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News

US ban has limited effects on Chinese exports of tomato products

26/10/2022 - François-Xavier Branthôme
Tomato products from Xinjiang were designated by Washington as ‘high-risk’ under the Uygur Forced Labor Prevention Act. But the industry has proved it does not rely on American imports, and exports across Europe, Asia, Africa and Oceania.

After the sweeping US ban on products from China’s Xinjiang region came into effect in June 2022, two pillars of local agriculture – known as “white and red” – have experienced very different fates.
Xinjiang’s tomato and cotton industries each play an important role in the global supply chain; the region processes about 14% of the globally processed quantities of tomato and a fifth of cotton. But after both were designated by the US as “high-risk” under the Uygur Forced Labor Prevention Act, cotton has suffered the most.
While cotton grown in the region is mostly consumed locally or sold to other provinces to be made into garments and textiles, most tomato products from Xinjiang are exported directly, in theory making them more vulnerable to external demand. But it has been the price of Xinjiang cotton that has tumbled, while the tomato industry has remained largely intact. The reason why the US ban had minimal impact on Xinjiang tomatoes is that the US does not import tomato products from Xinjiang.
The USA is one of the world’s largest growers of tomatoes, and the largest tomato processing country, particularly in the state of California. Under the North American Free Trade Agreement, the country also imports large quantities of tomatoes from Mexico and Canada.

Almost 820,000 tonnes of Chinese tomato products were exported to more than 125 countries in the past marketing year, stretching across Europe, Asia, Africa and Oceania. Italy has been the top importer, absorbing exactly 10% of the Chinese total exports between July 2021 and June 202, according to China customs data. It was followed by Russia, which accounted for 9.6% of total exports, then Ghana, Nigeria, Togo and the Philippines, respectively buying 8%, 6%, 4.5% and 4.4% of the total.

It is estimated the Xinjiang region grows 80% of China’s tomatoes, with the most output being for export. In 2021/2022, China exported more than 819,000 tonnes of tomato products under HS codes 200290, worth USD 714 million, up 4% from the previous year and from the very stable average of the previous three marketing years (2018/2019, 2019/2020 and 2020/2021).
Big barrels of tomato paste (HS codes 20029019), each typically weighing more than 5kg (11lbs), accounted for 69% of tomato exports in 2021/2022 marketing year, Chinese customs figures showed (see also additional information below).

Like cotton, the tomato industry in Xinjiang has been charged with forced labor allegations, which Beijing has vigorously denied. However, even though the US is not a major export destination uncertainties remain. The European Commission is also set to propose a ban on the sale of products involving forced labor.
According to Chinese sources, “leading tomato processing companies in Xinjiang have acknowledged the risks and proposed tackling them by increasing sales to the domestic market”. The state-owned COFCO Sugar, Asia’s largest tomato processing company and No 2 in the world, said it had expanded in the domestic market to avoid export risks, according to the company’s 2021 annual report.

 Xinjiang Guannong Fruit, another leading processing company, said that as Xinjiang mainly produces large buckets of tomato paste, its product is not diversified and highly dependent on the international market. “The global economic situation and trade policies would have an impact on the export and sales of tomato paste products,” it said in its annual report. “In the 2021 production season, the tomato industry encountered many challenges in terms of raw material supply, price, and foreign trade transport costs. “These problems may continue to exist in 2022, affecting the survival and development of tomato production enterprises to varying degrees.”

It has been a different story for Xinjiang cotton. In 2021, Xinjiang’s annual cotton output was 5.27 million tonnes, accounting for 91% of the nation’s total production, according to the China Cotton Association. Last year, 67% of cotton consumed across the country was grown in Xinjiang. But this year Xinjiang cotton has been increasingly shunned by downstream manufacturers, especially those that focus on exports who are wary of running afoul of the US ban.
Further, in recent years, countries in South and Southeast Asia have also been steadily increasing their market share in terms of textile and garment exports to the US and to the rest of the world. However, China – as the world’s largest textile producer and exporter – is still the No 1 American supplier.

Some complementary data
Distribution of Chinese tomato paste exports in 2021/2022, by region

Distribution of Chinese tomato paste exports in 2021/2022, by sector
 
20029019:  Tomato paste, in airtight containers weighing more than 5kg
20029011:  Tomato paste, in airtight containers weighing not more than 5kg

Sources: scmp.com, Trade Data Monitor
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