""

Required Report - public distribution

**Date:** 12/11/2003

**GAIN Report Number:** PO3026

PO8888

**Portugal**

**Tomatoes and Products**

**Semi-Annual**

**2003**

**Approved by:**

![](media/image1.wmf)Lloyd Fleck

U.S. Embassy

**Prepared by:**

Maria do Monte Gomes

**Report Highlights:**

Portugal\'s tomato production reached 1.05 million tons in MY 03/04, a 6
percent improvement over last year's poor crop; about 85 percent of this
amount was sold for processing. The output would have been even higher,
but high temperatures during the summer harvest period destroyed around
100,000 tons of fresh tomatoes for processing. Despite the increase in
the crop, tomato paste exports are expected to be off in MY O3/04.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Semi-Annual Report

Madrid \[SP1\]

\[PO\]

#  

[Production 3](#production)

[Policy 3](#policy)

[Trade 4](#trade)

[Imports 4](#imports)

[Stocks 4](#stocks)

[Marketing 4](#marketing)

[PS&D, Fresh Tomatoes 5](#psd-fresh-tomatoes)

[PS&D, Tomato Paste 5](#psd-tomato-paste)

[Trade Matrix, Tomato Paste 6](#trade-matrix-tomato-paste)

#   {#section-1 .unnumbered}

# Production

Portugal's tomato production for MY 03/04 (July-June) is estimated to
have increased by six percent from MY 02/03 levels. Total production is
estimated at 1,054,094 metric tons (mt) with 85 percent of the crop
(894,094 mt) expected to be sold for processing. The quantity going to
processing for tomato products is 15 percent below the allowed
production level of 1.05 million mt under the new EU threshold regime
for Portugal.

Production of processed tomato products in MY 03/04 is forecast at the
MY 02/03 production levels of 138,000 mt and consists mainly of tomato
paste.

Farmers initially thought that the MY 03/04 crop would be an
exceptionally large one. However, the abnormally high temperatures that
affected Portugal (and most of Europe) from late July through mid-August
destroyed around 100,000 mt of fresh tomatoes for processing. Processors
report that the low output of processed tomato products (estimated at
138,000 tons) is also due to problems with deliveries from producers.
Some producers were afraid of increased loses during the summer and
shipped tomatoes of different maturities in the same container.
Processors report that this has caused a decline in industrial yields
and affected the color of the final product.

**Tomato Use and Output by the Processing Industry (Metric Tons)**

  -------------- --------------- --------------- -------------- ---------------
                 **2002/2003**                   **2003/2004    
                                                 (\*)**         

                 **Fresh**       **Processed**   **Fresh**      **Processed**

  Paste          810,889         137,249         869,094        138,000

  Whole Peeled   0               0               N/A            N/A

  Other          9,340           3,902           N/A            N/A

  Juice          14,480          12,306          N/A            N/A

  **Total**      **834,237**     **153,457**     **894,094**    138,000
  -------------- --------------- --------------- -------------- ---------------

Source: National Intervention and Guarantee Institute (INGA).

(\*) Preliminary.

# Policy 

In MY2001/02, the EU implemented a new threshold regime for tomatoes
(which replaced the old quota system). Portugal's maximum threshold,
1.05 million mt, is considered by the industry to be a little over what
the country can actually produce in a normal year. As a result,
processors are happy with this new regime, since they now know in
advance what their final costs will be and thus are able to negotiate
with producers at international market prices.

Under this new threshold regime for processed tomato products, Portugal
is allowed to produce up to 1.05 million mt of fresh tomato equivalent.
The regime is more flexible than its predecessor, since it places no
restrictions on the type or quantity of each processed tomato product
produced (except that it has to be a type of product that was included
under the previous quota regime). The subsidy for tomatoes, €34.50/mt,
is paid directly to the producer organizations for the quantity of raw
material produced. If a member state exceeds its national threshold
limit, aid will only be paid up to its threshold limit. However, if
there are one or more member states that do not use their total national
thresholds, their unused aid will be transferred, uniformly, to the
member states that overrun theirs.

Producers, however, have been adapting quickly to the new regime.
Although the Portuguese sector is still very fragmented (there are
currently 34 producer organizations), the top 7 are responsible for 50
percent of total production and one of these is responsible for 15
percent. This fragmentation has hurt the sector since there is no
association that can speak for the entire sector. However, the number of
producer organizations will continue to decrease as smaller
organizations merge with larger ones.

# Trade

Portuguese exports of tomato paste in MY 02/03 are estimated at 117,446
mt, ten percent below MY 01/02. Data for domestic consumption in the PSD
table includes 20,000 mt (office estimate) of paste transformed into
tomato powder (which is all channeled to export) and other tomato
products (mainly pizza sauce).

The main export market continues to be the rest of the European Union
(EU), followed by Japan. Sales to the United States are minimal,
accounting for only 111 mt of total exports in MY 02/03. Total exports
in MY 03/04 are expected to decrease by two percent to around 115,000
MT. This is basically due to this year low quantity of processed tomato.

Exports from China continue to worry the Portuguese industry. China
exported about 50,000 mt of tomato paste to the EU during this period.
Although quality is reportedly not very good, Portuguese processors know
that Chinese producers adapt quickly and will likely be producing a
better quality product in the near future. With this competition in
mind, Portuguese processors are already looking for alternative products
to replace tomato paste. The EU Commission is also reportedly worried
about this new source of product.

# Imports

In general, there are no Portuguese imports of fresh tomatoes for
processing. However, an estimated 40,975 mt of tomatoes were imported
for fresh consumption in 2002. Most came from Spain's primary tomato
producing area, the Extremadura Region, which shares a border with
Portugal.

# Stocks

Stocks of tomato paste have decreased to an estimated 3,000 mt in MY
02/03. Stocks are expected to be even smaller at 1,000 mt in MY 03/04.

# Marketing

Since Portugal is self-sufficient in both fresh tomatoes and tomato
products -- and is in fact a substantial exporter of tomato paste \--
there are few opportunities for U.S. exports of these products.

# PS&D, Fresh Tomatoes

  ---------------- -------------- ---------- ---------- ---------- ---------- ---------- ---------
  **PSD Table**                                                                          

  **Country**      **Portugal**                                                          

  **Commodity**    **Fresh                                         (HA)(MT)              
                   Tomatoes**                                                            

                   2001           Revised    2002       Estimate   2003       Forecast   UOM

                   USDA Official  Post       USDA       Post       USDA       Post       
                   \[Old\]        Estimate   Official   Estimate   Official   Estimate   
                                  \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]    

  **Market Year                   07-2001               07-2002               07-2003    MM/YYYY
  Begin**                                                                                

  Plnt For Fresh   0              1500       0          1500       0          1500       (HA)
  Consump                                                                                

  Plnt For         0              11761      0          11851      0          12474      (HA)
  Processing                                                                             

  TOTAL Area       0              13261      0          13351      0          13974      (HA)
  Planted                                                                                

  Harv. For Fresh  0              1500       0          1500       0          1500       (HA)
  Cons.                                                                                  

  Harv. For        0              11761      0          11851      0          12474      (HA)
  Processing                                                                             

  TOTAL Area       0              13261      0          13351      0          13974      (HA)
  Harvested                                                                              

  Fresh Sale       0              155000     0          160000     0          160000     (MT)
  Production                                                                             

  Processing       0              917237     0          834709     0          894094     (MT)
  Production                                                                             

  TOTAL Production 0              1072237    0          994709     0          1054094    (MT)

  TOTAL SUPPLY     0              1072237    0          994709     0          1054094    (MT)
  ---------------- -------------- ---------- ---------- ---------- ---------- ---------- ---------

# PS&D, Tomato Paste

  --------------- -------------- ---------- ---------- ---------- ---------- ----------
  **PSD Table**                                                              

  **Country**     **Portugal**                                               

  **Commodity**   **Tom.                                          (MT)(MT,   
                  Paste,28-30%                                    Net        
                  TSS Basis**                                     Weight)    

                  2001           Revised    2002       Estimate   2003       Forecast

                  USDA Official  Post       USDA       Post       USDA       Post
                  \[Old\]        Estimate   Official   Estimate   Official   Estimate
                                 \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]

  **Market Year                  07-2001               07-2002               07-2003
  Begin**                                                                    

  Deliv. To       897267         897267     810889     810889     1070000    869094
  Processors                                                                 

  Beginning       20000          20000      13500      13500      1000       3000
  Stocks                                                                     

  Production      158387         158387     137249     137249     165000     138000

  Imports         0              0          0          0          0          0

  TOTAL SUPPLY    178387         178387     150749     150749     166000     141000

  Exports         130745         130745     120000     117446     125000     115000

  Domestic        34142          34142      29749      30303      36000      25000
  Consumption                                                                

  Ending Stocks   13500          13500      1000       3000       5000       1000

  TOTAL           178387         178387     150749     150749     166000     141000
  DISTRIBUTION                                                               
  --------------- -------------- ---------- ---------- ---------- ---------- ----------

# Trade Matrix, Tomato Paste

  --------------- ------------------- -------------------- ---------------
  **Export Trade                                           
  Matrix**                                                 

  **Country**     Portugal                                 

  **Commodity**   Tom. Paste,28-30%                        
                  TSS Basis                                

  Time Period     July-June           Units:               Metric Tons

  Exports for:    7/01-6/02                                7/02-6/03

  U.S.            480                 U.S.                 111

  Others                              Others               

  United Kingdom  34148               United Kingdom       29828

  Netherlands     19563               Netherlands          15209

  Germany         9669                Germany              14697

  France          6986                Sweden               6491

  Italy           6382                Italy                6347

  Sweden          5787                Spain                5288

  Denmark         4599                Ireland              5171

  Ireland         3620                Denmark              2943

  Other EU        8683                Other EU             6708

  Japan           11154               Japan                8959

  Total for       110591                                   101641
  Others                                                   

  Others not      19674                                    15694
  Listed                                                   

  Grand Total     130745                                   117446
  --------------- ------------------- -------------------- ---------------