The Australian processed tomato industry is facing some enormous pressure and does not know how to compete with cheap foreign imports. Victoria and New South Wales have lost almost half their growers in the past 10 years. Meanwhile, this deep decline reveals the extraordinary pressures on the sector. Fourteen years ago, tomato production accounted for 95 percent of their revenue. That number has dropped through the floor and is now at a mere 47 percent, according to Brad Free, CEO of Kagome—Japan’s largest tomato processor.
Recent climatic shocks during the past three years, including severe drought, have made life even more difficult for growers. Matthew Stewart, another experienced industry guru, emphasized how this volatility has led to a ‘shrinking number of active growing businesses. “In the last 10 years we’ve gone from about 12 active growing enterprises down to seven across northern Victoria and southern New South Wales,” he stated. The stakes for these changes are high, as our growers are getting hit with a market very much influenced by the foreign competition.
Competitive Landscape
As with most of the industry, the dynamics really play out on a global scale. Free explained that “tomato is a volatile industry and is completely hitched to the commodity market — global trends determine your future.” Specifically, he mentioned countries like China that have greatly increased production over the last few years, thereby flooding the market and resulting in drastically lowered prices. “China produced 11.5 million tonnes in 2024 and it’s really flooded the market, so it decreased prices significantly,” he added.
Even though these challenges persist, the surfaces industry should be optimistic. Brad Free indicated that this season’s production has been positive, describing the current raw material as “probably the best I’ve seen to date” in his 20 years of processing. This value added quality would provide a direct competitive advantage compared to sterile imported products, especially with consumer preferences shifting toward locally produced ingredients.
Innovations in Product Development
Facing challenges from a contracting industry and increasing competition, Kagome has rolled out some new ideas to stay ahead. The conclusion Tohoku wants to finish installing a new powder drying process at its powder factory soon, with the goal of recovering all by-products by 2027. This initiative is a prime example of an accelerating trend within the industry. Businesses are finding novel ways to re-use tomato waste products that used to be discarded.
Free elaborated on this approach, stating, “We’ve got a [tomato] skin and seed by-product that we weren’t processing and we’ve wanted to do something with it instead of feeding it to livestock.” This development fits in with Kagome’s recent expansion into beauty products, a radical departure from the company’s core markets. Free emphasized, “We’re doing this to help growers so we’re not just playing in a commodity market.” Through this diversification into non-food sectors, Kagome seeks to strengthen the overall sustainability of the tomato processing industry in Japan.
Future Outlook
The Australian processed tomato industry is struggling under increasing import competition and changing climate impacts. To succeed, it needs to double down on innovation and diversification. Kagome is one step ahead, though, taking the future into consideration and proactively adapting to stay ahead and transform. This provides local producers with a new optimism moving forward.
