BusinessDay
NigeriaDecides2023

Nigeria’s N3.7trn post-harvest losses open opportunities for investors

… as tomato, pepper prices double

Ibrahim Idris, a 47-year-old farmer in Chikun Local Government Area of Kaduna State, grows tomato and pepper 683.1 kilometres away from the Mile 12 Market in Lagos State – where the bulk of his fresh produce is sold.

Idris usually transports his tomatoes to Lagos via the road inside raffia baskets, with 100 of such baskets loaded inside a J5 truck.

He spends an average of two to four days getting his fresh produce to the Mile 12 Market, depending on the rate of banditry, kidnapping, and terrorism on the Kaduna – Lagos highway.

About 20 percent of his fresh tomatoes (equivalent to 20 baskets) would have gotten spoilt upon reaching Lagos, forcing him to transfer the cost on the remaining baskets of the fresh produce.

“We usually add the cost incurred on post-harvest losses to the ones that finally make it to the market,” Idris says.

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“This is why prices of tomato and pepper are higher than they ought to have been. Farmers cannot afford to bear the loss but would have to transfer it to the consumers,” he explains.

His situation is similar to what millions of smallholder farmers that grow perishable crops across the country go through.

It has led to a surge in the country’s post-harvest losses currently estimated at $9 billion (N3.7trn based on the current official exchange rate of N410), according to the Federal Ministry of Agriculture.

Post-harvest losses in Africa’s most populous nation have been estimated to range between 5 and 20 percent for grains; 20 percent for fish and as high as between 50 and 60 percent for tubers, fruits, and vegetables, according to experts.

Since the outbreak of the COVID-19 pandemic in the country, Nigeria has experienced an unimaginable food loss, threatening food security and precipitating massive importation owing to the high rate of insecurity, experts say.

Nigeria spent N1.732 trillion importing food in 2020, the highest in five years. An indication that the country is largely dependent on external sources to augment local production, according to data from the National Bureau of Statistics (NBS).

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The value of the imported agricultural goods for the period was 78.6 percent higher than in the full year of 2019.

Nigeria produces 1.5 million tons of tomato per annum, with 0.7 million metric tons lost post-harvest. Tomato demand in Nigeria is put at 2.2 million metric tons per annum, leaving a gap of 1.4 million metric tons, according to official data from the Agricultural Ministry.

The N3.7 trillion the country loses yearly to post-harvest losses and the gap in tomato production create investment opportunities for entrepreneurs to tap into.

From developing solutions that provide automated storage facilities to the manufacturing of plastic crates to transport fresh produce to the markets, and investing in processing factories to crush fresh tomato and pepper into pastes.

“The opportunities in post-harvest losses are huge and massive. We just started scratching the surface,” AfricanFarmer Mogaji, CEO, X-Ray Consulting says.

“The opportunities cut across storage, manufacturing of plastic crates for transportation of fresh fruits and vegetable and crushing of tomatoes, and fruits into paste and juices,” he states.

According to a PWC report, Africa’s most populous nation is the largest consumer of vegetables in sub-Saharan Africa with about 22kg per capita, with tomato consumption put at 12kg per capita in 2016.

Nigeria has 200 million people, which ordinarily is a big market for food makers. Tomato is widely consumed in the country, with uses from soups to stews and other forms of cooking.

The peak season for tomatoes and pepper in Nigeria is between September and February, and the price of the vegetable is usually low during the period.

However, the off-season period is usually April – July because tomatoes do not do well during the rainy season and the price usually peaks during this period.

Both start-ups and big businesses are already seizing these opportunities. Some small businesses have developed ways of pasteurising tomatoes into glass jars to curb post-harvest losses and ensure year-round availability during scarcity.

They process fresh tomatoes when it is cheap and abundant to supply the market when it is scarce and expensive. Among these start-ups is Smiley’z Fresh Tomato Paste – which says its product is 100 percent tomatoes with no additives or preservatives and has a one-year shelf life.

Similarly, there are big players like the Dangote Tomato Factory and Tomato Jos Processing Plant that are into the crushing of fresh tomatoes into triple concentrates.

Challenges facing investors already tapping opportunities

Among those investors tapping opportunity in crushing fresh tomatoes into triple concentrate are Dangote Tomato Factory and Tomato Jos Processing Plant.

While others such as Savannah Foods, Vegefresh, Manto Tomato Processing Plant (in Gombe), Spring Field Agro, Erisco Foods, and Perfect Integrated Foods are tapping opportunities in getting triple concentrate for onward processing.

However, majority of the factories are either shut down or processing skeletally due to irregular supply of fresh fruits by farmers and off-taker agreements.

Their periodic inactivity is perpetuating the party of triple concentrate importation and smuggling into Nigeria.

“Government must provide the right seedlings to farmers to cultivate the species of tomatoes more suitable for the production of concentrate and improve tons per hectare of the local farmer,” says Abiodun Olorundenro, manager, Aquashoots.

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