Local production of tomato paste and concentrate in Nigeria is currently at a stand-still due to a lack of competitiveness by processors, which is stalling the hope of having a flouring tomato processing industry in the country.
According to the latest National Bureau of Statistics (NBS) selected food prices report, an average price of a kg of tomato cost N336.3. This means that a ton of fresh tomatoes sells for about N336, 287 ($921).
Processors need four tons of fresh tomatoes to produce a ton of concentrate. This means the processors will spend an average of N1.34 million ($3,685) to produce a ton of concentrate, excluding other production cost.
It cost about $900 to produce a ton of tomato concentrate in China and other Asia countries that are major suppliers of tomato paste to Nigeria, industry data show.
The low price has continued to fuel the influx of tomato paste and concentrates into the country, making more difficult for local processors to favourably compete.
“We are not globally competitive in food production in a way that allows the processors take fresh produce and process to sell at internationally competitive price,” Prince Samuel, chairman and managing director, Vegefresh Group, told BusinessDay in a telephone response to questions.
“Farmers are not producing at the price processors are willing to buy to be able to compete favourably with imported tomato paste. This is why there is high importation of paste and concentrates into the country,” Samuel said.
Processors need to pay at most $200 per ton of fresh tomatoes to be competitive, BusinessDay calculations shows.
Africa’s biggest economy produces 1.5 million tons of tomato per annum, with 0.7 million metric tons post-harvest loss.
Tomato demand in Nigeria is put at 2.2 million metric tons per annum, leaving a gap of 700,000 metric tonnes, according to official data.
Nigeria is the 13th largest producer of tomatoes in the world and the second after Egypt in Africa, yet the country is still unable to meet local demand because about 50 percent of tomato produced is wasted due to lack of adequate storage facility.
The major issue hindering the sector remains the massive importation of paste into the country, according to Abdulkarim Kaita, managing director, Dangote Tomato.
“This kills the initiative of the farmers to grow more and the local manufacturers to be able to buy, process and sell,” Kaita said.
“It is cheaper to buy from China than buying locally because the imported tomato pastes are not 100 percent tomatoes; it is usually filled with body fillers like starch,” he added.
According to Kaita, most pastes found in the market have less than 28 percent minimum tomato fruit content which is the specification of the CODEX Standards and the Nigerian Industrial Standards (NIS), as confirmed by the National Food and Drug Administration and Control (NAFDAC).
He said that the Dangote Tomato Processing factory that has been shut down for over two years is planning to re-open in January 2019.
BusinessDay investigations found that no tomato processors are currently operating in the country, despite farmers increasing production to meet up with off-takers agreements entered into with various processing factories.
Since the Federal Government imposed a 50 percent import tariff, alongside an additional levy of $1,500 per metric ton on imported concentrates into the country while out-rightly banning the importation of tomato paste 16 months ago, the policy is yet to fully take effect.
Recently, BusinessDay surveyed some of the markets in Lagos and its environs and discovered that most shelves of traders in the market are filled with the brands of imported tomato pastes
This shows that imported paste are still finding its way into the Nigerian market.
Olatunde Oderinde, team lead, Market Development in the Niger Delta (MADE) said that Nigeria would only benefit from the tomato industry policy when all issues affecting all actors along the value chain are effectively resolved.
“We are yet to have a policy life cycle in Nigeria where every player in the industry is carried along and where their challenges are addressed holistically,” Oderinde said.
“Nigeria needs to work deliberately on policies that create inclusiveness. We need to sort out the issue of competitiveness to keep farmers productive,” he added.