Tomato Value

8/8/2019 Tomato Value

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T MATValue Added Products

ood processing sector in India is one of the largest in terms of production,

consumption, export and growth perspectives. The government of India

has identified horticultural crops as a means of diversification for making

agriculture more profitable through efficient land use, optimum utilization of natural

resources and creating skilled employment for rural masses. The Cabinet Committee

on Economic Affairs (CCEA) approved a proposal to raise allocation of plan fund

from Rs. 98 crore to Rs. 295 crore for the Scheme of Technology

Upgradation/Modernization/Establishment of Food Processing Industries (FPI) units

during the X Plan period.

FF


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Fruits and vegetables typically constitute an essential part of the daily diet in India

and they are in great demand round the year from most sections of the population.

The commercial value of fruits and vegetables in terms of direct consumption

besides, processing as well as trade has risen substantially in recent years. Their

economic importance

has also increased

and high labour

intensity in the production of

most fruits and

vegetables makes them

important from the

employment angle as

well. The growing food

processing industry is

poised to dominate the palate of Indian households in the near future.

The horticultural crops in the country presently cover 13.6 million hectares of arable

land, i.e. 7 per cent of the gross cropped area and contribute 18-20 per cent of the

gross value of Indias agricultural output.

Production of fruits and vegetables has been growing at compounded annual rates of

5% and 6%, respectively over the past decade. Although India is the second largest

producer of fruits and vegetables, only 2 % of this production is commercially

processed. Out of 370 million tons of fruit production in the world, India accounts for

33 million tons with a share of 11 per cent. Of the 450 million tons of vegetables

produced in the world, India produces as much as 70 million tons accounting for 17

per cent.

Almost 50 per cent of the population is under 20 years of age, providing a large base

of consumers for several decades to come. India's middle class is estimated at 250-300 million people, the majority of whom earn between $1,200 and $3,600 US per

household per year, an amount that is short of what many deem to be the income

required to purchase value-added food products ($5,000 US). Yet, about 30-40

million Indians earn $20,000 US or more a year, a huge market by any standard, but

scattered all over India in major cities. The consumption and living patterns of this


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emerging middle class is comparable to those in western market economies during

the 1960s.

Due to globalization, with the Government of India providing incentives and an easier

working environment for foreign investors, both the Indian corporate sector and

multinational corporations (MNCs) have jump-started the food processing industry,

with participation from farm to factory.

Primary food processing is a major industry with hundreds of thousands of rice-

mills/hullers, flour mills, pulse mills and oil-seed mills. There are several thousands of

bakeries, traditional food units and fruit/vegetable/spice processing units in

unorganized sector. Size of the semi-processed and ready to eat packaged food

industry is valued at over Rs. 4000 crores (US $0.8 billion) and is growing at over

20% annually.

As a result of the continuing reform process the food processing industry has drawn

a considerable amount of Foreign Direct Investment (FDI) in the last few years. As a

result of several policy initiatives undertaken since liberalization in August 1991, the

industry has witnessed fast growth in most of the segments.

Hence in this article, one of the major food processing industries i.e., tomato is

discussed. This article is most useful to the farmers, how to get more profit from

value added products of tomato instead of selling tomato as vegetable directly.

Processed tomato export trends

World trade

The production of processed tomato

has been predominantly concentrated inthe EEC and North America. These

accounted for almost 75 per cent of the

total production in 1992-93. USA

accounts for 42.2 per cent and Italy

producing about 16 per cent of the

world production has processed tomato.


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World trade in processed tomatoes is in the form of paste, ketchup/sauce, puree and

canned tomato. Italy ranks as the largest exporter of processed tomatoes, making its

presence felt on the world market for all the four processed tomato items.

About 6 per cent of the tomato products consumed by Americans today are imported.

During the 1990s, imports averaged about 4 per cent of consumption, down from 7

per cent during the 1980s.

Tomato processing industry in India

India is not a dominant player in the

world market, whether that is in the

context of production, imports or exports.

Indias share in world production is only

5.7 per cent. However, Indian tomato

processing industry prides itself on being

the largest in south Asia. Infact, the

output of the Indian industry is more than

twice that of Japan, and considerably greater than Thailand and Taiwan. Another

encouraging trend has been that Indias production level of processed tomato has

risen by 50 per cent. (Table 1)

Table 1

Production of tomato - Indias position in the world

Tomato Production ( 000 MT)

India 7,430

World 84873

Indias Share (in %) 5.7India' Rank 6

Source: Horticultural Statistics, Department of Horticulture, Chennai 1999-2000.

http://www.postharvestindia.com/indhrvst/fruits.htm


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Production of tomato in India

S.I.NO Tomato 1990 2000 2005

1. Production quantity (1000 tonnes) 4,603.45 7,430.00 7,600.00

2. Yield per hectare (kg/Ha) 158.59 161.52 140.74

3. Area harvested (1000 Ha) 290.28 460.00 540.00

Source: FAOSTAT

Recently, India has started the export of

processed tomato. Indias exports mainly

consist of tomato ketchup/sauce,

paste/chutney. In the export of processed

products tomato paste contributes a large

share and touched the level of 68

thousand tonnes as against the target of

one lakh ton, this is a substantial jump

from the base of 30 thousand tonnes.

The increased export of about 127 %

during last year encourages the growers.

In terms of value, exports do show an

increase of about 122 % as reported. The

level of exports has been rising in value and volume.

India exports processed tomato paste and chutney, to the USA, Saudi Arabia and

Japan. Other forms of preserved tomatoes are exported in small quantities to Kuwait,

Sri Lanka and the UAE.

Export competitiveness

Processed tomato is a major trade item in the world. But India does not figure

anywhere among the top exporters of any of its many forms. However, India has

been exporting processed tomato in the form of tomato paste and ketchup. India

does possess moderate export competitiveness on the world market for tomato

paste. The domestic market is expanding, and there is also world demand for this


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product. Tomato paste is another item in which India possesses export

competitiveness.

Quality of raw material suitable for processing

The quality of a tomato product is judged by its colour, which is dependent on the

redness of the tomatoes used. In fact, the red pigment (lycopene) can be used an

index of the amount of tomato actually present in a product.

Tomatoes should be ripe, red, and firm to soft, free of all mould growth (by cutting out

infected parts) and free of stems, leaves, dirt and other soils (by washing). It is less

important if the tomatoes have surface blemishes or splits/cracks (provided these are

not infected) and in most processes they will be cut or pulped. Tomato crop raised in

winter season is superior in quality because they contain more total solids.

Value added products of tomato

The following products can be prepared from tomato

Tomato paste

Tomato juice

Tomato ketchup

Tomato pickle and

Tomato sauce.

Working costs of preparation of tomato ketchup

It is observed from the table that, total working cost amounted to Rs. 60782.96/tonne

of tomato ketchup. Expenditure towards total raw material cost has maximum share

of 87.84 per cent, followed by tomato (20.36) and glass bottle (16.45). Table 2

indicates working cost of preparation of tomato ketchup.


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Table 2

Working costs of preparation of tomato ketchup (Rs./tones)

SI.NO Particulars Rs/tonnes Per cent to total

Working cost

a. Expenses on human labour

1. Plant manager 120.00 0.20

2. Plant supervisor 96.00 0.16

3. Technical assistants 180.00 0.30

4. Skilled artisans 144.00 0.24

5. office assistants 36.00 0.06

6. Unskilled workers 300.00 0.49

Total human labour cost 876.00 1.44

b. Expenditure on raw materials and Packing

1. Tomato 12375.00 20.36

2. Sugar 4000.00 6.58

3. Salt 175.00 0.29

4. Onion 1500.00 2.47

5. Ginger 450.00 0.74

6. Garlic 405.00 0.67

7. Red chilli powder 1125.00 1.85

8. Cinnamon 3250.00 5.35

9. Cardamom 5750.00 9.46

10. Cumin 3000.00 4.94

11. Black pepper 4500.00 7.40

12. Clove (Nos.) 1500.00 2.47

13. Vinegar(Lit) 600.00 0.99

14. Sodium benzoate 84.50 0.14

15. Glass bottle (500g. Capacity) 10000.00 16.45

16. Plastic Cork 1000.00 1.65

17. Plastic Cap 1000.00 1.65

18. Corrugated box @12 bottles/box 1530.00 2.52

19. Expenditure towards electricity@ 140 units 910.00 1.50

20. Water charges 240.00 0.39

21. Total raw material cost 53394.50 87.84

22. Interest on working capital @ 12% 6512.46 10.71

Total variable cost 60782.96 100.00


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Fixed costs of preparation of tomato ketchup

Total fixed cost accounted for Rs. 1075000. Among the fixed costs, area under

building has maximum share of 41.86 per cent, followed by machineries and

equipments has 37.21 per cent as shown in the Table.3.

Table 3

Fixed costs of preparation of tomato ketchup (in Rs.)

SI.NO

Fixed cost (Rs.) Per cent

1. Land (500 esq.) 90000.00 8.37

2. Area under building (150 m2) 450000.00 41.86

3. Machineries and equipments 400000.00 37.21

4.Installation and erection charges @ 15 %

cost of equipments and machineries60000.00 5.58

5. Office expenses (Furniture and chair) 75000.00 6.98

6. Total fixed cost 1075000.00 100.00

7. Total cost 1135782.96

Cost of production of tomato ketchup

The details of cost of production of tomato ketchup are given in the table.4. The cost

of production of tomato products are worked out for a tonne of output. It is observed

from the table that cost of production was Rs. 62882.96. per tonne of Tomato

ketchup.

Table 4

Cost of production of tomato ketchup (Rs./tonne)

SI.N

o.

Cost of Production (Rs./tonne) Per cent

1. Recurring expenses 60782.96 96.66

2. Depreciation on building (SLM) 490.00 0.78

3. Depreciation on machineries & equipments (SLM) 437.00 0.69


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4. Interest on fixed capital @ 12% 1173.00 1.87

5. Total 62882.96 100.00

Return

Turnover

1. Gross return of Tomato ketchup (1000 Kgs.) 85000.00Cost Economics

Net return 22117.04

Recurring expenses has maximum share of 96.66 per cent of the cost of production.

Gross return of tomato ketchup was Rs. 85000/ tonne and Net return was Rs.

22117.04/ tonne.

Challenges to the food processing sectors

Absence of post harvest practices at the farm level. Huge post harvest loss in

the range of 10-15 % for agricultural produce and 30-40 % for horticultural

produce.

Only about six percent of India's agricultural output is currently processed and

mainly primary processing like milling, sorting and refining are undertaken.

Hence for value addition of agricultural commodities, more investment is

required.

The local entrepreneurs have to compete with multinationals in terms of

quality, hygiene, appearance and standards.

Poor cold chain and weak infrastructure is a serious constraint for nation-wide

reach of the processed foods.

Seasonable availability of many of the agricultural commodities, particularly

fruits and vegetables.

The bulk handling facilities are not available in all ports.

Refrigerated warehousing and transportation facilities are also inadequate

and costly.

Conclusions

Developing cold storage closer to the major tomato markets will help to

stabilize tomato prices and post harvest losses can be reduced.


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Policies and plans are required for improvement of food processing

infrastructure including upgradation of technology and enforcement in food

processing, activating domestic market with focus on exports.

A strong and dynamic food processing sector could play a vital role in

diversifying agricultural activities, improving value addition opportunities and

creating surplus for exports of agro food products.

In India, the utilization of fruits and vegetables for processing in the organized

and unorganized sectors is estimated to be around 2 per cent of the total

production. The desired growth of agriculture sector in general and economic

prosperity of rural farmer in particular is achievable only with the effective

integration and synergy between agriculture and agro based industries. Value

addition ensures better market and remunerative price of the agricultural

produce by making it more marketable.

Dr. A. Malaisamy, Ph.DAssistant Professor

&

R. ParimalaranganSenior Research Fellow

Department of Agricultural Economics,

Tamil Nadu Agricultural University,

Coimbatore, Tamil Nadu

India - 641 003.

Tomato Value

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