 "Rising tomato prices cheer food processing firms")
Persistent volatility in the retail price of tomato has set a trend for an increase in demand for ready-to-cook products in India. Registering a CAGR (compounded annual growth rate) of 10-12 per cent, food processing companies are upbeat over increasing their capacities.
Market leaders Mother Dairy and Cremica Foods have lined up fresh investments to process higher volumes of tomatoes. Akshay Bector, director, Cremica Food Industries, said the company was setting up a pulp processing plant at Una in Himachal Pradesh with capacity of 30 tonnes per hour. This is part of the Rs 150-crore food park that has been set up by the Ludhiana-based food processor. Bector perceives an opportunity for ready-to-cook solutions as his company recorded 15-20 per cent returns under this vertical.
"The penetration level in the Indian market is low, but is picking up very fast. Mushrooming of large catering establishments and fast food chains has given momentum to the growth of consumption of processed tomatoes," he added.
Jain Farm Fresh Food, the food processing arm of Jain Irrigation, is creating backward linkages with growers to ensure good quality tomatoes. Sources in the company said 60,000 tonnes of tomato can be processed with the existing capacities, so they have commenced buy-back arrangements this year with contracts for 500 acres in the first year. "We plan to procure the entire supply of 60,000 tonnes in two to three years," a source added.
A senior official in the ministry of food processing confirmed that all the food parks that have come up recently have pulp processing plants and tomato is a major crop that is processed. Despite optimism because of growing retail demand, there are concerns over cheap imports from China. "Even a high import duty of 35-40 per cent on tomato pulp and paste fails to restrain imports if tomato prices in China sink because of suitable weather and over-production and Chinese players dump their product in the Indian market. This diverts the demand of bulk buyers towards imported processed tomato," Ravendra Nalluri, executive director, Srini Mega Food Park Chittoor, Andha Pradesh, said.
"We would process an estimated 20,000 tonnes of tomato this year and are aligning with farmers to grow and buy high yield hybrid varieties," he added.
According to trade estimates, about 30,000 tonnes of tomato paste is produced by domestic players and an equal amount is imported from China. Imports from China are Rs 5-10 lower than the average price of pulp in the domestic market.
LA TOMATINA
Market leaders Mother Dairy and Cremica Foods have lined up fresh investments to process higher volumes of tomatoes. Akshay Bector, director, Cremica Food Industries, said the company was setting up a pulp processing plant at Una in Himachal Pradesh with capacity of 30 tonnes per hour. This is part of the Rs 150-crore food park that has been set up by the Ludhiana-based food processor. Bector perceives an opportunity for ready-to-cook solutions as his company recorded 15-20 per cent returns under this vertical.
"The penetration level in the Indian market is low, but is picking up very fast. Mushrooming of large catering establishments and fast food chains has given momentum to the growth of consumption of processed tomatoes," he added.
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Mother Dairy Fruit and Vegetable is also expanding its operations beyond its existing location of Bengaluru and setting up a new food processing facility in Ranchi. Pradipta Sahu, business head-Safal Value Added, Mother Dairy Fruit and Vegetable, said it produces 5,000 tonnes of tomato paste annually for bulk consumers like Nestle, Hindustan Uniliver, MTR and others, and the new plant will double output. The new facility, spread over 27 acres worth Rs 76 crore, will be operational in two years.
Jain Farm Fresh Food, the food processing arm of Jain Irrigation, is creating backward linkages with growers to ensure good quality tomatoes. Sources in the company said 60,000 tonnes of tomato can be processed with the existing capacities, so they have commenced buy-back arrangements this year with contracts for 500 acres in the first year. "We plan to procure the entire supply of 60,000 tonnes in two to three years," a source added.
A senior official in the ministry of food processing confirmed that all the food parks that have come up recently have pulp processing plants and tomato is a major crop that is processed. Despite optimism because of growing retail demand, there are concerns over cheap imports from China. "Even a high import duty of 35-40 per cent on tomato pulp and paste fails to restrain imports if tomato prices in China sink because of suitable weather and over-production and Chinese players dump their product in the Indian market. This diverts the demand of bulk buyers towards imported processed tomato," Ravendra Nalluri, executive director, Srini Mega Food Park Chittoor, Andha Pradesh, said.
"We would process an estimated 20,000 tonnes of tomato this year and are aligning with farmers to grow and buy high yield hybrid varieties," he added.
According to trade estimates, about 30,000 tonnes of tomato paste is produced by domestic players and an equal amount is imported from China. Imports from China are Rs 5-10 lower than the average price of pulp in the domestic market.
LA TOMATINA
- Food processing companies in the segment are upbeat over increasing their capacities
- Sources in Jain Farm Fresh Food said 60,000 tonnes of tomato can be processed with the existing capacities
- Mushrooming of large catering establishments has given momentum to growth of consumption of processed tomatoes