By Hayley Boriss and Henrich Brunke, Agricultural Issues Center, University of California.

Revised April 2011.

For more information or specific inquiries, please contact Linda Naeve, content specialist, AgMRC, Iowa State University, lnaeve@iastate.edu.
 

Overview
The U.S. tomato processing industry, comprised primarily of tomato pastes, sauces and canned tomato products, is distinctly separate from the fresh-market industry. Specific characteristic differences separate tomatoes entering the two markets: fresh-market varieties are juicier and harvested prior to being ripe, while processing varieties contain higher percentages of soluble solids, are vine ripened and typically have a thicker skin than fresh-market tomatoes to survive mechanical harvesting and bulk transport.

The marketing methods of the two industry segments differ as well. The majority of fresh tomatoes are handpicked and sold on the open market, while all processed tomatoes are mechanically harvested and sold under contract. Although the harvest tonnage of processing tomatoes is five to six times larger than that of fresh tomatoes, the low market value for processing tomatoes in terms of dollars per pound make fresh-market tomatoes responsible for a larger share of U.S. total crop value than processed tomatoes. Processed tomato products are most often classified as one of four major subcategories: tomato paste; tomato sauces, ketchup and other products, which mainly consist of puree; whole canned tomatoes; and juices.

Market Structure
Nearly 100 percent of processing tomatoes are produced and sold under contract between growers and processing firms. Firms that contract for processing tomatoes are typically manufacturers of raw tomato paste. This paste is eventually used to make sauces, ketchup etc. and can be stored for up to 18 months (ERS 2005). Processing tomatoes harvested from the field are transported to the manufacturing plant and transformed into paste within six hours after harvest. The small window between harvest and conversion into tomato paste necessitates a manufacturing industry in close proximity to farm production areas. The raw paste is eventually sold to remanufacturing companies, which add water, spices, flavorings and other additives to make specialized retail products such as sauces and ketchup. In the past, a single manufacturer often produced both bulk paste and retail products. However, in more recent years, the processing industry has begun to specialize either in manufacturing bulk tomato paste or producing retail products (ERS 2005).

Demand
U.S. consumption of processed tomato products has been on the rise over the past two decades. For the processing industry, much of the increased consumption is attributable to the increased presence of tomato products used in popular food items and condiments such as pizzas, pastas, salsa and ketchup.

U.S. per capita consumption of processing tomatoes is estimated at 67 pounds in 2008, which is less than the peak value of 77.1 seen in 1991. According to an ERS consumption pattern study (2000), increased consumption of processing tomato products in the 1990s was primarily due to increasing popularity of ketchup and Mexican and Italian meals away from home. ERS estimates suggest that about one-third of all processed tomato products are purchased away from home at various food service outlets (pizza parlors, for example). Nevertheless, the majority of tomato products consumed are originally purchased at retail stores and consumed at home.

Another factor often cited as increasing the demand for processed tomato products is the promotion of tomatoes for their nutritious value. Tomatoes have been advertised as a good source of vitamin A and vitamin C as well as a source of the antioxidant lycopene, which, as some research suggests, aids in the prevention of specific digestive tract cancers (former California Tomato Commission).

Production
The total value of U.S. processing tomatoes was $926 million in 2010, making processing tomatoes the leading vegetable used for processing, in terms of value. California has been the leading state in production of processing tomatoes in the United States, accounting for about 96 percent of the total U.S. crop. By itself, California actually leads the world in the production of processing tomatoes. Indiana, Ohio and Michigan account for most of the remaining production.

The total harvested acreage of processing tomatoes in the United States was 288,900 acres in 2010, with 12.8 million tons of harvested tomatoes. In 1980, yields were 23.6 tons per acre, and by 2010 yields had increased to 47 tons per acre. From year-to-year, however, yields can be variable. Extended periods of rain can disrupt planting schedules, affecting yields and overall production. Wet weather also creates favorable conditions for diseases such as bacterial speck and late blight, which can severely damage tomato crops. The price per ton at the processing plant door was $76.39 per ton in 2010.

Exports
The United States has been a net exporter of processed tomato products since 1991. In 2010, the value of U.S. exports amounted to $474.7 million, while imports were valued at $152.8 million. Aside from being the world’s largest producer, the United States is also one of the top five exporting nations. Other important exporting nations include Mexico, Turkey, Morocco and the European Union, which all compete with the Unites States for a share of the global market for tomatoes.

U.S. processed tomato exports consist mainly of tomato paste and sauces. Both Canada and Mexico have been and remain large export markets for U.S. processed tomatoes and tomato products. Canada accounted for 44 percent ($213 million) of the $474.7 million in total U.S. processed tomato exports shipped in 2010. Mexico was the second largest export market , accounting for $50 million in U.S. exports.

Imports
According to ERS, nearly 6 percent of the tomato products consumed by Americans are imported. The total value of U.S. processing tomato imports has been increasing after a drop in imports in 2000. In recent years, Italy has accounted for the majority of U.S. imports of tomato sauce. In 2010, Italy shipped $68 million in tomato products to the United States, followed by Turkey and Mexico.


Sources
Factors Affecting Tomato Consumption in the United States, Economic Research Service (ERS), USDA, 2000.

Florida Tomato Committee.

Fresh and Processing Tomatoes: World Markets & Trade, Foreign Ag Service (FAS), USDA, 2008.

Global Agricultural Trade System (GATS), FAS, USDA.

Monitoring of U.S. Imports of Tomatoes, United States International Trade Commission, 2008.

Processing Tomatoes, Vegetables and Melons Outlook, ERS, USDA.

U.S. per capita food availability, ERS, USDA, 2008.

Vegetables and Melons Outlook, ERS, USDA.

Vegetables and Melons: Tomatoes, ERS, USDA.

Vegetables Annual Summary, National Ag Statistics Service (NASS), USDA.


Created November 2005 and  links checked April 2011.