Again, Dangote Shut Down Tomato Processing Factory

tomato paste
  • Again, Dangote Shut Down Tomato Processing Factory

Dangote tomato processing factory has shut down for the second time last week following the inability of the factory to access necessary raw materials.

A Bloomberg report said the farmers engaged by the factory to supply raw materials abandoned tomato farming for other crops at the start of the rainy season in May.

It would be recalled that the factory experienced the same thing about three years ago when engaged farmers complained of flooding and immediately left tomato farming for other crops, an occurrence that forced the factory to shut down for three years.

The factory reopened in March 2019 and shut down again last week because of the same reason. Meaning, until Dangote find a permanent solution by taking charge of the entire value chain process, including farming like he did with other businesses the factory may never be fully operational or even open for long.

Since the plant was inaugurated in March 2016, it has only been operational for just 13 months.

The company was established to reduce tomato paste importation estimated at 400,000 tonnes per year.

However, it is now obvious that the issue is not just the lack of tomato processing factory but also the lack of necessary raw materials.

Therefore, it is the shortage of fresh tomatoes that fuels the demand for imported tomato paste and also explains why the price of fresh tomatoes fluctuate with dollar liquidity.

Again, it shows the 400,000 tonnes is the reason a lot of us can still access imported tomato paste or fresh tomatoes.

In March, during the reopening ceremony of the plant, Mr. Abdulkarim Kaita, the Managing Director of the plant, said the factory was losing N30 million per month in maintenance fee, therefore it was necessary to commence operation regardless of production level to curtail losses.

The factory resumed production at 100 tonnes a day out of 1,200 tonnes capacity, hoping to up production over time. Barely 6 months later it has shut down again for the same reason.

About the Author

Samed Olukoya
CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade long experience in the global financial market. Contact Samed on Twitter: @sameolukoya; Email: [email protected]

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