Tomato paste manufacturers appeal for more time for backward integration

Tomato paste manufacturers in Nigeria have appealed to the Federal Government to hold back on the CBN forex policy in order to avail them more time for backward integration.

Triple concentrate, a major raw material for the production of packed tomato paste, was listed among the 41 items banned from accessing foreign exchange (FX) from the official window by the Central Bank of Nigeria (CBN). This policy has made it impossible for firms to import tomato concentrate, which in turn is having an adverse effect on the production of the product.

Speaking through Nnamdi Nnodebe, managing director, Sonia Foods Industries Limited, the manufacturers in a statement appealed for more time to further invest in backward integration in the country. “As a group, we are committed to the growth of the Nigerian economy and also wish to boost the GDP of the nation through the production and exportation of tomato paste. However, we will be pleased if the government can avail us more time to allow for backward integration just like it applies to some other sectors of the country.

“We have begun the process of backward integration in some parts of the country, but support for the process is critical to its success. We plead with the relevant government agencies to provide adequate support in terms of easy access to arable land, low interest loans, and irrigation facility, technical and also infrastructural support.

“In the long run, we intend to establish a triple concentrate factory using locally harvested product, which would fill up the huge shortage of about 150, 000 million tons (MT) in the Nigeria tomato paste market,” Nnodebe said.

The tomato industry is one of the sub-sectors Nigeria has comparative advantage, as Nigeria is ranked second largest producer of tomato in Africa and 13 largest in the world, producing 1.701MT of tomato annually at an average of 6MT per hectare, all of which remains insufficient to sustain the tomato paste industry in Nigeria.

The recent policy of the CBN, according to Nnodebe, will lead to approximately 100,000 job loss, increase in the product cost and ultimately the shutting down of some of the production companies if this is not well managed through adequate time for backward integration.

Backward integration refers to a company buying or internally producing parts of its supply chain locally. It is a vertical integration that combines a core business with local suppliers of its raw materials. Advantages of backward integration may include assurance of the pricing, quality and availability of supplies, and efficiencies gained from coordinating production of supplies with their consumption.