
downturn in export. Actually, COFCO Tunhe has planned to put more efforts to enhance its sugar
processing business in future.
As for Gansu Dunhuang Seed Co., Ltd. (Gansu Dunhuang), it has already transferred most of the
investment originally in tomato processing project into corn seed business at the end of
2011.strong resistance and high quality will be continuously promoted for the protection of food
security in China.
The gloomy tomato processing industry would seriously affect farmers' enthusiasm for planting
processing tomato. It can be predicted that the planting area of processing tomato in 2012 would
keep declining, following the significant decrease in 2011.
In China, processing tomato planting is mainly concentrated in Xinjiang, Gansu and Inner
Mongolia. Xinjiang, as the largest production base of processing tomato at home, owns planting
area of processing tomato of around 64,000 ha. In 2011, the output of processing tomato reached
4.35 million tonnes in Xinjiang, accounting for 15% of the world's total yield. With more than 110
tomato processing companies, Xinjiang annually exports over 700,000 tonnes of tomato paste to
over 100 countries and regions in the world.
Source: Seed China News 1204
http://www.cnchemicals.com/Newsletter/NewsletterDetail_28.html

3. Content of Seed China News 1204:
Winall Hi-tech vigorously expands business 2011
Shandong Denghai: both revenue and net profit increase in 2011
Hefei Fengle's net profit down 39.21% in 2011
WanXiang Doneed: sharp growth in net profit 2011
Domestic tomato processing industry sees overcapacity
Corn single-grain sowing technology promoted rapidly in Huang-Huai-Hai Plain
Longping High-tech suspends listing for asset restructuring
Grand Agriseeds to control a large rice seed company
Vegetable seed technological innovation incubator opened in Shouguang, Shandong
Domestic scientists successfully transplant oil palm plantlet
Seed China News, a monthly publication issued by CCM International on 30th of every month,
offers timely update and close follow-up of China’s seed industry dynamics, analyzes market data
and finds out factors influencing market development
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Source: http://www.cnchemicals.com/PressRoom/PressRoomDetail_w_1055.html