Nigeria’s need to boost domestic production of tomatoes is providing a business opportunity for some of its largest conglomerates. Linus Unah reports
Tomato paste, like rice, is a prized staple in Nigeria’s culinary repertoire.
A vital ingredient in meat stews, soups, homemade sauces and rice dishes, tomato accounts for nearly one fifth of Nigeria’s vegetable consumption.
Nigeria is Africa’s second largest producer of fresh tomatoes with an annual production of 2.3m tonnes, according to a 2018 report by PwC. Paradoxically, the report also found that the West African nation is the continent’s third largest importer of tomato paste, spending about $360m per year on imports between 2016 and 2017. As such, boosting domestic tomato production has been an important element in the Buhari government’s policy of making the country less dependent on food imports.
Some of the country’s conglomerates believe they can fill this supply gap. Dangote Group, headed by Africa’s richest man, Aliko Dangote, is one of the big players that have jumped into the fray. In March 2016, it invested $20m to start a tomato processing plant on the outskirts of the northern city of Kano.
The plant, with an installed capacity capable of producing 1,200 tonnes of tomato paste daily, was touted as a game changer. But after engaging over 5,000 farmers whose output would be purchased after harvest, the plant shut in 2017, re-opened in early 2019 and struggled until it became fully operational in February this year.
Within the same period, Lagos-based food manufacturer Erisco Foods, which had opened a tomato paste plant in Lagos in February 2016, also closed its plant in November that year due to a shortage of the dollars it needed to import machine spare parts and raw materials after Nigeria slumped into a recession.
At the heart of the problem is the lack of a steady, unhampered supply of raw tomatoes. Small- and medium-scale farmers, who account for 90% of domestic production, are grappling not only with a lack of quality seeds and fertiliser but also poor yields, pests and diseases and staggering post-harvest losses due to poor storage and transportation infrastructure.
In mid-2016 an invasion of tomato-leaf eating moths (Tuta absoluta) wiped out tomato farms in several northern states, the hotspot for tomato production. Prices went up, and production plants, including Dangote’s, struggled as supply dropped radically.
Between 2006 and 2016, tomato yields averaged 5.47 tonnes per hectare, compared to the global average of 38.1 tonnes per hectare, according to PwC.
Poor yields often mean farmers are unable to produce enough, leading to higher prices that are unappealing to large-scale processors who want to turn a profit, explains Bola Oyeleke, chief executive officer of the Tomatoes and Orchard Producers Association of Nigeria (TOPAN).
Most of Nigeria’s tomatoes are grown in the north but have to be transported to the more populous south on poor roads, leading to spoilage on the way. In 2017, Sahel Capital, a fund manager and advisory firm focused on West Africa, reported that 40-50% of tomato production in Nigeria was lost because of poor handling, processing and preservation practices. Big processors like Dangote want to do things differently now.
The conglomerate has set up a greenhouse nursery where it can cultivate up to 350m tonnes of hybrid tomato seedlings yearly. The hybrid seeds should be able to produce 40-70 tonnes of tomatoes per hectare every season, well above the usual average.
In collaboration with a financing scheme backed by the Central Bank of Nigeria (see below), Dangote will distribute one hectare’s worth each of seeds to 10,000 smallholder farmers in Kano state. The company hopes that this cultivation scheme will enable the farmers to produce at least 400,000 tonnes of tomatoes annually.
Spanish food multinational GBfoods, which produces Gino Tomato Paste in tins and sachets, set up a tomato processing plant in Kaduna state last year with a capacity of 30 tonnes per day. Raw tomatoes are to be sourced from a 30-hectare pilot farm that grows more than 15 different varieties, averaging a yield of 40 to 50 tonnes per hectare.
Olam International wants to stop importing tomato concentrates and ramp up local production to meet the needs of its factory, too. The Singapore-headquartered conglomerate jump-started a 20-hectare pilot tomato farm in northern Kano and Jigawa states late last year to grow its own tomatoes.
After harvest started this year in February, the company said each of its farms could produce up to 30 tonnes of tomatoes per hectare and expects to begin tomato paste production locally from March next year.
Olam is planning to support 1,000 farmers and expand to a 500-hectare farm under its out-grower scheme by September this year. It collaborated with World Vegetable Centre, a Taiwan-based research institute, to experiment with 18 varieties of seeds to boost yields.
Support for smallholders
Yet small-scale farmers are not entirely out of the picture. Under the Central Bank of Nigeria’s Anchor Borrowers’ Programme, launched in late 2015, the government is providing cheap loans and input subsidies for farmers to cultivate staples like tomato.
The bank has enrolled 140,848 tomato farmers across 25 states who will receive training and credit to produce raw tomatoes for either direct consumption or for major players like Dangote Tomato Processing, Sonia Foods, and GB Foods.
The National Horticultural Research Institute credits all these concerted efforts, especially investment in training and technology for farmers, as a major reason for the 25% increase in annual tomato production in the last decade.
Rosemary Enemuo, analyst at a Lagos-based political and economic risk advisory, says the partnership between large processors and small-scale farmers would “invariably make production and supply seamless” and help to counter pest outbreaks.
“In the event of pest outbreak, private companies who import machinery for tomato processing can import or prescribe best pest control chemicals or procedures for managing outbreaks,” she says.
In early 2017, the Ministry of Industry, Trade and Investment announced a policy aimed at limiting imports of tomato paste and boosting domestic production. Measures included only allowing the import of tomato paste through the ports, a ban on the import of tomato paste for retail sale and sharp increases in tariffs. It also removed import duty on greenhouse equipment for the production of tomato paste to stimulate investment in the tomato industry.
In February 2019, the federal minister of agriculture, Chief Audu Ogbeh, said that the government intended to impose a total ban, but no action has yet been taken, leading to criticism from producers.
“Our major challenge is to get the government to put a total ban on tomato in whatever form, like it did for rice,” Abdulkarim Lawal Kaita, managing director of the Dangote Tomato Processing Company, told The Guardian, a Lagos-based national daily, in September 2019. “This will encourage more farmers to grow tomato as they will get better prices and more investors will invest in the tomato value chain.”