“REDGOLD” Tomato Processing and Value Addition in Iringa Region

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Crates of Tomatoes

Darsh Industries Ltd (DIL) was founded in 1999 and is the leading manufacturer of fruits and vegetable products in the industrial area of Arusha, Tanzania. It was also the first to introduce tomato paste to the Tanzanian market and is now the country’s biggest tomato processor. In September 2014, Darsh Industries signed a grant agreement with Trademark East Africa (TRAC) Challenge Fund to provide complimentary support (7% of the total project value) to the largely Africa Enterprise Challenge Fund (AECF) sponsored Iringa Red Gold Facility in Tanzania.

The facility will have the capacity to process 150 MT of tomatoes a day; the raw product being purchased from local farmers in Iringa then transformed into tomato concentrates like ketchup and tomato paste, thereby replacing imported concentrate from China and Kenya with local product. The processing capacity of the Iringa facility is such that additional tomato concentrate can be potentially exported to neighboring countries in the East African Community (EAC).

Local smallholder farmers will benefit from this project, as they will receive extension services, which will improve their quality and quantity of tomatoes through promotion of Good Agricultural Practices (GAP). Local suppliers will also be provided with plastic crates by Darsh Industries to help reduce post-harvest spoilage, in turn also improving the quality of produce delivered to the buying stations. Informed estimates associated with the reduction in spoilage and reductions in the transport costs indicate that the farmers will see a $131 increase in their net income per household; 2,800 Iringa farming households benefiting from the projected increased profit margins. Furthermore, Darsh Industries has started construction of eight collection centres in Iringa to serve as buying stations and focal points for farmers. The collection centres will create 171 full-time jobs, with new hires being split 50-50 between men and women; young adults below the age of 35 accounting for 90% of the new workforce.

The project implementation was structured into 5 milestones as indicated below:

  1. 200 MT of finished tomato based products produced from Iringa farmers

  2. 8 collection centres established and operational

  3. 1,400 farmers adopting Good Agricultural Practices (GAP) in tomato production

  4. 10% increase in yields of 1,400 tomato producers

  5. an increase in income of US$ 72 per Household for 1,400 project households cultivating tomatoes

Tomato Picking

Project Objectives

  • The new factory will be the first to use aseptic bulk packaging which will help Darsh Industries gain cost-effective access to raw materials (tomatoes) from other parts of Tanzania; supplies that were previously too expensive to purchase due to gaps in logistics and transport provision, such as cold storage facilities and associated high transport costs caused by the water weight in the tomato concentrate when shipping. Other firms operating in the agri-product processing sector could replicate the use of this technology for intermediate processing and also gain access to additional volumes of Tanzanian farmers produce. Moreover, as Darsh Industries builds up a network of farmers to supply it processing plant, it can also engage in a dialogue with suppliers about the farming of other crops to respond to what will be a more diverse Darsh Industries processed fruit and vegetable product line.
  • By building 8 collection centers in Iringa to serve as buying stations and focal points, Darsh will bring the ‘factory gate closer to the farm gate’ in effect acting as a ‘farmer outreach’, the result being increased incomes for local farmers and lower costs of the raw material inputs for Darsh Industries as transport costs are reduced. Additionally, Darsh Industries will extend its offer of providing plastic crates to local smallholder farmers, the use of which is key to improvements in the quality of the Arusha region’s tomatoes brought to market. The wider distribution of the aseptic durable and easily cleaned crates will also see the steady replacement of the traditional packing crates which unintentionally promote spoilage through limitations on their abilities to be sterilized or cleaned.
  • Within 2 years of the processing facility’s opening, 100% of Darsh’s tomato supply will be domestically sourced (as opposed to 21% in 2012). The Iringa plant will also produce its own finished products to sell in Southern Tanzania and its western and southern EAC neighbours, a market that Darsh Industries has not been able to penetrate because of logistics costs. Importantly, the Iringa plant will increasingly supply Darsh’s Dar es Salaam depot and allow the Arusha plant to focus on increasing exports to Kenya (a market for which Darsh has already secured 1800 MT in distributor commitments).
  • Darsh Industries will also explore the use of mobile payments to its rural community suppliers in order to provide secure, reliable, and efficient payment transfers in the countryside.

Challenges and Lessons Learned

Despite the acknowledged successes, the project’s implementation was not entirely challenge free as there were delays in the accomplishments of the agreed milestones; the main obstacles to progress including the following:
  • Securing the certifications or permits for a new project was a lengthy and challenging process that jeopardized the project’s implementation plan, so future planning activities should incorporate greater lead times where informing stakeholders of project plans is concerned.
  • Opening a business and/or production facility in what is an isolated and undeveloped part of Tanzania also proved to be very difficult to implement against the planned time frame, adding an additional 3 months to the project’s delivery, so future planning should incorporate project input vagaries and contingencies.

Conclusion

The project will have significant impact if realized to its intended plan. To illustrate this point it was noted that 87% of the tomatoes produced in Iringa were sold outside the region, and of the remaining 13%, 1% were lost to spoilage in post-harvest processes. It is important to note that, this was consistent with the baseline survey where 1% of the tonnage was recorded as spoilt. Darsh Industries’ proposal indicates that they will purchase the 2nd and 3rd grade tomatoes that traditionally don’t reach the market at a premium of 40%. The baseline survey did not show evidence of such tomatoes being incorporated into Darsh’s planned purchases as all are sold to traders irrespective of the grade. As such, Darsh Industries will need to offer competitive prices to the farmers in order to meet their production demands.