Dangote tomato factory reopens amid fall in local demand

Operation has re-commenced at Dangote Tomato Factory, two years after the Kadawa-based factory was shut down due to declining market demand resulting mainly from dealers’ dependence on foreign imports and smuggling activities.

According to the Managing Director of Dangote Tomatoes Farms, Sani Kaita, the factory resumed operation to meet local demand after reaching an agreement with farmers on pricing, which was another factor threatening Dangote’s production.

It should be recall that back in 2016, the Kano State tomato farmland had been infested by tomato absoluta, which cost tomato farmers N2 billion. This development had also contributed to the shut down of Dangote Tomato Factory in 2017, as many farmers were disinterested in continuing farming the crop after the pest infestation.

However, Mr Kaita assured the a  new agreement will create a hitch-free business season for both the Dangote tomato processing factory and tomato farmers.

“we have reached an agreement with the three stakeholders in tomato production. we have resolved to offer what the open markets offer subject to review every two days and i am happy that the growers have been cooperating because we have since started.

“it will interest you to know that the company has made commitment to adhere to the agreement reached and also hope to have a hitch-free business season between us.”

Factors aiding resumption of operation

Aside the agreement with tomato farmers, the Federal Government’s policy on tomato is likely to boost revenue for the factory. The ban on tomato paste importation and the 50% increase in tariffs for the products is expected to help boost local investors’ confidence.

Although the local production of tomato is not enough to meet local demand, the Federal Government’s policy is in line with its fight to revive the sector. And the multi-billion dollar factory resuming operation shows the confidence the company and the tomato farmers have in the Federal Government’s policy drive.

Obstacle to revival

Importers have been dealing in backdoor trade since the ban, smuggling tomato products into the country. As expected, this has cost some tomato processing factories millions of naira. Dangote Tomato Factory, for instance, was unable to recuperate its cost of operation. And this is another reason that led to the shut down two years ago.

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Another problem is that before the locally-farmed tomatoes get to the market and factories where they can be utilised, about half of them are destroyed. This further worsens the troubles of the local producers,  who are struggling to meet the country’s domestic consumption rate of 2.4 million metrics tonnes per annum. The shortage is covered with the importation of about 500,000 metric tonnes, seeing as Nigeria only produces about 1.8 million metric tonnes (MT) despite the fact that it is Africa’s second largest producer and the 14th largest in the world.

As Dangote Tomato Factor resume production, many observers are hopeful that it will be able to survive the difficulties that pushed it out of the market the first time.

Nigeria can no longer allow its market to be saturated with foreign tomato paste brands.

Source: Nairametrics

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