Nigeria presents a paradoxical case when it comes to its agricultural sector – it is one of the largest producers of tomatoes in the world, but it is also one of the largest importers of tomato paste.
Let’s examine in more detail.
Nigerians love tomato paste. It is a central element of their kitchen. They use tomato paste in almost all of their most popular dishes.
But almost all the tomato paste consumed in the country is imported. According to some estimates, Nigeria imports up to $1.5 billion worth of tomato paste every year.
Most imported tomato paste comes from China, a country more than 12,000 nautical miles away.
The paste is imported from China in a highly concentrated form, which is then diluted and packaged in locally branded sachets.
Shipping a container of tomato paste from China incurs the following costs:
– Cost, Insurance and Transport: $23,000 to $24,300
– Delivery costs: $2000 to $4000
– Handling, unloading and customs fees, plus tariff: $2,000
The pulp that China exports to Nigeria is also of inferior quality, which cannot be exported to Western and other developed countries, due to failure to meet strict quality standards. As a result, there has been a public health backlash in Nigeria against tomato paste imported from China. Many Nigerians believe that the consumption of Chinese tomato paste has led to widespread health problems in the country, earning it the unwelcome nickname “killer tomato paste”.
All of this could be avoided if Nigeria could process its tomato products and produce tomato paste for local consumption. Nigeria is the 14th largest producer of tomatoes in the world, the 2nd largest producer in the African continent and the largest in the West African region. Nigeria produces over 2 million metric tons of tomatoes annually, according to the latest figures.
But about 900,000 tons out of the 2 million are wasted. The reasons for this massive post-harvest loss are:
– Poor supply chain management
– Inadequate water and electricity supply and storage facilities
– Price depression, as tomatoes are highly perishable and have a limited window of time to be sold and processed. 80% of the tomatoes are harvested between January and April. This leads to price volatility and market glut.
– Pests and diseases
– Heavy rainfall in high season
– Bad marketing
– Multiple local and state taxes and levies
– Corruption of airport and seaport officials
– High costs of processing, packaging and storage machinery and equipment
– Underinvestment in human capital has made Nigerian farmers less productive
Many companies have also dabbled in running successful tomato paste processing plants, including Dangote Group, the multi-billion dollar Nigerian conglomerate.
But most of them did not succeed financially.
One of the main reasons is that the productivity of tomato cultivation in Nigeria is not high enough to make investments in processing plants economically viable.
We will examine this in more detail later.
Other reasons for the failure of tomato processing plants are:
– Overinvestment in expensive production facilities
– Underinvestment in agriculture and logistics
Due to all these reasons, Nigeria has been caught in a vicious circle of producing lots of tomatoes but most of the tomatoes are wasted and then having to import tomato paste from other countries.
This is where Mira Mehta & Tomato Josent come into play.
Mira, who has a background in community health, was working in Nigeria in 2008, as a member of the Clinton Health Access Initiative.
Mira herself witnessed the overabundance of the tomato market. She saw, what she describes as, crimson carpets of rotting tomatoes on the sides of the roads.
She decided to tackle this problem and contribute more directly to the development of the Nigerian economy and the upliftment of Nigerian farmers.
She went to Harvard Business School in 2012, to equip herself with the education and network she would need to achieve her goals.
After her studies, she co-founded Tomato Jos in 2014 with the objectives of reducing post-harvest losses and developing a brand of tomato paste, made from locally produced tomatoes.
(Its co-founder, Shane Tiernan, left the company after a few years)
Mira and her team have thoroughly investigated where previous attempts by other transformative companies and entrepreneurs have gone wrong. She also consulted with top tomato growers and processors in California, USA.
She learned that she needed to focus on the entire value chain – agriculture, logistics and processing; instead of just focusing on the processing aspect.
It has deployed a systematic and multi-year strategy, which consists of:
1) Increase the productivity of tomato cultivation.
2) Starting an economically viable tomato paste processing plant.
3) Launch of an exclusive packaged tomato paste product.
Increase the productivity of tomato cultivation
Tomato Jos operates its own commercial farm, which is one of the largest active tomato farms in the entire country.
It also has a smaller model farm where farmers are trained.
Farmers join the company’s model farm program and are taught best practices to increase their productivity, through a mix of classroom and on-the-job training.
The program aims to optimize a hundred specific agricultural behaviors. To be continued