Processing of highly perishable non-storable crops, such as tomato, is typically promoted for two reasons: as a way of absorbing excess supply, particularly during gluts that result from predominantly rainfed cultivation; and to enhance the value chain through a value-added process. For Ghana, improving domestic tomato processing would also reduce the country’s dependence on imported tomato paste and so improve foreign exchange reserves, as well as provide employment opportunities and development opportunities in what are poor rural areas of the country.
Many reports simply repeat the mantra that processing offers a way of buying up the glut. Yet the reality is that the “tomato gluts,” an annual feature of the local press, occur only for a few weeks of the year, and are almost always a result of large volumes of rainfed local varieties unsuitable for processing entering the fresh market at the same time, not the improved varieties that could be used by the processors. For most of the year, the price of tomatoes suitable for processing is above the breakeven price for tomato processors, given the competition from imports. Improved varieties (such as Pectomech) that are suitable for processing are also preferred by consumers and achieve a premium price over the local varieties.
“Processing to buy up the glut” is neither an appropriate motivation nor a long-term viable strategy for Ghana’s tomato processing industry. Adding large-scale processing increases demand for tomato and so puts upward pressure on the price of fresh tomatoes. But processing also converts tomato—a non-tradable good at the regional level—into paste, an internationally traded commodity and so exposes the tomato sector to international competition. At current market prices for tomato, domestically produced paste typically will not be competitive with imported paste from the EU and China. In these working papers we focus on why tomato processing in Ghana has not worked.