Almost two years after the largest tomato plant ran aground on supply shortages, the Dangote Tomato Processing Factory has returned to operations with fresh strategies to shrug off challenges it previously underestimated.
It has now broadened its supply window to include greenhouse production of high yield seedlings, while retaining its partnership with thousands of local farmers.
Experts see the coming on stream of this project as another door to opportunities which entrepreneurs and investors can tap from, especially in areas of growing, aggregation, preservation and transportation.
If the plant begins operation at full capacity, it will be open much more to supply than local producers can currently handle, implying that more growers opting tomato can be guaranteed about off-take.
Businessday understands that the factory purchases at prevailing market prices. Prices are currently low due to the glut experienced in production and the uncertainty that rented the air in anticipation of the states and local government elections. For the week ended March 8, farmers in Kano sold at to the plant at N11 per kilo, immediately following a N20 per kilo rate.
Farmers began supplying the plant towards February end and in the opening week of this month, only 70 tonnes struggled to be delivered to the plant from over 2,000 tonnes churned out across fields. About 25 trucks of tomatoes journey from Kano to open markets in cities including Lagos, Calabar and Port-Harcourt among others in response to demands.
Sanni Yadakwari, Tomato Growers Association of Nigeria secretary told BusinessDay this presents opportunities for willing investors growing as the Dangote Factory expects a supply of 1,200 metric tonnes from it daily. Where the association has only supplied 5.8 percent of what is required, 1,130 tonnes demand is waiting to be fixed.
But beyond the production, preservative transportation is another value-chain experts suggest could be explored in the tomato area, since 50 percent of production perishes after harvest. Transportation is still done in raffia baskets which is a harsh carriage for the soft-natured commodity.
But with crates and a cold-chain transportation system, wastages may drop to about 10 percent, leaving more tomatoes for fit for the kind of supply needed by factories.
“Storage facility for fresh tomato is a very hard nut to crack here because going by the number of tonnage, to get a facility that can house 500 tonnes which is more than 25 trucks of tomato is a big deal. But if people can at least invest in transportation the cooling van, it will make huge difference,” Yadakwari said.
Taiwo Olaniran, PwC Nigeria agric-business lead believes most crucial investment area currently in demand is the construction of silos, which he said could even translate into an aggregation business for investors.
Citing the case of India, he said the government can encourage investors in storage facilities allowing storage facility owners to function as aggregators, with power to influence the commodity price.
“What India has tried to do is to encourage people to invest in storage facilities. So you have big cold rooms, where farmers can bring in their products to keep,” he explained.
“As a storage facility owner, you tend to function as a kind of aggregator and government then allows you to determine the price of the commodity.”