Tomato shortage hits manufacturers hard
Chukwuemeka Obioma is Businessamlive Reporter.
You can contact him on chukwuemeka.obioma@businessamlive.com with stories and commentary.
The severe shortage of tomatoes in Nigeria has been identified as a major reason for the closure of some tomato paste factories in the country.
Market analysts say tomato shortage worsens once the harvest season ends, impacting tomato processing firms adversely, a situation which is forcing manufacturers to source raw materials from smallholders.
Following this unpleasant experience, the business environment has been a tough one for quite a number of firms in the tomato manufacturing business. In 2016, Nigeria’s biggest tomato paste plant, Erisco Foods Limited, began the process of shutting down its $150 million plants, resulting in reduced output per production, owing to what its management described then as lack of government support.
Nigeria’s economy has had to grapple with recession almost since the inception of the Buhari led-government.
Though there have been reports and counter reports from relevant government and independent agencies on the status of the country’s economy as it concerns recession(with government report giving the economy a purported clean bill of health and reports from independent institutions stating otherwise), market dynamics suggest that the economy is still faced with challenges.
Sources within the industry say tomato manufacturing firms like Erisco Foods Limited struggled to access foreign exchange despite government’s effort at providing forex windows for investors and exporters alike, adding that the firm was mostly affected because it depended largely on the importation of raw materials and machinery for its operations. The company’s need to import raw materials was due to the constant shortage of locally-sourced materials.
The fallout of this unwholesome condition was the closure of Erisco, which in turn resulted in layoffs of an estimated 2,000 employees. Currently, the company operates in China from where it exports its finished products into its erstwhile manufacturing base, Nigeria.
This yet adds to the growing list of calls by stakeholders, for the creation of an enabling business environment, a responsibility which, for the most part, rests on government’s shoulders, analysts say.