November 24, 2010
Tomato Plant Provides Market Outlet for Egyptian Farmers
ACDI/VOCA Helps Resuscitate Modern Tomato Processing Plant
For seven years the only modern tomato processing facility in Upper Egypt sat dormant. Due to a lack of liquidity, managerial capacity and adequate supply of tomatoes, what should have been a boon to the lagging economy of Upper (southern) Egypt seemed instead a white elephant.
But that changed this month when a new deal—facilitated by ACDI/VOCA staff through our USAID Global Development Alliance project in Egypt—allowed the high-capacity, state-of-the-art plant to once again process the tomatoes produced by local smallholder farmers.
The plant, located in Qeft, is well placed to meet the demands of a voracious international market within easy shipping distance of Egypt. Tomato paste exports alone are growing annually at a rate exceeding 200 percent. The Qeft factory is due to process 42,000 metric tons per year starting in January.
Linking Smallholders to Markets
ACDI/VOCA has implemented the Global Development Alliance project in Egypt since 2008. The project helps smallholder tomato farmers become reliable suppliers of high-value process tomatoes to processors and exporters.
An important first step was ensuring that tomato farmers had a viable link to a high-value market.
Facing mounting financial problems, the owner of the Qeft factory, who knew of ACDI/VOCA’s work in the tomato value chain, asked for help.
After 18 months of negotiations, ACDI/VOCA put together a deal to resuscitate the facility involving the owner; the National Bank of Egypt, which holds the lien on the property; and the Delta Investment Group (DIG). The U.S. Agency for International Development (USAID) oversaw the arrangement.
Under the deal, the factory has been refinanced, and DIG will lease and operate it for the next seven years under its Nile Fruits brand.
Renewed Tomato Plant Celebrated
On Nov. 8 parties to the new agreement joined dignitaries, including new USAID/Egypt Mission Director James Bever, ACDI/VOCA chairman Mort Neufville and President Carl Leonard, at the facility to cut the opening ribbon. The ceremony was the high point of the ACDI/VOCA board annual project tour.
The ACDI/VOCA board spent a week in Egypt this month reviewing project performance. Six members of the board, including U.S. farmers and agribusiness officials, visited greenhouses and model farms and met with farmer groups and officials.
They saw the extensive effort to introduce improved agronomics in Egypt, including new seeds, institute product traceability, and integrated technologies like sub-soiling and laser-leveling of fields. USAID’s Bever called ACDI/VOCA’s practice of annual board missions to the field “fascinating and wonderful” for the insights it gives the organization.
Fresh or Process Tomatoes?
Traditionally small farmers have been at the mercy of the fresh market, where it was difficult to find a buyer, arrange transportation and negotiate a price—often when the market has a glut. But their fresh tomatoes are suitable for processing.
As ACDI/VOCA Regional Manager Doug Anderson says, “The conversion rate was terrible—they weren’t making paste but rather evaporating water.”
Under the project, farmers sign forward contracts with processors or exporters that institute a new cultivation program, which enables them to plan and guarantee prices. This is a new approach for independent, tradition-bound small farmers, and as the board heard in a tense meeting with farmers, depends on a so-far tenuous trust between the sellers and the buyer.
However, the stakes are large, and farmers are beginning to experience financial success.
Egypt’s poor southern farmers (it’s called Upper Egypt because the Nile flows from south to north), represent a vast but largely unrealized potential for the country’s agricultural economy, particularly tomatoes. They have the advantage of ideal soil, plenty of water, and the world’s longest growing season for that crop—255 days.
Better Practices, Better Profits
During the first two years, applying ACDI/VOCA recommendations in seedling cultivation, land preparation, irrigation, fertilization and integrated pest management saved the typical farmer up to 60 percent of production costs. As a result, famers now earn higher net incomes and processors benefit from predictability in supply, quality and price.
Says Anderson, “Egyptian farmers are catching on to this system, and at increasing scale are meeting value-added market demands for product quality and quantity, and doubling or even tripling yields.”
Applying better agricultural practices also benefits the environment, reducing the use of fertilizers, pesticides and water. For example, longer furrows have lowered water costs and reduced the time needed to irrigate. While Nile water is still free from government regulation, many people are increasingly concerned over the sustainability of that resource.
The right tomato varieties, some developed by H.J. Heinz Company, have cut post-harvest losses. And ACDI/VOCA’s technical support has enabled farmers to access a wider range of market outlets.
‘Thanks to the Captain’
“This project goes to the heart of ACDI/VOCA's work: Linking smallholders to markets is in our DNA,” says ACDI/VOCA Chairman Mort Neufville, who spoke at the ribbon-cutting ceremony at the plant.
The success of this tomato value-chain project at supplying international buyers who look to Egypt’s south for a growing supply of high-quality, year-round tomatoes has created a buzz at the highest levels of government. Both the minister of agriculture and the prime minister recently talked about the value of tomatoes. And Egypt recently joined the World Tomato Processing Congress to expand its leverage.
At the factory ribbon cutting, the owner of the plant Mr. Yassin Ahmed, who originally sought ACDI/VOCA assistance, says, “Any ship thanks its captain. The captain through this whole process has been ACDI/VOCA.”
For more information on ACDI/VOCA's work in Egypt.
