Tomato Jos

Anand Laishram *

Nigeria presents a paradoxical case when it comes to its agricultural sector- it is one of the largest producers of tomatoes in the world but is also one of the largest importers of tomato paste. Let’s examine in greater detail. Nigerians love tomato paste. It’s a central component of their cuisine. They use tomato paste in almost all of their most beloved dishes.

But almost all the tomato paste consumed in the country is imported. According to some estimates, Nigeria imports up-to $1.5 billion worth of tomato paste every year. Most of the imported tomato paste comes from China, a country more than 12000 nautical miles away. The paste is imported from China in highly concentrated form, which is then diluted and packaged in locally branded sachets.

Shipping a container of tomato paste from China comes with the following costs:
- Cost, Insurance and Freight : $23000 to $24300
- Shipping charges : $2000 to $4000
- Handling, unloading and customs fees, plus tariff : $2000

The paste that China exports to Nigeria is also of lower quality, that couldn’t be exported to Western and other developed countries, due to a failure to meet stringent quality standards. As a result, there has been a public health backlash in Nigeria, against tomato paste imported from China. Many Nigerians believe consuming Chinese tomato paste has led to widespread health issues in the country, earning it the unwelcome moniker of “killer tomato paste.”

All these could be avoided if Nigeria can process its tomato produce and produce tomato paste for local consumption. Nigeria is the 14th largest producer of tomatoes in the world, the 2nd largest producer on the African continent and the largest in the West African region. Nigeria produces over 2 million metric tons of tomatoes a year, going by the latest figures.

But about 900000 tons of the 2 million go to waste.The reasons behind this massive post-harvest loss being:
- Poor supply chain management
- Inadequate storage facilities and water & power supply
- Price depression, because tomatoes are highly perishable and have a limited time window for being sold and processed. 80% of tomatoes are harvested between January and April. This leads to price volatility and market glut.
- Pests and diseases
- Heavy rainfall during peak season
- Poor marketing
- Multiple local and state level taxes and levies
- Corruption by airport and seaport officials
- High costs of processing, packaging and storage machinery and equipment
- Underinvestment in human capital has left Nigerian farmers less productive

Many companies have also tried their hands at successfully running tomato paste processing plants, including Dangote Group, the multi-billion-dollar Nigerian conglomerate. But most of them have failed to succeed financially. A major reason is that productivity of tomato farming in Nigeria isn’t high enough to make investments in processing plants economically viable. We will look into this in more detail later.

The other reasons for the failure of tomato processing plants are:
- Poor management
- Over investment in expensive production facilities
- Under investment in farming and logistics

As a result of all these reasons, Nigeria has been caught in a vicious cycle of producing a lot of tomatoes but most of the tomatoes going to waste, and then having to import tomato paste from other countries.

TOMATO JOS

This is where, Mira Mehta & Tomato Josenter the picture. Mira, who has a background in community health, was working in Nigeria in 2008, as a member of the Clinton Health Access Initiative. Mira witnessed the tomato market glut herself. She saw, what she describes as, crimson carpets of tomatoes rotting away on the sides of the roads.

She decided to tackle this issue and contribute more directly to the development of the Nigerian economy and upliftment of Nigerian farmers. She went to Harvard Business School in 2012, to equip herself with the training and network she would need to achieve her goals.

After graduation, she co-founded Tomato Jos in 2014 with the objectives of reducing the post-harvest loss and developing a tomato paste brand, made from locally produced tomatoes. (Her co-founder, Shane Tiernan, left the company after a few years)

Mira and her team deeply studied where the previous attempts by other processing companies and entrepreneurs had gone wrong. She also consulted with the biggest tomato growers and processors in California, USA. She learnt that she had to focus on the entire value chain- farming, logistics and processing; instead of just focusing on the processing aspect.

She deployed a systematic, multi-year strategy, which involves:
1) Increasing the productivity of tomato farming.
2) Starting an economically viable tomato paste processing plant.
3) Launching a proprietary packaged tomato paste product.
Increasing the productivity of tomato farming
Tomato Jos operates its own commercial farm, which is one of the largest active tomato farms in the entire country.

It also has a smaller model farm where farmers are trained. Farmers join the company’s Model Farm Program and they are taught best practices on increasing their productivity, through a mixture of classroom and field-based training. The program aims at optimizing about 100 specific farming behaviors.

2nd Year

- Intermediate concepts in Planting, Fertilization and Integrated Pest Management
- Basic concepts in Irrigation, Labour Management and Record Keeping

3rd Year

- Advanced concepts in Planting, Fertilization and Integrated Pest Management
- Intermediate concepts in Irrigation, Labour Management and Record Keeping
- Basic concepts in Ground Preparation and Unit Economics

Farmers who graduate from the program lease bigger plots of land on the company farm or farm on their own land. Farmers pay for the training and other inputs provided by the company (such as better-quality seeds), with their tomato and other crops. The excess crops are bought by the company from the farmers, at the right prices.

The company has partnered with about 350 farmers till date. 7 billion tomatoes have been produced so far. More importantly the yield has reached an average of 39 tons per hectare (the maximum yield reached being 71 tons per hectare), which is more than the national average of 5 tons per hectare. Tomato Jos has also been able to help farmers increase their incomes up to 15 times.

Starting an economically viable tomato paste processing plant

Mira and her team spent the initial years just focusing on increasing the productivity of tomato farming. This is very important because, in order to run a tomato paste processing plant profitably, it is necessary to ensure a steady and consistent supply of tomatoes of good quality, at the right costs.

A tomato processing plant cannot afford to drop below 80% capacity utilization. Otherwise, the cost per-ton-of-production will go up to the point that profit cannot be realized from the finished products. Moreover, all the processing has to take place within a 90-day window from the time of the harvest.

A constant supply of raw materials needs to be fed into the plant every hour, in order to spread out the huge energy costs over as high a production volume as possible. Only then can the plant achieve desirable per-unit costs and be able to sell the products profitably in the market.

After spending the first 5-6 years developing a system for reliably increasing the yield, Tomato Jos broke ground for its first processing plant (worth $5 million) in 2020. However, the COVID pandemic struck and further work progressed very slowly, but eventually, the plant had its first production run in March 2021.

It is the only plant in Nigeria that can produce tomato paste from fresh tomatoes. It utilizes cutting edge equipment from Italy and has about 1000 square meters of indoor production space. The cold storage can store up to 1200 barrels of tomato paste concentrate at -10 degrees Celsius.

Launching a proprietary packaged tomato paste product

In 2022, Tomato Jos launched its own tomato paste, which is Nigeria’s first locally owned and produced brand. It comes in 65-gram sachets. The older generations of customers in Nigeria are used to the established, foreign brands and changing their buying behavior and preferences will be quite difficult.

Therefore, Tomato Jos is targeting young, up-and-coming professionals instead. Its marketing is focused on attributes such as higher quality & locally produced tomatoes as ingredients.

CONCLUSION

Tomato Jos’ journey so far has been filled with ups and downs. Its country of operation, Nigeria is one of the most difficult places to do business in the world. Corruption, lack of proper infrastructure and law & order problems (Tomato Jos needs to hire 24-hour security) have made things challenging for the company.

Also, it is quite rare for a woman to lead a company in Nigeria and Mira Mehta has faced numerous obstacles because of this as well. But the company has been making progress and steadily achieving its milestones, against all odds.

Its story has a lot of important lessons for agriculture entrepreneurs in the developing world, who want to help their respective regions achieve self-sufficiency in food.