Value chain analysis of tomato, onion, chilli value chains

Nigeria is one of the priority countries for the Dutch government’s aid for trade development cooperation policy. This has been underlined by the 2018 policy note 'Investing in global prospects'.[i] The Dutch private sector also has interest in Nigeria. VNO-NCW in its 2019 Africa strategy mentions Nigeria as the biggest economy on the continent and one of its 3 target countries on the African continent. Agriculture and food & nutrition security are priority sectors defined for Dutch interventions in Nigeria, and food loss & waste being one of the SDGs (SDG 12: 12.3) which the Netherlands intends to address.

Nigeria generates some 32 million tonnes of waste per year (including all stages of the value chain). Intervention in the three VCs identified (i.e., tomato, onion and chili) presents an opportunity to support Nigeria in addressing SDG 12. Annual loss of tomatoes in Nigeria is between 45 – 60 percent of the total production, while 50 percent of onions and 20-30 percent of chili are lost at different parts of the chain.

Food Loss is still a big challenge for Nigeria due to various reasons. Most of the VCs that contribute significantly to food loss (e.g., tomato, onion and Chilli) are not well developed (or advanced) and organized in terms of production and processing techniques, equipment, technology and governance.

Furthermore, there is poor enabling policy environment to catalyze development of the VCs. Chain supporters and influencers in Nigeria have also not taken a holistic view when proposing interventions or solutions to tackle this issue.

This study identifies some of the main causes, constraints and opportunities for addressing food loss in the three value chains and proposes quick wins, generic and cluster interventions for RVO to consider (as summarized below).

• Causes and constraints leading to food loss in tomato, onion and chili value chains:
  • Lack of good quality input (seeds and fertilizers)
  • Low Skills on crop management and GAP
  • Diseases, Pests and Rodents
  • Poor coordination with the rest of the chain and unmanaged seasonal production glut
  • Poor crop handling and storage at harvesting
  • Security Incidents
  • Insufficient modern processing facilities, and processing equipment and methods
  • Poor vehicle condition used during transport, overloading of trucks and the use of poor packaging materials (such as raffia baskets) during transport
  • Delays by police and customs during long distance transit
  • Poor road condition during transportation
  • Lack of efficient refrigeration during transport
  • Traffic constraints and rough offloading at major vegetable markets
  • Importation of tomato pastes and concentrates
     
• Opportunities
  • There are several existing initiatives to reduce loss within the three value chains, including initiatives by Dutch companies and institutions
  • There is possibility of applying circular economy solutions to address food loss in the three value chains
  • Some local solutions already exist, such as Zero energy cooling chambers, locally developed reusable plastic crates for packing during transport, aggregation packing houses, solar drying system, and CoolHubs.
  • Value addition through processing is possible for each of the value chains
  • There is possibility of applying digital smart tools such as Blockchain, Artificial Intelligence, Drones, satellite imaging, digital sensors, and advanced data analytics.
  • There is possibility of engaging youth in elaborating food loss solutions
  • Possibility of leveraging existing active associations to address food loss in the three value chains
  • There is potential for cool chain transport and railway as alternative to road
  • The government’s Anchor Borrowers Programme aimed at creating a link between off-taker companies involved processing and smallholder producers of some agricultural commodities, is accessible to the three value chains.
  • There is an opportunity to leverage on Nigeria’s existing waste policies and regulatory frameworks to address food loss in food value chains
     
• Interventions: Sector experts interviewed maintained that, any proposed intervention or solution by RVO, CBI and other VC actors should take a holistic approach. No meaningful results would be achieved on the food loss issue, without an intervention with a long-term time horizon; engagement and partnership with the Nigerian government, investments at all stages of the value chains, and build mutual trust between actors and cooperation of all stakeholders. In addition to some quick wins and generic interventions, we recommend that RVO and CBI apply a cluster approach to solve the key challenges that result in significant food loss in the three value chains.  Whereby, multi-stakeholder clusters (i.e., a combination of at least companies, government agencies, NGOs, Institutes) are developed between Dutch and Nigerian stakeholders around topics that could address food loss.
   

Quick wins:

• • Join EU/GIZ NICOP initiative, extend its duration and expand the focus to cover onions VC
  • Partner with IFC TechEmerge Programme to support innovations on Temperature -Controlled Logistics in Nigeria.
  • Support the scale-up (or further development) of existing local Initiatives:
  • Encourage the replication of successfully funded RVO Projects (particularly FDOV and PSD Toolkit) by Dutch companies/NGOs, which are ongoing in other countries or other sectors (but are applicable to addressing food loss in tomato, onion and chili VCs in Nigeria).
     
• Generic Interventions:
  • Engage with the Nigerian Government to address some of the challenging political economy issues, to ensure a better enabling environment for the value chains to operate in. Such as: support the Nigerian Government to develop a central strategy on food loss from agri-food value chains; provide financial and technical support to strengthen tomato, onion and chili associations; encourage sensible reforms in Nigeria’s public security sector; and encourage FMARD through diplomatic channels, to fully implement the Tomato sector policy and to develop policy reforms for other value chains such as Onions and Chili.
  • Financial support to improve roads, energy infrastructure as well as the machinery used in the VCs
  • Access to finance and (particularly) financial capacity development for SMEs in tomato, onion and chili value chains to ensure that they are investment ready.
  • Stimulate the Circular Economy approach to address food losses in Nigerian food value chains (with accent on the selected three VCs – tomato, onions and Chilli).
  • Communication and education campaigns targeted to reduce food loss (and wastage)
  • Organize a National Hackathon on solutions for food losses in the selected VCs
     
• Cluster Interventions: Increasingly, the cluster approach is used by most countries to organize a market-led economic development strategy by initiating dialogue between the various actors in their relevant systems of innovation. Four main clusters are recommended corresponding to the causes and constraints enumerated above:
  • Cluster on Good Agricultural Practices (GAP): This cluster would focus on productivity in the three value chains and the provision of improved seeds and fertilizers as well as transfer of best practice information to smallholder tomato, chili and onion farmers. It would also focus on supporting producers with technology and materials for greenhouses and introduce digital/ICT tools for Smart farming, etc. and to curb production inefficiencies and losses in the three VCs. In addition, the cluster would explore the possibility of linking GAP and extension training activities with youth vocational apprenticeships/internships.
  • Cluster on Processing: This cluster would ensure that processing equipment and machinery (instrumental to curbing food loss) are developed/ fabricated in Nigeria and provided at low cost to SMEs in the VCs. The cluster program would also focus on ways to provide access to finance for SMEs in the three VCs to hire processing equipment and machinery when available in the country. The cluster would explore possibilities to export fairly used processing equipment and machinery to SMEs in Nigeria, as well as the know-how to operate and service them.
  • Cluster on Logistics: This cluster would focus on improving infrastructure and coordinated transportation (logistics) including cold chain facilities. It would introduce digital ICT applications to improve actor coordination and communication, as well as product traceability and chain transparency.
  • Cluster on Infrastructure: The focus of this cluster would be on providing solutions for road construction and rehabilitation; revitalization of cargo rail as a viable alternative means for transporting tomato, onion and chili along the Northern – Southern trade corridor; develop more off-grid power solutions and construction of ultra-modern markets.