Paste imports frustrate $10m tomato project

Prosper Ndlovu, Business Editor
THE influx of cheap imported tomato paste into the country has weakened the domestic value chain competitiveness, resulting in a delay to operationalise the $10 million Esigodini Tomato Canning project, Schweppes Holdings Africa Limited has said.

Best Fruit Processors (BFP), a division of Schweppes Holdings Africa Limited, is spearheading the project, which was set to kick-off by mid-2018, in partnership with the Agricultural and Rural Development Authority (Arda). The two partners approved in March last year an initial $10 million investment to set the processing plant similar to the one in Norton.

A senior Schweppes executive in charge of marketing and corporate communications, Mrs Unaiswi Nleya-Nyikadzino, said while feasibility studies for the project have been done to ensure its operationalisation this year, progress has been frustrated by value chain dynamics that show weak competitiveness, which has a huge bearing on the long-term success of the business.

“We have all the required information for the project but had also set ourselves some metrics in certain key performance indicators for the plant in Norton, which will then trigger us activating and investing in the plant in Esigodini,” Mrs Nleya-Nyikadzino told Business Chronicle.

“So, we haven’t reached those metrics in terms of being able to export, for instance. We had hoped to channel significant export business of paste in addition to supplying the local market.

“But you find out that right now the value chain is not as competitive. A lot of regional players get their tomato paste from China and they land it very cheap in the region. South Africa is one of the biggest importers of paste and they re-export to the rest of the region and still land it cheaper than we are producing it here.”

Mrs Nleya-Nyikadzino said as a result of pressure from cheap paste imports, BFP has recently been forced to increase its price to farmers to ensure sustainability, although at a cost of viability.

“We are now paying them (farmers) up to $0,25 per kilo for processing tomato. So, before we talk about overheads for the plant, you need to pay the farmer up to $1,50 to have a kilogramme of processing tomato.

“But in South Africa they can get that paste for around $0,80 or so. Those are the figures we are talking about to say we need to have a significant export market,” she explained.

“Other metrics are in terms of plant efficiencies and we still haven’t reached a stage to trigger this (Esigodini) project at this point in time. So, the value chain now is not competitive as we have hoped. As it is, in order to get the feedstock into the plant, we had to increase price to farmers and its making it far less competitive to the end user.”

As such, Mrs Nleya-Nyikadzino said the Schweppes group was reviewing the model to see how best the business can be competitive enough to trigger activation of the Esigodini plant.

The tomato canning project is a brainchild of the late Vice President, Joshua Nkomo who had a passion to see most rural Zimbabweans empowered through agriculture, value addition and beneficiation, a crucial pillar in the industrialisation thrust of the country’s economic blue-print.

Hopes are high that the operationalisation of the project will help transform the fortunes of people from Esigodini and Matabeleland South province through an outgrower project, which will filter and benefit ordinary people.

Already preliminary insights indicate the project is expected to benefit 3 328 out-growers in Matabeleland region while 2 250 farmers participated in the out-grower programme supplying the Norton facility in 2016.

BFP has said it was targeting to process at least 20 000 tonnes of fruit with focus on import substitution for tomato paste and other fruit purees as well as export contribution to increase much needed foreign currency earnings for the country.

Meanwhile, Mrs Nleya-Nyikadzino said the success of domestic tomato processing must be hinged on use of local inputs and sourcing of raw materials from local farmers for purposes of sustainability.

She also suggested that Government looks at ways of incentivising farmers through ‘command horticulture’, for instance, so that market prices are reasonable enough to support value addition.

“With increased production and higher yields, more can be done to educate farmers on higher yields to make good margins if hectareage is increased and best practices used. This requires a collective input to come up with the best model,” she said.