Processing Tomato Contract Farming Model Hits a Dead End
· Tarım Dünyası
Despite the contract farming model, processing tomato growers are incurring losses due to cost pressures and high rejection rates in the field, amidst rising input costs.
Chronic Crisis Cycle in Processing Tomatoes
Despite contracts signed between parties in industrial tomato production, price crises have become chronic. Similar to dry onions, a year of abundant production causes prices to hit rock bottom, leading producers to withdraw from cultivation the following year due to unsold crops. This supply-demand crisis cannot be prevented even with contract farming, where the grower and industrial buyer agree on terms before the season. Structural uncertainties in the market create a vicious cycle that victimizes both farmers and industrialists.
Turkey's Tomato Production Capacity
According to Turkish Statistical Institute (TÜİK) data, Turkey ranks third globally in tomato production with an average annual yield of 13.5 million tons, following China and India. TÜİK announced a production of 13.5 million tons for 2025, with initial estimates for 2026 indicating a yield of 13 million 425 thousand tons. While 70% of the production is allocated for fresh consumption, 30% is processed industrially, with the majority of this industrial share directed towards paste production.
Disruptions in the Contract Farming Model
Contracts signed between paste factories and farmers are often flexibly interpreted by both parties based on market conditions. In seasons with low supply and high prices, producers sell their crops to the open market outside of contracts. Conversely, during periods of surplus supply, industrialists reduce their committed purchase quotas and aim to procure cheaper products from the market. Uncontrolled cultivation outside of contracts further deepens market supply imbalances. This situation renders the contract farming system, which has been in place for many years, ineffective.
High Rejection Rate Complaints in the Aegean Region
In İzmir's Torbalı, Tire, and Menemen districts, where the harvest season has begun, producers are complaining about rising costs and the rejection rates applied by factories. Producers of processing tomatoes in İzmir's Torbalı, Menemen, and Tire shared their grievances:
"Input prices, especially fuel and fertilizer, are constantly increasing. Due to the war in Iran, the prices of fertilizer and fuel have doubled. Harvesting costs and labor are high. The price of agricultural pesticides has increased. However, we have been selling tomatoes at almost the same price for 3 years. Forget making a profit, we are incurring losses. We harvest the tomatoes and take them to the factory, and they apply a 25-30% rejection rate. When the price is 4-4.5 lira, it drops to 3-3.5 lira due to rejection deductions. In years with low tomato yield, the rejection rate is cut by 1-2%, but when there is a high yield, the rejection rate is increased to 25-30%. This is a great injustice."
Factories attribute these rejection rates to foreign matter resulting from pre-harvest rainfall and mechanical harvesting.
Price and Cost Pressures from Past to Present
Similar cost squeezes recur periodically in the sector. In 2020, the production cost was 45 kuruş, while the purchase price remained at 30-35 kuruş. In 2024, following producer actions, the Ministry of Agriculture and Forestry and the Ministry of Trade intervened, instructing factories not to purchase tomatoes below 2.4 lira and announcing an industrialist support of 5,000 lira per ton. Currently, with production costs at 3.5-4 lira and factory purchase prices at 4.5 lira, rejection deductions reduce the effective price to 3-3.5 lira, causing farmers to incur losses.
Impact of Export Restrictions on the Paste Sector
In paste exports, revenue of $157 million was generated from 170,000 tons in 2020, and $208 million from 207,000 tons in 2021. In 2022, exports exceeded 300,000 tons, reaching a record high of $468 million. However, export restrictions imposed in September 2022 due to domestic price increases led to the loss of markets. Exports declined to 171,000 tons ($271 million) in 2023 and 177,000 tons ($233 million) in 2024, with an estimated 175,000 tons ($300 million) for 2025. According to 2024 data, Iraq was Turkey's largest buyer with 60,000 tons, followed by Italy with 25,000 tons and Germany with 14,000 tons.
Growing Unplanned Problem in Dried Tomatoes
Dried tomato production, which has spread from the Aegean and Marmara regions to Central Anatolia and Southeastern Anatolia, is showing crisis signals due to unplanned growth. Uncontrolled production exceeding external demand is causing export unit prices to fall rapidly. Exporting firms state that they cannot achieve profitability in foreign markets due to high interest rates, low exchange rates, and intense competition. The unplanned expansion of production areas leads the sector into price competition with itself in the global market.
Expectations for Solutions for Market Stability
There is a demand for the implementation of long-term risk management strategies in the tomato sector, rather than seasonal crisis management. Producers are requesting increased direct input subsidies in parallel with rising fuel, fertilizer, and labor expenses, and they want contracts to be made binding. It is stated that the Ministry of Agriculture and Forestry should set a floor price and that industrialist support should be structured based on this floor. If the supply chain from field to table is not planned, both farmer losses and consumer complaints about high prices will continue.