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Anxiety over fate of tomato paste industry

By Femi Adekoya
30 December 2016   |   4:22 am
With the Central Bank of Nigeria (CBN’s) reluctance to amend its foreign exchange restriction for the importation of certain commodities, value-chain operators in the tomato paste industry ...
A tomato processing plant in Nigeria

A tomato processing plant in Nigeria

With the Central Bank of Nigeria (CBN’s) reluctance to amend its foreign exchange restriction for the importation of certain commodities, value-chain operators in the tomato paste industry have warned of the potential collapse of the N19 billion manufacturing industry before the end of second quarter of 2017, if the decision is not reviewed.

According to the operators, the value of imported tomato paste in Nigeria used to be about $170 million before the CBN ban on 41 items, out of which imported triple concentrate tomato paste used as raw material by the packers account for around $50 million.

Recall that an indigenous local tomato paste manufacturer, Erisco Foods Limited, made good its threat of shutting down the $150 million plant and relocating its manufacturing base to a location outside Nigeria last month.

The Chief Executive Officer, Erisco Foods, Chief Eric Umeofia, had announced that the company was winding down operations preparatory for its final exit from the country, citing that he was moving the factory to China, where he already had a thriving business.
He added that from there, he would be manufacturing and exporting tomato paste back to Nigeria, as it was far cheaper doing so than producing locally.

Spokesman of the Union of Tomato Paste Manufacturers in Nigeria, Nnamdi Nnodebe, hinted that the tomato processing industry is in a dire position as unavailability of tomato paste triple concentrate for the industry is grinding production to a halt.

While some operators had urged government to embrace a gradual backward integration agenda to achieve its objectives, Nnodebe noted that the sudden implementation of the forex policy by the apex ban has affected the profile of the industry drastically.

He said: “It makes better economics to import the raw materials that will enable production, grow the economy and keep jobs rather than importing the finished products or frustrating efforts to get the raw materials, thereby rendering millions jobless which might further kill the economy.

“The local packing industry can also form the hub for exports to the hinterland countries as there are adequate local capacities to more than cater to the domestic requirement. Using the ECOWAS benefits, this can be a huge foreign exchange earner for the country today and in the near future. Through the growth of the tomato industry Nigeria can compete with China instead of buying the finished goods from them.

“It is important for the government to recognise that the packing industry is an essential component of the tomato paste value chain and without this sector there can be no link between the farmer and the final consumer. Even if we develop our own triple concentrate manufacturing industry in future, the bulk of triple concentrate cannot be consumed in Nigeria alone as exportation of the local production will become more lucrative.”