When the government decided to push for full implementation of its backward integration policy, this meant manufacturers using agricultural raw materials like tomato had to develop local supply chains in order to stay competitive. Over the years, tomato production in Nigeria has been challenging, with farmers recording huge losses mostly on account of post harvest losses that have been put at 45 percent. At the same time, the country has a high deficit that was for many years filled through importation of up to $360million annually.
The fragility and short shelf span of tomatoes facilitate wastage across many tomato producing regions. Inadequate logistics and storage facilities have further increased tomato wastage, as noted in a 2018 report by PwC on the tomato industry in Nigeria.
Caraway Foods International Nigeria Limited, a subsidiary of Olam Nigeria, is now taking what can be described as a bold step to contribute towards local sufficiency, and deepening backward integration. To give some context, the company imported tomato pastes into Nigeria between 2006 and 2010, promoting the De Rica and Tasty Tom brands. Initially, tomato pastes were imported as finished products and distributed but after testing the market and seeing it do well, the company decided to set up a factory in 2010.
In 2011, it commenced local production of its tomato paste brands in Nigeria, although concentrates were still imported. With the current plan now being evolved, however, the company is aiming for complete backward integration where the tomatoes will be sourced locally, crushed, turned into concentrates, and finally made into tomato paste. Up until now, both brands were produced and packaged locally at a processing facility located in Lagos. Now, the company wants to expand operations to the North, where it will have some of the processing done closer to the source of raw materials. This will invariably contribute towards reducing post harvest losses, enabling more farmers to find market for their produce, and bridging the country’s overall deficit to some extent.
“This is complete end-to-end production and backward integration,” said Prashant Thakur, the regulatory head for Caraway Africa Nigeria limited, who is also heading the tomato backward integration project. He explained that existing brands; Tasty Tom and De Rica, will continue to be produced except they will now be 100 percent local content. In addition to this, more innovative products such as mixtures giving ginger, garlic, onion, peppers etc are likely to be developed.
To achieve the backward integration plan, the company started a pilot project in September 2019 on 20 hectares of farmland across three locations in Kano and Jigawa states, which will be expanded to 500 hectares later this year. Following this, will be commencement of a larger out growers programme to engage 1000 farmers to be trained and provided with seeds that will deliver the same kind of output the pilot farms are recording.
“It is a very proud moment for us to say that our products are 100 percent locally made and also because it provides employment,” said Thakur who has been with the company for 14 years. “It is definitely a positive step in terms of developing production in Nigeria, and also because we will not be depending on imports anymore”.
By September (this year), Thakur said a processing facility would be in place so that by the time crops are ready from the farms in February 2021, they will move straight to the processing unit. By this time, the tomato pastes produced by the company would be 100 percent local content.
At an estimated 30 tons per hectare yield from harvesting done so far, the output from the pilot farms dwarf the four to seven metric tonnes realised by farmers in Nigeria. Agribusiness Insight visited some farm locations in Kano and Jigawa states last week, where the company has been running the pilot farms for its local production project. Knowledge from how the high yields have been achieved could enable smallholder farmers improve their yields exponentially, enabling them to focus more on volumes than to put high prices on the little they previously produced. There is in fact, optimism that yields could even edge up to 40 tonnes per hectare, and with more improvement over time. These high yields mean the company can produce raw materials at lower price points that would make processing viable.
“When a farmer produces (less than) 10 metric tonnes per hectare, it does not make economic sense either for the farmer or the processors who are willing to buy,” said Reji George, Olam’s vice president in charge of farming programs in Nigeria. This he said is because when a farmer produces less quantity, prices will be higher and processors will not be able to buy at that price and make their processing viable also.
Even though the pilot projects are currently running in Kano and Jigawa, there appears to be a preference to settle for Jigawa when the 500 hectare commercial farming and processing facility are launched. This derives from the existence of a processing plant in Kano already (owned by the Dangote Group) albeit not operational. According to George, Jigawa offers higher table waters, more land expanse for utilisation in a stretch, but final selection will done after an evaluation of yields from the project later this year.
Emmanuel Sangodele, a plant scientist specialising in plant breeding and genetics who has practised for 25 years manages the farm production process on the project. He said in an interview that the target is to produce enough tomatoes to meet the processing and market demands. So far, the pilot farms have been evaluating 18 varieties, and Sangodele explained preliminary results are pointing to three varieties based on their sizes, the crimson colour and less water content within it.
“We are optimistic that we shall be able to find a very good variety for the commercialization in the country,” Sangodele said. While the team is currently evaluating various varieties that can be selected for this purpose, once the right variety has been selected, it will be deployed for the large-scale commercial farming as well as the outgrower scheme with smallholder farmers.
“We have identified a number of outgrower Farmers that are being brought to the school Farm to learn and adopt this on their own farm,” said Sangodele, expressing optimism that by the next planting season, the same high yields will be replicated on the fields of smallholders farmers.
Addressing quality assurance, Thakur said in his 10 years of handling De Rica and Tasty Tom, that there have been no complaints on safety or quality, and if any, were limited to handling issues that were easily sorted out. Both brands are already certified by the Standards Organisation of Nigeria (SON) and National Agency for Food and Drug Administration and Control (NAFDAC), including regular inspection visits to ensure the company abides by all required quality parameters. This he says will continue even now that production will become 100 percent local. In the past, NAFDAC would visit the countries where raw materials came from, but will now be able to do this through visits to the local site and certify it.
“Be rest assured of these products definitely meeting quality parameters as prescribed by the laws of the country,” said Thakur, who is heading the backward integration project.
To achieve its plan for complete backward integration, Thakur said the company would need a lot of help from government, especially infrastructure wise. “While we are working on our side we also require help from government in getting land for production in appropriate areas,” he said.
CALEB OJEWALE
