Tomato Farming: Business Plan, Cost, Revenue and Profit

To grow tomato, you need to assess and analyse the expected cost, expected revenue and expected profit. This can only be done by writing a business plan.

This post shows a business plan for tomato farming in Nigeria. It shows all the factors you need to consider including the financial implication before you start your tomato farming venture.

Cost, Revenue and Profit Analysis of a One Hectare Tomato Farm (₦)

FARM SET-UP FOR ONE HECTARE OF TOMATO FARMING VENTURE

NOTES/ASSUMPTIONS

The profit analyses above were done using three scenarios (best case, mid case and worst case).

Drip Irrigation: N625,000 is taken as the cost of drip irrigation per hectare. You can get the drip irrigation kits from us.

Fertilizers: Whilst N200,000 is taken as the total cost to be spent on fertilizer per hectare. You should note that the volume and type of fertilizers to use will depend on the result of your soil analysis. If you have a soil with good nutrients, you may spend less on fertilizers. If your soil is poor and spent, you may spend more on fertilisers.

Pesticides: N70,000 is expected to be spent on pesticides (fungicides, insecticides and nematicides) per hectare of tomato. This figure can increase or decrease as per the intensity of pest and disease pressure.

Sales Revenue: The price of tomato goes through a cycle every year in Nigeria. At some times of the year, the price can increase by as much as 300%. For example, a 60kg basket of tomatoes can go for N20,000 between June and July in Mile 12 market, Lagos. Between January and February, same basket of tomatoes can go for as low as N5,000 per basket in Lagos.

I have assumed that if you implement good agronomic practices, you are expected to harvest up to 500 baskets of tomatoes (50-60 kg basket) per hectare. This is about 25-30 tonnes per hectare. Some farmers in Nigeria do well above this yield per hectare.

Manure: The soil in sub-Saharan Africa is not rich in nutrients. There is a misconception that the soil in Nigeria is rich in nutrients and organic matter, this is not true, except for newly deforested land. Chicken manure is advised to be added to your soil before farming. N50,000 is expected to be spent on chicken manure. You can however get it free of charge from some poultry farms.

Hybrid Seeds: N120,000 is taken as the cost of hybrid seeds per hectare. Please note that this cost can vary as per your location and the variety of hybrid tomato seeds you want to plant. If you use open pollinated tomato seeds like Roma, the cost is lesser but it has a lesser yield too.

Cost of Labour: N240,000 is taken as the cost of labour throughout the term of the tomato farm. This can be lower or higher as per your location and other factors. You can also use machines to reduce your need for human labour.

Knapsack Sprayer: One knapsack sprayer is N5,000 while the cost of a motorized sprayer is N150,000.

Farm Tools: The cost of other farm tools is expected to be N10,000.

Business Description of Tomato Farming

Tomato farming is planting of tomato seeds, transplanting and managing the tomato plants till they fruit and the farmer harvests. The cycle ends when the farmer sells his tomatoes in the market. Tomatoes can be sold in the open markets in Nigeria like the Mile 12 market in Lagos; they can also be sold in the more organized markets like Shoprite, Spar and hotels etc.

Market Analysis

Market Trend: The huge population of Nigeria is a plus for tomato farming. Almost all Nigerians consume tomatoes directly or indirectly every day. Tomatoes are used in making foods, soups and other edibles in Nigeria. As a matter of fact, I have never seen a Nigeria who says he does not eat tomatoes.

All through the year, the demand for tomatoes is fairly constant, however during the festive seasons in Nigeria, the demand for tomatoes skyrocket. The supply of tomatoes significantly reduces during the months of April to August because farmers in the north where a lot of tomatoes are farmed do not grow this crop during these months. Prices of tomatoes increase by as much as 200% during the months of April – August.

Target Market: The largest market for the supply of tomatoes in Nigeria is the Mile 12 market in Lagos. About 500 trucks of tomatoes are offloaded in this market every day. Other open markets in Nigeria also sell a lot of tomatoes, often in 50-60kg baskets.

A tomato farmer can also target the more organized market like shoprite, spar and hotels. The organized market has a more attractive market than the open market.

Competitive Analysis: A lot of farmers grow tomatoes in Nigeria. Ven a lot of people grow tomatoes in their home gardens. The good thing for a tomato farming investor is that 80% of tomato farmers in Nigeria do not get it right. They often get low yields because they do not use good agronomic practices. A lot of tomato farmers in Nigeria do not even use drip irrigation, they use old practices that are alien to modern science.

Cultivating tomatoes with the use of new technologies like drip irrigation can enable farmers to cultivate the crop all year round, especially during the lean months of April – August. Drip irrigation can enable a tomato farmer to make a huge profit.

Sales and Marketing Strategy

You need a sound sales and marketing strategy if you want to make good money from tomato farming in Nigeria. The sales and marketing strategy to use will depend on the market you want to sell your produce.

If a tomato farmer wants to sell in the open market in Nigeria, he has to use agents who will help him sell and charge a commission of 5-10%. The farmer can also sell himself in some open markets in Nigeria.

A tomato farmer who wishes to sell in supermarkets and hotels may use digital marketing techniques to give his produce better mileage. He can also do direct marketing.

Please note that this is not a financial advice, the onus is on you to do your own research before venturing into the business of planting of tomato.

If you need a business plan or feasibility study about tomato farming in Nigeria, you can contact us on sales@veggieconcept.ng.