Tomato Output Dropping in Spain, Portugal

WASHINGTON - Jun 11/06 - SNS -- Tomato production on the Iberian peninsula, in Spain and Portugal, should start trending lower as revised European subsidies erode income opportunities for the crop for Europe's second and third largest tomato producers.

However, eating through surpluses of tomato paste accumulated in prior years will see combined paste exports from the two countries maintain a torrid pace through the coming marketing year, argues the U.S. agricultural attache for the region.

"Until, and even after the European Commission (EC) revises the fruit and vegetable common policy, we expect Iberian processed tomato production to decline, while exports will likely remain strong until the excess stocks have been sold into the world market," the agricultural attache said.

"Fresh tomato production during 2006 will likely decrease in Spain and Portugal. The reduction will be in response to diminishing subsidies, calculated annually using a three-year moving average that includes a penalty factor for any and all years that producers exceed the national annual production quota.

"Spanish producers have, until now, been on the front side of this three-year sliding average, which perversely stimulated over-quota production. Now, however, they are feeling the results, as the moving average factors in their over-quota production and decreases the subsidy levels available to them."

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