Tomato Farming and Processing Business Plan
Nigeria produces 1.7 million metric tons of tomatoes annually. These tomatoes are grown in two seasons, which correspond to the country’s rainfall.
Despite the country’s large overall production, smallholders, who are the majority of Nigeria’s farmers and farm less than 2 hectares, get extremely low yields year after year. While the average yield in North America is 494 metric tons per ha, Nigerian farmers average only 7 metric tons per ha.
During the dry season, which spans from January to April, tomatoes tend to be plentiful; during the wet season, which stretches from April to September fewer tomatoes are grown.
The boom and bust of Nigeria’s tomato production correspond to severe price fluctuations: the price that farmers are able to command for their tomato crop varies seasonally from 600 to 3000 Naira per 36 KG basket. Low yields are at least partially caused by these seasonal pricing fluctuations.
Since farmers receive the lowest market price during periods when production reaches its peak, they have reduced incentive to increase their yields, since the market cannot absorb the temporary produce glut. Advanced pricing guarantees, which would disregard fluctuating market prices, could incentivize smallholder farmers to produce more crops than they currently do.
Farming practices also tend to be suboptimal. In many cases, smallholder farmers cannot afford or do not have access to improved inputs. This may particularly be the case for seed, which has few domestic Nigerian producers.
Fertilizers on the market may often be fake or unlabelled. In other cases, improved inputs are not adequately applied, since technical knowledge of agronomy best practices is often unavailable.
Table of content
Executive Summary 3
Business Description 6
Products and Services 11
Market Analysis 12
Competitor Analysis 16
Sales and Marketing Plan 17
Management and Structure 18
Financial Plan and Projections 19
PATILAD will plant and process tomatoes while also serving directly as raw materials buyers from farmers for tomato paste. Thereby we will be reducing poverty for smallholder farmers, who are among the country’s most vulnerable population and decreasing Nigeria’s dependence on imported food products.
Nigeria is ironically the world’s 13th largest tomato producer and the world’s largest importer of tomato paste. Although approximately 200,000 Nigerian farmers grow over 1.5 million metric tonnes of tomatoes every year, half of their harvest is lost before reaching the market, and the remaining 50% is subject to significant downward pressure on price due to common gluts in the markets and the perishable nature of the crop.
Farmers, who are among Nigeria’s most financially vulnerable population, bear the burden of both these post-harvest losses and this price uncertainty.
Smallholder tomato farmers lack access to a consistent, large market for their produce, rendering them unable to consistently make a profit and dis-incentivized to increase their yields or change their farming practices. As a result, domestic supply cannot meet local demand for fresh tomatoes, which exceeds 2 million metric tonnes or $2.5 billion annually. The country supplements local demand for fresh tomatoes with $360 million (over 300,000metric tonnes) of imported tomato paste annually.
A well-located commercial tomato processing operation focused on continuous production rather than absorbing seasonal harvest gluts can increase incomes over five times for participating smallholder farmers, who comprise 75% of Nigeria’s workforce.
PATILAD will follows a low margin, high volume base of the pyramid model where profit is driven by both scale and technological innovation to control costs. We project that PATILAD will become profitable within three years of launch following investment focused on expanding the farmer network, our nucleus farm and expanding tomato paste processing capacity.