Required Report - public distribution

**Date:** 6/1/2006

**GAIN Report Number:** BR6615

BR6615

**Brazil**

**Tomatoes and Products**

**Annual Report**

**2006**

**Approved by:**

![](media/image1.wmf)Alan D. Hrapsky, Agricultural Counselor

U.S. Embassy

**Prepared by:**

Elizabeth Mello, Agricultural Attaché

**Report Highlights:**

Post reports a 7 percent decrease in total Brazilian tomato production
in 2005 to 3.3 million tons and a 7 percent decline in area harvested to
58,385 hectares Production in 2006 is expected to increase slightly to
3.45 million tons as yields return to normal levels. Although a drop in
processed acreage is occurring this year, Brazil's ever-improving
varieties continue to improve yields, and production should surpass last
year's drought and moisture-affected crop. Fresh market tomatoes are
expected to decrease in 2006 by 40,500 tons. Production and acreage in
2007 is expected to return to 2005 levels.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

Brasilia \[BR1\]

\[BR\]

**Executive Summary**

Post reports a seven percent decrease in total Brazilian tomato
production in 2005 to 3.3 million tons and a seven percent decline in
area harvested to 58,385 hectares. Production in 2006 is expected to
increase slightly to 3.45 million tons as yields return to normal
levels. Although a drop in processed acreage is occurring this year,
ever-improving varieties are being developed by Embrapa, Brazil's
research entity, which means production should surpass last year's
drought and moisture-affected crop. Fresh market tomatoes are expected
to decrease in 2006 by 40,500 tons. Production and acreage in 2007 is
expected to return to 2005 levels.

# Economic Overview

# 

Brazil\'s economy, aided by favorable international economic
circumstances, has dramatically improved its foreign debt situation.
Although GDP growth dropped to 2.3% in 2005, down from a strong
performance (4.9%) in 2004, Brazil has experienced booming exports, low
inflation, decreasing unemployment and reductions in the debt-to-GDP
ratio. Economic activity should pick up in 2006; key analysts expect GDP
growth of about 3.5%. Buoyed by exports and investment inflows, the
*Real* has remained at strong levels, allowing the government and
businesses to pay down external debt. The government pre-paid its IMF
obligations, its last remaining rescheduled Paris Club obligations and
in April 2006, announced it had retired the last of its Brady bonds.
This removes from the books all restructured debt associated with
Brazil\'s late-1980\'s default. Based upon the improving external debt
dynamics, Fitch IBCA upgraded its credit rating on Brazil\'s sovereign
debt in February 2006, to BB (two notches below investment grade). The
economy also has shown resilience, remaining for the most part
unaffected by a major political scandal and the replacement of the
finance minister.

Despite this considerable progress, key challenges remain. The public
sector-debt-to-GDP ratio is on a downward trend but remains high, at
about 52%. Real interest rates are among the highest in the world;
reducing them will require both reductions in the government\'s
borrowing requirement and reform of the financial sector and the
judiciary. Income and land distribution remain skewed. Investment and
domestic savings are low, although growing. The informal sector
constitutes between 35 to 40 percent of the economy, in part because the
tax burden (nearly 38 percent of GDP) is high. Achieving and sustaining
high growth rates requires the implementation of more of the
government\'s structural reform agenda and increased efforts to build a
more welcoming climate for investment, both domestic and foreign. There
has been only marginal progress on the reform agenda after passage of
multiple measures in 2003 and 2004.

**Economic Indicators**

  ---------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ------------
                   **1999**   **2000**   **2001**   **2002**   **2003**   **2004**   **2005**   **2006\***

  **GDP Growth     0.90       4.00       1.50       1.90       0.50       4.90       2.30       3.50
  (%)**                                                                                         

  **Inflation (%)  8.90       6.00       7.70       12.50      9.30       7.60       5.20       4.20
  (IPCA/IBGE))**                                                                                

  **Average        1.81       1.83       2.35       2.93       3.07       2.93       2.44       2.32
  Exchange Rate                                                                                 
  (R\$/US\$)**                                                                                  

  **Total Exports  48.10      55.00      58.20      60.40      73.10      96.50      118.30     124.00
  (US\$ billion)**                                                                              

  **Total Imports  49.20      55.70      55.50      47.20      48.30      62.80      73.60      85.00
  (US\$ billion)**                                                                              
  ---------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ------------

Source: Central Bank and Ministry of Planning

\* Forecast

# Production

## Total Tomato Production

Post reports a 7 percent decrease in total Brazilian tomato production
in 2005 to 3.3 million tons and a 7 percent decline in area harvested to
58,385 hectares. Production in 2006 is expected to increase slightly to
3.45 million tons as yields return to normal levels. Although a drop in
processed acreage is occurring this year, ever-improving varieties are
being developed by Embrapa, Brazil's research entity, which means
production should surpass last year's drought and moisture-affected
crop. Fresh market tomatoes are expected to decrease in 2006, but only
40,500 tons. Production and acreage in 2007 is expected to return to
2005 levels.

Production in 2005 was affected by untimely rain during the harvest,
which reduced productivity, in particular in São José de Uba, one of the
major production areas. Producers in this region had difficulty covering
their costs and have reduced their planted area this year. Production in
the state of Rio was also negatively impacted by white fly that cause a
20- 30 percent reduction in production and a 50% drop in yields.
Finally, in the state of Espirito Santo, 40% production losses left
tomato farmers poorly positioned in 2006, lacking capital needed for
planting and pest and disease management.

During the period between harvests, bacterial canker (ring rot) reduced
yields 20% in São Paulo. Prices, however, maintained high during this
time, so producer losses were minor. An area increase for the
tomato-producing region of São Paulo is expected for this year. Farmers
in São Paulo made the best profits overall in 2005, due to higher
overall prices and record yields. In Mogi-Guaçu, São Paulo, yields
increased 30%.

Tomato area is expected to rise in 2006 due to the fact that more
production that will be financed by graders and wholesalers. Area in the
state of Santa Catarina is expected to rise 20% over 2005, and yields so
far have been reported as good due to drier than normal weather
conditions. Producers in Santa Catarina are also using a new technology
against hail which has also boosted yields.

The three largest producing states of Goias, Minas Gerais, and Sao Paulo
are expected to produce half of Brazil's total crop. The center-west
growing area, encompassing the states of Minas Gerais and Goiás, is
expected to produce approximately 75 percent of total processing
tomatoes. Production in three states continues to grow.

Due to the growth potential for Brazilian consumption, Brazilian
agricultural institutes and seed research companies have invested
considerable resources to develop new and improved tomato varieties
during the last 20 years. Brazilian research entity Embrapa is working
on seed that is not only resistant to the local Gemini virus but also
better suited to the climates of Brazil. New varieties and greater use
of inputs and technology continue to boost productivity.

![](media/image2.wmf)

Brazilian Tomato Production by State in 2005

  -------------------- ---------------- ---------------- ----------------
  **Region/State**     **Production     **Planted Area   **Area Harvested
                       (Tons)**         (Hectares)**     (Hectares)**

  **Brazil**           **3,396,767**    **59,376**       **59,286**

  **North**            **8,466**        **1,075**        **1,064**

  Amazonas             3,198            626              625

  Roraima              5,268            449              439

  **Northeast**        **519,059**      **12,848**       **12,842**

  Maranhão             6,814            340              340

  Ceará                94,482           1,775            1,775

  Rio Grande do Norte  11,841           373              373

  Paraíba              21,672           650              650

  Pernambuco           179,874          4,230            4,224

  Sergipe              5,340            310              310

  Bahia                199,036          5,170            5,170

  **Southeast**        **1,668,166**    **25,782**       **25,721**

  Minas Gerais         617,544          9,088            9,082

  Espírito Santo       123,961          1,959            1,959

  Rio de Janeiro       209,131          2,905            2,850

  São Paulo            717,530          11,830           11,830

  **South**            **399,539**      **8,376**        **8,368**

  Paraná               185,299          3,532            3,532

  Santa Catarina       123,239          2,309            2,308

  Rio Grande do Sul    91,001           2,535            2,528

  **Center-West**      **801,537**      **11,295**       **11,291**

  Mato Grosso do Sul   3,898            97               94

  Mato Grosso          2,231            126              125

  Goiás                776,430          10,792           10,792

  Distrito Federal     18,978           280              280
  -------------------- ---------------- ---------------- ----------------

**Source: IBGE**

Average Yield of Brazilian Tomato Production (kg/ha): 1997-2005

  ---------- ---------- ---------- ---------- ---------- ---------- ----------
  **1999**   **2000**   **2001**   **2002**   **2003**   **2004**   **2005**

  50.369     53.263     53.784     58.546     59.211     59.238     56.695
  ---------- ---------- ---------- ---------- ---------- ---------- ----------

Source: IBGE

There are no official Brazilian statistics distinguishing processing and
table tomatoes. Tomatoes can be grown in many regions of Brazil, and a
favorable climate allows for production throughout the year, but the
main season runs from June to September. Production is greatest in
regions with milder winters and low chance for frost. Summer production
poses greater risks for disease and fruit set problems, and is
concentrated in higher elevations. The cost of production for tomatoes
is very high, as it entails heavy use of labor and imported inputs, such
as seeds, fertilizer and chemicals. Many input costs are U.S.
dollar-based, so the recent appreciation of the Brazilian currency
relative to the U.S. dollar has begun to bring some relief, although
production costs continue to increase.

New higher-yielding tomato varieties are expected to further boost
yields and production. Planted area is increasing rapidly in the
Center-West region and has climbed from just 292,795 tons in 1996 to an
estimated 900,000 tons in 2005. Yields in this area known as the Cerrado
are the highest in the county at about 75 tons per hectare compared to
65 tons per hectare in the southeast region, which is the largest
production region. Use of drip irrigation in the Center-West region is
gaining popularity as it saves water (20 percent less) and energy.
Additionally, drip irrigation applies water to the base of the plant
without wetting the leaves and thus cuts down on humidity thereby
impeding the development of diseases and cutting fungicide costs. Though
installation of drip irrigation costs double that of center-pivot, some
producers report a financial return 25 to 30 percent greater than with
conventional center pivot irrigation. Yields under drip irrigation are
reported at 110 tons per hectare, which is 40 percent greater than under
traditional irrigation.

The Sustainable Agricultural Program, which is a technical assistance
program of Unilever Bestfoods, also helps to spur production in the
Center-West. The project aims to increase participating farmers profit
margins as well as stimulate overall production, which would
theoretically lower the company's tomato procurement costs. Unilever has
also established a research farm in Goias in the Center-West which works
to establish new tomato varieties, test irrigation systems, and monitor
diseases.

## 

## Fresh Consumption

According to industry contacts, tomatoes for fresh consumption accounted
for 75 percent of total Brazilian tomato production in 2005. The
percentage of production for processing tomatoes is increasing, and is
expected to continue growing.

The state of Goias became the leading producer in 2003 overtaking Sao
Paulo. However, the major consumer market for table tomatoes in Brazil
remains Sao Paulo and neighboring states are filling an increasing
percentage of its market's demand.

## Processing

Brazilian processed tomato production is estimated at 1.5 MMT for 2005,
up 500,000 tons from the previous year. New high-yielding hybrids and
greater use of inputs and technology are boosting productivity of
processing tomatoes, particularly in the Center-West region. Yields in
this area are highest in the country at about 75 tons/ha compared to 65
tons/ha in the Southeast region.

Tomatoes are produced throughout Brazil, primarily for fresh
consumption, but there are three regions within Brazil that are
commercially important for processing tomatoes. They are:

Region 1: the states of Bahia (BA) and Pernambuco (PE) in the Northeast
region (planting in March-May, harvesting in June-October),

Region 2: the states of Goias (GO) and Minas Gerais (MG) in the center
of the country (planting in March-June, harvesting in June-October), and

Region 3: the state of São Paulo (SP) in the Center-South region
(planting in February-June, harvesting in June-November).

Based on official Brazilian statistics (IBGE), these three regions
account for roughly 75 percent of all tomato production in Brazil, and
virtually all the processing tomato production.

Tomato production declined in Region 1 in the past 5 years by 35 percent
due, in large part, to further expansion of more profitable fruit
production (bananas, grapes, mangoes, guavas) in the region and
continued disease/pest problems, particularly with the white fly. The
increased cost of pesticides and other inputs to combat the problem
elevated the production costs for industrial tomatoes.

Production of processing tomatoes in Region 3 is expected to continue
gradually declining over the long-term due to competition for area by
other crops, urban encroachment, and subsequent increases in land
values. Disease and pests are also a problem in this area and the cost
of keeping these under control reduces the cost incentive to continue to
grow processing tomatoes.

Tomato producers and the processing industry continue to migrate to the
Center-West, particularly to the state of Goias due to financial
incentives and favorable growing conditions. Financial incentives
include lower taxes and easier access to long-term financing with low
interest rates. Furthermore, farmers are enticed by lower fixed
production costs in the form of cheaper land prices.

## Production Processing Breakdown 

## 

## It is the estimation of industry contacts that 40 percent of domestic production of processing tomatoes goes into extracts, which are more concentrated than paste and often used for marinating meats. Thirty percent goes into tomato sauces and purees, 15 percent goes into paste, and 14 percent into ketchup. However, since no official data on tomato products exists in Brazil and there is not a good match between terms used in Brazil and those used in the United States, it is difficult to estimate production numbers for processed tomato products. 

## 

## Tomato Paste 

Brazilian production of tomato paste is estimated at 145,000 in 2005,
and forecast to increase to 150,000 in 2006. The majority of the paste
is used in further processing for consumer-ready sauces and other such
products. Exports to neighboring Paraguay and Argentina continue to
decrease due to the strong Real, making Brazilian tomato products less
competitive in these countries.

## Demographic Trends and Tomato Product Consumption

There has been a fundamental shift in consumer preference toward
ready-to-eat foods in Brazil. This, in turn, has lead to increased
consumption of prepared tomato-based products such as \"ethnic\" sauces
for cooking meats, pasta, and ketchup. In addition to increased
purchasing power, Brazilians have less time to go shopping for fresh
produce, more women are part of the work force, fewer people have time
to go home for lunch and are instead eating fast food for lunch, fewer
people have full-time maids to do the cooking, and urbanization is
increasing. In addition, increasing consumption of fast food (pizzas,
hot-dogs, hamburgers) has also increased demand for tomato products.
Popularity of gourmet tomato products, such as sun-dried tomatoes,
continues to rise in Brazil.

The recent changes in Brazilian consumer habits and lifestyles are
expected to continue to drive consumption trends in Brazil over the long
term. Although short-term economic factors have slowed growth in
consumption of tomato-based products, consumption is recovering and
growing at a healthy pace with economic recovery.

## Fresh Tomato Consumption

Per capita tomato consumption is fairly low in Brazil, particularly for
fresh tomatoes. According to Ceagesp (A Sao Paulo-based Agricultural
Institute), Brazilian per capita tomato consumption is 6.3 kilos per
year, while per capita consumption in Norway, Greece, Switzerland, and
other countries exceeds 40 kilos per year. Brazilian fresh tomato
consumption should increase with economic growth, improvement in
varieties, and quality control.

# Trade

Historically, the majority of Brazilian imports of tomato products are
in the form of tomato paste (imported paste is 28-32 Brix), which is
used to supplement domestic production and is further processed in
Brazil into consumer-ready sauces and other similar products. Most
Brazilian imports of tomato paste, when they occur, enter the country
during the first half of each calendar year after the Brazilian harvest
has already been processed and subsequently used in the production of
finished products (harvesting in Brazil ends in October/November).

  ---------------- ---------- ---------- ---------- ---------- ---------- ----------
  **0702.00                                                               
  Tomatoes, Fresh                                                         
  or                                                                      
  Refrigerated**                                                          

  **Brazil                                                                
  Imports**                                                               

  **January -                                                             
  December**                                                              

  Country          Quantity   Value      Quantity   Value      Quantity   Value

                   Tons       US \$      Tons       US \$      Tons       US \$

                   2003                  2004                  2005       

  World            24         5,292      223        67,684     18         41,516

  Uruguay          24         5,292      200        54,782     18         41,160

  Chile            0          0          23         12,902     0          0

  United States    0          0          0          0          0          356

  Source: Ministry                                                        
  of Development,                                                         
  Industry, and                                                           
  Commerce                                                                
  ---------------- ---------- ---------- ---------- ---------- ---------- ----------

  ------------------- ----------------- ----------------- -----------------
  **210320 Tomato                                         
  Ketchup and Other                                       
  Tomato Sauces**                                         

  **Brazil Imports --                                     
  Tons**                                                  

  **January --                                            
  December**                                              

                      2003              2004              2005

  World               175               563               941

  Italy               133               303               379

  United States       34                157               290

  Chile               0                 93                170

  Argentina           0                 6                 53

  Colombia            0                 3                 21

  Venezuela           0                 0                 11

  Greece              0                 0                 8

  Germany             7                 0                 8

  Others              1                 1                 1

  Source: Ministry of                                     
  Development,                                            
  Industry, and                                           
  Commerce                                                
  ------------------- ----------------- ----------------- -----------------

+----------+---------+---------+---------+---------+---------+---------+
| *        |         |         |         |         |         |         |
| *2002.90 |         |         |         |         |         |         |
| Tomato   |         |         |         |         |         |         |
| Paste**  |         |         |         |         |         |         |
+----------+---------+---------+---------+---------+---------+---------+
| **Brazil |         |         |         |         |         |         |
| I        |         |         |         |         |         |         |
| mports** |         |         |         |         |         |         |
+----------+---------+---------+---------+---------+---------+---------+
| **J      |         |         |         |         |         |         |
| anuary - |         |         |         |         |         |         |
| De       |         |         |         |         |         |         |
| cember** |         |         |         |         |         |         |
+----------+---------+---------+---------+---------+---------+---------+
| Country  | Q       | Value\* | Q       | Value\* | Q       | Value\* |
|          | uantity |         | uantity |         | uantity |         |
+----------+---------+---------+---------+---------+---------+---------+
|          | Tons    | US \$   | Tons    | US \$   | Tons    | US \$   |
+----------+---------+---------+---------+---------+---------+---------+
|          | 2003    |         | 2004    |         | 2005    |         |
+----------+---------+---------+---------+---------+---------+---------+
| World    | 7,968   | 4.86    | 2,867   | 1.80    | 8,153   | 4.29    |
+----------+---------+---------+---------+---------+---------+---------+
| Chile    | 6,829   | 4.13    | 1,419   | 1.02    | 3,723   | 2.05    |
+----------+---------+---------+---------+---------+---------+---------+
| China    | 0       | 0.00    | 1,008   | 0.50    | 3,644   | 1.78    |
+----------+---------+---------+---------+---------+---------+---------+
| Italy    | 580     | 0.38    | 255     | 0.17    | 576     | 0.33    |
+----------+---------+---------+---------+---------+---------+---------+
| A        | 8       | 0.00    | 184     | 0.11    | 207     | 0.13    |
| rgentina |         |         |         |         |         |         |
+----------+---------+---------+---------+---------+---------+---------+
| Others   | 551     | 0.35    | 1       | 0.00    | 3       | 0.00    |
+----------+---------+---------+---------+---------+---------+---------+
| Source:  |         |         |         |         |         |         |
| Ministry |         |         |         |         |         |         |
| of       |         |         |         |         |         |         |
| Deve     |         |         |         |         |         |         |
| lopment, |         |         |         |         |         |         |
| I        |         |         |         |         |         |         |
| ndustry, |         |         |         |         |         |         |
| and      |         |         |         |         |         |         |
| Commerce |         |         |         |         |         |         |
|          |         |         |         |         |         |         |
| \*       |         |         |         |         |         |         |
| millions |         |         |         |         |         |         |
| of US\$  |         |         |         |         |         |         |
+----------+---------+---------+---------+---------+---------+---------+

  ---------------- ---------- --------- ---------- --------- ---------- ---------
  **0702.00                                                             
  Tomatoes, Fresh                                                       
  or                                                                    
  Refrigerated**                                                        

  **Brazil                                                              
  Exports**                                                             

  **January -                                                           
  December**                                                            

  Country          Quantity   Value     Quantity   Value     Quantity   Value

                   Tons       US \$     Tons       US \$     Tons       US \$

                   2003                 2004                 2005       

  World            3,176      667,642   890        101,572   476        135,107

  Argentina        3,135      664,781   265        64,508    380        83,504

  Paraguai         40         2,124     623        35,521    0          0

  Italy            0          0         0          0         58         45,455

  Uruguay          0          0         0          0         38         5,733

  Others           1          737       2          1,543     0          415

  Source: Ministry                                                      
  of Development,                                                       
  Industry, and                                                         
  Commerce                                                              
  ---------------- ---------- --------- ---------- --------- ---------- ---------

In the past, the vast majority of Brazilian imports of tomato products
have come from Chile, which is the largest and most efficient producer
in the region. Imports of most tomato products dropped considerably in
1999 because the January 1999 devaluation of the Brazilian currency
increased the cost of imported products. Conversely, Brazilian exports
of fresh tomatoes, primarily to neighboring countries, increased in 1999
as the devaluation made Brazilian products more competitive but have
since dropped considerably as the Real has gained strength.

Brazil's fresh tomato imports, which were primarily sourced from other
South American nations, have dropped considerably in recent years. The
Netherlands is currently the largest source of Brazil's fresh tomato
imports. The vast majority of Brazil's fresh tomato exports are destined
to MERCOSUL nations. African nations, particularly former Portuguese
colonies, occasionally import small quantities of fresh Brazilian
tomatoes.

The United States was the leading supplier to Brazil of ketchup and
other tomato sauces. However, U.S. ketchup exports have dropped
considerably since 1998 and domestic production of ketchup has increased
and replaced imports.

## 

## Tariffs

Brazil is a member of MERCOSUL, which is comprised of Brazil, Argentina,
Uruguay, and Paraguay. Countries within MERCOSUL enjoy duty-free access
for most agricultural products traded within the trading bloc, while a
Common External Tariff (CXT) is applied for non-MERCOSUL countries. The
CXT puts U.S. agricultural products at a competitive disadvantage. The
MERCOSUL's Common External Tariff (CXT) was lowered one percent in
January 2002.

As of February 2005, Brazil's applied Common External Tariff (CET) rates
for non-MERCOSUL trading partners for selected tomato products are:

U.S. agricultural products also face a Merchant Marine Tax, which is a
25-percent surcharge on the value of the freight for imports of all
products (Note: this measure has been waived for imports to the
North/Northeast regions of Brazil in order to stimulate development in
the region).

Brazil's tariff rates for MERCOSUL partners including Argentina,
Uruguay, and Paraguay is zero for fresh tomatoes and all processed
products.

HS code Tariff

0702.00 10 percent

2002.10 14 percent

2002.90 14 percent

2103.20.10 18 percent

2103.20.90 16 percent

Chile and Bolivia are associate members of MERCOSUL and receive
preferential reductions of 60% of the duty from the CET.

Since May 1, 2005, all import transactions of goods and services are
subject to a PIS/COFINS social tax of 9.5 percent. There are some
exceptions, but most of the agricultural and food product imports are
subject to the 9.5 percent tax, which represents the sum of two social
taxes: PIS/PASED (1.65%) + COFINS (7.60%). The PIS/COFINS tax was
approved through Law 10,865.

HS Code PIS/COFINS (%)

0702.00 0

2002.10.10 9.25

2002.10.90 9.25

2103.20.10 9.25

2103.20.90 9.25

# Other

## Loss Rates

Product loss for tomatoes in Brazil is falling due to the adoption of
long life and more transport resistant varieties. Loss rates have
dropped from more than 40 percent to an estimated 20 percent, according
to industry contacts. Improper handling continues to be the main reason
for losses. The common forms for packing and packaging are the
predominate causes for product damage. Tomatoes are generally packed in
wooden "K boxes," which are often infested with harmful bacteria and
mold and are easily contaminated. Furthermore, the tomatoes on the
bottom of the crates are crushed, thereby accelerating the rotting of
the fruit.

## 

## Industry Terms and Standards

Terms for the different classes of products are used differently in
Brazil than they are in the United States and this could cause some
confusion. In both the United States and Brazil, paste is considered to
be a product that has 28-32 Brix; generally 31 in Brazil.

Brazil also has a class of products that are called "extratos" or
extracts. Extratos have 21 Brix and can be considered a
"semi-concentrated" product. Puree would probably be the most similar
product in the United States. The difficulty is that paste and extratos
are considered one class of products by the industry and trade and it is
difficult to make a distinction between the two in the case of Brazil.
In general, it can be assumed that imported paste is 28-32 Brix but
domestic production will include products that are 28-32 Brix and
products that are 21 Brix.

To further confuse the issue, Brazil also has a class of products termed
"puree," which has 12 Brix and is analogous to tomato sauce in the
United States. Finally, there are sauces that also have 12 Brix but have
other ingredients or flavorings in them and are more consumer-ready than
the other classes of products.

# 

<table style="width:100%;">
<colgroup>
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="14"><strong>Salad Tomato Prices (Ceagesp - São Paulo) cents
per kg in Brazilian Reals*</strong></td>
</tr>
<tr class="even">
<td>Year</td>
<td>Jan</td>
<td>Feb</td>
<td>Mar</td>
<td>Apr</td>
<td>May</td>
<td>Jun</td>
<td>Jul</td>
<td>Aug</td>
<td>Sep</td>
<td>Oct</td>
<td>Nov</td>
<td>Dec</td>
<td>Avg</td>
</tr>
<tr class="odd">
<td>2001</td>
<td>64</td>
<td>58</td>
<td>66</td>
<td>79</td>
<td>73</td>
<td>51</td>
<td>54</td>
<td>52</td>
<td>51</td>
<td>48</td>
<td>49</td>
<td>62</td>
<td>82</td>
</tr>
<tr class="even">
<td>2002</td>
<td>54</td>
<td>62</td>
<td>64</td>
<td>79</td>
<td>59</td>
<td>71</td>
<td>74</td>
<td>63</td>
<td>82</td>
<td>80</td>
<td>79</td>
<td>58</td>
<td>85</td>
</tr>
<tr class="odd">
<td>2003</td>
<td>65</td>
<td>89</td>
<td>163</td>
<td>134</td>
<td>85</td>
<td>64</td>
<td>56</td>
<td>54</td>
<td>58</td>
<td>76</td>
<td>70</td>
<td>98</td>
<td>84</td>
</tr>
<tr class="even">
<td>2004</td>
<td>100</td>
<td>78</td>
<td>86</td>
<td>91</td>
<td>134</td>
<td>164</td>
<td>151</td>
<td>172</td>
<td>152</td>
<td>103</td>
<td>81</td>
<td>79</td>
<td>116</td>
</tr>
<tr class="odd">
<td>2005</td>
<td>77</td>
<td>89</td>
<td>113</td>
<td>104</td>
<td>126</td>
<td>103</td>
<td>106</td>
<td>89</td>
<td>96</td>
<td>95</td>
<td>145</td>
<td>101</td>
<td>104</td>
</tr>
<tr class="even">
<td colspan="14"><p>Prices refer to tomatoes commercialized at CAEGESP
in Sao Paulo only.</p>
<p>Source: CAEGESP, Boletim Mensal, Jan/Feb 2006 Edition of Hortifruti
Brasil</p>
<p>*Average Exchange Rate in 2005 approx. RS 2.44=U$S 1.00</p></td>
</tr>
</tbody>
</table>

# 

<table style="width:100%;">
<colgroup>
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="14"><strong>Santa Cruz Tomato Prices (Ceasa - Minas Gerais)
cents per kg in Brazilian Reals*</strong></td>
</tr>
<tr class="even">
<td>Year</td>
<td>Jan</td>
<td>Feb</td>
<td>Mar</td>
<td>Apr</td>
<td>May</td>
<td>Jun</td>
<td>Jul</td>
<td>Aug</td>
<td>Sep</td>
<td>Oct</td>
<td>Nov</td>
<td>Dec</td>
<td>Avg</td>
</tr>
<tr class="odd">
<td>2001</td>
<td>39</td>
<td>34</td>
<td>31</td>
<td>43</td>
<td>47</td>
<td>32</td>
<td>34</td>
<td>27</td>
<td>17</td>
<td>17</td>
<td>n/a</td>
<td>n/a</td>
<td>82</td>
</tr>
<tr class="even">
<td>2002</td>
<td>n/a</td>
<td>37</td>
<td>36</td>
<td>46</td>
<td>33</td>
<td>43</td>
<td>44</td>
<td>31</td>
<td>50</td>
<td>37</td>
<td>53</td>
<td>27</td>
<td>85</td>
</tr>
<tr class="odd">
<td>2003</td>
<td>38</td>
<td>57</td>
<td>85</td>
<td>74</td>
<td>57</td>
<td>28</td>
<td>27</td>
<td>22</td>
<td>25</td>
<td>33</td>
<td>37</td>
<td>43</td>
<td>84</td>
</tr>
<tr class="even">
<td>2004</td>
<td>62</td>
<td>49</td>
<td>44</td>
<td>37</td>
<td>66</td>
<td>96</td>
<td>125</td>
<td>113</td>
<td>105</td>
<td>79</td>
<td>47</td>
<td>49</td>
<td>116</td>
</tr>
<tr class="odd">
<td>2005</td>
<td>48</td>
<td>85</td>
<td>55</td>
<td>60</td>
<td>86</td>
<td>62</td>
<td>64</td>
<td>52</td>
<td>59</td>
<td>54</td>
<td>102</td>
<td>77</td>
<td>67</td>
</tr>
<tr class="even">
<td colspan="14"><p>Prices refer to tomatoes commercialized at CEASA in
Belo Horizonte/MG only.</p>
<p>Source: CEASA/MG Boletim Mensal</p>
<p>*Average Exchange Rate in 2005 approx. RS 2.44=U$S 1.00</p></td>
</tr>
</tbody>
</table>

#  

# 

# PS&D Tables

+---------+-------+-------+-------+-------+------+-------+---------+
| PSD     |       |       |       |       |      |       |         |
| Table   |       |       |       |       |      |       |         |
|         |       |       |       |       |      |       |         |
| Country |       |       |       |       |      |       |         |
|         |       |       |       |       |      |       |         |
| ######  |       |       |       |       |      |       |         |
|  Brazil |       |       |       |       |      |       |         |
|         |       |       |       |       |      |       |         |
| Co      |       |       |       |       |      |       |         |
| mmodity |       |       |       |       |      |       |         |
|         |       |       |       |       |      |       |         |
| Fresh   |       |       |       |       |      |       |         |
| T       |       |       |       |       |      |       |         |
| omatoes |       |       |       |       |      |       |         |
|         |       |       |       |       |      |       |         |
| (       |       |       |       |       |      |       |         |
| HA)(MT) |       |       |       |       |      |       |         |
+---------+-------+-------+-------+-------+------+-------+---------+
|         | 2004  | Re    | 2005  | Est   | 2006 | For   | UOM     |
|         |       | vised |       | imate |      | ecast |         |
+---------+-------+-------+-------+-------+------+-------+---------+
|         | USDA  | Post  | USDA  | Post  | USDA | Post  |         |
|         | Off   | Est   | Off   | Est   | Offi | Est   |         |
|         | icial | imate | icial | imate | cial | imate |         |
|         | \[    | \[    | \[    | \[    | \[O  | \[    |         |
|         | Old\] | New\] | Old\] | New\] | ld\] | New\] |         |
+---------+-------+-------+-------+-------+------+-------+---------+
| Market  |       | 01    |       | 01    |      | 01    | MM/YYYY |
| Year    |       | /2005 |       | /2006 |      | /2007 |         |
| Begin   |       |       |       |       |      |       |         |
+---------+-------+-------+-------+-------+------+-------+---------+
| Plnt    | 0     | 42500 | 0     | 42500 | 0    | 42500 | (HA)    |
| For     |       |       |       |       |      |       |         |
| Fresh   |       |       |       |       |      |       |         |
| Consump |       |       |       |       |      |       |         |
+---------+-------+-------+-------+-------+------+-------+---------+
| Plnt    | 0     | 16000 | 0     | 15550 | 0    | 16000 | (HA)    |
| For     |       |       |       |       |      |       |         |
| Pro     |       |       |       |       |      |       |         |
| cessing |       |       |       |       |      |       |         |
+---------+-------+-------+-------+-------+------+-------+---------+
| TOTAL   | 0     | 58500 | 0     | 58050 | 0    | 58500 | (HA)    |
| Area    |       |       |       |       |      |       |         |
| Planted |       |       |       |       |      |       |         |
+---------+-------+-------+-------+-------+------+-------+---------+
| Harv.   | 0     | 42415 | 0     | 42550 | 0    | 42450 | (HA)    |
| For     |       |       |       |       |      |       |         |
| Fresh   |       |       |       |       |      |       |         |
| Cons.   |       |       |       |       |      |       |         |
+---------+-------+-------+-------+-------+------+-------+---------+
| Harv.   | 0     | 15970 | 0     | 15550 | 0    | 15975 | (HA)    |
| For     |       |       |       |       |      |       |         |
| Pro     |       |       |       |       |      |       |         |
| cessing |       |       |       |       |      |       |         |
+---------+-------+-------+-------+-------+------+-------+---------+
| TOTAL   | 0     | 58385 | 0     | 58100 | 0    | 58425 | (HA)    |
| Area    |       |       |       |       |      |       |         |
| Ha      |       |       |       |       |      |       |         |
| rvested |       |       |       |       |      |       |         |
+---------+-------+-------+-------+-------+------+-------+---------+
| Fresh   | 0     | 20    | 0     | 20    | 0    | 20    | (MT)    |
| Sale    |       | 40500 |       | 00000 |      | 40700 |         |
| Pro     |       |       |       |       |      |       |         |
| duction |       |       |       |       |      |       |         |
+---------+-------+-------+-------+-------+------+-------+---------+
| Pro     | 0     | 12    | 0     | 14    | 0    | 12    | (MT)    |
| cessing |       | 63100 |       | 50000 |      | 70000 |         |
| Pro     |       |       |       |       |      |       |         |
| duction |       |       |       |       |      |       |         |
+---------+-------+-------+-------+-------+------+-------+---------+
| TOTAL   | 0     | 33    | 0     | 34    | 0    | 33    | (MT)    |
| Pro     |       | 03600 |       | 50000 |      | 10700 |         |
| duction |       |       |       |       |      |       |         |
+---------+-------+-------+-------+-------+------+-------+---------+
| TOTAL   | 0     | 33    | 0     | 34    | 0    | 33    | (MT)    |
| SUPPLY  |       | 03600 |       | 50000 |      | 10700 |         |
+---------+-------+-------+-------+-------+------+-------+---------+

+-------------+------+-------+------+-------+------+-------+--------+
| PSD Table   |      |       |      |       |      |       |        |
|             |      |       |      |       |      |       |        |
| Country     |      |       |      |       |      |       |        |
|             |      |       |      |       |      |       |        |
| Brazil      |      |       |      |       |      |       |        |
|             |      |       |      |       |      |       |        |
| Commodity   |      |       |      |       |      |       |        |
|             |      |       |      |       |      |       |        |
| Tomato      |      |       |      |       |      |       |        |
| P           |      |       |      |       |      |       |        |
| aste,28-30% |      |       |      |       |      |       |        |
| TSS Basis   |      |       |      |       |      |       |        |
|             |      |       |      |       |      |       |        |
| (MT)(MT,    |      |       |      |       |      |       |        |
| Net Weight) |      |       |      |       |      |       |        |
+-------------+------+-------+------+-------+------+-------+--------+
|             | 2004 | Re    | 2005 | Est   | 2006 | For   | UOM    |
|             |      | vised |      | imate |      | ecast |        |
+-------------+------+-------+------+-------+------+-------+--------+
|             | USDA | Post  | USDA | Post  | USDA | Post  |        |
|             | Offi | Est   | Offi | Est   | Offi | Est   |        |
|             | cial | imate | cial | imate | cial | imate |        |
|             | \[O  | \[    | \[O  | \[    | \[O  | \[    |        |
|             | ld\] | New\] | ld\] | New\] | ld\] | New\] |        |
+-------------+------+-------+------+-------+------+-------+--------+
| Market Year |      | 01    |      | 01    |      | 01    | M      |
| Begin       |      | /2005 |      | /2006 |      | /2007 | M/YYYY |
+-------------+------+-------+------+-------+------+-------+--------+
| Deliv. To   | 0    | 0     | 0    | 0     | 0    | 0     | (MT)   |
| Processors  |      |       |      |       |      |       |        |
+-------------+------+-------+------+-------+------+-------+--------+
| Beginning   | 9000 | 6876  | 1    | 9990  | 8735 | 9390  | (MT,   |
| Stocks      |      |       | 1235 |       |      |       | Net    |
|             |      |       |      |       |      |       | W      |
|             |      |       |      |       |      |       | eight) |
+-------------+------+-------+------+-------+------+-------+--------+
| Production  | 14   | 1     | 15   | 1     | 0    | 1     | (MT,   |
|             | 5000 | 50000 | 0000 | 47000 |      | 49000 | Net    |
|             |      |       |      |       |      |       | W      |
|             |      |       |      |       |      |       | eight) |
+-------------+------+-------+------+-------+------+-------+--------+
| Imports     | 6452 | 8153  | 2000 | 8400  | 0    | 8500  | (MT,   |
|             |      |       |      |       |      |       | Net    |
|             |      |       |      |       |      |       | W      |
|             |      |       |      |       |      |       | eight) |
+-------------+------+-------+------+-------+------+-------+--------+
| TOTAL       | 16   | 1     | 16   | 1     | 8735 | 1     | (MT,   |
| SUPPLY      | 0452 | 65029 | 3235 | 65390 |      | 66890 | Net    |
|             |      |       |      |       |      |       | W      |
|             |      |       |      |       |      |       | eight) |
+-------------+------+-------+------+-------+------+-------+--------+
| Exports     | 1    | 8539  | 1    | 7000  | 0    | 7500  | (MT,   |
|             | 4217 |       | 4500 |       |      |       | Net    |
|             |      |       |      |       |      |       | W      |
|             |      |       |      |       |      |       | eight) |
+-------------+------+-------+------+-------+------+-------+--------+
| Domestic    | 13   | 1     | 14   | 1     | 0    | 1     | (MT,   |
| Consumption | 5000 | 46500 | 0000 | 49000 |      | 49000 | Net    |
|             |      |       |      |       |      |       | W      |
|             |      |       |      |       |      |       | eight) |
+-------------+------+-------+------+-------+------+-------+--------+
| Ending      | 1    | 9990  | 8735 | 9390  | 0    | 10390 | (MT,   |
| Stocks      | 1235 |       |      |       |      |       | Net    |
|             |      |       |      |       |      |       | W      |
|             |      |       |      |       |      |       | eight) |
+-------------+------+-------+------+-------+------+-------+--------+
| TOTAL       | 16   | 1     | 16   | 1     | 0    | 1     | (MT,   |
| D           | 0452 | 65029 | 3235 | 65390 |      | 66890 | Net    |
| ISTRIBUTION |      |       |      |       |      |       | W      |
|             |      |       |      |       |      |       | eight) |
+-------------+------+-------+------+-------+------+-------+--------+