TomatoValueChain 10 Septembe2009 1 PDF

Iringa Tomato Value Chain Analysis for Local
(National) Market
and
Value Chain Development Investment Plan

1
st
DRAFT

Submitted by a Consortium of

Business Care Services Limited

and

Centre For Sustainable Development Initiatives

September 10
th
, 2009

MINISTRY OF INDUSTRIES, TRADE AND MARKETING
SMALL INDUSTRIES DEVELOPMENT ORGANIZATION

Packaging material s
Finished Product s
Tomato Demonstration Plot
Tomato Demonstration Plot
MUVI-SIDO
Iringa Tomato Value Chains Analysis for Local (National) Market
iii

ACKNOWLEDGEMENT

Business Care Services (BCS) and Centre for Sustainable Development Initiatives (CSDI)
take this opportunity to thank Small Industries Development Organization (SIDO) for hiring
us to carry out this interesting study to diagnose and analyse the value chains to be supported
by Rural Business Support Programme (RBSP) or popularly known as MUVI for Iringa
Region.

Throughout the undertaking this assignment, the Consultant was cognizant of the need for a
participatory approach and therefore the work has directly and indirectly involved a number
of people outside the Consulting team. To begin with, we acknowledge the guidance offered
by Client namely the Director General of SIDO, Mike Laiser who responded to our inception
report with significant insight issues on the scope of the study and the process and later
reviewed the progress reports and advised the Team to add tomatoes to the list of products to
be analysed. Equally important has been Mr. Mwene Milao, the Programme Coordinator who
from the outset worked closely with the team including coordination between SIDO and the
Consultant, between the Consultant and SIDO Iringa Regional office and he actively
participated in all the workshops. Within SIDO we also thank the Regional team led by
Mr.Gervas Kashebo who assisted the Consultant in liaison, protocols with regional and
district authorities, sourcing of information, availing office space and logistical support.

The Consultant is highly indebted to the Regional Authorities and particularly the Regional
Administrative Secretary (RAS) Ms. Getrude Mpaka who officiated the workshops and
provided the regional perspective to the Consultant. Mr. Adam Swai the Regional
Agricultural Adviser and Head of the Agriculture and Productive Sectors Clusters in the
region played a very critical role in the whole process, also important had been Mr. Emil
Kisoka Regional MUVI focal person, apart of effective participation, he assisted the Team
in coordinating the processes with Regional and District authorities.

It is important to acknowledge the support the team got from all DEDs in the seven districts
and their respective officers and especially the DALDOs and District Trade Officers who are
also the MUVI focal persons. Outside the Government, we are very grateful for the
contribution of the private sector in Iringa particularly Mr. Mandakishar Bharati of Dabaga
Vegetables Limited, Esmail Thakore of IVORI, Marriet Natural Foods Limited, in Dar es
Salaam. In Arusha we are grateful to Mr. Ravikant Bhalarao of Darsh Industries Limited
manufacturer of Redgold brand in Arusha. In the financial services we recognize the input
from NMB Bank in Ludewa and CRDB Njombe.

In the research realm, we interacted with Mr. Humphrey Ndosi of Tanzania Industrial
Research and Development Organization (TIRDO), Mr. Elimringi of Tanzania Engineering
and Manufacturing and Design Organisation (TEMDO). Ms Theresia Shanga of Ilonga
Agricultural Training Institute (ARI) and Mr. Faustine Barongo of Dakawa (Morogro) ARI
and Adonisian Shayo of Tanzania Official Seeds Certification Institute (TOSCI). We thank
farmers, traders, transporters, input suppliers and small processors whom we interactively
extensively, we are aware that we have not mentioned a substantial number of people who
contributed to this work because of the space, we request all to accept this collective thanks
as being our sincerest. While we share the credit with all mentioned above, we would like to
exonerate them from any shortcoming in the work and reiterate that the liability is solely of
the Consultants.
MUVI-SIDO
iv
TABLE OF CONTENTS

1.0 INTRODUCTION 1
1.1 Background 1
1.2 Study Objectives, Outputs Deliverables 1
1.3 Value Chain Analysis Methodology 2
1.4 Limitations of the Study 3
1.5 Limitations of the Study 4
2.0 IRINGA REGIONAL PROFILE 5
2.1 Geo-climatic condition of Iringa 5
2.2 2.2 Regional Demography 6
2.3 2.3 Regional Administration 6
2.4 The Economy and Economic Infrastructure 7
2.5 Stakeholders in Tomato Industry in Iringa 7
3.0 TOMATO MARKET ASSESSMENT 9
3.1 Product Description and Uses 9
3.2 Overview of the World Market 9
3.3 Export and Imports of Tomatoes 10
3.4 Tanzania Market 11
3.5 Price Pattern in Urban Markets: The Case of Dar es Salaam 13
4.0 TECHNICAL ASPECTS AND BEST PRACTICES 14
4.1 Production Systems 14
4.2 Tomato Processing 17
5.0 SOCIAL ECONOMIC ASPECTS 20
5.1 Income Generation in Major Chain Segments 20
5.2 Wholesale Business Value 21
5.3 (Direct) Employment in Tomato VC 21
5.4 Gender Aspects 21
5.5 HIV/AIDS 21
6.0 STRUCTURE OF THE VALUE CHAIN 22
6.1 Actors and Functions 22
6.2 Tomato Channels Map and its dynamics 27
6.3 Actors Relationships in Tomato Value Chain 29
6.4 Driving Forces and Points of Leverage 30
7.0 GOVERNANCE OF VALUE CHAIN 34
7.1 Conceptual Framework 34
7.2 Governance in Tomato Value Chain in Iringa region 35
8.0 GROSS MARGIN ANALYSIS 37
8.1 Key Assumptions and Parameters 37
8.2 Method of Data Collection 37
8.3 The Results of the Analysis 37
9.0 CONCOMITANT SERVICES MARKET 39
9.1 Technical Services 39
9.2 Financial Services 39
10.0 INSTITUTIONAL AND REGULATORY FRAMEWORK 42
10.1 Tropical Pesticides Research Institute (TPRI) 42
10.2 Tanzania Foods and Drugs Authority (TFDA) 42
10.3 Tanzania Seeds Certification Institute (TOSCI) 42
10.4 The National Environment Management Council (NEMC) 43
10.5 Tanzania Bureau of Standards 43
MUVI-SIDO
v
11.0 TOMATO VC SWOT ANALYSIS 44
11.1 Opportunities 44
11.2 Strengths 44
11.3 Weaknesses 45
11.4 Risks (Threats) 45
12.0 EXIT STRATEGY 47
MUVI-SIDO
vi

ACRONYMS

(R)MSE(s) (Rural) Micro and Small Enterprises(s)
AIDS Acquired Immune Deficiency Syndrome
AMSDP Agricultural Marketing Systems Development Programme
ARI Ilonga Agricultural Training Institute
BCS Business Care Services
BEE Business Enabling Environment
BEST-AC Business Environmental Strengthening Advocacy
Cm Centimeter
CRDB Cooperative Rural Development Bank
CSDI Centre for Sustainable Development Initiatives
DADP District Agriculture Development Plan
DAIPESA Development Alternatives, Inc. Private Enterprise Support Activities
DALDO District Agriculture and Livestock Officer
DASP District Agricultural Support Programme
DED District Executive Director
EAC East Africa Commission
FAO Food and Agriculture Organization
FFS Field Farmer School
FGD Focus Group Discussion
GDP Gross Domestic Product
HIV Human Immunity Virus
HIV/AIDS Human Immunodeficiency Virus/Acquired Immunodeficiency Syndrome
IFAD International Food for Agriculture Development
Kg Kilogramme
LGA Local Government Authority
MAFC Ministry of Agriculture, Food Security and Cooperatives
MITM Ministry of Industry, Trade and Marketing
MKUKUTA Mkakati wa Kukuza Uchumi na Kupunguza Umaskini Tanzania
mt Metric tone
MUVI Muunganisho wa Ujasiriamali Vijijini
MVIWATA Mtandao wa Vikundi vya Wakulima Tanzania
NADO Njombe Agricultural Development Organization
NBS National Bureau of Statistics
NGO Non Government Organisation
NMB National Microfinance Bank
NSGRP National Economic Growth and Reduction of Poverty
OTC Oxenization Training Centers
QDS Quality Declared Seed
RAS Regional Administrative Secretary
RBSS Rural Business Support Services
REA Rural Energy Agency
RFSP Rural Financial Services Programme
RMA Preliminary (Rapid) Market Assessment
SACCOS Savings and Credit Cooperative Society(ies)
SIDO Small Industry Development Organization
SMART Specific, Measurable, Achievable, Realistic and Time bound
SME Small and Medium Enterprises
MUVI-SIDO
vii
SMS Subject Matter Specialist
SWOT Strengths, Weaknesses, Opportunities and Threats
TAFOPA Tanzania Food Processors Association
TCCIA Tanzania Chamber of Commerce, Industry and Agriculture
TDC Technology Development Centre
TEMDO Tanzania Engineering and Manufacturing and Design Organisation
TFC Tanzania Fertilizer Company
TIRDO Tanzania Industrial Research and Development Organization
TOSCI Tanzania Official Seeds Certification Institute
TRA Tanzania Revenue Authority
US/ADF United States/African Development Foundation
USAID United States Agency for International Development
VC Value Chain
VCA Value Chain Analysis
VCD Value Chain Development
VCIP Value Chain Implementing Partner
VCO Value Chain Operators
VCS Value Chain Supporters

MUVI-SIDO
viii
EXECUTIVE SUMMARY
Background
MUVI Programme is one of the Government strategies to address rural poverty as elucidated in the
National grand strategy, the National Economic Growth and Reduction of Poverty NSGRP branded
as MKUKUTA. It is aimed at strengthening Rural Micro and Small Enterprises (RSMEs) as a strategy
towards employment creation, enhanced productivity, profitability and off-farmincomes through
increased access to markets and services and through improved RSMEs, improving youth and women
empowerment, strengthening of the link between agriculture and industry and raising the
contributions of other sectors to GDP. Further, MUVI aims to promote off-farmactivities and value-
addition to primary commodities. The main objective of this study had followed the diagnosis process
that recommended tomato to be among the three commodities to be supported under MUVI in Iringa.
The study was an exploratory research-based work, a total of 116 key informants fromgovernment
and private sectors were consulted at different levels. Major market points of Iringa Municipal, Ilula,
Mafinga, Makambako, Njombe and Iwawa (Makete) were visited. Using the whole systemin a
room approach, focus group discussions (FGD) were widely used in all the districts, participants
included producers, traders, processors, transporters, warehouse service providers/owners, TCCIA,
NGOs, district and ward extension officers.
The significance of the commodity
Tomato, scientifically called Lycopersicon esculentum Mill is important due to its nutritional
value, as its commercial value increased, there has been an increase in selection and breeding
of the tomato to improve yield and adapt it into different agro-climatic environments. Total
world production of tomato fresh fruit in 2004 was about 100 million mt with China
producing 30,102,040 mt; other leading countries are United States, Turkey, Italy, and India.
Record holders in terms of yield are The Netherlands that reported a yield of 496 mt per
hectares and Belgium at 416 mt. Tomato processing absorbs about 25% of the total
production but has grown faster than production of fresh tomato. In 2008 processing industry
used 35 mln Mt of fresh tomato.

There had been consistent growth in national output up to around 2000 where production has
been staggering at around 140,000mt. With 107,190 mt in 2008, Iringa accounts for 72% of
tomato produced in Tanzania. Average regional yield is around 17.5 mt per hectare or about
7mt per acre. Tanzania is a net exporter of fresh tomato; between 2004 the countrys annual
export averaged 1.05 million kgs against an average imports of 6,824 kgs though the pattern
is highly uneven for both exports and imports. Tanzania imports preserved tomatoes, sources
and ketchups amounting to 1,500 mt per annum (the average for 2004 to 2008).

It is estimated indicated that 87% of the tomato produced in the region was sold outside the
region and that out of the remaining 1% was lost in post-harvest processes. Dar es Salaam
absorbs about 60% of tomato from Iringa, imported major sources of imported tomato
ketchup are Middle East countries that essentially buy tomato paste from China and add value
and brand the products lead by Oman and Arab Emirate. China is known to be the major
source for tomato paste. Prices of fresh tomato in Dar es Salaam fluctuate significantly with
seasons.

In Iringa the tomato plant is affected by a number of diseases, they include root rot, stem cut
and late blight. Nematodes (causing root rot) and cutworms are the two most important pests.
Root rots caused by nematodes (Funza wa mizizi in local language) affects tomato roots that
leads to rotting of the plant.
MUVI-SIDO
ix
Tomato processing
Tomato processing is important to even out availability of tomatoes throughout the year
through preservation, it is processed into various products including sauce, paste, ketchup,
chutney, puree, jam, juice or squash, base of other sauces (chili, garlic, etc.), it provides a
medium for baked and canned beans, maize, carrots, green peas, etc.
Underutilization of the existing tomato processing capacities in Iringa region including
Dabaga and Ivory factories. The factories are utilizing only 40% - 50% of their installed
capacities. Under utilization is mainly because of low local product demand, competition
from imports and unfavorable tax policies.
It is difficult for SMEs to access the tomato processed markets due to poor product quality
particularly packaging and labeling, inability to qualify for safety standards lack of critical
traceability information. Diseconomies of scale affect cost effectiveness and ability to
promote the market.

The tomato value chain in Iringa is governed by the market, there is no lead firm at any level
of the chain (i.e. production, processing, trading and consumption) that govern and control
the system and instead it is governed and controlled by the supply and demand conditions in
the market.

Return on tomato cultivation can be improved if yield is enhanced from around 17 mt per
hectare reported in the field to at least 22 mt (a 25% increase) that could add about Tshs
600,000 to a farmer. Room for innovation technologically and strategically also drives the
tomato value chain. There are improved physical infrastructure road network and land for
tomato farming expansion is also available.
Concomitant Services
Availability and accessibility to support services is one of the critical success factors in VC
upgrading and sustaining competitiveness. Segments and services that need more support
services are producers, traders, manufacturers of packaging materials and processors.
Producers need services for enhancing entrepreneurial, marketing, finance, extension services
and organizational development skills. Some non-government organizations that can
complement the supply of services include COAS (based in Mufindi), NADO (based in
Njombe), INCOMET (based in Mufindi), etc.

Most RMSEs rely on SACCOS for financial needs as they are closer to them. Iringa has
registered about 173 SACCOS, 89 AMCOS, 9 cooperatives, 12 bank branches and several
MFIs/NGOs. About 41% of the SACCOS are located in urban centers (with Iringa Urban
carrying 45% of them) whereas 60% SACCOS are located in the rural areas. Based on the
number one could conclude that access to financial services is higher in the rural areas than,
the reality is the percent of population accessing SACCOS services is far less in rural areas
than in urban centers.

In Iringa there are a range of financial institutions, commercial banks in Iringa region include
National Microfinance Bank Ltd (with 7 branches namely Ludewa, Mafinga, Makambako,
Makete, Mkwawa, Njombe and Kilolo); CRDB Bank Plc (3 branches namely Iringa,
Mkwawa and Njombe); National Bank of Commerce Ltd (2 branches namely Iringa and
Njombe) and Exim Bank Ltd (1 branch in Iringa town). Non-bank financial institutions
present in the region is Tanzania Postal Bank (with 1 branch in Iringa).
MUVI-SIDO
x
Regulatory Institutions
National Environment Tropical Pesticides Research Institute Act was established by the Act
No. 18/79, it deals with supervising and regulating the manufacture, importation, distribution,
sale and use of pesticides in Tanzania and to administer the regulations made under the Act.
TPRI competency is of critical importance to the tomato VC as they have to assure that
quality of chemical are up to standards. There have been reports of some pesticides being
ineffective lending producers into losses.

Tanzania Food and Drugs Authority (TFDA), a semi-autonomous body supervises in this
respect pre-packaged food and food supplements, it registers production premises, registers
the products and licenses firms to carry out business. The Tanzania Official Seed
Certification Institute (TOSCI) certifies seeds, it is important that TOSCI becomes aware of
the importance of tomato seeds to the economy of the region and the country so as to allocate
adequate time and resources. NEMC is another important stakeholder to the tomato industry
given the environment implication of intensified tomato production under the project. The
legal mandate of NEMC to ensure sustainable of the environment, prevention and control
pollution, waste management, environmental quality standards, public participation,
environmental compliance and enforcement.
Risks (Threats)
The major risk of tomato VC is over dependency on rainfall, therefore weather or rather
climate change is the major risk and producers have indicated experiencing erratic rainfall
pattern over the past 10 years. Poor water management and pollution water sources adjoining
the tomato fields are two other important risks. At macro level, the opening of EAC markets
in 2010 could be a blessing for fresh tomato segment if Iringa tomato could be competitive
while processors may face serious competition. Processors have complained of taxes on
packaging materials that are used to pack tomato rendering prices of local processed tomato
less competitive, as processing capacity increases the impact of imported packaging materials
will become even more significant. At one level consumer preference towards processed
tomato poses a risk if it wont grow significantly.
Points of Leverage
Rural Market Collection (Cluster) Centres: These form important system nodes for outreach
to a wide range of the chain actors in terms of exchange of information regarding, product
supply and demand, market prices, product quality issues, transport, among others. Main
collection centers in study area are Ilula, Makambako and Mlandege. Orders are done
through mobile phones or visits by traders from Mbeya, Dodoma, Morogoro, Dar es Salaam
and Zanzibar.
Producers associations: At the farm level, there is a need of strengthening/establishing
farmers associations (groups) and networks such as MVIWATA as a point of leverage for
capacity building issues such as training, dialogues on policy issues with public sector,
market and financial linkages.
Processors platform: Tanzania Food Processors Association (TAFOPA) is also a potentially
important player in the food processing industry. The association has real potential for
leveraging MUVI Tanzania project interventions on policy and regulation advocacy,
marketing and capacity building among others.
Traders and manufacturers of packaging materials platform: Traders do drive the value
chain in the sense that they manage the commodity flow, market information and cash
MUVI-SIDO
xi
transactions. Together with manufacturers they will improve the value chain by ensuring that
appropriate measurements are in place and enforced. They will also work close with the
Project in exploring export market for Tanzania fresh tomatoes.
Recommendations: Interventions to upgrade the value chain

Mobilisation and organization of actors in the Value Chain Actors will be encouraged to
associate in order to harness synergies, economies of scale and increased voice. Cluster level
associations will be based on output concentration level e.g. Ilula, Makambako, etc.
(geographical area of business convenience), the major benefit includes arrangement for
transport, information hub, exchange point between farmers and traders, point of interface
with government and institution of code of conduct.

To improve producers understanding of basic faming business ideals in including
optimization of factors of production for higher yield. This will be in class and study visits
training.

Improving access to effective (good practice) technical messages, apart from traditional
visitation by extension/experts, leaflets and booklets shall be prepared and disseminated using
success stories from within the region, in the country and outside the country. Cinema shows
will be done using documented success stories from within Iringa, in the country and the
world over, the cinema if appropriately packaged will attract youths attention.

There will be initiatives to standardize and innovate on crates, currently the weight of the
boxes that accounts for as much as 16% of the cargo weight. This calls for technical review
of tomato handling containers to involve SIDO TDCs and Weights and Measures Agency.

Initiating and supporting eco-friendly tomato production that employ cost-effective use rain
or ground water on a relatively larger scale (e.g. more than 50 hectares) with little
environmental impact powered by renewable energy such as wind and or solar to pump water.

Promoting access to business-enabling credit services, producers and rural service providers
they will be mobilized to establish/strengthen grass root financial structures (SACAS,
ROSCAS, VICOBA and SACCOS).

Tomato exports has grown and more sharply in the last two years. A study to review tomato
exports market in E.A. (particularly Kenya, Rwanda) and Western DRC.

Facilitate the expansion of national supply of tomato paste. The project will leverage
increased production of tomatoes targeting processing plants through promotion of contract
farming (it is being done in Arusha).

Promote solar-dried tomato preferably mixed with some other local vegetables targeting the
rural market which normally has limited supply of green vegetables during dry seasons at the
time when supply for tomato is very highest (hence lowest prices).
MUVI-SIDO
xii
Proposed project budget
It is requested that MUVI make available a total sum of USD 887,600 to implement the
project of which USD 634,000 shall be towards capacity building of the value chain and USD
253,600 for facilitation expenses.
USD Percent

Direct facilitation cost

586,400

71%
Facilitation fee for 3 years at 40% of the capacity building direct
costs

234,560

29%
Total project cost 820,960 100%

The expected value for money from the investment is that improvement in the value chain of
at least of 25% in production will be worth Tshs 6.75 billion or USD 5.19 million per annum
from the third year onward.
Exit Strategy
The purpose of any VCD facilitation is to ensure that the VC becomes sustainably
competitive in the market through improving market offering (superior product - innovation,
competitive pricing - cost leadership). It should be is led by the private sector. Part of the role
of the facilitator will therefore be to craft and implement a seamless exit that will leave the
VC on a growth path. Lessons learnt from other VCs indicate that the duration of support
varies greatly with the complexity of the chain (governance structure). The most complex
structure is the market-governed value chain, there is low, none on sometime negative cost of
switching channels/relationships. The facilitators inputs will be reduced gradually with the
building of stakeholders within the chain and from the market to fill in.

SIDO - MUVI

PART A

Proposed Commodity Value Chain Analysis

1
1.0 INTRODUCTION
1.1 Background
MUVI Programme is one of the Government strategies to address rural poverty as elucidated
in the National grand strategy, the National Economic Growth and Reduction of Poverty
NSGRP branded as MKUKUTA. While the immediate impact shall be reduction of income
poverty, MUVI addresses other opportunities that include: -
Employment creation in absolute and relative contexts which will reduce unemployment
and underemployment respectively especially of rural youth, women and marginalized
groups (MKUKUTA cluster 1 goal),
Enhanced productivity, profitability and off-farm incomes through increased access to
markets and services and through improved rural SMEs (MKUKUTA cluster 1 goal),
Improving youth and women empowerment so that they can participate in the shaping of
the destiny of their livelihood.
The goal is to develop rural micro, small and medium enterprises in the value chains that will
sustainably deliver increased incomes and therefore reduce poverty; so as: -
More sustainable, and less risky jobs in rural areas are obtained
To facilitating expansion of enterprises, especially RMSMEs, in exporting activities,
hence improve Balance of Payment
To entails strengthening of the link between agriculture and industry and raising the
contributions of other sectors to GDP
To promote off-farm activities and value-addition schemes to primary agricultural,
fishing, forest, wildlife and livestock products through agro-processing RMSMEs and
cooperatives
To support RMSMEs and the informal sector in accessing financial services and
implementing land use and management plans.

This 7-year, Programme funded by IFAD has three main components; (i) Communication in
Rural Business focusing strategizing and implementing communication and knowledge
management for rural businesses, (ii) Rural Business Support Services that aim at
strengthening businesses through various processes including diagnosis, analysis,
intervention planning and implementation and (iii) Institutional strengthening that will entail
technical capacity building, monitoring and evaluation, environmental impact assessment.
This study is part of the Rural Business Support Services (RBSS) whose objective is to
strengthen the growth of Rural Micro, Small and Medium Enterprises (RMSMEs) and their
value chain actor through access to advice, training, and markets.
1.2 Study Objectives, Outputs Deliverables
1.2.1 Objectives and Deliverables
The main objective of the study was to diagnose and recommend two value chains and their
concomitant support activities for the MUVI Project in Iringa Region. More specifically, the
study aimed at identification of commodity chains with viable current or potential markets,
and which would have a significant impact on the rural poor. Value chains are driven by
coalition of actors from different domains, the study therefore identifies public and private

2
organizations working in identified commodity value chains with a view of forging strategic
and practical partnerships to bring in synergies reduce learning curve and broaden impact.

The Value Chain Analyses needed to ensure that the RMSMEs involved in the support
Programme have the potential to generate employment, especially for youth and women, and
have a direct impact on poverty reduction. Value addition is another important driver of the
value chains to be supported, the study therefore has to identify and elaborate in the support
Programme for the introduction of proven technology(ies) or new investment models that
could be replicated the value chains, potential spin-offs of new activities including markets
for support services.

The study identified risks inherent in the commoditys chain including on food security and
there from derive issues viable and recommended practical measures to address them in the
context of the Programme. At the end, the study is expected to outline an exit strategy for the
Value Chain Implementing Partner (VCIP) to further the achievements attained during the
implementation period.
1.2.2 Deliverables
The Consultant had been required to deliver to SIDO a report having the following
information: -
A draft diagnostic report based on the study, and analysis of the value chains identified in
the respective region.
A set of recommendations based on the value chains study and analysis, specifically:
Specific constraints analyses of the recommended value chains to be supported.
Organizational and value chain support activities (to address identified constraints) that
should be undertaken for the recommended value chains.
An investment proposal for implementing the recommended value chains.
The analysis was guided by the deliverables indicated above.
1.3 Value Chain Analysis Methodology
This study employed multi-dimensional approach to diagnose and study the value chains and
necessary support markets for the recommended commodities, it had distinct phases.
Preparations: This was an administrative phase which included negotiating and contracting
with SIDO. Also it involved initiation of communication between the Consultant and SIDO
Iringa, Iringa Regional Administrative Secretary (RAS), Districts Executive Directors
(DEDs) and TCCIA regional branch. Further, the preparation phase addressed issues of
logistics to the districts i.e. setting the work plan, transport, contact information, etc.
Literature review was also undertaken at this stage. The Consultant developed field
data/information gathering tools and processes. Quick Scan took place from 13th to 30th
April 2009 identified all commodities in the region and collated with commodity list obtained
through literature review that later was subjected to pre-selection workshop. About 116 key
informants from government and private sectors were consulted (see annex I). Major market
points of Iringa Municipal, Ilula, Mafinga, Makambako, Njombe and Iwawa (Makete) were
visited. Using the whole system in a room approach, focus group discussions (FGD) were
widely used in all the districts, participants included producers, traders, processors,
transporters, warehouse service providers/owners, TCCIA, NGOs, district and ward
extension officers.

3

Table No. 1.3.1 List of commodities found in Iringa

Commodity No Commodity No Commodi
ty
No Commodity No Commodity
1 Maize 11 Paddy 21 Paprika 31 Cattle 41 Fish
2 Beans 12 Avocado 22 Onions 32
Dairy
products 42 Artemisia
3 Banana 13 Cow Peas 23 Sorghum 33 Honey 43 J atropha
4
Irish
Potatoes 14 Peaches 24
Sweet
potatoes 34 Beeswax 44 Apple
5 Wheat 15 Tomatoes 25
Finger
Millet 35 Mineral 45
Barley
(Shayiri)
6 Sunflower 16 Pyrethrum 26
Bambara
nuts 36 Soya beans 46 Mushroom
7 Tea 17 Pears 27 Tobacco 37 Cashew nuts 47 Goats
8 Groundnut 18 Cabbage 28 Cotton 38 Handcraft 48 Sheep
9 Garden Peas 19 Simsim 29 Tree 39
Bamboo juice
(Ulanzi) 49 Rabbits
10 Cassava 20 Coffee 30 Timber 40 Flowers 50 Pigs
51 Chicken

The pre-selection stage screened using desired indicators ended up with 13 (maize, beans,
Irish potatoes, wheat, sunflower paddy, tomatoes, pyrethrum, onions trees and timber, dairy
cattle, avocado and apples). In the selection process, sunflower and maize scored higher. The
Client requested that tomato be analysed in place of maize because of limitations with maize
to add value.

At regional level, public and private sectors actors were consulted; in public sector were
Assistant RAS economic and productive sectors, Regional Manager National Bureaus of
Statistics (NBS) and officers, Regional Manager Weight & Measures, SIDO General
Foremen Technology Development Centre Iringa and SIDO Regional manager Iringa. At
district level, the public informants consulted were DEDs, DALDOs, Cooperative officers,
Financial Institutions, Natural Resources and Environment personnel, ongoing programs
coordinators including Farmers Field School (FFS) and seed production programme, village
government leaders and wards extension offices. In private sector the information was drawn
from traders (i.e. of maize, sunflowers and tomato and its products), processors (maize,
sunflower and tomato), farmers (organized in FGDs conducted in the villages). In private
sector, the team interviewed farmers, traders, transporters, processors, consumers, financial
institutions, service providers, input suppliers, association representatives, etc.
1.4 Limitations of the Study
1.4.1 Limited participation of the private sector
Good practices in value chain development require that the chain is driven and managed by
the private sector, it is the engine of value chain and it is able to take the risk. Unfortunately,
despite several invitations large commodity processors in Iringa (IVORI, Dabaga and Crispo)
did not attend both the pre-selection and selection sessions. Their presence was aimed at
seeking their commitment to invest in those value chains.

4
1.4.2 Limited up to date data
Background data for some variables in the region was outdated, the 2007 Regional Profile
had some of its data taken in 2005. The data could not be adequately updated through the
VCA study process.
1.5 Limitations of the Study
This report has two parts, part A explains the background, process, methodology and findings
while part B provides information of VC upgrading (Investment Plan). Specifically, part A
has 12 chapters, Chapter 1 covers the programme background while Chapter 2 provides the
Iringa regional profile. Chapter 3 looks at end markets for tomatoes globally, nationally and
in the region. Chapter 4 addresses the crop technical aspects, Chapter 5 looks at social-
economic significance of the VC. The value chain structure is analysed in chapter 6 while
governance is explained in Chapter 7. The financial aspects of the chain are explained in
Chapter 8. Support services for the value chain are analysed in Chapter 9, Chapter 10
addresses institutional and regulatory framework. Chapter 11 highlights on some institutions
that influence the value chain where as Chapter 12 present a synopsis of an exit strategy.
Note that the numbering of tables and figures has followed the numbering of section. Part B
contains the proposed Investment Plan

5

2.0 IRINGA REGIONAL PROFILE
The foregoing is a summary of Iringa region in terms of its geography, administration and
economy. A significant amount of information on this section comes from secondary sources.
2.1 Geo-climatic condition of Iringa
Iringa region is located between latitudes 60 551 and 100 301 south of the Equator and
between longitudes 330 451 and 360 551 east of Greenwich. To the north of the region are
Singida and Dodoma regions. It borders Morogoro region in the east and Ruvuma region in
the south. The regions total surface area is 58,936 sq. kms made up of 53,342.8 sq. kms land
area. More than one third of the total regional surface area is in Iringa Rural district. Table 3
shows the different geo-economic zones of Iringa.

Table No. 2.1.1 Geo-economic Zones of Iringa Region
Zone General characteristics Main economic activities
Highlands Temperatures below
15
0
C Rainfall between
1,000 and 1,600 mm per
annum.
Crop farming: maize widely cultivated; bananas,
garden peas (green peas), tea, coffee, wheat,
pyrethrum, temperate fruits.
Livestock keeping: dairy cattle, pigs and sheep.
Forestry Products: timber

Midlands Temperatures between
150 and 20
0
C Rainfall
average between 600
and 1,000 mm p.a.
Crop farming: maize, beans, sweet potatoes,
cowpeas and fruits.
Livestock keeping: cattle and dairy farming, sheep,
pigs and goats.

Lowlands Temperatures between
150 and 20
0
C
Rainfall: 500-600 mm
p.a.
Crop farming: drought resistant crops (sorghum,
cassava) groundnuts, paddy, bananas, vegetables,
fruits,
Livestock keeping: cattle, goats and sheep,
donkeys.

Source: Iringa Regional Socio-economic Profile, 2007

Iringa Rural has the largest area with 39% of the total regional area followed by Njombe that
is 19%. Makete makes 6%, Ludewa 11% and
Mufindi 12%. Iringa Rural has the largest area
with 39% of the total regional area followed
by Njombe that is 19%. Makete makes 6%,
Ludewa 11% and Mufindi 12%. The region
has a total of 5,168,180 hectares out of which
41% is available for agriculture, 29% was
allocated for wildlife reserve and 9% for forest.
Other uses accounted for 17%.
Figure No. 2.1.2: Land Use in Percent of
the total land available
Other
17%
Forest
reserve area
9%
Wildlife
reserve area
29%
Arable land
(Ha)
41%
Forest
plantation
area
4%
Source: Iringa Regional Profile - 2007

6

2.2 2.2 Regional Demography
The 2002 Population Census indicated that there were1,490,892 people in the region with an
inter-Censal (1988 2002) increase of 25%. Population growth in Iringa is largely due to
population momentum as annual growth rates between censuses has been declining, it was
2.7% in 1967 - 1978, 2.6% in 1978 - 1988 and fell to 1.6 in 1988 2002. Projection puts the
2002 2012 annual population growth at 1.1% with Iringa (U) having the highest growth at
1.5% due to immigration, Ludewa is expected to grow at 1.4% and Njombe at 1.3% while
Makete is expected to have a near zero growth (at 0.1%). The main tomato growing districts
(Iringa (R), Kilolo and Njombe) do not seem to face a threat in terms of labour supply in the
long term as they experience relatively higher population growths.

Table No. 2.2.1 Distribution of land area in hectares according to broad areas of land
classification by district, Iringa region, 2006.

District Projected Population Average
population per sq.
km.
2008 2009 2010 2011 2012 2002 2012
Iringa Rural 261,656 264,535 267,445 270,386 273,361 12 14
Kilolo 218,451 220,853 223,283 225,739 228,222 30 34
Makete 106,411 106,518 106,624 106,731 106,838 33 34
Mufindi 297,650 300,329 303,031 305,759 308,511 46 50
Njombe 452,887 458,775 464,739 470,780 476,900 42 48
Ludewa 139,304 141,254 143,232 145,237 147,270 23 26
Iringa Urban 116,311 118,055 119,826 121,624 123,448 665 775
Total/Regional 1,592,037 1,609,549 1,627,254 1,645,154 1,663,251 29 32
Source : Projection based on growth parameters provided by NBS, found in Iringa Regional Profile.
2.3 2.3 Regional
Administration

Administratively, the Region is
subdivided in seven districts namely;
Iringa Municipal, Iringa Rural, Kilolo,
Ludewa, Makete, Mufindi and
Njombe. The districts are sub-divided
into 33 divisions, 138 wards and 720
villages. The table on the right
provides more information on the
region administration set up.

Table No. 2.3.1 Administrative Setup of Iringa
Region

District Division Wards Villages
Iringa Rural 6 20 119
Kilolo 3 12 81
Makete 6 17 98
Mufindi 5 28 133
Njombe 7 25 210
Ludewa 5 22 76
Iringa Urban 1 14 3
Total 33 138 720
Source: Regional Social Economic Profile, 2007

7
2.4 The Economy and Economic Infrastructure
1

2.4.1 The Economy
According to the Regional Socio-Economic profile, Iringas per capita GDP in 2004 was
Tshs 394,449 (equivalent to USD 479.81 based on average exchange rate of July 1
st
, 2004),
this was 23% percent higher than the Tanzania Mainland average. Between 1997 and 2004
the regions contribution to the Tanzania Mainland GDP averaged at 5.5%. GDP increased
from Tshs 238,929 million in 1997 to Tshs 605,027 million at current prices in 2004, an
increase of 153 percent. Agriculture (crop production) and plantation forest resources
(timber) and derived spin offs are the major contributors to the regional economy.
2.4.2 Farm Size
On the average, farmers in Iringa own about 5 acres of land
2
, data provided by DALDOs
confirms the findings of the focus group as they put the area of 5.1 acres.

Table No. 2.4.1 Average Smallholder farmer Farm Size in Iringa Rural, Mufindi and Njombe
District Reported Number of acres Reported Number of hectares
Female Male Average Female Male
Avera
ge
Iringa
Rural 4.1 5.8 5.0 1.7 2.4 2.0
Mufindi 3.8 4.7 4.3 1.6 1.9 1.7
Njombe 3.4 8.7 6.1 1.4 3.5 2.5
Average 3.8 6.4 5.1 1.5 2.6 2.1
Source: ACT, 2009: Baseline study.

In Iringa, tomato production
is labor intensive, hence
farmers were been observed
to maintain relatively small
area of tomatoes as indicated
in the chart on the right.
2.5 Stakeholders in
Tomato Industry
in Iringa
Tomato stakeholders in Iringa include; Farmers most of whom are small with an average of
0.25 acres per farmer, it is estimated that there are more than 30,000 smallholder farmers
involved in tomato production in the region. Producers get supplies of seeds, fertilizers, pesti-
and fungicides from inputs stockiest who are readily available normally within 10kms
radius. The stockiest do also provide information on best practice in seedbed management.
There is minimal mechanization in tomato plots much of the critical activities are done by
hand, equipment that is common includes ox ploughs, petrol engine powered water pumps
and knapsack sprayers. The equipment is sold by dealers in farm implements located in

1
There has been no up to date data of Iringa region Gross Domestic Product, most literature including the
Regional Profile of 2007 refer to 2004 data.
2
Established through focus group meeting
Below0.25
65%
Between 0.25 and0.5
20%
Between 0.5 and1
10%
Above 1
5%
Source: NBS 2003 Agricultural Census
Fig 2.4.1 Average hectares used for tomato per household

8
district headquarters and major settlements. Crop husbandry skills are largely passed over
through action-learning and this is complemented by ward/village extension officers. Traders
can be categorized as inward or outward, inward are those who originate from tomato
markets while outward are those from tomato growing areas who take the tomato to markets.
Artisans in woodwork produce wooden crates are also important in the value chain. Given the
perishability of tomato efficient transport is very important, truck owners facilitate the flow
of tomato to the market.

As the chain develops it may be important to work with financial institutions especially
SACCOS, banks and MFIs. A number of farmers need business management skills,
organizational/group development services thus BDS providers will be important actors.

Tomato processing is increasingly becoming important, processors in Iringa are Dabaga and
IVORI based in Iringa and Marriet Natural Foods based in Njombe. Redgold (based in
Arusha) has indicated interest to expand to Iringa if tomatoes could be available at
competitive price.

The government is an important active actor because it provides valuable extension services,
builds business relations e.g. the use of proper weights and measures, through its institutions
such as TPRI and TOCSI do ensure inputs into the sector are up to standards. TFDA
regulates food safety while OSHA ensures that tomato processing actors operate and produce
products that confirms to healthy and safety requirements.

9
3.0 TOMATO MARKET ASSESSMENT
3.1 Product Description and Uses
Tomato is scientifically called Lycopersicon
esculentum Mill.), literature
3
indicate that it originated
in South America. It is one of the basic food in most
societies in the world, it is either consumed raw to
maximize the nutritional usefulness, or used as an
additive to vegetables to improve taste and colour, it
is sometime processed and packed as tomato paste,
tomato sauce, tomato ketchup, tomato juice, tomato
concentrate, chili sauce, tomato puree, tomato
chutney, etc. It is widely as a medium for other foods
such as baked beans, corn, etc. According to literature,
tomato has so many useful nutrients as shown under
table No. 2.1.1 below.

The nutritional value of tomato has made the fruit one
of the most popular item on menus. As its commercial
value increased, selection and breeding of the tomato
to improve yield and adapt it into different agro-
climatic environments and resistance to diseases,
there has been research for approximately 200 years
(Stevens and Rick, 1986).
3.2 Overview of the World Market
Total world production of tomato fresh fruit in 2004
was about 100 million mt from 3.7 million hectares
with China being the major producer at 30,102,040
Mt from 1,255,100 hectares. Other leading countries
are United States, Turkey, Italy, and India. Record holders in terms of yield are The
Netherlands that reported a yield of 496 mt per hectares and Belgium at 416 mt. Tomato
processing absorbs about 25% of the total production but has grown faster than production of
fresh tomato, for example according to http://www.freshplaza.com in 2008 processing
industry used 35 mln Mt of fresh tomato. China has a cost leadership in the in the market, it
estimated to command 67% of the export market for tomato paste from which various
tomato-based products are produced. The surge in Chinese export is also attributed to
enhanced compliance with US (and other authorities) on pesticides residual levels.

3
Online document

Table 3.1.1: Range of vitamins and
mineral components of ripe tomato
fruit constituents per 100 g of fresh
tissue
Constituent Normal
Range
Unit
Dry matter 4.71 - 8.3 grams
Vitamin A 192 - 1667 IU
Vitamin B1 16 - 80 g
Niacin 0.3 - 0.85 mg
Folic Acid 7.4 - 8.6 mg
Vitamin C 8.4 - 59 mg
Potassium 92 - 376 mg
Phosphorus 7.7 - 53 mg
Calcium 4.0 - 21 mg
Magnesium 5.2 - 20.4 mg
Sodium 1.2 -32.7 mg
Iron 0.2 - 0.95 mg
Aluminum 0.5 - 2.95 mg
Boron 0.04 - 0.13 mg
Copper 0.05 - 0.2 mg
Lead 0.02 - 0.05 mg
Manganese 0.04 - 0.05 mg
Zinc 0 - 0.25 mg
Chlorine 24 - 69 mg
Nitrate 1.3 - 30 mg
Ash 0.51 - 0.7 grams

10
3.3 Export and Imports of Tomatoes
3.3.1 Tomato External Trade: Volume
Data from Tanzania Revenue Authority (Customs Department) shows that Tanzania is a net
exporter of fresh tomato; between 2004 the countrys annual export averaged 1.05million kgs
against an average import of 6,824 kgs. Highest export volume was recorded in 2,632,700
while the highest imports were in the same year at 24,194 kgs. The pattern is highly uneven
for both exports and imports, exports were the lowest in 2006 at 124,000kgs while imports
were low in 2004 at 754kgs. Major destinations for Tanzania fresh tomato is Kenya, Comoros
and DRC.

Table No. 3.3.1 Tanzania Exports and Imports of Tomatoes in Kgs
2004 2005 2006 2007 2008 Average
Tomatoes fresh or chilled
Exports 204,302 652,373 124,000 2,632,700 1,681,355 1,058,946
Imports 754 1,080 4,956 24,196 3,134 6,824
Net Trade 203,548 651,293 119,044 2,608,504 1,678,221 1,052,122
Tomatoes, whole or in pieces, preserved other than by vinegar, etc
Exports 110,000 30,000 222,381 2,632,700 160 599,048
Imports 141,646 154,670 122,772 175,561 102,387 139,407
Net Trade -31,646 -124,670 99,609 2,457,139 -102,227 459,641
Tomatoes, preserved otherwise than by vinegar or acetic acid, not
elsewhere classied(nes)
Exports 0 0 4,700 18 0 944
Imports 840,002 746,674 1,226,979 1,488,400 993,627 1,059,136
Net Trade -840,002 -746,674 -1,222,279 -1,488,382 -993,627 -1,058,193
Tomato ketchup and other tomato
sauces
Exports 12 12,155 4,520 9,657 12,892 7,847
Imports 457,706 533,379 580,563 929,095 794,361 659,021
Net Trade -457,694 -521,224 -576,043 -919,438 -781,469 -651,174
Source: TRA Customs Department

Traders in Iringa indicated that exports to Kenya (Mombasa) are seasonal, they happen when
production in Kenya is at ebb from December through February. Traders at Makambako
reported that there had been buyers
from Malawi when there is shortage in
their country. Note that TRA data
doesnt show any exports to Malawi
3.3.2 Tomato external trade:
Value
The value of tomato and related
products imported far outweigh
exports making the country a net
importer of tomato-based products. It
can be seen from table no. 3.3.1 above
that the country imports a significant
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2004 2005 2006 2007 2008
V
a
l
u
e

i
n

T
s
h

m
i
l
l
i
o
n
Exports Imports
Fig. No. 3.3.1 Tomato balance of payment (2004
2008 in Tshs million)
Source: TRA Customs

11
amount of processed tomato if converted into fresh tomato equivalent can result into higher
figures. The major implication from the above figures are that there is room for both import
substitution and export provided the value chain can become competitive. If strengthened
with the opening of EAC common market there is possibility for more Iringa tomato to be
exported. Among the important input into the sector might be to carry out a study for Iringa
fresh and processed tomato into EAC market
3.3.3 Imports of tomato products
Tanzania imports preserved tomatoes, sources and ketchups amounting to 1,500 mt per
annum (the average for 2004 to 2008).

Table No. 3.3.2 Countries of Origin for Imported Processed Tomatoes (2008)
Tomato Ketchup

Preserved tomato otherwise than by
vinegar or acetic acid
Country of Origin Percent of total
imports

Country of Origin Percent of total
imports
Oman 40.76% Oman 34.30%
United Arab Emirate 38.20% United Arab Emirate 30.60%
Kenya 5.89% China 19.30%
South Africa 5.62% Italy 7.30%
United States 4.45% Iran 8.60%
Egypt 2.99% Total 100.00%
Others 2.10%
Total 100.00%

3.4 Tanzania Market
3.4.1 Production of Fresh Tomatoes in Tanzania
FAO data shows that the country produces around 145,000 metric tones per annum staggered
there had been consistent growth up to around 2000 when production has at around
140,000mt.

Table No. 3.6.1 Tanzania production: Hectares cultivated in 000 and output in 000
1970 1975 1980 1985 1990 1995 2000 2001 2002 2003 2004 2005 2006 2007
Hectares 3.7 5.0 7.0 10.3 14.0 16.2 18.0 18.0 19.0 19.0 19.0 19.0 19.0 19.0
Production
in '000 MT

28

40

54

80

105

125

140

140

145

130

145

145

145

145
Growth in
Percent 43% 35% 48% 31% 19% 12% 0% 4% -11% 12% 0% 0% 0%
Source: http:llfaostst.org/site/567

The data above can be well visualised in the graph below.

12
Figure No. 3.6.1Tomato production trend: 1970 - 2007
Source: FAO : http:llfaostst.org/site/567

It can be noted therefore that Iringa with
107,190 mt in 2008 (72%) of tomato produced
in Tanzania.
3.4.2 Production of Fresh Tomatoes in
Iringa
Tomato is an important cash-earning
commodity for Iringa region. Going by the
parameters obtained during focus group
discussions and collating it with district
statistics
4
, it can be estimated that 60,000
farmers are involved in tomato production in
Iringa, according to regional agricultural
statistics Kilolo District (Ilula corridor) accounts
for 51% of the 107,000 mt reported in 2007/08,
Iringa Rural for 44% and Njombe for 5%.
Output per hectare is around 17.5 mt per hectare
or about 7 mt per acre.

District 2006/2007 2007/2008
Area Production Area Harvesting
Hectares Tones Hectares Percent Tones Percent
Municipal - - 34 0.6% 57 0.1%
Iringa 2,101 37,330 2,393 39.2% 46,694 43.6%
Kilolo - - 3,229 52.9% 54,569 50.9%
Njombe - - 453 7.4% 5,789 5.4%
Total 2,101 37,330 6,109 100.0% 107,109 100.0%

An estimate by Development Alternatives, Inc. Enterprise Support Activities PESA project
that implemented a USAID funded Private indicated that 87% of the tomato produced in the
region was sold outside the region and that out of the remaining 1% was lost in post-harvest
processes.

4
On average a farmer has a quarter of an acre producing about 17 mt per hectare
0
20
40
60
80
100
120
140
1970 1975 1980 1985 1990 1995 2000 2001 2002 2003 2004 2005 2006 2007
H
e
c
t
a
r
e
s
'
0
0
0

a
n
d

M
e
t
r
i
c

t
o
n
n
e
s
'
0
0
0
_

Productionin'000MT Hectares

13

3.4. Demand for tomato in Dar es Salaam

A limited survey in Dar es Salaam indicates that the city conserves about 60,000mt for
annum; urban areas estimated to consume 60,000 which makes the title consumption at
120,000mt p.a. Iringa with an output of 107,000mt with about 60% being sold in Dar es
Salaam or 61,000mt is the at least the population in urban areas. Major sources of imported
tomato ketchup are Middle East countries that essentially buy tomato paste from China and
add value and brand the products lead by Oman and Arab Emirate. China is known to be the
major source for tomato paste.
3.5 Price Pattern in Urban Markets: The Case of Dar es Salaam
Reflecting seasonality of supply of
Tomato in Dar es Salaam prices do
fluctuate significantly, note in Fig.
no 3.1 of higher prices between
March and May and a trough (low)
from June through September. The
spike in December is assumed to
be caused by year-end festivals
when consumption is highest.

Traders who take the risk
5
at farm
gate indicate that the major risk in
tomato marketing is oversupply
caused by weak market
intelligence and inability to forecast. In order to minimize losses
from such fluctuations many traders have business networks at
Tarakea, Lushoto and Taveta (for monitoring tomato from
Kenya) that provide indicative market situation.

5
Part of the risk is borne by the transporter, the trader is asked to foot fuel costs and pay the remaining amount
after he had sold the tomato, in the event of poor response in the market the truck owner takes part of the loss in
form of time wasted or even reducing the agreed charge.
Trader based Makambako
recalled in 2005 when he
encountered a glut in Dar es
Salaam. His tomato remained
in the truck for 5 days in the
end they had to sell to the
factory at a price that was
below farm gate price by
25%.
100
200
300
400
500
600
700
800
900
J
a
n
F
e
b
M
a
r
A
p
r
M
a
y
J
u
n
J
u
l
A
u
g
S
e
p
O
c
t
N
o
v
D
e
c
T
s
h
s
/
k
g
Minimum price Average Maximum price
Source: Kariakoo Market
Fig. 3.5.1 Source: Kariakoo Market (2008)

14

4.0 TECHNICAL ASPECTS AND BEST PRACTICES
4.1 Production Systems
4.1.1 Production Seasons
In Iringa, there are three production seasons for tomatoes; the first is the main season that
follows the rainfall. The season commences planting in March and harvesting is between July
and September. The second (minor) season starts in October and harvesting takes place in
April through June. Irrigated tomatoes are planted during the dry season (July October),
harvesting takes place in April through June. However, it depends on irrigation potential of
an area. In Iringa tomato production cycle is four months i.e. from sowing at nursery bed to
harvesting (in Nursery bed one month and field bed three months. See Table No. 4.1.1 below
for detail.

Table 4.1.1.1: Tomato production calendar in Iringa
Activities Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Nursery preparation X X X X X
Land ploughing X X X X
Harrowing X X X X
Planting X X X X X X X
Weeding X X X X X X X
Fertilizer application X X X X X X X
Pesticides and
disease control X X X X X X X
Harvesting X X X X X X X X X X X
Selling X X X X X X X X X X X

Key Note:
Seasons Code Features 2007/08 Farm gate prices in Tshs
First (main) season X April June peak harvest Ranges between 5,000 to 12,000
Second (minor) season X July Sept low harvest Ranges between 1,000 to 4,000
Irrigated (dry) season X Nov-March low harvest Ranges between 15,000 to 20,000
Source: Field team outline

Tomato crop is been planted in pure stand due to their aggressive nature in competing for
nutrients and light. Meanwhile tomato plant tends to host several diseases (see .. below)
that can affect other crops. It is possible to find some farmers who have intercropped with
other crops like maize, cassava and cowpeas, but normally ensure adequate spacing.
4.1.2 Farm inputs and tools
Tomato production is relatively input
intensive, composed to other crops they
include seeds, fertilizers and pesticides
Farm implements used tractors, power
tillers, oxen ploughs, spray pumps,
protective gear and water pumps. The
inputs distribution is carried out by
existing agro-dealers in Iringa Municipal,
Njombe town, Ilula Township,
Table 4.1.1.2: Number of Registered
Stockiest in Iringa
District No. of agro-dealers
1 Iringa Municipal ?
2 Iringa Rural 54
3 Njombe 60
4 Mufindi 66
5 Kilolo ?
6 Makete 23
7 Ludewa 54
Total
Source: Quick scan

15
Makambako Township as well as at Mafinga. Major suppliers of tomatoes seeds are East
African Seeds, Malt flower, Alfa Seeds, Kibo seeds and Mukpar Ltd.

Farmers have not reported any major constraints regarding the quality of seeds they buys
except for intermittent shortages of some varieties. Agro-dealers have indicated that suppliers
(some of them are global brands) are very keen to safeguard their markets and image so they
have close control of the supply channels. Some have set up distribution channels that ensure
high cost effectiveness. However, respondents reported cases of shortages for some varieties
because of failure to synchronize demand (by season and size) and supply. East African
Seeds has an innovative approach towards enhancing tomato seeds availability by entering
into agreement with farmers and a processor that buys tomato at market rate so that farmers
can sell the seeds to EA Seeds Company getting an additional income.
4.1.3 Tomato Yield
FGD established that an acre is able to produce 285 tengas equivalent to 3 buckets of 20
litres. A tenga is estimated to hold 50kgs of tomatoes. This output is equivalent to 14,250 kg
per acre, the regional average for 2007/2008 is 17.53 mt/ha which is equal to 7.1mt/acre.
Good practices within the country show that it is possible for farmers to get more than
25mt/acre something that bring to the attention the need to improve productivity.
4.1.4 Crop farming practices
Land Preparation: Tomato cultivation consists of two major stages nursery bed and field bed.
In nursery stage, seeds are sown in fine soil bed to allow smooth seedlings emergence during
germination. A nursery bed measuring 10m2 has the capacity to produce 12,000 13,000
seedlings adequate for one acre. Soil preparation is by hand hoe and a rake and takes about
four person-hours. Majority of growers adopts line methods of sowing because it is easy to
access and attend individual seedlings during nursery management. Four debes (equivalent to
12 kgs) of livestock manure and 60 gallon (1,200 liters) are used in preparation of nursery.
Seedlings are nursed for one month (about 30 days) before being ready for transplantation
into the main field. Good agricultural practice requires that the nursery area must be cleaned
and disinfested prior to use and that it is important to use fresh seeds (less than one year old),
older than one year seeds reduce germination rate and vigour.

Major tasks in preparation of the main plot include cleaning of field through collecting,
heaping and burning of the crop left-over which takes 2 person-days. Hand hoe and ox
ploughs are major tools used in land preparation; about 7 person-days are needed to plough
an acre. Tillage depths vary depending on technology used, a hand hoe tills 10 -12 cm deep
while and ox-plough goes up to 15 25 cm. However, the recommended tillage depth is 25-
30 cm, it is recommended that it is done one month before planting in order to open up the
soil and preserve soil moisture by recharging from subsequent rains. Harrowing to produce
fine tilth is necessary the same way as in nursery bed.

Optimal conditions: Tomatoes thrive well in areas with 1,000-1,600 mm of rainfall that is
evenly distributed during the growing period. The important consideration in sowing is
timing to make sure that the crop will mature within favorable weather for harvesting the
crop, i.e. end of rains research findings show that late planting reduces reduce yield
significantly. Thus, it is advised to plant long maturing varieties earlier than short varieties
and vice versa. In Iringa, season 1 starts in December to February and ends in April to June,
season 2 starts in April to May and ends in July to September.

16
Irrigation: Irrigation is another common and crucial managerial practice in tomato farming,
farmers being small as they are, rely on rivers, wells, and streams for irrigation. This is
evidenced by observed situation that majority of tomatoes fields in Iringa region are located
along the river valleys and streams. Irrigated tomato has enabled Iringa to prolong its supply
season almost throughout the year and is the main limited factor in the expansion of tomato
production area wise. On average one liter/plant per round of irrigation may be adequate for
health crop performance. While manual water handling is common, some farmers draw and
distribute water motorized and manual water pumps.

There is a perception that pesticides in tomato plots may be trickling into streams/rivers
where some people use for household needs, consultation with District Agricultural Officers
in Iringa Rural indicated that they have not done any study to ascertain the problem and
suggested that it is an area that needs to be investigated.

Planting Spacing: DALDOs offices reported and recommended three plant spacing options;
high density that is 30 cm by 30 cm, medium density 60cm by 60 cm and low density at 100
cm x 100 cm. The spacing depends on the variety of tomatoes, fertility of the soil, overall size
of the plot (considering access). Farmers at Ihanja village in Njombe reported to space 60 cm
by 45 cm while those at Kiwere Village Iringa rural indicated to space crops at 50 cm by 50
cm. Agricultural Research Institutes (ARI) Ilonga, Dakawa and Mikocheni recommended
optimal plant density as 75 cm by 60 cm for short varieties like Tanya and 75 cm by 50 cm
for long varieties like Money maker. The average yield under correct spacing for ranges
between 3-6 kg per plant depending on other production factors.

Weeding: Weeds are controlled using hand hoes and hand dressing, in one acre seven to eight
person-days are required per weeding. The suitable periods for weeding are before plants
flower and before fruit formation in order to minimize damages to flowers i.e. first weeding
is between 4th and 5th weeks after planting and second weeding is between 9th and 10th
week after planting.

Fertilizer Application: Producers do apply fertilizers at a higher rate compared to other
vegetables produced in the region, the commonly used fertilizer includes DAP, Urea, CAN,
SA, composite manure and Booster.

Table 2: Average Fertilizer application rates in Iringa Region
Type of
Fertilizer
Farmers Practices
Quarter an Acre Per hectare
DAP 3 kgs 30 kgs
SA 3 kgs 30 kgs
Booster 1 litres 10 ltrs
Source: Farmers interview

Harvesting and Selling: Harvesting is by hand picking matured ripe (wine colour) fruits; they
are ready for the market. Timely harvesting has been emphasized to check pre and post-
harvest losses and for meeting market demand timely. During main (the first) season, traders
come from different parts of the country on the understanding that there are adequate
volumes for buyers something that creates competition. In the second (minor) season (low
season) in normal cases prices are supposed to be higher but on the contrary they are
relatively low because traders are not sure of getting desired volumes leading to low

17
competition and price, a large proportion of the tomatoes are consumed within the region and
neighbouring towns.
4.1.5 Pests and Diseases
In Iringa the tomato plant is affected by a number of diseases, they include root rot, stem cut
and late blight. Nematodes (causing root rot) and cutworms are the two most important pests.
Root rots caused by nematodes (Funza wa mizizi in local language) affects tomato roots that
leads to rotting of the plant. The main treatment is crop rotation. Cutworms (viwavi nondo)
attacks plant steams to the level of ground. Two ways of treating Cutworm traditional
methods include cleaning the farm, spraying mixture of ash/water, utupa, lidupala and
staking steaks to each tomato seedling. Industrial agro-chemicals like Thiodan 35, Diazinon
or Actellic 50. Late blight is a fungal diseases and it is the main diseases affecting tomato
production in Iringa. Treatment include; firstly cleaning the field, pruning and staking steaks
to each plant. Secondly using manufactured agro chemicals such as Dithane, Blue Copper,
Ridomil.

Farm Management: Though agricultural experts reported that there are no significant
problems related to abuse of the chemicals, farmers reported during the focus group meeting
cases wrong or incorrect chemical dosage application and application of mosquito
repellant/killer ngao and accarricide (dip wash) in place of recommended chemicals.
Proper administration of pesticides and protection of water sources is one of the activities of
the project to be implemented to develop the value chain.
4.2 Tomato Processing
There are many reasons for processing tomatoes, the major one is to even out availability of
tomatoes throughout the year through preservation. For example supplies at Mabibo market
between August 2008 and June 2009 indicate that supply November was 62% of what was
supplied in August 2008, it was 63% in December and it was 55% January 2009. Processing
improves taste of tomato by adding some ingredients, improves distribution as fresh tomatoes
are perishable and bulky, processed tomato can be distributed at low cost to areas where
tomatoes do not do well. Tomato can be processed into various products but the common
ones are sauce, paste, ketchup, chutney, puree, jam, juice or squash, base of other sauces
(chili, garlic, etc.), medium for baked and canned beans, maize, carrots, green peas, etc.
Technology for processing of tomatoes is highly scalable, it can be done at household, micro,
middle and large scale levels, the process involves the stages outlined in figure No. 4.2.1
4.2.1 Processing Capacity
It is estimated that the current industrial processing throughput capacity for tomato in
Tanzania is about 15,000 mt per annum produced by Darsh Industries Limited (hereinafter
referred to by the product brand Redgold with a daily capacity of 20 mt, Dabaga 5 mt and
IVORI 10mt. Marriet of Njombe uses 170kgs.
4.2.1.1 Dabaga Company

Dabaga was established in 1973 dedicated in canned and bottled foodstuffs. The factory is
currently processing about 5 mt every day in 12 months of the year which translates
maximum of 150 tons per month or 1,800 tons of raw materials per annum.

Iringa small-scale producers are the main tomato suppliers in Dabaga industry, between 40
and 50 farmers are estimated to supply Dabaga with tomato daily. Price ranges from Tshs 90

18
to 400 per kg depending on the season. For instance in June 2009 Dabaga were purchasing
tomato at prices ranging from Tshs 200 - 250 but sometimes prices drops down to Tshs 90 -
100 per kg as for the case of January April 2009 and sometimes hikes up as anticipated by
Dabaga management that from August December the price of tomato per kg will rise up to
TZS 300-400/kg.

Iringa small-scale producers are the main tomato suppliers in Dabaga industry, between 40
and 50 farmers are estimated to supply Dabaga with tomato daily. Price ranges from Tshs 90
to 400 per kg depending on the season. For instance in June 2009 Dabaga were purchasing
tomato at prices ranging from Tshs 200 - 250 but sometimes prices drops down to Tshs 90 -
100 per kg as for the case of January April 2009 and sometimes hikes up as anticipated by
Dabaga management that from August December the price of tomato per kg will rise up to
TZS 300-400/kg.

Table No. 4.2.1 Grades of tomato based on Dabaga criteria
Grade Grading attributes Remarks
One

Fully ripped, red, wholesome, full size Passed and fetch Tshs 250/kg
Two Partly ripped, some greenish, fully size
grow
Passed, fetch Tshs200/kg per kg i.e.
80% of the grade one price.
Three Partly ripe, green color dominate,
immature, rupture, rusty, some lesions,
Rejected

Farmers and traders bring tomatoes up to the Dabaga collecting yard where they selected and
graded before being processed. The farmer/trader sells on credit paid in 2-3 weeks time.
Preferred varieties in order are Tanya, Cal J, Roma and Money maker. Key characteristics of
these varieties include low seeds content and higher solid matter content. Some actors term
the varieties as tomato for industrial market while other varieties are referred as tomato for
fresh market.

Dabaga ten makes tomato-based products; tomato sauce, tomato chili (economic and
premium packs), tomato ketchup, hot pilipili (larger portion is tomato), garlic chili sauce, hot
pepper, tomato chutney, tomato puree and tomato juice. The largest markets outlets for
Dabaga products include; Dar-es-Salaam, Iringa, Morogoro, Mbeya and Dodoma. In recent
days, Dabaga has opened new outlets in Arusha and Mwanza. Meanwhile the other four
outlets which are in pipeline include Singida, Shinyanga, Lindi and
4.2.2 IVORI Industry
Iringa Vegetable Oil Related Industries Ltd (IVORI), has large capacity and producer based
large scale processor of vegetable and fruits items including tomato, its located at Kilolo
area along Tanzam road in Iringa Municipal. The industry started its operation by processing
sunflower in 1998. Later in 2006, IVORI diversified into tomato processing and idea that was
encouraged by convenience and relatively low cost of accessing tomato.

The product portfolio includes chili sauce and tomato sauce. Short term goal of IVORI
management is to capture larger share of domestic market through opening distribution
outlets at up country, additional of product lines and products volume extension. The factory
uses 10 tons of fresh tomato per day, procurement is facilitated by brokers, IVORI depends
on local market for sale. They consider strengthening export market much more than

19
domestic market. Recently, the main buyers are in Iringa region, Dar es Salaam, Arusha,
Moshi, Dodoma and Morogoro.
4.2.3 Marriet Natural Food
Marriet Natural Foods is a Micro-enterprise based in Njombe that produces an array of
processed foods including juices jams, sauces and pastes from a variety of fruits. Her
products are found in Njombe labeled Marriet Natural Foods, she was trained by SIDO in
2003 and later by TIRDO in 2007. At present the unit has 10 employees all of them youths
who also undergoing training.

The processing is done using domestic-scale equipment such as grinder, blender, charcoal
stove for sterilizing, sufurias, etc. She currently produces 50-100 cartons per day of tomato
source. The 50 cartons require 10 debes of fresh tomato or about 3 crates that are 150kgs.
Hence at optimum capacity of 100 cartons, Marriet requires factory about 7 crates of tomato
per day.

Marriet desires to upgrade her
business to level, currently she
has a 40 acre farm where she
plans to set up production abut
2-3 mt per day in the initial
phase. Marriet is willing to get
into contract to work with
farmers as long as there is a
mutual win-win situation.
Consultation with CRDB
indicated that they are willing to
finance the business but it needs
to have business and strategic
plans.
4.2.4 Tomato Processed by
Micro-Enterprises
SIDO in Iringa is active in
training entrepreneurs in tomato
processing, a survey in shops at
both village and district level
did not find any tomato product
made by these trainees except
Marriet which is indicative that
village level tomato processors
(if they are there) have not made
an inroad in the mainstream
market. Solar dried tomato was
not found in the market but consultation with TIRDO and SIDO food technologists indicate
that the product could have a potential at both village and urban markets because of the
secondly of supply. The value chain will pilot solar drying facility (dryer and packaging unit)
which will blend tomato with other vegetables that has higher solid matter content for rural
and urban markets.

On farm sorting
Delivery to factory
Sorting at the factory
Washing
Pulping
Pulp Seeds
Heating/Sterilization
Paste
Sauce, juice/squash, ketchup, puree, chutney, chili, etc.
Heating/Sterilization
Packaging

20

5.0 SOCIAL ECONOMIC ASPECTS
5.1 Income Generation in Major Chain Segments
5.1.1 Tomato Production
Tomato production in Iringa is a very important economic activity, interpreting it in monetary
terms, at a farm gate price of Tshs. 10,278 per tenga during low demand season in 2008, the
107,109 mt tones are valued at Tshs. 27.52 billion. It is estimated that between 33,000 and
35,000 farmers are involved in tomato production hence the regional average of income from
tomato house hold is Tshs. 820,000 per annum. If output per acre is to increase by 30% in the
region because of the intervention it will add an equivalent of Tshs 8.25 billion to farmers.
5.1.2 Packaging materials business: Wooden Crates
There is a trend to move away from tengas to wooden crates following a parliamentary Act of
2003 that bans packages that bring wastes in the city including tengas that are usually lined
with grass. It estimated that about 10% of the containers are tengas due to shortage of timber
in some tomato growing areas. It is estimated that in Iringa the business uses 266,000 crates
per annum, the annual investment in containers is worth Tshs. 400 million. Normally the cost
of the crate is part of the wholesale of the tomato. Most traders from Iringa dont return
empty crates back because the cost of returning empty crate is Tshs 400 while the crate is re-
sold at Tshs 700 in Dar es Salaam to traders from areas that have short supply of timber.

Currently a wooden crate with 3 debes capacity weighs 60 kgs with tomatoes, traders indicate
that net weight is 50 kgs tomato that is 16% of the weight is the container. There is a need to
find out if the crates present an optimum utilization of transport, some work needs to be done
to assess and improve upon the crates any saving in weight will be passed over to more cargo
weight per truck hence cutting transport cost per kg.
5.1.3 Transporters
Traders use trucks popularly known as FUSO, it carries 220-230 crates at a price of Tshs
650,000 for the Ilula Dar es Salaam trip. (A large of type of Fuso) type Fuso loads up to 360
crates at a cost of Tshs 980,000 for the same trip (Kilolo Dar es Salaam). Smaller (mini)
trucks rated 4 mt (Canters) with a loading capacity of 160 crates charges about Tshs 470,000
per Kilolo Dar es Salaam trip. Sometime larger trucks (semi-trailers) are used, they charge
Tshs 2,500/per crate. Ilula - Dar es Salaam is about 550kms. Hence transport cost averages at
Tshs 124.84 per ton km.

Table No 5.1.1 Transport cost between Ilula and Dar es Salaam
Type
Capacity
in Kgs
Cost in Tshs Charge
Per Crate
Per Kg
Fuso (normal) 230 650,000 2,826 71
Fuso Tandem 360 980,000 2,722 68
Canter 160 470,000 2,938 73
Large trucks 2,500 63
Average 69
Source: Field survey

21

It has been estimated that 93,250 Mt were sold in Dar es Salaam, assuming an average
distance 550kms for tomatoes from Ilula (Kilolo) Rural and Makambako (Njombe), the
transport per tone km is Tshs. 124.84 which makes the transport business volume at Tshs.
5.88 billion. This figure excludes transport beyond Dar es Salaam (such Zanzibar, Mombasa
and Comoros and transport within the growing area from the farm to a trading point).
5.1.4 Foreign Exchange Generation
The value of tomato exports from Tanzania has been increasing from Tshs 58 million in 2004
to Tshs 1,954 million, there had been a sharp increase in 2007 and 2008.

Table No 5.1.2 Tanzanias Tomato Balance of Trade (2004 2008)
2004 2005 2006 2007 2008
Exports (Tshs million) 58 63 75 213 1,954
Imports (Tshs million) 699 719 1,104 1,285 1,107
Source: Customs Department - TRA
5.2 Wholesale Business Value
According to Kariakoo market, the wholesale price in Dar es Salaam per crate between July
2008 and June 2009 ranged from Tshs. 13,000 during peak supply season to 24,000 during
low supply season (see Fig. No 3.5.1.). Assuming on all-year round price of Tshs per 50kg
per crate or about Tshs. 373 per kg, the value of traded tomato at whole sale level is at least
Tshs. 32.13 billion.
5.3 (Direct) Employment in Tomato VC
Involved in tomato VC are estimated at more than 30,000 households are involved in tomato
production, about 50 wood work artisans are making packaging materials (crates), in
transport it is estimated that tomato VCD is supporting employment of about 80 workers
employed as driver, 2 assistants and the owner. The number of traders is more dynamic
depending on market situation, it is estimated that there are (???) traders in the VC in
Iringa. Dabaga and Ivory are employing ??.. people while Marriet has an all time personnel
of about 10 workers. There are many more actors e.g. brokers, porters, suppliers of inputs and
services, etc,
5.4 Gender Aspects
On the overall the VC is male dominated all over the downstream activities, they outnumber
men in retail segment. The project will therefore target to attract women to take up
opportunities through raising and sensitization. It is proposed that plot activities to be
subsidized by project should have more women in order to attract them. There is a need for
gender mainstreaming expert in the implementation team.
5.5 HIV/AIDS
Iringa is one of the leading regions in terms of HIV/AIDS transmission, it has been
established that increased business interaction is closely related with HIV/AIDS transmission.
This has been notable at Mafinga where timber trader has flourished and as a result there is
higher prevalence of HIV/AIDS. The project will liaise with organizations that undertake
campaigns against HIV/AIDS and counseling services.

22

6.0 STRUCTURE OF THE VALUE CHAIN
6.1 Actors and Functions
6.1.1 Inputs Supply Level
Importers: Iringa region like other regions in the country relies heavily on imports for
industrial fertilizers (e.g. Urea, DAP, CAN), hybrid seeds, pesticides, herbicides, and
fungicides. There are only a few large input suppliers in the country, who supply about 85%
of inputs they include YARA (Chapameli brand), STACO, Premium, Tanzania Fertilizer
Company (TFC), etc. All Agro-importers are located in Dar es Salaam with branches/
agencies countrywide. These large input suppliers import in bulk directly from manufacturers
abroad and retail mainly through their own managed, but few outlets that are located in the
major towns branches/ agencies.

Stockiest: Also called agro-dealers they purchase inputs from importers or large traders and
sell directly to farmers in the deal in the less bulky inputs such as chemicals and seeds inputs
are sometimes re-packed in small units to meet the needs of smaller-scale farmers who are
their clients stockiest, source supplies from large agro-dealers (importers). Stockiest supply
both subsidized and non-subsidized fertilizers and improved seeds.

Research Institutes: Agricultural research institutions are an important component for the
development of the agricultural sector. Research has the role of developing superior produce
with higher yield, disease and pest resistant, which are also better adapted to the natural
conditions. Tomatoes high yielding seeds breeders in Tanzania include. Tengeru in Arusha
region, MAT- Uyole in Mbeya region and Sokoine University of Agriculture of Morogoro
These institutions are involved in development and multiplication of improved seeds and
planting materials, training of technical staff in various aspects of horticultural production.
These research institutions also provide appropriate packages for control of diseases and pests,
analyzing soils and climatic condition suitable for different tomatoes varieties etc. The basic
seed (foundation) multiplications farms includes; Msimba seed farm located in Kilosa district
Morogoro and Dabaga seed farm in Kilolo district Iringa region, certified seed are also
produced.

Seed farmer producers: Selected farmers are involved in seed multiplication that is sold to
farmers at a lower price compared to branded names, the seeds are known as quality declared
seeds (QDS). It was informed that QDS qualities are as good as imported seed provided they
are multiplied within recommended framework.

Seed companies: With the liberalization of the sector, several private companies are now
participating in the supply and distribution of improved tomato seeds e.g. Kibo Seed
Company, East African Seeds, Multiflower, Alfa Seeds, Monsanto, Mukpar, etc. The seed
industry is constrained by non-synchronized supply to farmers and insufficient funding which
poses difficulties on developing new varieties or maintaining germplasm of existing varieties.

Extension Services and Training: Agricultural extension services in the country are provided
by the government through the Ministry of Agriculture, Food Security and Cooperatives
(MAFC). Crop yields and productivity are low compared to the potential demonstrated by
good agricultural practices agricultural. Low performance is attributed to ineffective

23
extension services. Some weaknesses in the services are; Non use of the package approach
which emphasizes combining of the dissemination of that include extension messages and the
use agro-inputs; Weak research extension farmer linkage; Technical recommendations are
not frequently used in the context of indigenous technologies;Extension messages and
agricultural technology are not well designed and delivered; There is low priority accorded
non-traditional crops in terms of availability of SMS and in DADPs;

Credit facilities: These are among the concomitant services in the VCD, fortunately Iringa
was one of the regions covered under the Rural Financial Services Programme (RFSP), there
is a strong base for SACCOS in Iringa particularly in Mufindi, Njombe and Kilolo. In
Ludewa and Makete the limited economic activities have limited economic activities have
limited the importance of SACCOS. Farmers refrain from taking loans because they fear
crop failure and not being able to repay their credits. Another reason that emerged from the
qualitative interviews is that the farmers have too little information about loan conditions.
6.1.2 Production Level
The main production districts are Iringa rural, Kilolo and Njombe, Ilula division in Kilolo
district is particularly an important geographic cluster for the production and marketing of
tomatoes mainly the Roma and Tanya tomato varieties, which are in greater demand
compared to other varieties. There are few farmers cultivating around 5 acres with yields of
up to 18 tons per acre. Makambako is another important cluster for tomatoes production and
trading. At the peak periods, the wholesale market in Makambako town receives
approximately 28 tons daily during the dry season and 70 tons during the wet season. The
medians from the quantitative data indicate in the main season is 15t/ha and in the low season
is 14t/ha. Main activities and relations at production level are as illustrated below.

Fertilizers and pesticides: Farmers have indicated awareness on the side effects of chemicals
but are not heeding to the recommended practice, management of pesticide application will
be one of the responsibilities of the producers bodies.

Cooperation: Farmers groups are not common among tomato growing communities, this
bottleneck is recognized by cooperative department in the Local Government Authorities
(LGA) and NGOs working in the field. LGA and NGOs promote, strengthen and support the
establishment of co-operations amongst the farmers.

Casual workers: About 95% of the farmers manage their plots using household (family)
labour or with the help of casual workers. It is common for farmers to employ casual workers
in times of heavy workloads such as soil preparation, stocking, weeding and harvesting.

Grading and Standards: Farmers do to some extent sort out tomato that has deteriorated in
quality and leave the turgid ones for the market. Other standards such as pesticide residue or
production conditions are not taken into consideration. If the produce is sold at the farm gate
the traders do re-grade in response to market needs before transporting, if the farmers go to
the market they also improve grading before selling.

Post harvest handling: Farmers prefer varieties that have longer post harvest life such as
CAL J and Tanya, on average these tomatoes varieties can be kept for up to 3 weeks without
rotting depending on weather conditions and post harvest handling. The common practice is
for farmers to harvest tomatoes when they have received an order farm a trader, the broker
and trader work out the logistics and the packaging.

24

Transportation: Most cases farmers use animal carts (mkokoteni) ferrying the produce to
collection center. Here is where primary/secondary trader and brokers interact.
6.1.3 Trading level
Traders: There are different types of traders who interact in the tomato trading segment.
There is a broker, this is a person who does not own the product at any point in the
transaction loop, role is to connect buyers and sellers and in some cases to negotiate prices
either in the name of the buyer or the seller. He is paid a commission by either party. In
contrast to brokers, buyers (both primary and secondary) take ownership of the product at the
time they pay for it. At Ilula there are 18 brokers who collect between Tshs. 200 to 500 per
crate depending in availability.

Traders at district (cluster) level: Most traders in the tomato value chain in Iringa are
wholesalers. They purchase tomatoes from farmers or collection centers, major wholesale
markets are Ilula in Kilolo, Makambako in Njombe and Mlandege in Iringa Rural. There
could be more than 100 registered traders at Makambako market alone Makambako handless
per day around 1,000 crates in high season and 400 crates in low season. The end markets are
Dar es Salaam, Zanzibar, Morogoro and Dodoma. The common varieties sold on the market
are Cal J. (35%) Onyx (20 %), Tanya (25 %) and Roma (30 %). About 45% of the tomato
trade from Ilula and Makambako wholesaler markets are for the Dar es Salaam markets, 20%
for Zanzibar markets, Mbeya (15%), Morogoro (10%) and local markets absorbs (10%) that
is sold to retailers in Iringa.

Weight and measures: The main unit of measure for buying is estimate to selling at farm level
is the plastic bucket (weighing around 17kgs of tomatoes) while at the market is wooden
crate that holds between 40 and 50kg of tomatoes.
6.1.4 Traders at national level
At national level, there are four wholesaler markets in Dar es Salaam that include: Kariakoo,
Buguruni, Mabibo and Ilala markets. More than 80% of tomatoes and other fresh fruits and
vegetables (FFV) in the Dar es Salaam are sold on these markets. The other 20% is
distributed between local markets, kiosks, and hawkers/venders. Only a very small amount
(less than 1%) is sold in the supermarket, these markets also do the retailing.

Market access local traders and farmers: Communicatewith the traders before entering into
business deal, they use mobile phones. They set up contacts to traders and buyers in the
markets of Makambako, Ilula, Dar es Salaam, Zanzibar, Morogoro and Mbeya, whom they
call to check their demand before taking the commodities there. They also exchange contacts
at this point some of which establish long term contract. Some farmers try to assess demand
before planting based on previous years experience.
6.1.5 Retailing Level
At retail level the operators are differentiated according to their location and/or the volume
they trade. There are sellers on open markets, roadside sellers with small wooden kiosks and
vendor (hawkers). The latter sell at the roadside without a stand (booth), walking around and
approaching potential customers. While the first two operate in the formal sector the hawkers
work in the informal one. In addition, supermarkets are part of the formal retail sector but
they do not play an important role for the supply of tomatoes and other FFVs. The smaller
supermarkets do not even offer FFV but there are kiosks located next to them. Most of the

25
vendors on the retail markets specialize in some products and only change their range in the
off-seasons. The range they offer and the amount they sell also depend on the kind of stall
they own. Kiosk retailers normally only sell tomatoes and FFV and try to have a large
selection of products to meet their customers needs. As hawkers depend on their mobility in
general they have only few commodities to offer. Big supermarkets in contrast often supply
besides the local or seasonal FFV also exotic ones like apples or strawberries.
6.1.6 Consumption Level
On the consumption side individual and large consumers such as hotels, restaurants, hospitals
and schools are considered. Most consumers buy tomatoes and other FFV at retail but also at
wholesale markets, at kiosks or hawkers. About 99% of consumers purchase tomatoes and
other FFV in open markets e.g. Kariakoo, Buguruni, Kiosks and Vendors. Less than 1% of
customers purchase in supermarkets. It was reported that decisive criteria when choosing the
seller are cheap prices, quality of products, proximity to the vendor, and trust. It was noted
that the consumers are not aware of the different varieties. Consumers characterize high
quality in terms of medium size, good colour, faultless skin, shape, taste, and they look for
storable goods. Low consumers quality is less important than price
6.1.7 Transportation Service
Transport is a cross-sectional issue in the VCs affecting all actors. The most important actors
for transport are entrepreneurs who own trucks, truck drivers as well as porters. They all
belong to the VC supporters. The first group is mainly responsible for transport from the
production areas to the markets. Farmers or intermediaries hire the means of transportation
plus drivers and often accompany them. Truck drivers are often employed seasonally. The
porter group comprises firstly handcart drivers (called Mkokoteni in Kiswahili) who are
engaged in transporting the commodities from the wholesale to the retail markets or kiosks.
They normally own the carts themselves or rent them.

The second groups are the porters (who load, unload, and carry the goods) all along the chain.
In some cases they also perform the grading and repacking at the market. They get paid for
each tour they do, with the prices depending on the type and amount of commodity they
transport. Given that they do not possess a legal work identity, they are sometimes double-
crossed by customers who fail to pay their wages. They are also often harassed by law
enforcers as loiterers. Farmers are only involved in transport from the field to the farm (if
necessary) and in some cases they arrange transport from the farm to the markets, especially
to the local markets.

Table 6.1.3 -: Summary of Business relationships in tomato value chain
Functions Services Participant Linkage between actors
Research
institutions
Research,
multiplicati
on of seeds
Researchers Persistent network relations exist between
Researcher and Input suppliers.
Input supply Agro-
chemicals,
equipments
supply
Input supplier
(stockiest)
Spot market relationships the relations are
created on the sport (including negations
on price).
Production Input
purchase,
ploughing,
ridging,
Transporters,
Farmers.
Labourers
(casual)
Spot market relationships (the relations
are created on the spot (including
negotiations on price).

26
planting
weeding
Harvesting Labour for
harvesting
Labourers Spot market relationships (the relation are
created on the spot (including negotiations
on price) between farmer and labour
Loading at
farm / local
collection
place
Transport,
loading,
unloading
Transporters
and labourers
Spot market relationships (the relation are
on wage) between farmer and labour
Trading
(primary)
Move
tomatoes to
markets,
load
/unloading,
transport
Transporters,
urban trader sell
tomatoes to
retailer
on price, volume, type) between local
trader and urban trader
Trading

( secondary)
Unloading,
packing,
transport,
loading
Wholesaler and
retailer
on price, volume, type) between urban
trader & retailers
Retailing Transportin
g, Selling
Shopkeepers /
stall
Spot market relationships (The relation
are created on the spot (including
negotiations on price, volume) between
Retailer & consumers
Exporting /
importing
Grading
and
packing,
loading
Exporter /
importer
Persistent network relations exist between
exporters and importers, prearrangements
on volume but prices determined by
market forces

The findings indicates the relationships in tomato value chain are informal and disorganized
as the business transactions are in most cases are not performed under written contract such
that are not legally binding. Trading activities (buyers and sellers) are done with no formal
and legal documentations. The businesses are as usual done on trust basis. Traceability
concept cannot be easily undertaken due to uncertainties around the market linkages.

27
6.2 Tomato Channels Map and its dynamics
The Channels map in this context is a conceptual frame work or schematic representation
showing how products flow through the channels. The map illustrates the functions, actors
(operators) and markets in the value chain. It also indicates alternative supply channels in the
chain (figure1). There are five channels through which tomatoes move from the farm to the
consumer as narrated in the section below.

Fig. 6.4.1 Tomato Channels Map in Iringa Region

Processor
5 %
Retail
Whole sale
Trade
Processing
Primary trade/
Collection
Production
Inputs Supply
Research
Fresh tomato
National HH
Consumption
I
n
t
e
g
r
a
t
e
d

S
m
a
l
l
-
S
c
a
l
e

F
a
r
m
e
r

C
h
a
n
n
e
l

1
0

%

Fresh 1? %
Markets
Importers (10)
Agro-dealers at district
level (Stockiest) 100
Input voucher system
distributors (.?)
Rural
Collection
Points
Secondary Trader (87%)
Market Retailer
District /
regional
Consumption
Export
Channel 1:
Integrated
Small-scale
Channel 2:
Commercial
fresh tomato
Channel 3:
Value
Addition
Channel 4:
Supermarke
t Contracted
Tomato farmers in Iringa Region (30,000) farmers, 6,109 hectares, production
107,190mt p.a. (data for 2008)
Fresh tomato
Institutional
Consumption
Shops/
supermarkets
Tengeru Imported Seeds: Kibo
Seeds Ltd, EA Seeds
Kenya seeds
On farmseeds:
produced by
selected farmers
Channel 5:
Exports

28

6.2.1 Channel 1: Integrated Small-Scale Farmer Channel
This channel consists of non-commercial oriented farmers who cultivate tomatoes just as a
source of supplementary income. They cultivate smaller plots, use less input, harvest and
transport to the selling points in small quantities (by bicycles, handcarts or on human heads).
Markets are located alongside roads or towns, customers are small retail markets or directly
to urban housewives or the passers-by consumers. This channel accounts for approximately
8% of marketed produce. It was noted that this channel has experienced moderate growth and
future prospects will depend on income growth in the rural areas, profitability of local sales
compared to sales to the district markets.
6.2.2 Channel 2: Fresh tomatoes (Secondary/Wholesaler) Trader Channel
This is the biggest and most dynamic channel, accounting for approximately 87% of total
marketed volume. There are eleven (11) wholesale markets selling tomatoes and other fresh
fruits and vegetable (FFV) namely; Ilala, Kariakoo, Buguruni, Mabibo, Tandika, Vingunguti,
Gongo la Mboto, Kigamboni, Wailes-Temeke and Makumbusho. Dar es Salaam markets
sources tomatoes from various regions such as Iringa, Morogoro, Coast Dar es Salaam, Tanga
and Arusha. Dar es Salaam has 4 wholesale associations.
Retailers: Market retailers buy tomatoes crates and for smaller retailers they may jointly buy
a tenga/crate and share the tomatoes. Common transport used by retailers from wholesale
markets to their kiosks is pickups, push carts, bicycles and daladala. The costs vary with the
load and distance, but a crate of tomatoes will typically cost Tshs 1,500 from Ilala market to
places within 10 kms. Retailers sell tomatoes per fruit, per heap, per kg or per Sadolin.

Suppliers to institutional consumers such as schools/colleges and hospitals normally buy
tomatoes as wholesalers. Restaurants and hotels differ in size, large hotels do contract
suppliers through tenders, smaller ones purchases tomato on retail-outlets.
6.2.3 Channel 3: Processed Tomato
Processing capacity is estimated at 15,000mt p.a. One major constraint to grow of this
channel has been higher cost of tomatoes compared to imports, this is compounded by
seasonality. Processors are looking for commercial suppliers, most of the regard industrial
buyers as low end segment and will supply it when the open market is saturated. But it is
stable segments that can absorb tomato on contracts. At least in Arusha farmers are selling
tomatoes to Darsh Industries below the open market price but they are guarantee constant
revenue.
6.2.4 Channel 4: Supermarkets (Fresh Tomatoes Supplier) Channel
The supermarket retailers, particularly Shoprite and Imalaseko have in the recent past
contracted a few agents to supply tomatoes and other fresh fruits and vegetables. In this
regard, the supermarkets enter into short-term contracts of three or four months based on pre-
agreed amounts, quality standards and buying prices. The contracted agents are often retail
traders or dedicated commercial-oriented farmers who are likely to have better quality of
produce than the non-commercial farmers. About 65% of the reasons for the low exports
were reported to include lack of storage facilities, high competition in the export markets, and
low quality of tomatoes.

29
6.2.5 Channel 5: Fresh Tomato Export Channel
The only difference between the Export channel and the supermarket channel is that the
exporter goes to the farm to buy, while the contracted supplier delivers to the contracting
agency. It was gathered that exports are often procured directly from dedicated small-scale
commercial oriented farmers who are more likely to provide better quality and consistent
products in terms of size and color. This channel is also relatively small and accounts for less
than 1% of total fresh horticultural produced in the country. Kenya major importers of
tomatoes from Tanzania are Kenya Comoro and DRC.
6.3 Actors Relationships in Tomato Value Chain

The framework of tomato value chain consist five levels: input, production, trade, retailing
(marketing) and consumption. Transport is a cross-cutting issue involved in all levels. The
figure 2 below illustrates the different functions (activities), actors and their inter-relationship
in a tomato value chain in Iringa region.

Figure 6.3.1: Framework of Actors Relationship in Tomato Value Chain Iringa Region

30

6.4 Driving Forces and Points of Leverage
6.4.1 Driving forces
Value chain forces refer to those factors that are at the root of the dynamics and change
within the value chain, these often relate to market demand, technological change, and
barriers to entry, input supply, and profitability of different niches, risks or regulatory
framework. The following sections summarize the main driving forces for the tomato value
chain in Iringa.
6.4.1.1 National Markets
National market is the most important driving force of the tomato products from Iringa where
it is estimated that 99% of the fresh produce is sent to market and the remaining 1% is
consumed at household. It is estimated that Dar es Salaam urban consumes over 50% of
tomato produced in Iringa hence it is a very important driving force in the sub sector.
Kariakoo market is the main (reference) market. Currently, there is high seasonality effect in
national market demand is not met during the low supply season (December-April) and there
is a need to promote production during this period. At the market level, activities geared
towards increasing supply during the wet season and exports and/or processing during the dry
season should be the main focus for MUVI initiatives.

6.4.1.2 Irrigation Technology
Irrigation technology through furrow and water pumps (mainly foot water pumps) and
emerging growth of commercially oriented production in a number of geographic clusters,
resulting in increased production during the dry season. The use of this production irrigation
technology is confined to areas with rivers and ground water resources. These farmers are
achieving better profit margins because of the lower transport costs to both the seller and the
buyer and lower product losses. Because of their proximity to market outlets, these farmers
are at least able to spread out their patterns of harvesting and delivery to the market.
6.4.1.3 Import and Export Market
The fact that Tanzania imports more tomato than it sells out indicate that there is market
potential for import substitution through value addition (processing) and export market for
fresh tomatoes.
6.4.2 Opportunities
Opportunities refer to the prospects of businesses that can be undertaken as part of resolving
constraints in the value chain. Thus, behind every constraint there is an opportunity or
opportunities for business. The following are some of the existing opportunities for
improving the Tomato value chain in Iringa:

Progressive small-scale farmers: A large number progressive small-scale farmers who are
willing to adopt the production of tomatoes in the current farming systems as an important
source of income. Lack of technical skills and market information, lack of appropriate
extension services and the concomitant poor crop husbandry are however constraining
progress in this direction, yet some amount of networks and skills to provide the training
exists in the country:
Iringa Dar es Salaam road: Production of tomatoes along Makambako, Ilula- Iringa to
Dar es Salaam road which can link the growing areas and Dar es Salaam

31
Land availability: The availability of land for expansion, varied climatic conditions and
possibility for irrigation, which provides an opportunity to produce a wide range of good
quality vegetables including tomato throughout the year.
Technology: The existence of agricultural and other research institutes such as ARI Tengeru,
ARI Uyole, SUA that are developing appropriate technologies including improved varieties
to support development of the horticultural sub-sector in Tanzania.
Institutional Support: Presence of horticultural promotion and marketing section within the
Ministry of Agriculture and Ministry of Cooperatives, Ministry of Industry, Trade and
Marketing (MITM) through SIDO and IFAD.
6.4.3 Constraints
Constraints refer to factors that inhibit enterprises or firms in a given value chain from
performing their business in the best way. These include:
6.4.3.1 Production Constraints
High incidence of pests and diseases, especially during the wet season, resulting in low
productivity and supply. The losses is estimated to be 80-100% is un-attended
Poor and unspecialized crop extension services at producer level with subject matter
specialists (SMS) sometimes available only at the district level. This leads to production
of sub-standard product qualities which do not meet the export market quality standards
High level of losses (about 30 - 40%) of tomatoes due to poor post harvest handling (that
is all activities from harvesting, loading/ unloading, transportation and transport facilities,
and storage facilities.).
6.4.3.2 Marketing Constraints
High market price fluctuations due to the high seasonality of supply.
Stiff competition on the Dar es Salaam urban market as most of tomato producing regions
(Morogoro, Tanga, Arusha and Kilimanjaro) relies on the same market resulting in
increased transport costs and hence low producer prices to farmers.
Lack of adequate and reliable tomatoes production and trade statistics necessary for
analysis and planning and lack of relevant market and price information, especially to
farmers.
Lack of effective marketing farmer organizations, resulting in the traders dictating the
price.
Lack of export market information particularly the quality specifications
Lack of expertise in product packaging and shipping (forwarding & clearing)

6.4.3.3 Transport and Product Handling Constraints
Poor rural roads particularly the feeder roads leading to high costs, product quality
deterioration and physical losses, which when combined with other aforementioned
constraints such as lack of markets and poor packaging materials lead to losses of up to
40% in some cases.
Corruption along highways by traffic police, accidents of trucks due to poor conditions of
the trucks,

32
Lack of insurance from such losses as accidents
6.4.3.4 Processing Constraints
Underutilization of the existing tomato processing capacities in Iringa region including
Dabaga and Ivory factories. The factories are utilizing only 40% - 50% of their installed
capacities. The reasons of under utilization production are mainly because of low local
product demand, stiff unfair competition from imports, unfavorable tax policies.
Underdeveloped small-scale tomato processors: It is difficult for SMEs to access the
tomato processed markets due to poor product quality particularly packaging and labeling,
no quality and safety marks (critical traceability information) due to the bureaucratic and
costly government business licensing and TBS product standards certification procedures;
lack of computerized and accessible production database; lack of transparency in export
trading.
Difficult access to affordable processing technologies.
6.4.4 Points of Leverage
Leverage is the ability to reach large number of RMSMEs at a single stroke. Points of
leverage are those points where working with an established group of value chain actors or
firms can achieve high outreach (critical mass). These points of leverage are either system
nodes (e.g. collection centres) along the value chain, institutions, geographic/or product
clusters, processing levels. In the case of tomato value chain in Iringa the main leverage
points may include the following nodes:
6.4.4.1 Tomato Processing
Rural Market Collection (Cluster) Centres: At this point is where a large number of
producers, especially the commercial oriented farmers deliver their produce for sale to a
number of local and regional wholesale traders. These collection centres provide an important
contact point between household and institutional consumers, input suppliers, farmers, local
and regional and wholesale traders and their associations. These centers therefore form
important system nodes for outreach to a wide range of the chain actors in terms of exchange
of information regarding, product supply and demand, market prices, product quality issues,
technology on production, storage and transport among others. Good examples of rural
market vegetable collection centers in study area are Ilula, Makambako tomato markets. In
these markets business transactions are conducted by spot and orders. The orders are done
through mobile phones or visits by traders from Mbeya, Dodoma, Morogoro, Dar es Salaam
and Zanzibar.
Producers Associations: At the farm level, there is a need of strengthening / establishing
farmers associations (groups) and networks such as MVIWATA as a point of leverage for
Processors Platform: Tanzania Food Processors Association (TAFOPA) is also a potentially
important player in the horticultural processing industry. The association has real potential
for leveraging MUVI Tanzania project interventions on policy and regulation advocacy,
marketing and capacity building among others. In addition, at the farm level, there is a need
of strengthening/ establishing farmers associations (groups) as a point of leverage for

33
Traders and Manufacturers of Packaging Materials Platform: Traders do drive the value
chain in the sense that they manage the commodity flow, market information and cash
transactions. Together with manufacturers they will improve the value chain by ensuring that
appropriate measurements are in place and enforced. They will also work close with the
Project in exploring export market for Tanzania fresh tomatoes.

34
7.0 GOVERNANCE OF VALUE CHAIN
7.1 Conceptual Framework
7.1.1 Definition
In value chains, governance refers to the relationships among the buyers, sellers, service
providers and regulatory institutions that operate within or influence the range of activities
required to bring a product or service from inception to its end use. Governance is about
power and the ability to exercise control along the chain at any point in the chain and some
firms sets and or enforces parameters under which others in the chain operates. Key
parameters (issues) includes product design and specification, definition of the production
processes, which can include elements such as the technology to be used, quality systems,
labor standards and environmental standards. Production scheduling and logistics is also
included.

The chain governance exists when some firms work to the parameters set by other powerful
firms in the chain. The firm that sets the parameters with which other firms in the chain must
comply is referred to as the lead firm in the chain. The relationships lead firms have with
their suppliers can either be helpful with respect to improving the competitiveness of the
industry, based on a commitment to long-term, mutually beneficial relationships with
suppliers, or they can be greedy and focused on realizing a quick profit in the short-term
7.1.2 Types of Value Chain Governance
The connections between chains activities within a chain can be described along a continuum
(range) extending from market, characterized by arms length relationships, to
hierarchical value chains illustrated through direct ownership of the production processes.
Between these two extremes, are three network-style modes of governance: modular,
relational and captive as explained here below and illustrated in Figure 7.1.1.
Market governance: involves transactions that are relatively simple, information on
products specifications is easily transmitted, and producers can make products within
minimal inputs from buyers.
Modular governance: occurs when a product requires the firms in the chain to undertake
complex transactions that are relatively easy to codify.
Relational governance: in this net-work style governance pattern, interactions between
buyers and sellers are characterized by the transfer of information and embedded services
based on mutual reliance regulated through reputation, social and spatial proximity,
family and ethnic ties and the like.
Captive governance: in these chains, small suppliers are dependent on a few buyers that
often wield a great deal of power and control. Such networks are frequently characterized
by a high degree of monitoring and control by lead the lead firms
Hierarchy governance: describes chains that are characterized by vertical integration and
managerial control within a set of lead firms that develops and manufactures product in
house. This usually occurs when product specifications cannot be codified, products are
complex, or highly competent supplier cannot be found.

35

Fig. No. 7.1.1: Type of Value Chain Governance

7.2 Governance in Tomato Value Chain in Iringa region
The tomato value chain has no lead firm at any level of the chain (i.e. production, processing,
trading and consumption) that govern and control the system and instead it is governed and
controlled by the supply and demand conditions in the market that set commodity prices only
(Figure No. 7.1.1). The tomato VC in Iringa is characterized by the following features: -

Lack of formal Governance. The governance mechanism in the tomato value chain is
underdeveloped. Value chain actors operate in an un-coordinated manner. Nevertheless, a
few rules exist among the value chain actors that include size of containers.
Presence of many actors and transactions: The value chain is characterized by too many
small actors with small business transactions that increase transaction costs and therefore
rendering the products less competitive in the market. This relates to the fact that many
people are involved in operating the value chain. For example, Channel 2 in the sub-sector
map (i.e. fresh tomato channel) there are about 15 transactions involving local trader,
harvesting, loading, unloading, transport, urban trader, loading and unloading, transport,
market levy, broker, retailer, loading, unloading and transport that occur between farmers and
ultimate consumers;
Weak Market Coordination: There is no lead firm that coordinates the value chain in relation
to markets, technology and other important information shared among the actors.
Consequently, actors particularly farmers and processors receive no incentives for up-grading
their tomato product and the value chain process as a whole to promote sustainable income
earning opportunities.
Degree of Explicit Coordination

Low High
Degree of power Asymmetry
Suppliers
Component &
Material Suppliers
Price
Lead Firm
Full-package
supplier
Lead Firm
Relational
Supplier
Lead
Firm
Integrated
Firm
Customers
Component &
Material Suppliers
Component &
Material Suppliers

36
Product Up-Grading: Focuses on the introduction and delivery of new products within the
value chain. In this respect, it is expected that the development of the tomato processing
sector might stimulate more efficient and higher quality production practices among tomato
suppliers. At the same time, the development of channel --- that is processing industry need
to be promoted.

Process Up-Grading: Process upgrading is defined as improvement in the efficiency of the
production process. This refers to the introduction of new cultivation techniques at all levels
in the chain including production, processing and marketing. In the tomato value chain,
farmers and other actors have been applying inferior production, in harvesting and post-
harvesting technologies and leading to high level of tomato losses (about 40%) and seasonal
prices fluctuations. In order to reduce the losses in particular, there is a need for the adoption
of the improved and appropriate post-harvest technology (such as cold storage systems and
small scale processing machinery), which would increase the shelf life of tomato products,
decrease transportation costs and promote agribusiness enterprise development through better
coordination and planning in input procurement.

37
8.0 GROSS MARGIN ANALYSIS
8.1 Key Assumptions and Parameters
Production Conditions: The season 2008/09 is considered to have represented a fair condition
in terms of weather, rainfall, pests and diseases. Market Conditions: It has been established
that the amount of tomato consumed in urban areas is directly proportional to households
disposable income, it is assumed that consumer behavior towards fresh tomatoes will remain
as it is and there will increased uptake of processed tomatoes. Macro-economic Performance:
The overall macro-economic performance of the country will continue to be positive. The
parameters used in the analysis are: -
One acre produces 285 tengas,
A tenga is equivalent to 3 debes/buckets of 20 litre,
Output per acre in Iringa Rural is 290 and in Njombe is 271 tengas
A 20 litre debe of tomatoes weighs 16.7 kgs hence a 3 debes tenga will contain 50 kgs of
tomatoes.
8.2 Method of Data Collection
The data used in this analysis was collected through a focus group discussions at six villages
two at each district (Iringa Rural and Njombe), however Ludewa was excluded from this
analysis because it was found to be a net importer of tomato from Njombe and therefore data
from Ludewa would have skewed the results slightly above the average, for example retail
prices at Ludewa central market was about 150% higher than in Njombe, due to
diseconomies of scale costs per unit area would be equally higher. Data from the village was
cross-checked with reports from other sources e.g. costs were compared to tomato farmers in
Arusha.
8.3 The Results of the Analysis
Gross margin refers to the percentage obtained by dividing the result of subtracting direct or
variable costs from revenue to the revenue. It does not take into account overheads, capital
investment, or cost of borrowed capital. Such approach is adopted because small scale
farmers do not often incur much of these costs and partly because such information is often
difficult to obtain. Thus data provided below should not be misinterpreted as profits.
Considering importance of opportunity cost economic theory, labour was priced at wage rates
paid to competing labour uses was provided. At this level main transactional activities are
mainly against services and inputs which are obligatory to tomato sub sector. Services which
provided from the point of production to collection point are nursery establishment, land
preparation, purchase of inputs, planting, weeding, spraying, harvesting, packaging and
transport (from farm to collection point).

Marketing at the Iringa Rural and Njombe districts has an average of 24 significant
transactional activities from inputs acquisition, land hiring and crop planting stages to the
point of delivery to the collection center. The average tomato yield per acre is
285tengas/boxes equivalent to 3 debes per bucket of 20 litters. Iringa Rural produces 290
tengas per acre and Njombe 271 tengas per acre. Average cost from farming to collection
point is Tshs 2,831/tenga or Tshs 806,835 per acre whereby average cost for Iringa Rural is
Tshs 3,093 per tenga (Tshs 898,600/acre) and in Njombe is Tshs 2,815 (or Tshs 761,475).
Variable costs incurred include land hiring Tshs 43,333 per acre, seeds acquisition Tshs
33,667, nursery preparation and management is Tshs 64,850 per (about 10m
2
), land

38
preparation is Tshs 51,833, transplanting task Tshs 14,000, fertilizer acquisition for planting
and boosting Tshs 129,500, pesticides and fungicides Tshs 66,834, labour for spraying and
fertilizer application Tshs 50,001, irrigation cost Tshs 154,667, harvesting Tshs 75,200,
sorting and packaging Tshs 8,400 and transport Tshs 152,017 (to where)?.

There is strong on influence on seasonality on tomato prices in the region, wet season is
between December and April while dry season is between May and November. A farm gate
price per tenga during wet period is Tshs 12,833, during dry season is Tshs 10,083 thus there
is 21% difference between dry and wet seasons.

Table No.8.3.1 Farm gate price pattern seasonality per tenga of tomato (2008/09)

District Wet period (Dec-April) Dry season (May-Nov)
Kiwere

16,000 12,000
Magulilwa

12,000 10,000
Ihanja

12,000 9,000
Makambako
Njombe
13,000 10,500
Average 13,250 10,375

Tomato prices per tenga were Tshs 10,417 and Tshs 10,167 for Iringa Rural and Njombe
Therefore gross margin of 60% for a tenga of which is Tshs 7,446 per tenga or Tshs
2,122,110 per 285 tengas harvested from an acre.

Return on tomato cultivation can be improved if yield is enhanced from around 15mt reported
in the field to at least 20mt (a 30% increase) that could add about Tshs 600,000 to a farmer.

(Detailed gross margin analysis is provided as an Annex 1 to this report)

39
9.0 CONCOMITANT SERVICES MARKET
9.1 Technical Services

Availability and accessibility to support services is one of the critical success factors in VC
upgrading. Segments and services that need more support services are producers, traders,
manufacturers of packaging materials and processors. Producers need services for enhancing
entrepreneurship, marketing and value chain concept, access to finance, extension services
and organizational development skills.

The above services are available within the region and SIDO Regional office has the capacity
to provide entrepreneurial, marketing, value chain and financial linkages. Extension services
will be initially relied on district extension personnel but it is encouraged that the sector (VC)
in the long run should either build internal capacity r procure the services from the market to
enhance accountability. There are working models where the sector is financing its extension
services innovatively e.g. the tobacco. Through FFS (demonstration farms) dissemination of
extension services will be accelerated. Some non-government organizations that can
complement the supply of services include COAS (based in Mufindi), NADO (based in
Njombe), INCOMET (based in Mufindi), etc.

Technology can be classified as hard technology which involve access to and use of physical
processes such as irrigation, pumps, water harvesting, etc. The second type of technology is
soft technology i.e. skills of performing activities in the VC. The skills are varied and will
therefore require various BDS, those identified ex-ante for producers are; entrepreneurship
(farming as business); value chain concept and marketing; group formation and
strengthening; management of chemicals and environment. The services will initially be
subsidized with a gradual phasing out in the following order of subsidy as 100% year 1, 60%
year 2, 20% year 3 and 0% in year 4.
9.2 Financial Services
In general, the demand for financial services in most rural areas in Tanzania is characterized
by low participation and poor financial accessibility. This is attributed to the present
situation that most economic activities in rural as well as sub-urban areas depend on
agriculture which again is characterized by low degree of agricultural mechanization, low
technological adoption and high price volatility of agricultural outputs. As a result, most
household farmers are often considered of high risk by banks and other formal financial
institutions. The problem is exacerbated by the fact that only 5% of smallholder farmers in
Tanzania have official land titles that could be otherwise used as collateral to access loans
from formal financial sector.
6
Other demand-driven factor that explains low level of access of
financial services in rural Tanzania includes the level of transaction costs incurred by
households and the financial illiteracy.

6
In efforts to stimulate and encourage formalization, the GOT is implementing the Property and Business
Formalization Program (popularly known as MKURABITA, its Swahili acronym), which is aimed at improving
the services of the land registries in order to support the registration of land and landed property, its valuation
and use as security for underwriting economic activities.

40
In Iringa there are a range of financial institutions, commercial banks in Iringa region include
National Microfinance Bank Ltd (with 7 branches namely Ludewa, Mafinga, Makambako,
Makete, Mkwawa, Njombe and Kilolo); CRDB Bank Plc (3 branches namely Iringa,
Mkwawa and Njombe); National Bank of Commerce Ltd (2 branches namely Iringa and
Njombe) and Exim Bank Ltd (1 branch in Iringa town). Non-bank financial institutions
7

present in the region is Tanzania Postal Bank (with 1 branch in Iringa).

Most RMSEs rely on SACCOS for financial needs as they are closer to them. Iringa has
registered about 173 SACCOS, 89 AMCOS, 9 cooperatives, 12 bank branches and several
MFIs/NGOs. About 41% of the SACCOS are located in urban centers (with Iringa Urban
carrying 45% of them) whereas 60% SACCOS are located in the rural areas. Based on the
number one could conclude that access to financial services is higher in the rural areas than,
the reality is the percent of population accessing SACCOS services is far less in rural areas
than in urban centers.

Table No. 9.2.1 The number of financial institutions in Iringa (June 2009).
No. District
SACCOS
Total Members AMCOS Coops Bank Branches
Urban Rural Total
1 Iringa Rural 3 23 26 3,288 20 1 0
2 Iringa Urban 31 0 31 2,961 N/A N/A 4
3 Kilolo 0 6 6 2,223 N/A N/A 1
4 Ludewa 3 15 18 744 10 6 1
5 Makete 3 16 19 3,538 19 0 1
6 Mufindi 21 20 41 20,099 18 1 2
7 Njombe 9 23 32 9,055 22 1 3
Total 70 103 173 41,908 89 9 12

Non-governmental organizations providing financial services (NGO-MFIs) operating in the
region include PRIDE Tanzania Ltd (currently Iringa has 2 branches Iringa and
Makambako) and PASS (currently operates in Iringa through CRDB Bank branch in Iringa).
There is Mufindi Community Bank located at Mafinga and plans to establish a community
bank in Njombe are at an advanced stage. In Iringa other sources of credit to RMSEs are
SIDO and SELF. Given the extended presence, SACCOS make the first line of resort for VC
actors to access credit.

Banks are not the appropriate vehicle for supporting RMSEs, the innovation is in wholesaling
the services to SACCOS that interface with communities. Table No. 9.2.2. below presents
summary of the key characteristics of financial service providers in the banking sector in
Iringa.

Table No. 9.2.2. Key characteristics of banks
Bank NMB Ltd CRDB Ltd TPB NBC LTD EXIM BANK
Total number of
branches in the
region.
7 3 1 2 1
Network of
branches/outlets
All district
headquarters
Iringa Urban,
Mkwawa &
Iringa Urban Iringa Urban
& Njombe
Iringa Urban

7
These are institutions licensed by Bank of Tanzania and authorized to engage in banking business not
involving the receipt of money on current account subject to withdrawal by cheque.

41
Njombe
Range of loan
amount (Tshs)
300-500
million per
MFI/SACCOS
300-500 million
per
MFI/SACCOS
Average 1.1
million per
MFI/SACCOS
5 250
million per
MFI/SACCOS
500 million per
MFI/SACCOS
Types of
Products:
Provides whole range of financial products to individual clients: these include savings, SME
as well as individual loans, money transfer, payment services etc. Wholesale loans are
extended to SACCOS and MFIs.
Profile of clients NMB, NBC, EXIM and CRDB bank are primarily indirect providers to rural areas through
their links with MFIs and SACCOS. TPB has a greater tendency to provide direct services
to individual rural clients.
Characteristics of
the portfolio
CRDB volume of loans to the agriculture (rural) comprises about 25% of total lending.
NMB has extended significant lending in agriculture whereas TPB, NBC and EXIM have
continued to lend to individual farmers as demand arises.
Financing sources
and capital
structure
SACCOS & other MFIs are able to generate funds from the banks, NGOs and own
members.
Source: Field Survey 2009

Assessment of financial institutions attitudes towards financing agro-based value chain
activities is mixed. Each bank with branch presence in Iringa has specific financial package
to SMEs and particularly SACCOS. CRDB has many years of experience in financing agri-
businesses and working with IFAD funded projects in the past. CRDB has been actively
funding agricultural projects in cooperation through the linkage by Private Agricultural
Support Services (PASS) that specializes in advisory services and financial linkage of agri-
businesses to financial institutions. CRDB has indicated that it continues to work with
agribusinesses based on financial viability of their projects.

Similarly, NMB is leading bank in terms of range of products extended to the farmers who
are actually majority actors in the selected value chains. For example, interview with NBM
Branch Manager in Ludewa District indicated that the bank is working to reach farmers via
their SACCOS. While from the banks standpoint they are not directly lending to agri-
businesses, it was noted that traders may be financing agricultural commodity trade through
bank loans covertly (under the cover of trading industrial merchandise) because the pattern
shows high growth in loans for trading during harvest period.

Figure No. 9.2.1 Proposed Financial Access Preference Matrix

42
10.0 INSTITUTIONAL AND REGULATORY FRAMEWORK
10.1 Tropical Pesticides Research Institute (TPRI)
National Environment Tropical Pesticides Research Institute Act was established by the Act
No. 18/79, it deals with supervising and regulating the manufacture, importation, distribution,
sale and use of pesticides in Tanzania and to administer the regulations made under the Act.
Major activity is to oversee pesticides including acaricides, arboricides, herbicides,
insecticides, fungicides, molluscides, nematicides, hormonal sprays and defoliants used or
intended to be used, either alone or together with other material or substance for the control
of weeds, pests and disease in plants; or for the control of external vectors of veterinary or
medical disease and external parasites of man or domestic animals or for the protection of
any food intended for human or animal consumption8. TPRI competency is of critical
importance to the tomato VC as they have to assure that quality of chemical are up to
standards. There have been reports of some pesticides being ineffective lending producers
into losses.
10.2 Tanzania Foods and Drugs Authority (TFDA)
Tanzania Food and Drugs Authority (TFDA) was established under Tanzania Food, Drugs
and Cosmetics Act No. 1 of 2003, TFDA a semi-autonomous body under the Ministry of
Health and Social Welfare supervision and became operational on 1st July 2003. The
Authority has broad but with respect to tomato value chain its main involvement is in
processed products.

Pre-packaged food and food supplements are evaluated
and registered by the Tanzania Food and Drugs
Authority (TFDA) before being approved for marketing,
it aims at ensuring safety to consumers. It registers
production premises, registers the products and licenses
firms to carry out business. In compliance TFDA
undertakes surveillance, does control imports and
exports in relation to importing and exporting countries
standards and carries out post-marketing product risk
analysis. Another important function of TFDA is to
provide public education on food safety.

10.3 Tanzania Seeds Certification Institute
(TOSCI)
For producers, the institution that interacts most with
farmers is Tanzania Official Seed Certification Institute
(TOSCI), TOSCI certifies seeds though there is no direct relationship with farmers TOSCI
has to approve seeds and the quality of seeds depends on the competency of TOSCI. While
there was been cases of poorly performing seeds, the problem is not a threat to the value
chain. However as the project aims to upgrade tomato VC it is important that TOSCI

8
http://www.leat.or.tz/publications/env.handbook/4.4.c.pesticides.act.php
The analysis cost is USD 330 while
evaluation of the product is USD 50
making the total cost USD 380. The
approval is valid for 2 years after which
the manufacturer if to resubmit the
application. The time from lodging the
application to issuance of approval is
set at a maximum of 280 days. The
actual period depends on the list of
products being analysed at a given point
in time and the complexity of the
product. TFDA has however provided a
leeway so that its process does not have
adverse effect on business, they allow
marketing of the product while samples
are being samples are being analysed.
TFDA plans to introduce its own mark
on approved products.
Source: Interview With TFDA Staff

43
becomes aware of the importance of tomato seeds to the economy of the region and the
country so as to allocate adequate time and resources.
10.4 The National Environment Management Council (NEMC)
NEMC is another important stakeholder to the tomato industry given the environment
implication of intensified tomato production under the project. The National Environment
Management Council (NEMC) came into being in 1983 when the Government of Tanzania
enacted the National Environment Management Act No. 19 of 1983. The Environment
Management Act of 2004 provides for a legal and institutional framework for sustainable
management of the environment, prevention and control pollution, waste management,
environmental quality standards, public participation, environmental compliance and
enforcement. NEMC undertake enforcement, compliance, review and monitoring of
environmental impacts assessments, research, facilitate public participation in environmental
decision-making, raise environmental awareness and collect and disseminate environmental
information. The Council will be consulted in preparing modules for training of tomato
producers on eco-friendly production systems as well advising factories on waste water
management.
10.5 Tanzania Bureau of Standards
Many products use TBS label to improve the product image and marketability. IVORI,
Dabaga and Redgold all have TBS marks.

44
11.0 TOMATO VC SWOT ANALYSIS
11.1 Opportunities
Iringa has emerged the main source of tomatoes in the country because of suitable agro-
climatic conditions which are suitable of tomato production compared to other regions.
The temperate climate, volcanic soils and water bodies combine to give the region the
desired conditions for commercial tomato production.

Road network especially between Dar es Salaam and major collection points (Ilala,
Makambako and Mlandege) are accessible by tarmac road cutting down transport costs
(in relative terms and reduce) travel time.

Governments commitment to develop agriculture as pronounced in policies, strategies
(MKUKUTA, ASDS, Kilimo Kwanza, Agricultural Marketing Policy, etc.) and
implementation plans (ASDP, DADPs, DASIP), presence of donor (IFAD) and
institutional capacity SIDO, LGAs and the private sector places the project in a positive
environment.

Thus for tomato has the highest return per acre compared with other computing
commodities in the area. The financial incentive guarantees availability of resources e.g.
labour and land tomatoes grows with income and urbanization, large cities including Dar
es Salaam are expected to continue to grow how the demand for tomato. The economy as
well has been growing at above 5% p.a. in this decade, the combined effect of the urban
growth, economic growth and peoples awareness on the value of tomatoes assures the
market opportunity.
11.2 Strengths
Accumulated knowledges on tomato farming and trading by actors in Njombe, Iringa
Rural and Kilolo provides a robust building ground for upgrading the VC and eases entry
into the chain.

The youths (at least made) are already engaged the production and trading segments of
the chain, youths have higher affinity to change especially where incentives are clear.

LGAs (supported with Regional Government) involvement in taking lead to support the
VCD including participation from the onset has entrenched LGAs stake in the project.

Tomato processors in Iringa and Arusha are willing to work with other value chain actors
to improve the production and marketing local processed tomatoes.

Local brands (Dabaga, IVORI, Marriet and Redgold) are competing favorably with
imported brands such as Peptang, Heinz, American Garden, and an array of products from
Middle East.

Availability of trust among VC actors has reduced cost of doing business.

Responsiveness and participation of Research institutions and seed multiplication
companies has led to continuous improvements of seeds and supply system.

45

11.3 Weaknesses
There limited information about the sector as a result of lack of coordination among value
chain actors.

There is low awareness on the nutritional value of tomatoes among the population as
noted on low consumption of fresh/raw tomatoes and tomato juice.

Low priority accorded to the commodity by the government at the National and Regional
level because of overemphasis on grains, legumes and traditional cash crops despite their
dismal contribution to the economy of the region (e.g. pyrethrum, tobacco, coffee) that
have SMS.

Traders have low knowledge about the export market and subsequently lack of strategy to
promote this segment.

Some value chain actors have low entrepreneurial skills, e.g. producers (at least in Iringa)
have failed to tap into industrial segment because they are driven by price and they
overlook the volume side of the business.

On the overall there is low awareness on health and environment issues among producers.
Despite that there has been no scientific studies done, the general information shows that
pesticides pollute water sources.

There is limited access to improved farming equipment small as ox ploughs, power tillers,
tractors, pumps, etc. to reduce drudgery, increase acreage and product quality.

Access to rural-based tomato processing technologies has been a challenge, there are no
rural-based tomato processing activities in rural areas.

Non-standardized measurements erode accuracy of information, add to cost of transaction
and distort levy base.

There limited access to credit (all along the chain).

11.4 Risks (Threats)
11.4.1 Commodity Level Risks
Weather or rather climate change has made rainfall became unpredictable. Most of the
tomato is produced along the rivers and streams some of which are seasonal and therefore
are susceptible to drought.
Poor water management in tomato corridor production area requires more research and
long term strategy to improve water management is needed. Pollution of water sources
needs to be contained because higher level of contamination may jeopardize the industry
through legal courses.

46
11.4.2 Macro Level Risks
While the opening of EAC markets in 2010 could be a blessing for fresh tomato segment
as it may promote exports, processed tomato will face formidable competition from
similar products particularly from Kenya. One industry actor commented
It is a reality that we will have to live with, everyone must factor in his strategy now.
Processors have complained of taxes on packaging materials that are used to pack tomato
rendering prices of local processed tomato less competitive, as processing capacity
increases the impact of imported packaging materials will become even more significant.
At one level consumer preference towards processed tomato poses a risk if it wont grow
significantly.

47

12.0 EXIT STRATEGY
The purpose of any VCD facilitation is to ensure that the VC becomes sustainably
competitive in the market through improving market offering (superior product - innovation,
competitive pricing - cost leadership). It should be is led by the private sector. Part of the role
of the facilitator will therefore be to craft and implement a seamless exit that will leave the
VC on a growth path. Lessons learnt from other VCs indicate that the duration of support
varies greatly with the complexity of the chain (governance structure). The most complex
structure is the market-governed value chain, there is low, none on sometime negative cost of
switching channels/relationships. Tomato is a typical product where market forces are
determining what, when, how, what amount to produce and how to pack, how, where and
when to deliver. Good practices in the VCD show that in order to have a sustainable
competitive VC, actors need to:-

Acknowledge the interdependency among actors and articulate incentives or disincentives
for the actors to be part and not part respectively
In a participatory manner, building a consensus to collaborate and developing a VCD
action plan with a clear view of each members contribution.
Establishing structures of responsibility and accountability in the VC.
Strengthening the structures so that they assume strategic role of driving the VC in
absence of a facilitator.

The exit is phased to minimize disruption to the VC, responsibilities of the facilitator will be
reduced gradually with the building of stakeholders capacity to fill in or the capacity to
purchase the services from the market. Examples well coordinated VCs include tobacco,
sugar out-grower schemes, Tanga Fresh (dairy), etc. The key factor is clarity of incentives
and costs for members subscribing to the system. Further experience indicates that the
process may require more time (than 2 years) and in many projects the transition is at least 3
years. Under the good practice that each chain segment should focus on core competency, it
is important to build the capacity of actors to procure services from the market.

SIDO - MUVI

PART B

Proposed Investment Plan for
Iringa Tomato Value Chain Development

1
1.0 INTRODUCTION
1.1 Envisioning the Project
To see tomatoes value chain actors in rural areas (RMSEs) have better economic and social
wellbeing through benefits derived from promotion and upgrading of tomato Value Chain
competitiveness. Economic and social wellbeing shall be manifested in business and
household assets, access to social services including better houses, food security, health,
education, water, etc.
1.2 Key Good Practices in VCD
This investment plan is intended to provide a framework and focus within which the VC will
develop. The Plan draws lessons from some implemented VCs in Tanzania to have a set of
good practices that include the following: -
In a coffee value chain supported by USAID it was found out that the biggest impact
came from the unplanned introduction of a new business model into the value chain, not
from the narrowly defined outcomes realized by the main project beneficiary.
The assumption that the value chains will grow in a pre-determined linear most often is
not true, there are ample cases that call for an inbuilt flexibility mechanism in the VCD
management. Effective implementation of VCD is in essence about managing a business
in a turbulent (dynamic) environment. The strategies needed must be both pro-active and
re-active, success is based on how nimble the VC can adapt to the obtaining environment.
Demonstrated in horticulture VC and Tanga Fresh, it is recommended that each actor in
the focus on core competency instead of trying to integrate many activities in a chain by
one segment.
It is recommended that support services are procured from the market instead of creating
parallel systems that last as long as the donor is there and collapse after phasing out. This
is important say with financial and other support services.
Always it has to be borne in mind that it is the market that pulls the chain.
VC actors have to have incentives that are strong to make them change the way they have
been doing.
1.3 Main VCD Objective and Outputs
The following are delineated projective objectives that address rural poverty through
increased and equitable incomes, growth RMSEs through value addition to tomatoes,
innovation in irrigation systems and community-based processing, gender mainstreaming and
environment and natural resources management.

Table 1.3.1 VCD Objectives and Outputs

Objective Output
1.1 Improved capacity
of producers to
absorb services
and address
1.1.1 Tomato is accorded due priority in the districts of
Kilolo, Iringa Rural and Njombe and mainstreamed in
DADPs. SMS are identified, oriented and engaged in
the VCD.
2
Objective Output
common issues 1.1.2 RMSEs are organized at grass-root, village, cluster,
district and regional level in order to improve their
capacity access services and influence on the VC.
1.2 Producers have
increased their
income
1.2.1 Producers (RMSEs) are trained in a farming as a
business a in order to improve their understanding of
the dynamics of value chains, opportunities
(incentives) and risks in the value chain to solicit their
active participation.
1.2.2 Producers have improved access inputs and
sustainable extension services
1.2.3 Producers targeted by the project are able to improve
average yield by 25% in the first two seasons
following interventions of the project.
1.2.4 Tomato producers in pilot areas are aware and
practice good water management and eco-friendly
tomato farming.
1.2.5 Producers increase supply of tomato to processing
plants as a result of contract farming initiatives.
1.3 Producers are
undertaking safe
and eco-friendly
farming
1.3.1 All producers in the pilot areas are aware of the risks
(health and environment) related to improper use of
chemicals applied in tomato production and general
agricultural practices.
1.3.2 Producers have established self-regulating
body/bodies and harnessing on economies of scale in
marketing, procurement of inputs and equipment.
1.3.2 At least one irrigation project using sustainable source
of energy particularly wind and gravity (rain water
harvesting) is piloted and results disseminated.
Output No. 2
2.1 Cost of doing
business is
reduced through
using appropriate
packaging
materials
2.1.1 Advantages and disadvantages (value
addition/subtraction) of grading tomatoes are
identified and communicated to producers; if there are
adequate incentives producers are motivated to grade
their produce at farm level instead of the current
practice.
2.1.2 Initiatives to streamline weights and measures all over
the tomato value chain and a mechanism to monitor
and enforce the packaging are agreed and
implemented.

2.1.3 Cost effective and healthy tomato packaging materials
including improvements on existing materials are
explored, findings shared with actors and a consensus
is established among actors.
3
Objective Output
2.2 Increased tomato
export
2.2.1 Level of understanding about export market is
increased, benefit/risks assessed and rational decisions
made on increased exports to traditional tomato
importers.
2.3 There is higher
level of
compliance to
agreed good
business practice,
voice of traders in
the VC and policy
making bodies is
strong.
2.3.1 Traders at cluster level are organized and have
established a structure to oversee interests of traders
and accountability in the VC.
2.3.2 Legal and regulatory constraints to trade are identified
and addressed and there is higher compliance to laws
and regulations by traders.

Output No. 3
3.1 Processing
capacity is
increased as a
result of reliable
supply of local
tomato to
processors hence
reduced import
bill (in relative
terms)
3.1.1 There is higher understanding and interest of private
investors to take an active (and lead) role in upgrading
the VC including Dabaga, IVORI, Redgold and
Marriet.
3.1.2 There is increased understanding on the advantages
and disadvantages of contract farming is provided to
both the processors and producers drawing lessons
from Redgold in Arusha.
3.2.4 A strategy is place and contract farming is
implemented to improve supply to processors as an
income stabilization strategy to producers particularly
women who are more amenable to contract farming.
(Processors have indicated the need to use more local
tomatoes from farmers in place of paste imported
from China).
3.2.5 Processors are linked to financial institutions
3.3 New nutritious
tomato-based
product with high
market potential is
tested and
promoted in the
market.
3.3.1 At least one entrepreneur has piloted and concluded
on technical and market viability of solar dried tomato
and tomato-leafy vegetables blend recipes.

Output No. 4
4.1 There is low
transaction cost
between traders
and transporters
4.1.1 There is higher understanding by transporters on the
VC concept and they take an active part in ensuring
that packaging materials are complied with.
4.1.2 There is improved business environment as
transporters form a platform to address their problems
including trade disputes and corruption by traffic
police.
4
Objective Output
4.1.3
Output No. 5
5.1 There is
sustainable and
competitive
technical services
to the VC
5.1.1 Technical services (tilling, mobile water pumping
units, spraying units, transport and inputs supply) are
packaged and made competitively and sustainably
accessible to producers.
5.1.2 Technical services (tilling, mobile water pumping
units, spraying units, transport and inputs supply) are
packaged and made competitively and sustainably (on
commercial basis) accessible to producers.

Output No. 6 (Cross-cutting)
6.1 Relationships in
the value chain is
strengthened
elevating trust
6.1.1 A forum for tomato stakeholders is established to
address issues of weights and measures, industry
information/knowledge sharing, development of
export strategy and general advocacy and lobbying.
6.1.2 Information system for tomato chain is established
and is readily accessible by all actors.

5
2.0 PLANNED INTERVENTIONS
A number of activities involving existing and new actors in the tomato VC will have to be
brought together and a shared vision and mission for developing the business agreed in
principle. Other capacity building activities shall be built upon organized actors since the
strategy is to empower them and be able to sustainably support VCD after the phasing out of
the project. Specific envisaged interventions are indicated in the following sub sections.
2.1 Mobilization and Organization of Actors in the Value Chain
Actors will be encouraged to associate in order to harness synergies, economies of scale and
increased voice. The association may have different levels including: -
Producer level groups to improve delivery of common services e.g. extension,
information, farm to collection centre transport, etc.
Cluster level associations will be based on output concentration level e.g. Ilula,
Makambako, etc. (geographical area of business convenience), the major benefit includes
arrangement for transport, information hub, exchange point between farmers and traders,
point of interface with government and institution of code of conduct.
Regional level collaboration shall be more concerned with advocacy and lobbying,
National level partnership will focus on industry export competitiveness and policies.
Using the LGA officials, the project will reach out actors, raise awareness on the project and
provide them with training on organizational and leadership skills.
2.2 Business training (farming as business);
This aims at producers to improve their understanding of basic faming business ideals in
including optimization of factors of production for higher yield. This will be in class and
study visits training. It is important to improve farmers access to better farming
technologies e.g. tractors, power tillers, motorized pumps, sprayers, etc. Through promoting
and building dedicated service providers farmers will be assured of sustainable and
competitive services. The project will assess farmers ability and willingness to pay for the
services, will mobilize investors (service providers) who will provide services on commercial
basis. Eventually the service providers will be linked to credit facilities.
2.3 Improving Access to Effective (Good Practice) Technical Messages
Apart from visitation by extension/experts, leaflets and booklets shall be prepared and
disseminated using success stories from within the region, in the country and outside the
country. Compilation and documentation of success stories will be done in the first year of
the project. Cinema shows will be done using documented success stories from within Iringa,
in the country and the world over, the cinema if appropriately packaged will attract youths
attention. The shows will have slots for other important issues in the chain such as gender,
HIV/AIDS, natural resource management. Sokoine University and other research institutes
will be involved in the preparation of the documentary. Learning visits to Arusha on GAP in
horticulture will be implemented. There will be a project document to replicate sustainable
tomato production under eco-friendly systems.
6
2.4 Standardization of measurements
The understanding and rationalization of measurements will require more analysis especially
to get answers on economic incentives for tengas and inconsistence in volume of wood
crates and implications to efforts to upgrade the value chain. Apart from standardization there
is a need to innovate on reducing the weight of the boxes that accounts for as much as 16% of
the cargo weight. Options to be looked at include possibility for lighter and or collapsible
crates. This calls for technical review of tomato handling containers to involve SIDO TDCs
and Weights and Measures Agency. Awareness raising on the negative effects of non-
standard weights and measures in value chain development (refer to building trust) is also
essential. There will be capacity building for manufacturers of packaging materials on VC
concept and their role, entrepreneurship and working with financial institutions.
2.5 Development of a niche market for raw tomato (and juice)
The most nutritious form of tomato is in its raw form or pressed juice, they avail all the
nutrients in the fruit to the consumer. Consumption of raw tomato is being discouraged
because of healthy risks as they are not grown, treated and handled in hygiene conditions.
The project shall aim to target this niche through proper promotion and branding. TFDA will
be approached to guide on for food safety requirements, there will be a follow up with
TIRDO for continuous monitoring or product quality (sampled test), TIRDO is providing that
service to some hotel chains in the country.
2.6 Initiating Eco-Friendly Tomato Production
Tomato farming is putting pressure on water sources that are used for other domestic
purposes but also limits expansion of tomato fields. A feasibility study will be undertaken for
cost-effective use rain or ground water on a relatively larger scale (e.g. more than 50
hectares) with little environmental impact powered by renewable energy such as wind and or
solar to pump water. Upon positive results women will be encouraged to hire the plots, they
will however be guided on crop husbandry. If the channel grows it can provide tomato for the
niche market as well as the factory.
2.7 Promoting Access to Business-enabling Credit Services
Access to credit has been cited by all actors to be an impediment to the VCs. For producers
and rural service providers they will be mobilized to establish grass root financial structures
(SACAS, ROSCAS, VICOBA and SACCOS) where they dont exist and build capacity to
broaden services where they exist. Capacity building to grass root financial structures
especially SACCOS will focus on management, mobilization, promotion and consolidation of
credit business. Many SACCOs are too small to make economic business volume, they need
to be capacitated through improved managerial and consolidation linking of SACCOs in
tomato growing areas and financial institutions,
2.8 Export Market Development
This will build on the fact that tomato exports has grown and more sharply in the last two
years. A study to review tomato exports market in E.A. (particularly Kenya, Rwanda) and
Western DRC. The purpose is to enhance Tanzanias competitiveness in the region for
tomato market given the opening up of EAC common market and ongoing improvement in
infrastructure (road network)
7
2.9 Facilitate the expansion of national supply of tomato Paste.
Tomato paste is a basic input to many tomato-based products, currently Redgod is building
the capacity for tomato paste, and this can have potential market in the country and in the
region. The constraints at present are low volume of tomato supplied to factories due to
higher factory gate prices. The project will leverage increased production of tomatoes
targeting processing plants. A firm commitment from private sector to expand capacity and
engage on contract farming (it is being done in Arusha) will have to be reached before the
expansion of production. Initiatives to minimize farmers exposure to the risk of relying on a
single buyer will in built into the system that include producer setting aside part of the tomato
plots for feeding the processors.
2.10 Promote Solar-dried tomato (some blended with leafy vegetables for
rural and urban markets
Facilitate the identification and support an entrepreneur who is willing to pilot a unit for solar
drying tomatoes preferably mixed with some other local vegetables targeting the rural market
which normally has limited supply of green vegetables during dry seasons at the time when
supply for tomato is very highest (hence lowest prices).
8
3.0 PROPOSED PROJECT BUDGET
3.1 Budget Summary
It is requested that MUVI make available a total sum of USD 887,600 to implement the
project of which USD 634,000 shall be towards capacity building of the value chain and USD
253,600 for facilitation expenses.

Table No. 3.1 VCD Project Summary
USD Percent
Direct facilitation cost 586,400 71%
Facilitation fee for 3 years at 40% of the capacity building direct
costs
234,560 29%
Total project cost 820,960 100%

The expected value for money from the investment is that improvement in the value chain of
at least of 25% in production will be worth Tshs 6.75 billion or USD 5.19 million per annum
from the third year onward.
3.2 Detailed Budget Break Down
(See attached Results Framework spreadsheet)

SIDO - MUVI

Tomato Value Chain Analysis and Investment
Plan

ANNEXES

ANNEX I

Results Framework and Budget

ANNEX II

Tomato Gross Margin Analysis

Kiwere villlage (One acre)
Production cost Quantity Price Cost
1 Seeds buying Pkt 100gm 2 19,000 38,000
2 Plot hiring acre 1 30,000 30,000
3 Nursery bed prep per bed 1 6,000 6,000
4 Nursery Manure per debe 4 1,000 4,000
5 Nursery Irrigation day 30 1,000 30,000
6 Field clearing man day 4 2,000 8,000
7 Tilling by Oxplough acre 1 25,000 25,000
8 Harrowing man day 8 2,000 16,000
9 Transplanting man day 8 2,000 16,000
10 Basal Fert DAP kg 50 1,900 95,000
11 labor fert DAP appl man day 4 2,000 8,000
12 Weeding I man day 10 2,000 20,000
13 Dithane Fungicide Pkt 60gm 2 8,000 16,000
14 Thiodan Pesticides Liter 1 15,000 15,000
15 spraying labor man day 16 2,000 32,000
16 Sprayer hiring round 4 4,000 16,000
17 Weeding II Man day 10 2,000 20,000
18 Fert DAP kg 50 1,900 95,000
19 Fertilization task man day 4 2,000 8,000
20 Weeding III Man day 10 2,000 20,000
21 Tenga buying pc 7 1,100 7,700
22 Irrigation man day 70 2,000 140,000
23 Harvesting per tenga 277 300 83,100
24 Transport to C.P trips 40 5,000 200,000
Total 948,800

Average yields tenga 277
Prices I (Mar-Apr) 1 8,000
II (May-Jun) 1 12,000 12,000
III (Jan-Feb) 1 16,000

Revenue I 2,216,000
II 3,324,000
III 4,432,000

G.M I 1,267,200
II 2,375,200
III 3,483,200

Magulilwa village (One acre)
Seeds buying 50gm 4 9,000 36,000
Plot hiring acre 1 40,000 40,000
Nursery bed prep Man day 2 2,000 4,000
L/stock Manure Debe 4 500 2,000
Nursery watering Man day 30 600 18,000
Field Clearing Man day 5 2,000 10,000
Tilling by Oxplough are 1 20,000 20,000
Harrowing Man day 5 2,000 10,000
Transplanting Man day 5 2,000 10,000
Planting fert CAN Kg 40 800 32,000
Labor CAN appl Man day 5 2,000 10,000
Weedings I Man day 8 2,000 16,000
Ivory Fungicide Liter 1 65,000 65,000
Pesticide thionide Liter 1 28,000 28,000
Spraying labor Man day 16 2,000 32,000
Sprayer hiring per day 4 1,000 4,000
Weeding II Man day 8 2,000 16,000
Boosting fert DAP Kg 50 1,900 95,000
Fert DAP appl Man day 5 2,000 10,000
Weeding III Man day 8 2,000 16,000
Tenga Buying Pc 8 1,200 9,600
Irrigation 3month Man day 76 2,000 152,000
Harvest per tenga 304 200 60,800
Trasport to c.p per tenga 304 500 152,000
Total 848,400

Yield Tenga 304
Prices I Aug-Sep 4,500
II Oct-Dec 10,000 8,833
III Jan-Feb 12,000

Revenue I 1,368,000
II 3,040,000
III 3,648,000

G.M I 519,600
II 2,191,600
III 2,799,600

Ihanja Village (0.25 acre)
Seeds buying 25 gm 12 1,500 18,000
Hiring of plot 0.25 acre 4 15,000 60,000
Nursery prep Man day 1 2,000 2,000
Nursery Manure Debe 4 500 2,000
Nursery Irrigation bucket 60 200 12,000
Main Field clearing Man day 3 2,000 6,000
Tilling by Oxploug acre 1 30,000 30,000
Harrowing Man day 5 2,000 10,000
Transplanting Man day 12 2,000 24,000
Basal Fert DAP kg 36 1,500 54,000
Labor fert appl Man day 5 2,000 10,000
Weeding I Man day 5 2,000 10,000
Novathion Pesticides per unit 8 1,500 12,000
Ivory Fungicides per unit 4 14,000 56,000
spraying labor Man day 16 2,000 32,000
sprayer hiring round 4 1,500 6,000
Irrigation Man day 90 2,000 180,000
Weeding II Man day 5 2,000 10,000
Fert S/A Kg 28 1,000 28,000
Labor fert appl Man day 6 2,000 12,000
Weeding III Man day 5 2,000 10,000
Tenga buying pc 8 1,050 8,400
Harvesting tenga 285 300 85,500
Transport to C.P tenga 285 200 57,000
Total 734,900

Yield tenga 285
Prices Dry July-Aug 7,500
Dry Sept-Nov 9,000 9,500
Wet Feb-Ap 12,000
REVENUE
I 2,137,500
II 2,565,000
III 3,420,000
G.M
I 638,500
II 1,238,500
III 1,538,500

Makambako area (one acre)
Seeds buying 50gm 2 19000 38000
Plot hiring 0.25 acre 4 10,000 40,000
Nursery bed prep 1sqm 10 1,000 10,000
Nursery Manure Debe 5 1000 5,000
Nursery Irrigation Debe 120 200 24,000
Land clearing 0.25 acre 4 5,000 20,000
Tilling 0.25 acre 4 10,000 40,000
Harrowing man days 8 2,000 16,000
Transplanting man days 8 2,000 16,000
Basal Fert DAP kg 50 1,600 80,000
Labor Fert appl man days 3 2,000 6,000
Weeding I man days 5 2,000 10,000
Thionix Pesticide Liter 4 10,000 40,000
Ivory 72 Fungicide Liter 4 17,000 68,000
Sprayer operator man days 8 4,000 32,000
Sprayer hiring day 4 3,000 12,000
Irrigation man days 75 2,000 150,000
Weeding II man days 5 2,000 10,000
Fert CAN per bag 2 42,000 84,000
Labor Fert appl man days 3 2,000 6,000
Weeding III man days 5 2,000 10,000
Harvesting per tenga 256 100 25,600
Transport to center per tenga 256 300 76,800
Tenga acquisition pc 7 950 6,650
Total 788,050

Total Yield tenga 256
Prices Dry 9,000
Dry 10,500 10,833.3
Wet 13,000
Revenues
1st price 2,304,000
2nd price 2,688,000
3rd price 3,328,000
Gross Margin
1st price 1,515,950
2nd price 1,899,950
3rd price 2,539,950

ANNEX III

List of People Consulted During Value
Chain Analysis

Tomato VCA for Iringa
People Consulted in VCA Study

S/N Names Position Telephone
1. Adam Swai Assist RAS Econ & Prod sectors 0782 113977
2. Angelus Mwakilovelle Reg Manager Weight & Measures 0754 961694
3. Fabian Fundi Regional NBS manager Iringa 0754 048116
4. Jonas Mdundo Assist Regional Manager NBS 0755 765945
5. Thomas Mashaka General Foreman TDC SIDO Iringa 0757 385720
6. Gervas Kashebo SIDO regional Manager 0754 469176
7. Enoch Ndondole TCCIA C/Man 0754 310270
8. Lucy Nyalu District Crop Officer - DCO 0754 867756
9. Salvina Njohole Extension Officer - Kiwere 0787 656251
10. Shaban Ngwenga Extension Officer - Magulilwa 0755 804536
11. Paul Mwangimba District Inputs Officer- Iringa R 0754 989264
12. Amon Lyimo District Pest Control Iringa R 0784 425771
13. Evelyne Mkemwa Agro-dealer shop Iringa town 0783 249488
14. Jumanne Luambati Sunflower and Maize processor 0752 614313
15. Aloyce Mduda VEO Kiwere Village 0784 564815
16. Ramadhani Mnganguli C/man Kiwere village 0786 167456
17. Dr Steven Ngwale District Livestock Officer - Njombe 0784 189468
18. Elitha Mligo DALDO Njombe district 0784 324634
19. Mohammed Mkupete DED Njombe District 0784 504877
20. Romuald Mtewelle DCO Njombe district 0755 673535
21. Luwendo Samson SMS Njombe district 0757 675442
22. John Wihawa NADO Association Njombe 0784 153677
23. Mrs. Fidelis Kilamulya Maize Processor - Igwachanya 0754 658848
24. Valentino Mkongwa Ward Extension Officer Mdandu 0755 625612
25. Nehata Robert District Coop Officer Njombe 0784 496812
26. L.M Mgaya Internal Auditor Njombe 0754 503056
27. Victor Mguji District Accountant- Njombe 0715 394044
28. Frank Tabu Mhandwe DED Ludewa 0752 898870

29. Thomas Komba Ward Extension Officer Ludewa 0714 052137
30. Paschal Nzumbi Ward Ext Officer Luana Ludewa 0714 699438
31. Amas Chacha District Coorp Officer Ludewa 0784 375860
32. Kelvin Mbennah District Inputs Officer 0784 873432
33. Ndyetabura Kalokola DEO Ludewa 0754 201485
34. Daniel Mwasapi Agromech Officer Ludewa 0764 513713
35. Beatrice FFS district coordinator Ludewa 0752 472813
36. Mandakishar Bharati Production Manager Dabaga 0716 831444
37. Esmail Thakore Director - IVORI Ltd 026 2725019
38. Adonisian Shayo TOSCI Njombe 0784 585150
39. Kimaro Extension officer Makambako 0753 650150
40. Luwumba Extension officer Makambako 0755 816003
41. NJODECO Njombe
42. Mtewelle General Traders Njombe
43. Mrs. Theresia Shanga MATI-Ilonga 0787 044462
44. Dr. Thani FARMBASE agricultural dealers
45. Mr. Nyella Extension Officer 0754 223766
46. Elibariki Ndekirwa PASS H/q Morogoro
47. Mr. Komba S.H ARI Mikocheni DSM 0784 565115
48. Faustin Barongo ARI- Dakawa Morogoro 0784 143938
49. Mbiza A.B.C ARI-Ilonga 0784 914422
50. Mount Meru oil Mill Arusha
51. FGD of 8-14 participants 2x3 (two villages at @3 district

TomatoValueChain 10 Septembe2009 1 PDF

Diunggah oleh

Informasi Dokumen

Deskripsi Asli:

Judul Asli

Hak Cipta

Format Tersedia

Bagikan dokumen Ini

Bagikan atau Tanam Dokumen

Opsi Berbagi

Apakah menurut Anda dokumen ini bermanfaat?

Apakah konten ini tidak pantas?

Hak Cipta:

Format Tersedia

TomatoValueChain 10 Septembe2009 1 PDF

Diunggah oleh

Hak Cipta:

Format Tersedia

Iringa Tomato Value Chain Analysis for Local

Anda mungkin juga menyukai