The private sector, whether as the market driver, technology provider or distribution partner, can play a much greater role in reducing post-harvest loss (PHL) in Africa. The “Building a Business Case for Nigerian Tomatoes” blog series explores the role business can play in addressing challenges that exist in Nigeria’s tomato processing industry. The first blog in the series focuses on the importance of the collective business voice. Why is the private sector the best champion for addressing PHL?
Realities in Nigeria’s Tomato Processing Industry
The rising market demand for tomato products means tremendous business opportunities in the Nigerian tomato industry. But the market advantages created by such demand and the extent tomatoes are being cultivated by smallholder farmers are not enough to outweigh the challenges facing Nigerian businesses in the tomato value chain.
Localizing the supply for tomato products to reduce crop loss and boost incomes for smallholder farmers seems like an obvious business opportunity for social impact and post-harvest loss reduction, but if you are operating in the downstream of the value chain such as a food or beverage company, there are two critical issues as to why supply localization is not currently happening.
Countries with large-scale commercial farming, such as United States and China, are able to produce low-cost tomato paste at a fraction of the cost compared to African countries. Nigeria and Ghana have experienced a sharp decline in domestic production, which has led to higher domestic prices.
Therefore, tomato processors are currently operating on slim profit margins and the unit cost of a tomato in Africa is significantly higher than the cost of imported tomatoes, partly due to the low global market price for tomato paste.
Additionally, a considerable amount of tomatoes grown are not able to reach markets. Some of the key reasons contributing to post-harvest losses include the harvesting of tomato varieties unsuitable for processing, seasonality of crop, subpar quality with high chemical content, and spoilage while in transit to markets.
Overlapping Solutions of Nigeria’s Private Sector
Yet, companies engaged in agriculture are problem solvers and have created innovations to address the challenges in their sector.
Entrepreneurs in Nigeria have developed business solutions to challenges in farmer aggregation, extension services, and specialized cold chain logistics. At times, a single business will be developed to vertically integrate the entire process from farm to table.
However, such integrated approaches may end up causing as many problems as they resolve. The IGD Advisory team has found that the absence of neutral, informed, and influential voices that go beyond each company with a single interest leads to overlaps and inefficiencies in the value chain and a lack of national and regional vision for the development of Nigeria’s tomato market.
Harnessing a Collective Value Chain Voice
The private sector in Nigeria’s tomato industry sees itself as having the practical, linkage-specific know-how to address the challenges along the value chain, but each actor within the sector can only provide limited resources, time, influence, and financing.
The IGD Advisory team organized the workshop, “Making Markets Work: A Private Sector Workshop on Reducing Post-harvest Loss and Unlocking Potential in the Nigerian Tomato Value Chain,” last November in Lagos, Nigeria, aimed to forge stronger partnerships between companies in the tomato value chain to catalyze effective collaboration to achieve efficiencies and address gaps and bottlenecks in the value chain.
The workshop, held in partnership with the Rockefeller Foundation’s YieldWise initiative and PYXERA Global in Nigeria, also sought to encourage companies to share their learnings and open the door for better collaboration outside their operational silos.
IGD’s is engaged in bringing together the private sector to address the Nigerian tomato processing industry’s overlaps through convenings and workshops and building collaboration throughout the value chain to bring forth sustainable solutions.
Stay tuned for our continued insights on improving efficiencies in Nigeria’s tomato value chain.
>>Check in with the IGD Advisory team for an update on convening the first Nigerian Tomato Working Group
>>To learn more about IGD’s work with the Rockefeller Foundation’s YieldWise initiative to reduce post-harvest loss, please click here.
>>Join the conversation on Twitter. Hashtag: #YieldWise, #postharvest