SINGAPORE/US: Olam eyes organic tomato export growth
Olam says California will likely displace China as leading organic tomato exporter
Olam International said it believes California will displace China as the leading exporter of organic tomatoes.
Speaking at the SIAL food and drink exhibition in Paris last week, Greg Estep, president and global head of Olam's spices, vegetables and ingredients arm, told just-food the firm was using the show as an opportunity to promote its organic tomato product range from California.
Ten to fifteen per cent of exports from Olam's US arm is organic tomatoes from California. Estep said the company wants to increase that level to 20-25%.
The US is the only country in which Olam produces organic tomatoes and Estep believes California can surpass China as the number one exporter of the vegetable.
According to the US Department of Agriculture, the US is the world's second-largest producer of tomatoes behind China.
"For us, we think California will be very competitive in the world [organic tomato] market for years to come. Exports is the big opportunity for us for California, so it's about making buyers aware of products from California, the quality, the reliability, investments we've made, sustainability and traceability," Estep said.
"For us, exports have been growing in the last few years. In the past, China was capturing quite a bit of international demand but China, having been less competitive, we feel California will displace China today and in future years."
Estep said declining production from China, primarily driven by higher costs of production, has meant the country has become less competitive.
"Chinese prices have been going up, allowing the US to become more competitive, so that's helped the export markets."
Olam has traditionally focused its organic tomato exports on the Middle East and Latin America but Estep said the company is increasingly looking at Europe.
"We see opportunities in Europe. Recently there's been some certification changes in Europe to allow more organic products to come in, so we've recently sold our first organic products into Germany. We think organic [in Europe] could be a good opportunity for us."
Estep said the company was not put off trading in Europe, despite the eurozone crisis.
"It seems to me the organic sector [in Europe] is relatively stable, despite the economy. People that have already made the move to organic, I don't think they're switching out of that."
Estep did, however, suggest high agricultural input costs were a concern and an issue that had affected the company.
"In the US gasoline is much higher than it was historically, so the cost of hauling raw material from the field to transportation costs, that's probably one of the biggest input costs we've had and then the raw material costs with the grower has gone up.
"It's been relatively stable in the last few years but it's still up from what its historical levels were. But that's just with commodities in general going up. Tomatoes have to compete for acres with wheat and other products, so that's raised the cost of raw materials bidding for land."
Estep said he had not sees any easing in input cost inflation and that it was likely to remain "stable" with the potential to "increase slightly" this year.
- M&A Watch: Raisio should sell to private equity
- Infographic: Snapshot of Japan's food sector
- On the money: Solid Lindt outpaces chocolate peers
- Spotlight: What could be impact of Russia's ban?
- Briefing: Expansion agenda of Japan's food majors
- Kerry cools claim spreads move could hit jobs
- Pork Farms buys Kerry Group's pastry plants
- Profits up at chocolate group Lindt
- Russian government eases ban on food imports
- Japan's Sanyo takes stake in Olam's food biz