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India: The sleeping tiger? - Part 1

14/12/2020 - Shruti Sasidharan , Sophie Colvine
India is the second largest country globally both in terms of population (1.38  billion inhabitants) and in terms of volume of tomatoes produced with more than 20 million tonnes in the fiscal year 2019-20. A well known Indian saying is "No tomato, no cooking" but 99% of the tomatoes are currently consumed fresh as it is currently estimated that only about 150,000 tonnes of tomatoes are processed annually. Is this about to change? Will India emerge in the next few years as a significant player in the tomato processing industry?  

“India is one of the largest producers’ of fresh tomatoes. However, India is primarily a fresh tomato consuming market. Processed tomato consumption is lesser. This market is advantageous in terms of the availability of raw materials for processing tomatoes. One of the key challenges is to be able to convert fresh tomato consumers to processed. Secondly, tomatoes being a cyclical fruit, the processing infrastructure is more suited for other fruits when compared to tomatoes, hence processors tend to focus processing seasonal fruits. We at Kagome India work with directly with the farmers and also with some of the FPOs in order to establish our ‘farm-to-fork’ linkage. Kagome India has been in the forefront of launching new product verticals in the Indian processed tomato sector with the “crushed tomatoes” being our flagship product, which is a recommended alternative to fresh tomatoes in the Indian and Italian cuisine due to its consistent quality and pricing.”
Rohit Bhatla, Managing Director, Kagome Foods India (Excerpts of  interview with Tomato News SAS) 
Tomatoes in India
The Indian economy is predominantly dependent on the agriculture sector, which contributes about 17% to the total GDP, and tomato is one of the three most importants crop under the Indian government “TOP” priority list of horticultural crops alongwith Onions and Potatoes. These three TOP staples found across the country symbolizes the government of India’s initiative called 'Operation Greens' to improve the living condition of farmers.

ln lndia, the tomato is mainly grown in two seasons across the country, which is from June to September (Kharif/monsoon season) and from October to February (Rabi/spring season), although in some regions, tomatoes are cultivated throughout the year. The Southern states comprising of Andhra Pradesh, Karnataka and Tamil Nadu as well as the Central states of Madhya Pradesh, Maharashtra, Gujarat and Bihar contribute maximum to the total tomato production in the country.
Though, lndia is the world’s second largest producer of fresh tomatoes after China, it currently processes less than 1 % of its production, compared to a much higher proportion in other major producer countries.

During the marketing year 2019-20, the production volume of processed tomato products rose significantly to reach an estimated 154,300 metric tonnes (MT) from 142.550 MT in 2018-19. Similarly, the average yield of fresh tomatoes in lndia has increased from 24.09 MT/ha in 2018 to 25.33 MT/ha in 2019-20 mainly owing to the availability of better inputs, seeds and sustainable farming techniques.

Due to its perishable nature, tomatoes cannot be preserved in their fresh state.  Hence, these are processed in order to reduce their loss percentage.  In India, huge post-harvest losses of the harvested tomatoes occur due to inadequate storage facilities, which brings substantial loss to the growers and hence to the national economy. A governement report estimates that 12.4% of tomatoes are lost. 

The preservation of tomatoes in a semi-processing system not only takes care of the marketable surplus but also ensures the supply of raw materials for finished products like sauce, ketchup, drink and other processed products. Presently, there are no processing varieties that are commercially viable for use in India. In the absence a suitable processing variety, Indian processors tend to import bulk tomato paste mostly from China and simultaneously process fresh market tomato F1 hybrids during the glut period i.e., when the prices go below Rs.2 per kg.

Tomato production
According to reports, tomato farmers sell their produce usually through a local aggregator or via a trader at the local or regional mandi (marketplace). Farmers realize an estimated 30-50% of total value through the supply chain with the remainder being distributed amongst a multiplicity of traders and commission agents. This low margin on total value makes production unviable during the glut periods when tomato prices can fall to between Rs 0.50 to Rs 2 a kg. Few farmers are organized into production clusters through formal or informal structures like registered organizations or Farmer Producer Organizations (FPOs) reducing their access to contract farming options as well as their bargaining capacity with processors. 

For instance, Sahyadri Farms, a leading FPO through its “Seed to Plate” approach plays an important role in tomato supply chain. Farmers and middlemen have a preference to sell to urban markets rather than to sell toprocessors.  As a result, several paste makers have indicated a slippage of 10-20% in production which farmers seek to sell on the open market when market rates are more attractive than the contracted rates.

Production costs are currently estimated at between Rs 2 to 2.50 per kg on average (assuming yields of 50 tonnes/ha and operating expenses of between Rs 40,000 – Rs 45,000). As per reports, Processors seek tomato at or under Rs 4.50 per kg to maintain commercially viable operations, though some indicate a willingness to go beyond Rs 5 per kg, particularly during the off-season.

"India is a consumption oriented economy. Tomatoes are mainly grown to meet the domestic demand.  Many at times, when there is too much of abundance, crop prices rise. Being a "TOP-crop”, with reference to the Government of India’s top priority crops, tomatoes are subject to wide fluctuations in prices and often farmers face hardships with such fluctuations”
V.D Sharma, Vice President, Sunsip Agro Food Processors (Excerpts of interview with Tomato News SAS)

Mandi prices typically range between Rs 6 to 10 per kg though they may skew to Rs 2 per kg in glut market conditions and Rs 40 during the off-season. The challenge is to establish a price arbitrage equilibrium that supports both the farmer and processor – this can best be achieved through improved crop yields coupled with reduced production costs by the farmer and effective as well as sustainable contract farming mechanisms offered by the processor. There is also a significant interstate trade in tomato driven largely by availability (varying harvest seasons and particularly off-season production), price variations and quality considerations.
Mandis and traders play a primary role in moving produce around through extensive trading networks. This in part helps create price equilibrium across regional markets but could also cause local shortfalls, a particular issue for the small processors who depend on local markets to secure raw tomato. On July 5, 2019, the Government of India announced a plan to promote 10,000 new farmer producer companies over the next five years.

“One of the main reasons as to why the Indian tomato processing industry is yet to successfully develop is because processors have not managed to obtain a reliable and consistent source for raw materials at the required cost and quality.  Many at times, the real challenge for processors is when the contract price fails to match the farmer’s expectations. These issues can be resolved through better contract enforcement and backward integration. Expected policies could include, promotion of mechanized harvesting, subsidizing transportation costs incurred while supplying tomatoes to processing units and fixing a minimum support price based on the actual cost of processed tomato cultivation.”
Arun Talwar, General Manager, Cremica Food Park Pvt Ltd (Excerpts of presentation titled, ‘Prospects for processing tomatoes in India &  Expected Govt. policy’ at NAAS Strategy Workshop on 24 Nov, 2020)
Processing tomatoes- Breeding efforts by public Institutions
Public institutions have been breeding varieties more suited for processing than the ones generally grown by farmers. The tomato variety Pusa Ruby (IARI, New Delhi) was one of the earliest varieties used for both fresh market and the processing industry in India. Public bred processing varieties viz;  Punjab Chhuhara (PAU, Ludhiana), Roma (NBPGR, New Delhi), Pusa Gaurav (IARI, New Delhi), Arka Ashish & Arka Ahuti (IIHR, Bengaluru)  were adopted by farmers up to  a limited extent.  However, gradually commercial fresh market hybrids were being adopted by farmers due to their high yield potential.

Furthermore, ICAR-IIHR, Bengaluru has observed that there is ample scope to breed dual purpose tomatoes with processing quality attributes viz., high pigment genes (Ogc, hp) for      deep red colour, joint less pedicel for mechanical harvesting, on plant storage of fruits, TSS, acidity, resistance to bacterial wilt, early blight, and begomo viruses with a minimum yield of 75-80    t/ha. In 2019,  ICAR-IIHR, Bengaluru developed two high yielding F1 hybrids Arka Apeksha & Arka Vishesh suitable for processing  with high yield potential (75-80 t/ha). Subsequently, both the hybrids were analyzed by four processors Sunsip Foods, Karnataka, Sahyadri Food processing, Maharashtra, Jadli Foods, Tamil NDU and Cremica Foods, Punjab. All the four processors reported that both Arka Apeksh and Arka Vishesh varieties could be suitable for processing.

“The development of high yielding multiple disease resistant processing tomato with high yield potential is utmost priority with Concentrated Fruit Maturity (CFM)& jointless pedicel for machine harvesting (MH). An emphasis should be laid on the enhancement of productivity, lycopene and brix in processing tomato and an effective utilization of MAS and genomic tools for expedite development of processing tomato is the need of the 
Dr.A.T.Sadashiva, Former Head (Div. of Veg. Crops, ICAR-IIHR) & Director (R & D), Nethra Crop Sciences (Excerpts of presentation entitled,‘Need for breeding tomatoes suitable for processing in India’ at NAAS Strategy Workshop on 24 Nov, 2020)
Packaging & Quality Parameters 
Tomatoes are processed into bulk packaging for example, in an aseptic pre-sterilized bag in barrel that has a 210-228kg capacity.

To cater to the needs of the retail consumer segment, processors pack tomato Ketchups, Pastes, Sauces, Powder and Canned Tomatoes in varied packaging ranging from 8 gram sachets to 2.5 kg Cans.

The tomato processing industry in India is highly scattered in terms of production and only a handful of processing units are actively converting fresh tomatoes into pastes, which is again done depending on the local demand. However, the domestic consumption of processed tomatoes is on the rise in India and is most likely going to continue in the near future. As a leading FPO, Sahyadri Farmers Producer Company Ltd plays an important role in the tomato supply chain by providing complete solutions to farmers as well as consumers
Azhar Tambuwala, Director- Marketing, Sahyadri Farmers Producer Company Ltd. (Excerpts of interview with Tomato News SAS) 

The leading Indian Tomato Processing Companies
Nestle India
Nestle is India’s leading ketchup maker with a market share of 37% through its Maggi brand. Nestlé India collaborates with suppliers to source raw materials locally under its Supplier Development Program though it also uses its global supply chain to import raw material for ketchup production in India.
Hindustan Unilever
HUL’s Kissan brand is India’s second-most popular ketchup brand in India.HUL was one of the first processing firms to institutionalize farm-gate sourcing of tomatoes from smallholder farmers in Nasik district in 2011. Kissan partnered with smallholder farmers, a local tomato paste processor named Varun Agro and agri-input supply companies to establish a supply chain aimed at producing tomato paste locally that could be used as an input into its ketchup production process. Unilever sourced 40,000 tonnes of tomato from India in 2011, some 60% of its requirement for ketchup production. Working with growers it sought to mainstream sustainable agriculture practices including improving soil fertility, water management, and pest control. 
Field Fresh Foods/Del Monte
India’s third largest processed tomato products maker, Field Fresh manufactures ketchup, pasta and pizza sauce under the Del Monte brand at its factory in Krishnagiri District, Tamil Nadu. 
Kagome Foods India
Japanese food maker Kagome Co. had begun commercial production and sales of processed tomato products in India, catering to hotel and restaurant demand. The company, which entered the country in 2013 in partnership with a local firm and terminated the joint venture in 2016, invested 500 million rupees ($7 million) in its own plant at Nashik in the western state of Maharashtra. United Genetics, Kagome’s wholly owned subsidiary company, supplies specialized, tested and approved seeds to farmers in Nashik, who grow them in exclusive farms in a controlled environment. The company also imparts agricultural guidance to farmers to grow high yield, high quality tomatoes at low cost, thereby improving their income. Some of these initiatives are highlighted in the "tomato revolution video on the company's website
Varun Agro Processing Foods Pvt. Ltd.
Varun Agro Processing Foods Pvt. Ltd was established in 1996 initially with the manufacturing of tomato ketchup only. Currently, the company manufactures Tomato Ketchup, Red Chilly Sauce, Green Chilli Sauce, White Vinegar, Black Vinegar etc. Over the years, Varun Agro has turned into a premier name in manufacturing, supplying and exporting Fruit Pulp, Tomato Paste, and Tomato Ketchup. Varun Agro has a 5MT per day production capacity for tomato ketchup. In addition to this, the processor has a fully automatic all Indian tropical and subtropical fruit processing unit in Maharashtra. The fruit input capacity for processing mango is 250 MT and Tomato is 300 MT in its manufacturing plant. Varun Agro Processing Foods Pvt. Ltd is also undertaking contract farming with 650 farmers in 1200 acres area which is in Dindori and Peth Taluka in the Nashik District. In this contract, tomatoes are directly sourced from  farmers.
Cremica Food Park Pvt Ltd
Cremica Food Industries Ltd. is leading manufacturer and supplier of processed tomato products in India and the overseas markets. It has established a dedicated tomato paste line with capacity of 700 MT per day at Una in Himachal Pradesh which can be extended up to 1400 MT per day. To get this much of tomato is a challenge for company. The tomato processing window in the north is very short and to get right quality tomato with right price and required quantity is a challenge. In 2019, the company could not operate due to non-availability of tomatoes. In 2020, it managed to process tomatoes by paying a higher price to farmers, but tomato paste processing is not viable at this cost as it is cheaper to import tomato paste than to process in house. The company has an internal consumption of 4500 MT of tomato paste. Apart from its retail products, the company supplies to food chains like McDonald’s, Barista, Café Coffee Day, Pizza Hut, Domino's and Papa John's as well as to institutional partners and private labels like Big Bazaar, Spencer's, Taj Group, ITC, Jet Airways and Air India. It also sell in the market and can produce for export as the state-of-the-art processing line and quality & food safety system meets all the international standards. 
Global Green
This Bangalore-based processor and exporter commenced large scale contract farming of hybrid tomatoes in 2012 to meet the growing demand for tomato paste and tomato paste based sauces in India. It has promoted the use of processing hybrid varieties from United Genetics USA like UG-37, UG-157, UG-52, amongst farmers which have a high lycopene content. It established farmer groups and small cooperatives to enable production volumes for its processing needs and to improve quality compliance through a cluster-based approach. Global Green sources tomatoes over the two peak seasons annually from farmers in the Madanapalle area in Andhra Pradesh as well as from Kolar and adjoining areas of Karnataka which are processed at the facilities of Srini Food Park in Chittoor, Andhra Pradesh. Global Green processes over 20,000 tonnes of fresh tomato each year. Using paste produced at the Srini Food Park, it produces value-added tomato based products under the Tify brand including
ketchup, pasta sauce, tomato blend and pizza sauce.
Sunsip Agro Processors
Sunsip Agro Processors, a leading agro processor was originally started by a Swedish multi-national company called Wimco. Sunsip Agro Processors today is part of a well-diversified group from the South of India. The processor has  a 2000 ton annual processing capacity of tomato paste at its unit in Srinivaspur, Karnataka.Apart from tomato pastes, Sunsip Agro Processors also process tropical fruits such as mango, guava, papaya and banana. Sunsip Agro Processors supplies crushed tomatoes to the Compass Group- an international catering services provider that has a presence in more than 45 countries worldwide. Their tomato paste is highly sought after by leading FMCG players in India such as Pepsico, Hindustan Unilever, Nestle and other small-medium size players. With a view to backward integrate fruit supply chain, Sunsip Agro Processors also undertake contract farming of various fruit crops. The integrated supply chain helps them maintain their quality standards and thereby provide traceability. 
Sahyadri Farms
Sahyadri Farms was registered in 2010 as a Farmer Producer Company in Maharashtra. It is 100% owned by farmers and its aim is to create crop-specific integrated value chains empowered by technology and efficient management. It claims to be India's largest tomato processor, with 55 000 tonnes processed in 2020 from over 5 000 acres. 

Indira Foods
Established in 2008, Indira Foods produces tomato ketchup for the retail and institutional segments with a focus on the southern Indian market. The company procures tomatoes from Kolar district in Karnataka.
Dabur India
Is a leading producer of tomato puree, tomato juice, soups and chutneys under its homemade retail brand and for the institutional market. Tomato processing operations commenced in 2011 at its processing plant in Siliguri (West Bengal) while juices are produced at its factory in Nepal.
Capricorn Food Products
Capricorn is one of India’s largest independent tomato paste makers supplying paste and puree to leading processors and private labels including Hindustan Unilever, Nestle and FieldFresh. It has processing facilities for paste making in Nashik (Maharashtra) and puree production in Koyna (Maharashtra), Krishnagiri (Tamil Nadu), Chittoor (Andhra Pradesh). In 2013, Capricorn established a plant in Nashik, Maharashtra. 
NijjerAgro Foods
An Amritsar-based tomato paste manufacturer which supplies to Nestle, Del Monte and other processed food makers in the northern Indian region.
GD Foods
Produces both tomato paste and processed products like ketchup under its Tops brand at its plant operations in the Indian state of Punjab. For tomatoes, it undertakes contract farming over 400 ha with farmers in Punjab.
Mother Dairy

The company produces tomato paste and its Safal brand of tomato ketchup at its facility in Bengaluru, Karnataka. Mother Dairy partnered with Bayer CropScience to improve tomato production amongst farmers in Chickballapur and Tumkur districts of Karnataka for its processing needs. Bayer CropScience identified tomato varieties suitable for processing and scientifically raised seedlings of the shortlisted varieties. These were then provided to some 361 farmers for further cultivation on 280 hectares under its supervision and improved crop production practices including crop protection techniques were applied as well as the internalization of traceability processes. As a result, tomato yields of farmers are reported to have increased from 35 tonnes/ha to 45 tonnes/ha. The company also announced in February 2016 plans to develop a new puree production and processing unit in Ranchi in Eastern India. Mother Dairy also sells frozen tomatoes in the Delhi-National Capital Region which it processes at its facility in West Delhi.
ITC Group
ITC produces a range of ready-to-eat (RTE) products for the Indian and export market under its Kitchens of India brand. This includes curry pastes, sauces and chutneys which include tomato as an important ingredient.
Griffith Laboratories
Griffith is a US-based specialized condiments producer which manufactures Indian paste and powder mixes at its Bengaluru facility for food services institutional clients including hotels and restaurant chains in India and overseas.

This dossier was complied by Shruti Sasidharan, an Independant Market Research Consultant in cooperation with the Tomato News Team. Shruti can be contacted at  

In Part 2 to be published next week, the Indian imports and exports, and the outlook for development of the tomato processing industry and markets.





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