Baked beans and canned spaghetti are set to become more expensive as EU tomato production falls while demand rises, says Mintec’s Robert Miles


Few categories have been immune from food inflation.

And now it’s the turn of store cupboard - favourites such as tinned tomatoes, pasta sauces, tinned spaghetti and baked beans to be hit by price hikes. Growing global demand has collided with tighter supplies, bad weather and higher raw material costs to put the squeeze on tomato paste and processing tomatoes.

EU tomato growers have already pushed through price increases for this year’s crop of processing tomatoes, prompting fears that retail prices will follow. Italian contract prices for fresh processing tomatoes currently stand at 88/tonne ex-field, up 26% on last year, with Spanish prices up 15% and Portuguese prices up 11%.

The moves follow steep increases in energy, transportation and canning costs and two successive years of global consumption outpacing world supply. Demand has been especially high from emerging markets such as Asia-Pacific, Latin America and Russia.

At the same time, supplies from Europe, the world’s largest exporter of processed and tinned tomatoes, have been falling as farmers are no longer incentivised to maximise production volumes following reforms in the EU’s Common Agricultural Policy.

To make matters worse, Spain and Portugal were hit by heavy rain earlier this year, resulting in dramatic declines in local tomato production, of 19% and 22% respectively, with volumes falling to 1.9 million and one million tonnes.

As a result, total European processing tomato production is forecast to be down nearly 10% in 2011, to 8.7 million tonnes.

Production in Italy, where most tinned tomatoes sold to the UK originate, is expected to decline slightly less than the EU average (down 7% instead of 9.4%), as many Italian tomato growers have benefited from the warm and dry weather this spring. But they will still be down, which is bad news for the UK, which as the world’s largest importer of tinned tomatoes buys roughly 25% of global tomato exports.

UK buyers have consequently been forced to look to alternative exporting countries such as the US, China and Turkey to source tomatoes. But there will be limits on how much they can source from these markets. Total global production levels have fallen 0.4% since 2010, despite a good year for China, where production was boosted by 7.9% or 0.5 million tonnes as tomato producers took advantage of decreased competition for land from cotton, maize and wheat.

The retail price of baked beans has been relatively stable over the past 12 months, with a 410g tin of branded beanshovering around the 64p mark [BrandView.co.uk].

But with low processing tomato stocks and tight global supplies threatening to push wholesale prices up ever higher, a hike in retail prices could well be on the cards soon.

Topics