Stimulating Nigeria’s tomato value-chain

In 2014, the Federal Ministry of Agriculture and Rural Development, under the previous administration’s Agricultural Transformation Agenda launched the first phase of its Staple Crop Processing Zones (SCPZ) initiative to drive modernisation of Nigeria’s agricultural sector.

The SCPZ approach to Nigeria’s agricultural development is designed to concentrate infrastructure investments in areas of high agricultural production by integrating production, processing and markets.

Despite the loftiness of the scheme, Nigeria’s dependence on food supply through imports remains high. To reduce the imports, a backward integration agenda was initiated for some staple commodities, while the tomato paste industry remains bedevilled by heavy imports of sub-standard tomato paste, especially when local production is already matching growing demands.

Presently, about 1.8 Million tonnes of fresh tomato are produced yearly in Nigeria, but over 50 per cent of these are lost due to poor storage system, poor transportation and lack of processing enterprises, therefore necessitating the need to develop strategies for the development of tomato value chain.

For those interested in investing in the nation’s manufacturing sector, being aware of the plethora of problems such as power, insecurity, lack of infrastructure and poor government policy remains a concern.

According to the National Bureau of Statistics, manufacturing is responsible for about 10 per cent of the country’s total GDP yearly. In terms of employment generation, it accounts for about 12 per cent of the labour force in the formal sector of the nation’s economy.

With the success of the backward integration exercise in the cement and sugar industries, operators in the tomato value-chain believe the programme can be introduced in the sector to stimulate investments and economic growth.

For instance, the Chief Executive Officer of Erisco Foods Limited, Eric Umeofia lamented the high level of importation of processed tomato paste when local players have capacity to produce such.

He said: “Erisco Foods Limited’s mission is simply to help the economy, to help Nigeria control our own economy. We deal in the manufacturing of tomato paste, to help stop the importation of fake and substandard tomato paste from China that is actually damaging both our economy and health. We want to be exporting tomato paste from Nigeria. We have the capacity and all it takes to achieve it.
“The big question that should be on every Nigerian’s lip is: Why do we still import tomatoes when there is an abundance rotting away in the northern part of the country? A 2014 report noted that Nigeria is rated as the second largest producer of tomato in Africa and 13th in the world but loses over 50 per cent of the commodity due to lack of storage and under-developed marketing channels.

“It was one of the reasons why we decided to go into tomato refining. We set up our factory, with a capacity of 250,000 tonnes of processing tomato paste, and keep running it, keep losing money every month, just to get people off the streets and get them engaged. People like to talk about importation, but I prefer manufacturing, and this is what I’m doing.

“Some months ago, the tomato plant almost closed down. We couldn’t sell our tomato because of the fake ones in the market. NAFDAC refused to do its work. Luckily, the federal government said no product that can be made in Nigeria will have foreign exchange allocation. That was when our business started to rise like Lazarus. Now, we have recalled all the staff we sent away and are employing more.

“By the time this product saturates the market, Nigerians will realise what we’ve done for them. It is about creating a standard, and letting everyone work based on that. That way, the economy will be better. We will be able to use our own tomato to develop our economy. We will be able to create jobs. It touches my heart to see graduates applying for casual work here.

“When you want to do backward integration of tomato in this country, you need minimum of one line to process tomato into concentrate; and it costs 30 to 50 million dollars to do one line. In China, 95 percent of the factories are owned by government. The same machine that will work 70 days a year, will work just 35 days in China. So, getting the money isn’t easy.

“The major investment in that area, which will take 15 years to recover, should have been done by the government or a special fund. I have been to the Central Bank for it, but they haven’t listened to me. Moreover, in China, interest rate is about 3 percent. Here, it is about 22 percent. How can I perform? You’ve tied my legs and arms and say I should be running. So, that’s why we are still importing concentrates as our raw material”.

Emphasising the need support made-in-Nigeria goods, he said: “If you don’t patronise your own, nobody will patronise you. Every country in this world eats its own food, except Nigerians. Look at Shoprite, 95 percent of goods there are imported from South Africa, yet they are packing Nigerian money. We’ve approached them to sell our tomatoes, but they refused. They are importing more from South Africa. Government should do something about these people; they are killing us, packing our money away.”

To address challenges in the tomato value chain, industry watchers believe that though the development of tomato for industrial use is currently gaining momentum, in the area of production of tomato juice, paste, ketchup, puree, and powder, efforts must be made to address the lingering challenges.

Strategies identified to overcome the challenges include policy shift to encourage Small and Medium Enterprises (SMEs) as well as Industries along the value chain; improved input supplies; organisation of farmers into cooperatives so as to initiate innovative funding mechanism for them; establishment of clusters for processors; improvement in marketing strategies including guaranteed price for fresh tomato products.

Furthermore, there is need for the adjustment in tariff regime to favour local manufacturers through an outright ban on importation of processed tomato products; increased investments in Research and Development (R&D) to produce improved seed varieties and develop technologies for storage and processing; adoption of Good Agricultural Practice (GAP) by farmers and a strong National Commodity Association or Network.