Top tomato grower struggling to stay afloat

(Conclusion)

While contending with internal problems, NFC is also struggling to fend off growing imports of tomato paste from China, now averaging about 4,000 MT yearly.

"We are competing against Chinese tomato paste producers with two, three, five-year old processing plants," said Mitra.

China reportedly, has more than 50 processing plants, all of which have bigger production capacities than NFC.

China is so strong that it has even invaded the US and Italian markets. Italy has stepped up its efforts to ward off tomato imports from China by redefining the standard for "passata" to mean that for any product to be called passata it should be prepared directly from fresh tomatoes in Italy. Because of China’s cheap production costs, some Italian companies have been buying from Chinese tomato paste producers and passing these off as passata.

NFC on other hand, despite China’s lower grade tomato paste, has been unable to convince a major market segment – the country’s fishcanners, to use local tomato paste.

"We cannot penetrate the sardines industry and they are big importers of tomato paste. We are puzzled because some of the buyers admit that our product is far more superior than the ones from China. They bought a token volume, but only on the intercession of the Board of Investments," said Mitra.

We are dumped not just sub-standard tomato paste, but even unhealthy ones as well, those that Japan rejected. They said we are off specs, but that’s because the fish canners prefer lower specifications," added Mitra.

To control imports of tomato paste from China, NFC is trying to convince the Cabinet-level Tariff and Related Matters (TRM) committee to grant its petition for a two-tiered import tariff. This is aside from its previous plea for the TRM to increase current import tariff on tomato paste from 10 percent to 30 percent for 28-30 Brix content, it also wants additional protection by having a different import tariff for tomato paste with Brix content exceeding 30.

NFC currently produces an average of 6,000 MT tomato paste yearly with 28-30 Brix content, the same kind being exported into the Philippines by China, while Italy and the United States bring in tomato paste with 32 Brix and above.

Mitra said that while a 30 percent tariff hike should be imposed on tomato paste with 28-30 Brix, the NFC is comfortable with maintaining or lowering the tariff for the 32 Brix tomato paste.

"We don’t produce it anyway. But if we could upgrade our plant, we will be able to produce the 32 Brix. What this means is the likes of major food processing companies like Del Monte Philippines which imports about 10,000 metric tons annually can start buying from us. That would also translate into significant foreign exchange savings," said Mitra.

Mitra said the proposed tariffs would provide a breather for NFC and the rates asked are still well within bounds of the country’s tariff commitments to the WTO.

The NFC is also planning to revive its anti-dumping case against China filed with the DA in 2001.

"We filed our petition but no action has since been taken by the department. It was the first anti-dumping case in the agriculture sector and its outcome would be significant especially since the influx of imported agricultural products have already killed other sectors such as the onion and garlic industries," stressed Mitra.

Keep NFC open?

While beset with difficulties, Mendoza said government should exhaust all possible options to keep the plant open.

"NFC may not be as strong financially, but there are other economic factors such as the local employment, we are the largest taxpayer for Region I. Keeping the plant open will allow that multiplier effect to continue and even expand. We have farmers relying on NFC for their produce, we have the displaced tobacco farmers and other allied industries such as the truckers and kaing weavers," said Mendoza.

Since NFC started operations in 1984, it has increased its customer base to include its biggest buyer, Jollibee Foods Corp., Genosi which toll packs for McDonalds Phils., California Manufacturing Co. Inc., RAM Food Products Inc., Del Monte Phils., Heinz-UFC Phils. Inc., San Miguel Foods, Purefoods-Hormel, toll packers and sauce and ketchup manufacturers.

Ilocos Norte Chamber of Commerce and Industry president Manuel M. Ablan said it is critical to keep the NFC alive.

"It is the only agro-processing industry in the province, the other manufacturing concern is Coca-Cola Bottlers. It provides livelihood to our farmers. Even if farmers continue planting after Northern Food closes, there is no longer a guaranteed price for their produce so the old cycle is revived with traders dictating the price, it will be them that will benefit from the closure of the plant," said Ablan.