Developing the Tomato Processing Sector in Egypt
The Four Thousand Tons per Day project is funded by the U.S. Agency for International Development and implemented by ACDI/VOCA in partnership with the H.J. Heinz Company, which provides technical guidance on Heinz’s production system for processing tomatoes and Good Agricultural Practices (GAP).
The deal to supply Egyptian factory El Ain with processing tomatoes was not smallholder Farag Mahmoud Farag's first forward contracting experience, but it was his most successful. In the past, Farag grew wheat under forward contract, but he did not receive technical support such as ACDI/VOCA provided through the USAID-funded Four Thousand Tons per Day project, nor did he profit as much as he did from the sale of tomatoes to El Ain during the summer 2009 tomato season.
Farag owns five feddans in the Mubarak New Graduate village of Bangar El Sokar, Nubaria governorate. He is not actually a graduate—in fact, he dropped out of primary school—but he purchased the land from a graduate six years ago. Farag grew up on his family's farm in Beheira, and he has a lifetime of experience in agriculture. He has even developed his own crop rotation system whereby he has divided his land into four pieces and he rotates tomatoes, eggplant, zucchini and sesame during the summer season. During the winter, he usually grows cauliflower, yellow corn for his animals and some other crops.
Farag has been producing tomatoes for many years and has plenty of experience in both the cultivation and the marketing of this crop. He knows that the market price can fluctuate wildly within any given season and from one year to the next. For this reason, he was keen to participate in the forward contract to sell his tomatoes to El Ain at a fixed price that would at least cover his costs and stabilize his income, as recommended in ACDI/VOCA’s Farming as a Business training program. Nonetheless, growing tomatoes under forward contract was still a gamble for Farag. The 500LE per ton price that he contracted with El Ain through the local marketing association was significantly less than the 800LE per ton that he earned last year, and Farag's neighbors poked fun at him for accepting such a "low" price. However, Farag was skeptical that the market would see such high prices two years in a row.
The season did not start off well for Farag: his tomato seedlings were infected with collar rot. As soon as Farag found that the seedlings were perishing, he notified his field representative (an extension agent who receives training from ACDI/VOCA to assist farmers in implementing project recommendations), who in turn notified ACDI/VOCA. When project staff visited the farm to examine the infected plants, Farag was waiting with a group of neighbors and friends who wanted to see how the professionals would deal with the problem.
Farag was very pleased with the response he got from ACDI/VOCA's technical staff. They taught him how to estimate the percentage of infected plants in the field by selecting a few rows for observation and counting the infected plants in those rows. Eighty percent of the seedlings had to be replanted, but ACDI/VOCA advisors convinced the El Ain factory to bear the cost of the new seedlings, since it had selected the greenhouse where the original seedlings were cultivated. Collar rot infects tomatoes during the seedling stage and is usually linked to polluted irrigation water, which the greenhouse was found to have.
ACDI/VOCA's technical staff and master trainers continued to provide Farag with excellent support throughout the season. In particular, they taught Farag how to use the results of the water and soil analyses that were conducted at the start of the season to determine the crop's fertilization requirements. According to Farag, ACDI/VOCA showed him the science of planting and taught him to “give the plant only what it needs.” In the past, he would randomly apply fertilizer, usually four to six sacks of nitrate and urea, throughout the season. With ACDI/VOCA's guidance, Farag reduced his use of fertilizer to three sacks of nitrate only, and he applied calcium carbonate for the first time. Moreover, he estimates that he used about 30 percent less water by following ACDI/VOCA's irrigation recommendations.
Farag's gamble paid off. By following ACDI/VOCA's advice, he doubled his yield from 20-25 tons per feddan to more than 40 tons. Although the sales price was higher last year at 800 LE per ton, Farag practically doubled his net income (from 8,000 LE to 15,000 LE) from tomatoes this year as a result of better quality, higher yield and savings in production costs. His wife, who manages the household finances, intends to purchase a few animals with some of the extra income. As for Farag, he intends to increase the area under tomato cultivation next season. And his formerly skeptical neighbors are clamoring to follow his lead and join the 4000 Tons per Day project.
During the project’s first tomato crop season, in the winter of 2008 to 09, more than 100 farmers in El Minya, Fayoum, Sohag and Qena governorates supplied processing tomatoes to Cairo Food Industries (CFI) and El Wadi Factory under forward contracts. Approximately 220 farmers (1265 feddans) in the Noubaria region supplied P & J and El Ain with tomatoes for the summer 2009 season.
