Starting a Tomato Plant in Nigeria

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Introduction

The tomato paste industry in Nigeria has strong potential given the country’s large agricultural base and demand for processed food. Nigeria has a sizeable level of tomato production, being one of the largest producers of tomatoes in Africa, with production hotspots in the north and middle belt regions (Kano, Kaduna, and Benue). Due to its large levels of production, the country ought to rank more prominently in the tomato processing and preservation industry; however, Nigeria still grapples with tomato processing and preservation which leads to a large number of post-harvest losses. Today, this leaves Nigeria with a considerable amount of tomato imports to meet domestic demand, which are processed into tomato paste.

The recent growth the Nigerian paste market has experienced has been primarily driven by the increased preference towards processed foods, especially with the growing urban population. The most significant consumer requirements in the table tomato market are convenience and longer shelf life, making processed food an attractive proposition. The current state of the Nigerian tomato paste market leaves a large opportunity for local production with the added benefit of growing jobs in both the agricultural and manufacturing sectors.

Significance of the Industry for Local Production and Import Substitution

Tomato paste production is a vital component of Nigeria’s quest for food security and import reduction. By launching a tomato paste plant, you are providing valuable contributions to:

• Import Reduction: Nigeria spends millions on tomato paste imports as currency. Local tomato paste production will save currency and support the local economy.
• Supporting the Agriculture Sector: Tomato paste production will provide a market for local tomato farmers, thus developing the rural economy and improving the financial well-being of family farmers.
• Employment Creation: Tomato paste plants require all skills of labor including factory workers, clerical staff, and distribution, thus providing direct and indirect employment.
• Encouraging Agro-Processing: Tomato paste production is an example of localized value-added processing of raw agricultural commodities. This is essential to moving agriculture towards industrialization and providing progressive economic development for Nigeria.

Goals for Launching a Tomato Paste Plant in Nigeria

The objectives for starting a tomato paste plant in Nigeria should include:

1. Satisfying Local Demand: Satisfy the growing demand for tomato paste in Nigeria by providing for both retail consumers and the food service market.
2. Contributing to Social and Economic Growth: Support Nigeria’s desire for agriculture industries, job creation, and rural development.
3. Decreasing Post-Harvest Losses: Set up processing systems that will minimize waste by allowing tomatoes to be processed as soon as they are harvested. Thus increasing productivity for farmers.
4. Increasing Quality Options: Create a dependable and high-standard quality substitute for imported tomato paste that offers the same familiar tastes and quality consumers are already accustomed to.
5. Creating Sustainable Business Profitability: Create a profitable and sustainable business that serves local, national, and potentially international markets.

This introductory chapter provides the groundwork for understanding not only how starting a tomato paste plant can be a revenue-generating business, but also provides opportunities to contribute to Nigeria’s agricultural and economic growth. In the subsequent chapters, we will delve deeper into each of the core objectives and illustrate how to reach the goals through details related to the many aspects of addressing each of the objectives such as market investigation, equipment, location, and finance.

Market Research and Feasibility Study

To invest in a tomato paste plant, you need to understand the market environment, consumer demands and needs, and potential challenges. A well-executed market research and feasibility study will help guide your decisions and to mitigate your risks.

1. Consumption and Demand for Tomatoes in Nigeria

• High National Demand: Nigeria consumes over 900,000 metric tons of tomato paste annually, creating one of the largest tomato paste markets in Africa.
• Urbanization and Changing Dietary Patterns: Nigerians are increasingly relying on ready-made and processed foods like tomato paste for convenience as they urbanize and lead busy lifestyles.
• Household Consumption: Tomato paste is a very common household product in Nigeria, often used in cooking soups and stews, rice and jollof rice.
• Industrial Consumption: In addition to households, depending on paste in food preparation the food service and processing sector such as hotels, restaurants, processed food products, also competes for tomato paste in the marketplace, adding complexity to the demand.

1. Supply & Production Gaps

• Post-Harvest Losses: Nigeria produces about 2.3 million metric tons of fresh tomatoes every year, but more than 40% of this is lost because of poor storage systems, no processing, and poor transportation.
• Import Reliance: Nigeria spends billions importing tomato paste, mostly from China and Europe, in spite of having a huge capacity for production.
• Local Processing Space: There are very few factories making tomato paste in Nigeria that are fully operational – you can easily fill this gap.

1. Target Market Analysis

• Retail Market: This category has consumer individuals purchasing small sizes (sachets or small tins) directly from the markets, supermarkets, or online.
• Bulk Buyers: These buyers include institutions such as hotels, restaurants, fast food establishments, and catering companies purchasing tomato paste in larger sizes.
• Institutional Buyers: These buyers are government agencies (i.e., school feeding programs), NGOs, and relief agencies that often include tomato paste in their food supply contracts.
• Export Market: ECOWAS countries and other parts of West Africa also use tomato paste, and if you export your product you would have access to a larger regional market.

1. Competitor Analysis

• Imported Brands: Chinese and European companies are strong competitors, dominating the Nigerian tomato paste market, but are now increasingly challenged due to foreign exchange costs and quality of product issues.
• Local Brands: There are a few small tomato paste producers in Nigeria (e.g. Dangote Tomato Processing, Erisco Foods), but their influence is negligible as their production quantity doesn’t represent the national demand.
• Competitive Advantage: Entering the Nigerian tomato paste market, our advantage would be more culturally fresh products, more culturally fair pricing, better match to local flavor profiles, flexible packaging options.

1. Customer Preferences

• Packaging: Users state they prefer sachet or tins that are easy to open and tamper-proof.
• Taste & quality: Customers want products that culturally match and cook well in traditional/Nigerian recipes.
• Price sensitivity: For most Nigerian customers, price is still a significant factor in deciding a purchase. Therefore, it is important to continue to produce the tomato paste in a cost-effective manner plus passing along those costs to customers.

1. Feasibility Considerations

• Access to raw materials: It is important to have a reliable tomato supply big enough for the company (i.e., contract farming, out-grower schemes, or owning a farm).
• Seasonality: Because tomato harvesting is seasonal in Nigeria, you may need to consider cold storage or finding a way to serve it fully processed as tomato powder during the dry season.
• Logistics: The distance between farms, packaging suppliers, and market develop many logistic challenges that will influence feasibility.
• Infrastructure requirements: In order for a plant to operate effectively and properly, steady access to power is needed and water supply and access roads will also need to be considered.

This section gives you an overview of the available opportunities and gaps as well as what you are going to need to position yourself for success in the tomato paste market.

Business Model & Strategy

choosing the right business model and strategy is essential for running a profitable and sustainable tomato paste business in Nigeria. this section explains the type of business setups you can pursue, how to generate income, and strategies to stand out in the market.

1. Small Scale versus Large Scale

When considering whether to start small versus large, it is useful to take into consideration the differences in investment, risk, and growth potential.

• Small Scale: A small scale operation typically has a lower starting investment for machinery, factory space, and raw materials. A small scale operation might focus on a local market, producing only a small quantity of tomato paste, and begin to scale as the business grows.

Advantages:

• Less risk: The initial investment will be less, and therefore the risk is also less, making it easier/better to take a risk to test the market and determine demand.
• More flexible: Because there will be less investment, it is easier to change as needed in response to market changes or customer tastes. You can adjust based on customer taste, new competition, etc.
• Gradual implementation: You can gradually scale and increase production as demand increases and avoid the burden of large up-front capital investments.

Constraints:

• Limited market access: If the scale of the business is smaller, the number of sales may also be lower, and market visibility may be lower in the overall market.
• Less economical: You may lose out on the economics of initial and operating cost efficiencies available in buying raw materials or machinery in bulk.
• Large Scale -: A large scale operation requires significant investment in the first instance. Larger scale production facilities, larger equipment, and the capacity to serve either regional or international markets.

Advantages -:

• Economies of Scale: The more you produce the cheaper the production cost per unit. You can purchase raw materials in larger quantities, thus reducing the costs of production.
• Wider Market Audience: A large scale operation provides the opportunity to broaden your audience, not just within Nigeria, but you may also be able to export. This boosts sales and market penetration.
• More Profit Potential: With more production, and more sales, there is more profit potential.

Disadvantages -:

• More Risk: Larger operations require significant monetary capital investment, and if the market does not buy your products, you are more likely to take losses.
• More Complexity: A larger business, naturally has more complexity in logistics, and staffing, and abiding by rules and regulations.

1. Product Diversification (optional)

Adding a product line beyond just tomato paste can help better fulfill differing customer needs, and provide additional income sources.

Tomato Paste:

Core Product: Tomato paste is a core product. Tomato paste will be used for many dishes, is always in demand both locally and globally.

Market Postion: The quality of the product will be emphasized. You build a good reputation developing a good customer base.

Tomato Puree:

Alternative to Paste: Tomato puree is a less concentrated version tomato product than paste. The consistency is slightly different than tomato paste, and is used in some cooking recipes.

Market Advantage: If you offered tomato paste and tomato puree, then we offer customers two choices to fit their preference, and potentially overall gain a larger piece of market.

Ketchup & Sauces:

Expanding Product Offerings: Ketchup and ketchup-based or tomato bases sauces are widely eaten within the Nigeria/Global market. To expand the range of products that you can offer along with tomato paste might help in accessing the fast-food retail or foodservice market.

Competitive Edge: Offering more than one product under the same brand will give your customers options to cross sell your products and have brand loyalty especially if they believe in your quality.

Why Diversify?

To have a market with broader appeal. Different customers have different needs. For example; Families may choose ketchup and restaurants may choose tomato puree.

1. Revenue Streams & Profitability

This section looks at how to make money and stay profitable by using pricing and marketing strategies.

Pricing Strategies:

• Competitive Pricing: Prices are set based on what competitors are charging in the market. If you are starting small you may have to set your prices lower in order to attract customers to capture some market share.
• Premium Pricing: If you can guarantee high quality, unique features, or organic certification, you can establish a higher price for premium products catering to middle-to-high income consumers or the export market.

Cost-Plus Pricing: This pricing strategy simply adds a fixed margin to your production cost. This helps ensure you cover your expenses and make a profit. For example, if your cost to produce 1 kg of tomato paste is ₦200, and you wanted a 20% profit margin, then your price would be ₦240.

Market Penetration:

• Initial Target Market: Initially target local supermarkets, retailers, and food stores. Establish a solid local market position before moving further afield.
• Regional Expansion: Once you have stabilized your local market, you can start targeting regional markets to expand sales into other states or even neighboring West African countries.
• Export Opportunities: Nigeria is known for its vast tomato production, and there appears to be a growing global demand for tomato based products.

Location Selection

Selecting the most appropriate location for your tomato paste factory is critical for minimizing costs, ensuring reliable supply, and operating efficiently. The specifics are as follows:

1. Proximity to tomato farms

Key considerations for locating your tomato plant are as follows –

Why?

Tomatoes are perishable food commodities and start to spoil almost immediately, especially in high temperature conditions, such as Nigeria. By setting up your factory in a location in-hot climates where tomatoes are cultivated, you will minimize the time lost in transport and post-harvest losses in processing tomatoes into tomato paste.

Key states that produce tomatoes are as follows:

• Kaduna: Produces high yields of tomatoes and agricultural investment is on the rise.
• Kano: One of the largest tomato-producing states with good agricultural base.
• Benue: Often referred to as the food basket of the nation and has conditions suitable for tomato production.

Benefits of establishing your tomato paste plant in close proximity to tomato farms include the following:

• Reduced costs of transportation.
• The fresher the raw material, the better the quality of the final product.
• Reduced difficulty in developing relationships with produce farmers or cooperatives.

1. Infrastructure

You will have to consider the location you choose based on how developed the infrastructure is, as well as assessing:

• Electricity:

Tomato processing is heavy machinery dependant and most towns or cities don’t have a good supplying public power. There is no develop or manufacture tomato paste processing facilities without decent electricity.

If the area does not have a decent public power supply, you may have to invest in reliable and potentially long term generator or other power solutions like solar.

• Water:

Tomato processing uses considerable quantities of water to wash, boil, clean etc.

Ensure that the water is potable and that you have a reliable source that is sufficient to meet the needs of your operations.

1. Environmental Considerations

Environmental responsibility is a very important consideration which will impact your image/reputation and ability to gain permits for your operations.

• Waste Management

Tomato skins, seeds, and others waste needs to be managed appropriately.

Things to consider include composting, animal feed and waste to bio-energy.

• Sustainability

Using energy-efficient equipment, or by going solar can save operational costs.

Water recycling and rainwater harvesting can help improve sustainability in the long-term.

• Government Regulations

You will need to get environmental permits from local/state (e.g. NESREA), or federal government for waste disposal, water use, and emissions (if applicable).

Summary of considerations related to location:

1. You want to be close to tomato farmers. This will help reduce your costs and spoilage by travelling shorter distances shorter distances.
2. You want basic infrastructure. Having stable power supply, consistent water supply and roads in better condition are important considerations for location.
3. You will want a plan to manage environmental issues. This is will help with compliance and longer-term sustainability.
4. Equipment & Technology

The operations of a tomato paste facility mainly depend on the selection of processing equipment and technological sophistication and the routine maintenance together with the skilled operation of equipment. The third section consists of three distinct parts.

1. Key Machinery

This category represents fundamental machinery used for every tomato paste production protocol. The production process of raw tomatoes into finished paste depends on distinct equipment mechanisms that execute unique operations during sequential processing.

1. Tomato Sorting Machine

The sorting machine conducts a vital task of distinguishing between fresh appetizing tomatoes and defective spoiled or unripe ones.

The consumption of spoiled tomatoes results in affected product flavor, brown spots in the final product and decreased quality. The sorting machine enables the process to accept only perfect tomato products.

Small facilities conduct this work by hand through manual efforts because they lack automatic machines for the process. The production of larger factories uses processing machinery to complete tasks more efficiently in a consistent manner.

2. Washing Machine

The washing machine serves two functions: it cleans tomatoes by dislodging both farm-dirt and pesticide traces as well as sand and dust from the surface.

Such cleaning becomes vital for maintaining food security during tomato processing. The incorrect cleaning procedure allows dangerous bacteria and chemicals to remain thus making the product ineligible for NAFDAC certification.

A high-pressure spray nozzle system and water recycling capabilities to conserve water should appear in your choice of washing machine.

3. Crushing & Pulping Machine

The mechanical equipment dampens tomatoes into liquid form while it extracts seeds together with skin parts.

This step converts whole tomatoes into a homogeneous liquid which will become the basic component of the paste. The paste develops a superior texture and better visual appearance once seeds and skin materials are eliminated.

A supplementary pre-heating machine can be installed before crushing to help skin separation and enhance juice recovery.

4. Evaporation or Concentration Machine

The machine applies vacuum or pressure to boil tomato pulp before reducing it into paste by extracting excess water.

Paste production reaches its critical phase at this moment. Increasing water removal by the equipment produces thicker paste results. The control of paste thickness occurs through machines which operate via the Brix measurement scale.

Vacuum Evaporators represent an energy-efficient method which delivers better nutrient retention and color protection.

5. Sterilization Equipment

The tomato paste receives high temperature heat (90–120°C) from this equipment to eliminate both bacterial growth and other microbial agents.

The production step prevents contamination and ensures months of shelf life for paste products.

Two types:

• Batch sterilizers for smaller quantities.
• Continuous sterilizers for large-scale operations.

6. Packaging Machine

This machine performs two tasks by filling tomato paste into cans together with sachets and bottles before sealing each container completely.

Packaging techniques maintain both product integrity and product viability along with enhancing market consumer perceptions.

Types of packaging machines:

Sachet Filling Machines (affordable, great for small packets for the local market)

The Can Sealing Machine operates as the main packaging equipment when selling goods in bulk or supermarkets.

Due to their preferred use for ketchup and sauces Bottle Filling Machines remain the primary equipment in this sector.

1. Technological Requirements

Triple aspects of machine systems from power access to operation method to connection points carry equal importance to the physical machines themselves. The section guides you to determine the necessary technological standards for your budget along with your desired outcomes.

1. Automation vs. Manual Operations

• Manual:

Worker hands perform most of the job tasks.

Operational expenses are minimal at the beginning yet processing occurs at reduced speeds and demands significant manual work.

Higher chance of errors and inconsistent product quality.

• Semi-Automated:

The primary operations remain with machines but employees maintain oversight during such processes.

More efficient than manual and affordable for medium-scale businesses.

• Fully Automated:

The entire manufacturing process is managed by machines which undertake sorting activities all the way to sealing tasks.

Fast, consistent, and efficient.

Expensive, but ideal for high-volume production and export.

2. Local vs. Imported Machines

Locally Made Machines:

Less expensive.

• The repair process becomes simpler because manufacturers stock local repair technicians who also encourage easy accessibility to replacement parts.
• The machines often have reduced durability alongside basic technological features.
• The commercial world leads to international trade through Imported Machines which adopt sources from Italy China and India.
• More efficient and longer-lasting.
• Operating these machines needs particular training for users.

Acquiring both maintenance parts and spare parts as well as their maintenance could become pricy and time-consuming to obtain.

3. Compliance with Standards

All machines should fulfill both national and international requirements and standards.

NAFDAC (Nigeria): Ensures food safety.

SON (Standards Organisation of Nigeria): Regulates product quality.

The application of HACCP / ISO Standards becomes mandatory for companies seeking to enter large supermarket markets.

1. Maintenance & Support

The failure of primary equipment happens when maintenance operations are inadequately carried out. The second section prioritizes maintaining equipment quality alongside operation functionality.

1. Spare Parts Availability

• Check that your equipment possesses available spare parts within the Nigerian market.
• Production stops immediately because lack of replacement parts after machinery breakdowns extends from days to weeks.
• Unique machines together with unbranded models that lack local support tools should be avoided when making a purchase.

2. Technician Training

• Every equipment device needs someone who learned how to use it safely along with efficiency for its operation.
• As a part of their installation service equipment suppliers teach operators how to use these machines.
• Employing staff members to attend courses about machine handling and maintenance along with food safety training is recommended.

3. Preventive Maintenance Plan

A routine schedule should exist for equipment cleaning alongside part replacement and oiling while also performed checks of operational machines.

Document all maintenance activities.

Scheduled maintenance activities protect your equipment from unexpected system failures as they enhance machine operational longevity.

Raw Materials & Supply Chain

Operation of every tomato paste facility depends completely on dependable continuous supplies of fresh tomatoes together with packaging materials. The section explains proper methods for securing and handling and moving your basic materials which will guarantee continuous production functionality.

1. Sourcing Fresh Tomatoes

The process of acquiring fresh tomatoes as production base material determines both cost-efficiency and product quality outcomes for tomato paste manufacturing.

1. Local Farms

Why source locally?

• Reduces transportation costs and spoilage.
• Supports local farmers and communities.

How to source:

The best time to obtain fresh produce directly from nearby farmers exists during harvest period.

The company should work with farming cooperative organizations to obtain bulk supplies of tomatoes.

2. Contract Farming

Through contract farming farmers accept a legal arrangement to produce specific tomato crops for your factory operations.

Advantages:

• The amount and condition of your harvested tomatoes remain under your manufacturing authority.
• The farming community demonstrates greater dedication because a guaranteed purchasing agreement exists.
• You will receive continuous supply by offering seeds or fertilizers to farmers.
• The first step should consist of five to ten regional farmers with whom you need to develop enduring business connections.

3. Storage & Transportation Logistics

Tomatoes have a short shelf-life particularly under conditions of hot weather.

Solutions:

Crate transportation should be used instead of bags because crates minimize damage to tomatoes.

The establishment of either built or rented cold facilities and cooling vans serves for short-term product storage needs.

Process fresh tomatoes as quickly as possible after the time of harvest.

1. Packaging Materials

The packaging process requires suitable materials to present your tomato paste to market consumers. The chosen materials should be safe for use and must also be attractive and durable.

1. Types of Packaging:

• Cans: Popular in supermarkets and for export.
• Sachets: Common and affordable for local markets.
• Bottles: Used more for ketchup and tomato sauces.

2. Other Packaging Components:

Bottles and cans need air-tight caps and seals which prevent contamination from occurring.

You should write the brand name alongside NAFDAC number and list ingredients while adding expiration date and brand name on package labels.

To deliver finished products to retailers one should use either cartons or boxes.

3. Where to Buy:

The nation of Nigeria operates domestic facilities that produce cans alongside manufacturing sachets and generating labels and building cartons.

Some types of packaging require importation when targeting high-end consumers or export activities.

1. Preservatives & Additives

Several additives are needed to ensure both shelf stability and food safety in tomato paste products.

1. Types of Additives:

• The substance Citric Acid controls acidity levels within the product and protects against bacterial growth.
• The small quantities of Sodium Benzoate serve as a preservative to make the product:last longer.
• Two agents known as Salt and Sugar may be added to the mixture for both preserving the product and improving its flavor.

2. Food Safety Regulations:

• The National Agency for Food Drug Administration and Control (NAFDAC) approves all the additives which tomato paste requires.
• The maximum quantity restrictions for each additive remain mandatory for usage.
• Shopt only from producers who maintain certification or approvals.

3. Quality Control:

The testing of your paste in a lab needs to occur regularly to verify its compliance with health requirements.

The records must contain information about ingredient origins together with usage amounts and production run identifications.

Legal & Regulatory Requirements

The startup of tomato paste production and sales in Nigeria demands that you fulfill various legal requirements and enforce regulatory standards. Both governmental recognition and product safety certification are essential for operating your business in Nigeria.

1. Business Registration
2. Business registration with the Corporate Affairs Commission (CAC) needs to be accomplished first.

Legal business entity status enables you to open business bank accounts and request loans and sign contractual agreements.

Types of Registration:

• Business Name (e.g., for sole proprietors or small partnerships)
• Limited Liability Company provides maximum legal protection which makes it suitable for businesses aiming at expansion.

Steps:

1. Visit www.cac.gov.ng to book your prospective business name for online reservation.
2. Fill in the registration forms
3. Pay the registration fee
4. Get your Certificate of Incorporation
5. NAFDAC Approval
6. Why You Need NAFDAC Registration

NAFDAC stands as the National Agency for Food and Drug Administration and Control which controls all processed food items.

Before conducting legal sales your tomato paste requires NAFDAC registration.

2. What NAFDAC Checks:

Your production process (hygiene, cleanliness, safety).

Every ingredient you use along with your additives needs to be both harmless and authorized.

Every label of your product requires the NAFDAC number together with ingredient declaration followed by expiration information.

3. NAFDAC Registration Process:
4. Apply on NAFDAC’s online portal
5. Submit product samples and documentation
6. Undergo inspection of your factory
7. Pay the processing fees
8. The processing ends with NAFDAC issuing your registration number.
9. Environmental Permits

During tomato processing operations the manufacturing activities result in wastewater together with the separation of peels and seeds along with possible disposal of packaging waste.

1. Why Permits Are Needed:

The environmental protection of your plant is needed to obtain.

You may need permits from:

• NESREA (National Environmental Standards and Regulations Enforcement Agency)
• Procedure for water usage and waste disposal through respective state environmental organizations.

2. What You Need to Do:

• Install a wastewater treatment system
• The business needs a waste management strategy which includes composting tomato waste or transforming it into animal feed material.
• Your plant must adhere to maximum emission standards for both sounds and pollutants and waste materials.

1. Taxation & Compliance
2. Federal and State Taxes:

You will be required to pay:

• Company Income Tax
• Personal income tax applies to your organization in combination with Value Added Tax that affects your product sales.
• Pay-As-You-Earn (PAYE) tax for employees

2. Your business must enroll at the Federal Inland Revenue Service (FIRS).

• Acquire your Tax Identification Number through obtaining TIN.
• Filing annual returns together with timely tax payment prevents penalties from arising.

3. Other Licenses and Inspections:

• Fire safety clearance
• Local government permits
• The SON (Standards Organisation of Nigeria) should certify your products when targeting international markets through exportation.

Financial Requirements & Budget

A successful tomato paste plant requires accurate awareness about capital requirements at startup and running expenses as well as funding sources. This section provides complete clarification about all matters.

1. Capital Investment Breakdown

Every expense necessary to establish a brand-new tomato paste plant forms part of this category.

1. Land & Building

• The expense required for acquiring land at a suitable location within proximity to tomato cultivation areas.
• Construction of factory buildings, office space, storage, and power rooms.
• The estimated financial investment ranges from between ₦10 million and ₦50 million based on choose site location and factory dimensions.

2. Machinery & Equipment

Manufacturing a tomato paste plant requires expenses for equipment acquisition and importation and installation and the testing stage.

• Washing machine
• Pulping/crushing machine
• Evaporator
• Sterilizer
• Packaging machine

The production cost range from ₦15 million to ₦100 million varying with size selection along with imported or domestic equipment choices.

3. Installation & Setup

• Foundation work for machines
• Electrical wiring, plumbing, water tanks
• Generator and power backup setup

4. Legal and Administrative Costs

Before you operate, you must:

• Register the company (CAC) – ₦50,000–₦200,000
• NAFDAC grants product approval for a cost ranging between ₦500,000 and ₦2 million based on your product type.
• The company must acquire all needed environment licenses and tax permissions as well as township permits.
• Estimated Cost: ₦1 million – ₦3 million

5. Initial Working Capital

The capital required for plant operation amounts to a six-month time period.

Acquire new and intact tomatoes while you purchase your containers.

Pay salaries and utility bills

Transport and distribute your products

The estimated amount for working capital starts at ₦5 million and goes up to ₦15 million.

1. Operating Costs (Monthly Expenses)

The plant will demand monthly recurring expenses during its active operation phase. These include:

1. Raw Materials

• Raw material prices for fresh tomatoes fluctuate according to seasonal markets.
• Packaging (cans, sachets, bottles, labels)
• The production needs preservatives such as citric acid and sodium benzoate.

2. Salaries & Wages

• Machine operators
• Factory workers
• Drivers, sales reps
• Security and cleaners

3. Utilities

• Diesel or electricity bills (for machines and cold storage)
• Water supply and treatment
• Waste disposal and factory maintenance

4. Marketing and Distribution

• Transport to markets or distributors
• Retail incentives or promotions
• Advertising (social media, radio, banners)

5. Repairs and Maintenance

• The factory requires components to repair equipment and professionals to provide maintenance services on various machines.
• The operating costs for the plant fall between ₦2 million to ₦8 million based on business scale.

1. Funding Options (Where to Get Money)

You have several options to obtain funding when lacking sufficient revenue as described below.

1. Bank Loans

• Present banks with well-developed investment plans
• You should choose between enterprise-friendly banking institutions or microfinance banking organizations.
• Be prepared to offer collateral

2. Government Loans/Grants

• Businesses dealing with agro-processing can access funding through Bank of Industry (BOI).
• CBN intervention funds for agribusiness
• The loan or grant support comes from NIRSAL MFB and You Win programs.

3. Private Investors

You should demonstrate your concept to individuals who will join as investors to gain profit shares from your operations.

4. Family, Friends, or Cooperative Funding

Connected individuals as well as farmer groups can help you raise money from trusted sources and networks.

1. Profitability Analysis

Conducting profitability analysis determines the potential earnings of your business concept. Succeeding in the financial aspect of your business becomes possible by conducting this analysis.

1. Revenue Estimate

Your company produces 100,000 sachets every month at ₦100 each for your products.

₦100 x 100,000 = ₦10 million/month in revenue

2. Expense Estimate

Production expenses encompass ₦6 million monthly between materials and labor and transportation charges.

3. Profit Calculation

₦10 million – ₦6 million = ₦4 million/month profit

4. Break-even Point

Having a ₦60 million setup cost enables you to earn monthly profits of ₦4 million.

The investment needs 15 months or 1 year and 3 months to return its initial value.

5. Key Factors Affecting Profitability

• How efficiently you process tomatoes
• How much waste you reduce
• The effectiveness with which you operate marketing efforts together with transportation control
• Tomato prices during the off-season

Manpower & Human Resources

A tomato paste production facility must have an organized group of workers to run efficiently. Technical as well as non-technical personnel form the workforce at the facility to maintain production and handle maintenance alongside selling and administrative functions. This section details:

1. The specific categories of employees needed for this business
2. How to train them
3. The factory operation needs to fulfill all legal requirements stated in Nigerian labor legislation.
4. Key Personnel

Employment requirements depend on facility size and selection between manual, semi-automated or complete automation of processing operations. Once you have this list it includes the staff that cannot be removed from your operation.

1. Factory Workers

• The responsibility of factory workers concerns tomato physical handling from washing through sorting together with machine loading and package sealing as well as plant cleaning duties.
• Workers do not require educational qualifications to work at the plant as long as they have physical capabilities and training potential.

2. Machine Operators

• You will use the crusher and pulper and evaporator and packaging equipment as an operator.
• Personnel should have either technical capabilities or some engineering knowledge for work qualification.

3. Technicians and Maintenance Staff

• This staff will solve equipment breakdowns in addition to routine maintenance work and system electrical repairs.
• Qualification: Trained electricians or mechanical technicians.

4. Quality Control Officer

• Quality Control duties include sample testing and NAFDAC standard compliance while maintaining cleanliness of the facility.
• Qualification: Food science, microbiology, or chemistry background.

5. Procurement/Logistics Officer

• The Procurement/Logistics Officer handles both material purchasing and delivery of tomatoes along with packaging and distribution of ready products.
• A candidate should have past experience between supply chain or logistics sectors to apply for this position.

6. Sales and Marketing Officers

• The sales personnel should identify new clients and administer customer-supplier relationships along with implementing product promotion strategies.
• Qualification: Marketing experience, communication skills.

7. Administrative Staff

• The administrative staff member executes payroll duties simultaneously with accounting tasks while also performing recordkeeping and customer service activities in addition to handling human resource functions.
• Qualification: Business or accounting background.

8. Security and Support Staff

• The safety measures with cleaning services and protection systems are important to establish at your facility.

1. Training & Skill Development

The company needs to train its staff in a regular basis to maximize operational efficiency and maintain cleanliness while minimizing waste generation.

1. Technical Training

For machine operators and technicians

All necessary skills for operational machine start up and diagnosis and equipment shutdown and safety operations must be included in training.

2. Food Safety & Quality Control

The factory employees along with QC staff need to receive a full understanding of these principles:

How to handle food hygienically?

How to test for spoilage

How to prevent contamination

3. Sales & Customer Service Training

Your sales team requires training for effective partnerships with retailers as well as distributors and customers.

4. Ongoing Improvement

The organization should schedule periodic refreshers involving NAFDAC food processing specialists and other industry experts from institutes.

1. Labor Laws & Compliance

Every company operating in Nigeria must respect employment laws which serve both to defend workers and protect the business.

1. Minimum Wage

• Presently the countrywide base salary stands at ₦30,000 per month yet some areas or sectors operate with their own specific rate.
• Every staff member must receive minimum compensation that should be paid in full and on time.

2. Workplace Safety

The factory must have proper maintenance standards for safety together with these features:

• Safety gear (gloves, boots, aprons)
• First aid box
• Fire extinguishers

3. Employment Contracts

Every staff member needs written documentation containing the following information:

• Salary
• Work hours
• Leave entitlements
• Termination terms

4. Pension & Tax Compliance

Register your staff for:

• Pension (PenCom)
• PAYE (Pay as You Earn) tax with your state tax office
• Health insurance (NHIS or HMOs) ; optional but recommended

Marketing & Sales Strategy

This section provides guidance on how to:

1. Create a brand that is strong and recognizable
2. Get your tomato paste to the right buyers
3. Market your product to create sales and awareness
4. Brand Development

The brand you create will distinguish you from competitors and wins trust from buyers.

1. Logo and Brand Name

• Your logo should be simple, memorable and convey freshness and quality.
• Your brand name should be easy to pronounce and have a reference to either your Nigerian roots or a reference to “fresh” product or promise as part of its value proposition.

> Eg: “Naija Fresh Paste”, “Tomakitchen” or “RedGold Nigeria”

2. Packaging and Labelling

Your packaging should:

• Be appealing and colorful
• Show the product clearly (especially if packaging is sachet or transparent clarity)
• Consist of critical information: NAFDAC number, ingredients, expiry date, and weight

> Hint: “Good” packaging can add perceived value and generally people are willing to trust and pay more for well-branded products.

3. Unique Selling Points (USPs)

Why should people choose your tomato paste?

• Locally grown and processed tomatoes in Nigeria
• No added sugar or artificial coloring
• Greater value proposition with decent pricing and great taste
• A long shelf life even without refrigeration.

1. Distribution Approaches

These are the different ways to get your product into the hands of customers.

1. Wholesale and Distribution Channels

• Sell in fractions to wholesalers, as they buy in bulk and serve as distributors in major trading market who supply to retailers and smaller market merchants.
• To entice bulk buyers, offer volume discounts.

2. Supermarkets and Retail Stores

• Visit supermarket chains such as Shoprite, Spar, Ebeano; or local supermarkets and retail shops.
• Attempt to offer promotional materials (posters, banners, free samples).

3. Open Markets and Grocery Shops

• You might direct supply the tomato paste products directly to the traders in open markets or grocery shops in key open markets nationwide (in the cities and the rural areas). If you can reach major city areas, the rural areas will be easy to reach.
• Make sure that as a marketer, you can tap into the grocery segment of the market.

4. Food Vendors and Restaurants

• Approach fast food companies, caterers, bukas and hotels; these guys must use tomato paste products on a regular basis (daily).

5. Online Platforms

• Include your products in Jumia, Konga or even your own website.
• You could even promote your products through WhatsApp groups, or Instagram.

6. Export Opportunities

With an aggressive approach, there is opportunity to export to West African coun tries such as Ghana, and Togo, as well as to shops in diaspora countries that import Nigerian products.

1. Marketing Strategies

Now that you have a brand and know where to sell it, you might be wondering how to share your product’s marketing message effectively. Here are some suggestions.

1. Social Media Marketing

• For example, use Facebook, Instagram, TikTok, and WhatsApp to:
• Post videos and photos of how your paste is made along with cooking tips.
• Why not leverage the use of influencers or food bloggers?

2. Local Promotions

• Why not have some free samples in markets or in schools?
• What about a bundle offering? “Buy 5 get 1 free”
• What about branded t-shirts, aprons, or umbrellas to give to traders?

3. Radio and Local Media

• I think short radio jingles in local languages are excellent for this need and they are highly effective even in rural or peri-urban locations.
• Consider sponsoring local cooking shows or market days.

4. Partnerships

• Consider partnering with NGOs, farmer cooperatives, or government programs that promote local agricultural activities.
• Co-branding with other Nigerian food products is also interesting and might consider a local brand of rice, or local unsaturated noodle or agidi.

Risk Management

Risk management refers to predicting problems that may threaten your business and developing solutions to avoid and/or mitigate the impact. In the production of tomato paste, risks can impact your supply, operations, finances, and reputation.

This section will cover:

1. Supply chain disruptions
2. Power and water problems
3. Seasonal production risks

1. Supply Chain Disruptions

What can go wrong:

• Not enough tomatoes are delivered by farmers due to drought, disease, or market problems.
• Tomato prices reach too high a level when there are shortages (especially in the dry season).
• Delays in transport (bad roads, fuel shortages).
• Packaging materials are either not available or too expensive due to import issues.

Solutions:

1. Contract Farming:

• Work in direct partnership with farmers.
• Assist farmers with inputs such as seeds and fertilizers then purchase tomatoes at predetermined prices.
• This arrangement provides you with a reliable supply of tomatoes and lessens the risk of market price fluctuation.

2. Multiple Suppliers:

• Do not rely on a single farm or supplier.
• Develop your supply chain with many farmers in many states (e.g. Kano, Benue, Kaduna).

3. Early Packaging Procurement:

• Buy and stock enough packaging material before peak season.
• Work with local growers to mitigate risks of importing.

4. Transport Relationships:

• Develop solid relationships with local transporters or buy your own truck if possible.

1. Electricity and Water Supply

What Can Go Wrong:

• Customer returns due to products going bad from power cuts.
• The cost of diesel to run generators is high.
• A lack of water supply or dirty water supply can not only stop operations but also contaminate product.

Solutions:

1. Power Backup:

• Purchase and install a diesel or gas powered generator.
• Choose solar for lighting, office, and small power applications.

2 Efficient use of power:

• Use energy-efficient machinery wherever possible.
• Run machinery in batches to limit the number of operational hours for the generator.

3. Water Treatment:

• Install and pump your own borehole.
• Include a filtration system for clean, food grade water.

4. Water Re-use:

• Use treated water where possible (eg. wash down floors, non-food applications) to minimize waste.

1. Seasonal Production Challenges

In Nigeria, tomato harvests are seasonal; tomato has the largest harvest during the rainy seasons, whilst harvest decreases significantly in the dry season; thus creating:

• High price and low supply in any dry season
• Wastage and oversupply in peak season (assuming processed fast)

Solutions:

1. Tomato powder or concentrate:

• Consider buying and storing imported tomato powder or concentrate as an interim raw material source/backup during the off-season.
• You could use this tomato powder to allow for continuity of production when fresh tomatoes are not available.

2. Cold storage or mini processing:

• If you plan to invest in a cold room, it can extend the life of tomatoes.
• Then, when you have any excess, you can convert to a semi-processed pulp and store this in drums.

3. Staggered production:

• Run through full production when tomato is in peak harvest of a season (June – October)
• During dry season or other extreme scarcity, reduce production, or switch off production altogether, but keep up sales, or part sales with stored stock.

4. Work with dry-season farmers:

• Work with dry season farms or irrigated farms in northern Nigeria who can offer you a steady supply of tomatoes throughout the year.

Conclusion

1. Summary of Key Steps

Starting a tomato paste plant is a complex process; however, it can be broken down into several tasks, each of which plays an important role in the success of the project:

• Market Research: Look for a demand, gaps in products offered and competition
• Feasibility & Strategy: Select project scale, products and customers
• Location Selection: Find a site near tomato farms where infrastructure is accessible
• Machinery & Technology: Obtain reliable machinery while maintaining high production standards
• Supply Chain: Create a source of raw tomatoes and packaging products.
• Regulatory Compliance: Enrol as an entity in the CAC, NAFDAC, Environmental & Tax Code
• Finance: Budget for capital costs and operating costs, negotiate a loan
• Staffing: Source and train workers, follow labour laws in Nigeria
• Marketing & Sales: Create a customer focused brand and sales strategy and work through multiple sales channels
• Risk Management: Consider the risks involved in supply, power and seasonal availability.
• Planning, investment, and good management are required for each area ; when done as conceived and planned, the result is a growth plan for the long-term.

2. Future Prospects for the Tomato Paste Sector in Nigeria

Nigeria, as one of the most significant global producers of raw tomatoes, imports millions of dollars’ worth of tomato paste each year. The growth potential in this sector is immense given the following factors:

• Increasing population and demand for convenience food items
• Support from the government for agricultural processing and backward integration.
• Job creation and opportunities for the youth to pursue careers in agribusiness
• Unexploited export opportunities within West African markets

As we continue to see the importation of food, particularly tomato paste, challenged by import restrictions, locally produced tomato paste will be even more competitive and increasingly the desired product by buyers.

3. Conclusion on Profitability, Growth & Sustainability

Provided you apply management best practices; this business can provide you with:

• High margins, especially if you have some control over your input supply chain and are able to manage food waste.
• Opportunities to move from a small tomato paste producer to a mid-large scale operation, as your business expands;
• Sustainability benefits of reducing food waste, increasing the income of farmers, and local manufacturing benefits;

You will need to focus on quality, consistency and controlling your costs as much as possible. In addition, staying close to market trends and maintaining good relationships with your input supply partners and distributors will help solidify your business.

Final Comments: 

With the right vision, resources, and execution, your tomato paste facility can be a rewarding financial proposition – while contributing to food security, local industrialization, and rural development in Nigeria.

Call To Action

Be a part of Nigeria’s Tomato Paste future ;  begin your factory today

Nigeria spends billions importing tomato paste ;  whilst we produce millions of tons of fresh tomatoes locally. The opportunity is clear; the gap can be bridged by a locally owned efficient profitable tomato paste factory.

At Business Cardinal, we have mapped out every angle of the tomato manufacturing plan including, sourcing tomatoes, machinery, setting up marketing, parameters, compliance and risk management. Whether you are a budding agripreneur, investor, or development partner, the time is now to take action.

We are here to help you:

• Build up a fully structured business plan
• Assess market demand, supply chains, and profit potential
• Establish compliant and efficient processing operations
• Attract funding, technical support and partnerships

Be part of the solution. Decrease imports. Create jobs. Add value to agriculture!

Are you ready to make your vision a viable business?

Call us today 08023200801

Email hello@businesscardinal.com

Let’s build Nigeria’s tomato processing revolution together ;  one factory at a time.