Fruit and Vegetable Processing
Fruit and Vegetable Processing
Business Model Description
Provide and operate machinery and technology for the commercial processing of fruits and vegetables, such as mangoes, oranges, pineapples and avocados, into high value added products, such as juices concentrates, organic pulps and purees. Raw material supply comes from smallholder farmers through a contract farming model.
Expected Impact
Improve nutritional levels, provide employment opportunities and enhance industrialisation towards regional trade and integration.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Tanzania: Northern Zone
- Tanzania: Eastern Zone
- Tanzania: Southern Highlands Zone
- Tanzania: Lake Zone
Sector Classification
Food and Beverage
Development need
Agriculture is the main stay of the Tanzanian economy, contributing about 24% of GDP. As a key driver for the economy, it can help to achieve major national priorities. Despite the potential, the sector suffers from a number of challenges, including low productivity and limited value addition (1).
Policy priority
The Tanzanian government recognizes agriculture as central to realizing its objectives of socio-economic development. It is committed to promote value addition in agriculture in order to increase the overall sector competitiveness. There is also commitment to use science technology to improve agriculture productivity and quality (3, 4, 5).
Gender inequalities and marginalization issues
Although agriculture employs over 70% of women, they are faced with a myriad of constraints in terms of access to land, credit, extension services and markets. As a result, women end up engaging in inferior, low quality jobs and earn far less compared to men (6).
Investment opportunities introduction
Most of the Tanzanian agriculture products are exported in raw form with minimum value addition. There is significant scope for value addition. For example, the CAGR for juice processing estimated at 7%. The fruit juice market is growing as a result of a growing population and economic output, increased urbanization and an expanding middle class (8).
Key bottlenecks introduction
The most common weakness for the majority of agriculture commodities in Tanzania is the slow pace of productivity increase. This is caused by multiple factors, including seeds, inputs like fertilizer and pesticide, watering, harvesting, drying and processing (10).
Food and Agriculture
Development need
Tanzania's food industry faces several challenges, including lack of sufficient medium and large-scale processing activities, and inadequate market development and weak industry linkages. Local markets are ill-structured, have unclear models with inadequate information and very long chains, which inhibits profitable businesses (2).
Policy priority
The government of Tanzania has identified horticulture as a major priority commodity value chain. The subsector has been acknowledged as contributing significantly to the attainment of various socio-economic benefits to the nation (5).
Gender inequalities and marginalization issues
Women generally struggle to raise the funds to invest in land and irrigated vegetable production, and are often prevented from trading over long distances by their domestic responsibilities (7).
Investment opportunities introduction
Considering the nascent stage of Tanzania's horticulture industry, processing can be viewed as a lever of change which can propel the industry to the next level. Product segments with potential opportunities for processing activities are fruit juice processing vegetable concentrates, and organic pulps and purees (9).
Key bottlenecks introduction
Tanzania's production base is fragmented, smallholder farmer dominated and with low yield. Input manufacturing activities are relatively underdeveloped with limited involvement of the private sector. Limited processing technologies for value addition are available, and there is also a lack of packaging activities for horticulture products (11).
Processed Foods
Pipeline Opportunity
Fruit and Vegetable Processing
Provide and operate machinery and technology for the commercial processing of fruits and vegetables, such as mangoes, oranges, pineapples and avocados, into high value added products, such as juices concentrates, organic pulps and purees. Raw material supply comes from smallholder farmers through a contract farming model.
Business Case
Market Size and Environment
USD 100 million - USD 1 billion
5% - 10%
Tanzania's aggregate production of vegetables and fruits has grown at CAGR 7% and 4%, respectively, in recent years. This creates a reliable raw material base for large-scale processing (17). The market is projected to register a CAGR of 6.7% during the forecast period of 2021-2026. The growing demand for derived products and an increase in consumer awareness of healthier alternatives are among the factors driving the market growth (13).
Tanzania exports an average of 10% of total fruits and vegetables produced. This corresponds to a value of USD 779 million per year. A calculation of the corresponding value of local consumption provides a domestic market size of USD 3.5 billion after adjusting for post-harvest losses, which are estimated at 50% (8). A significant part of this can be attributed to fruit and vegetable processing.
Tanzania has started exporting processed products to neighbouring countries, including fruit juices to DR Congo and Comoros averaging USD 14,171,000 between 2014 and 2018 (12). This equates to a CAGR of 8% (1, 35).
Indicative Return
10% - 15%
A feasibility study conducted by World Agroforestry Centre and Wild Research Alliance on production of indigenous fruit juice concentrate at Tabora, Tanzania indicates a Gross Profit Margin of 13.8% of gross value of production (15).
A feasibility study for the establishment of a facility for processing canned green beans at Tengeru, Arusha indicates a net profit margin of 18.3% (19).
Investment Timeframe
Short Term (0–5 years)
A feasibility study for the establishment of a facility for processing canned green beans at Tengeru, Arusha shows that the operations will be profitable from year 1 onwards (19).
Ticket Size
USD 500,000 - USD 1 million
Market Risks & Scale Obstacles
Business - Supply Chain Constraints
Impact Case
Sustainable Development Need
Tanzania's agricultural sector is characterized by limited value addition. The share of fruits and vegetables in manufacturing is very small at on 4-12% (1, 10).
Malnutrition remains high in Tanzania despite the steady economic growth over the past decade. 16.8 million Tanzanians are chronically undernourished. Over 34% of children under the age of five are stunted and nearly 45% of women of reproductive age are anaemic (1, 30).
Gender & Marginalisation
Tanzania's horticulture activities are labor-intensive compared to staple food production. It provides potential for addressing employment challenges among youth and women, particularly in the value-added processing activities (1, 10).
Expected Development Outcome
Fruit and vegetable processing improves the food security and nutrition situation among the Tanzanian population (1).
Horticulture can provide jobs for some of the 800,000 youth that enter Tanzania’s workforce each year. The industry employs about 4 million people, which makes it a major employer within the agriculture sector (1, 10, 31).
Fruit and vegetable processing contributes to Tanzania’s aspiration of becoming a semi-industrialized country by 2025 though the enhanced manufacturing activities (16).
Gender & Marginalisation
Processing facilities for fruits and vegetables contribute to increased employment opportunities for women and low-income groups across different segments of the processing continuum, such as cleaning, grading sorting and packaging. In addition, they get an opportunity to learn and upgrade their skills in these areas, offering further growth potential (1).
Primary SDGs addressed
1.2.1 Proportion of population living below the national poverty line, by sex and age
Proportion of population below “basic-needs-poverty” at 26.4% (national), 31.3% (rural) and 15.8% (urban) in 2019/20 (3).
Proportion of population below “basic-needs-poverty” reduced to 22% (national), 28.4% (rural) and 13.2% (urban) in 2025/26 respectively (3).
2.4.1 Proportion of agricultural area under productive and sustainable agriculture
2.2.3 Prevalence of anaemia in women aged 15 to 49 years, by pregnancy status (percentage)
2.2.2 Prevalence of malnutrition (weight for height >+2 or <-2 standard deviation from the median of the WHO Child Growth Standards) among children under 5 years of age, by type (wasting and overweight)
Average agriculture growth rate and productivity growth currently estimated at 5% and 4% (3). Volume of total horticultural production per year estimated at 6,556,102 tons in 2020/21 (3).
Proportion of women aged 15-49 years with anaemia estimated at 44% in 2020/21 (3).
Prevalence of global acute malnutrition among children 0-59 months estimated at 3.5 in 2020/21 (3).
Tanzania targets average agriculture growth rate of 6.1% by 2025/26 and productivity growth of 4.7% (3). Volume of total horticultural production per year projected at 14,600,000 tons in 2025/26 (3).
Proportion of women aged 15-49 years with anaemia projected at 22% in 2025/26 (3).
Prevalence of global acute malnutrition among children 0-59 months projected at less than 5 in 2025/26 (3).
9.2.1 Manufacturing value added as a proportion of GDP and per capita
Manufacturing value added as a proportion of GDP increased from 4.5 % in 2000 to 5.4% in 2019 (36).
N/A
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Corporates
Public sector
Indirectly impacted stakeholders
Planet
Corporates
Outcome Risks
External factors, such as solid waste build-up in processing sites due to operational failure, for example due to frequent power outages, may result in environmental hazards and health danger to people.
Increased industrial activity through fruit and vegetable processing may exacerbate pollution levels with negative health and biodiversity consequences for people and planet.
If the contract farming model is set up in a way that challenges small-scale farmers to participate and honour obligations, it may skew opportunities towards large-scale farmers and exclude those most in need.
Impact Risks
High levels of post-harvest losses may limit the availability of sufficient raw materials as inputs for processing and hence reduce the expected impact.
If no deliberate efforts are in place to enhance the skill base of women and youth, the processing activities may provide opportunities to those already served and hence limit the expected impact.
Impact Classification
What
Fruit and vegetable processing improves nutritional levels, provides employment opportunities and enhances industrialisation towards regional trade and integration.
Who
Farmers, especially small farm owners and farm households, benefit from new opportunities to supply raw material, and especially the rural population obtains enhanced skills in agro-processing and additional job opportunities through fruit and vegeta
Risk
While the fruit and vegetable processing model is proven, input availability and the target focus on women and youth requires consideration.
Impact Thesis
Improve nutritional levels, provide employment opportunities and enhance industrialisation towards regional trade and integration.
Enabling Environment
Policy Environment
Third National Five-Year Plan (FYDP 3): Aims to address the challenges of horticulture by investing as well as creating an enabling environment for the private sector to invest in storage, transport and logistics, accreditation laboratories and building capacity to the existing professionals (3).
Agriculture Sector Development Program Phase 2: Provides a strategic policy framework for promoting agriculture commercialization and value addition as well as developing market access for all priority commodities (4).
Tanzania Horticultural Development Strategy 2012- 2021: Envisages facilitating the development of the horticultural industry so as to improve nutritional status, increase incomes and reduce poverty while increasing productivity and quality of the produce (21).
National Agricultural Policy of 2013: In recognition of the role of gender in agriculture, it emphasizes the need to promote technologies which reduce farm drudgery given that women are involved in most activities that are strenuous, manual and highly time consuming (22).
Tanzania Agriculture and Food Security Investment Plan (TAFSIP), 2011‐12 to 2020‐21: Outlines government measures in the agricultural sector to contribute to the national economic growth, household income and food security (28).
Financial Environment
Financial incentives: In 2021, the European Union (EU) and the Government of Tanzania launched AGRI-CONNECT, a flagship programme to support sustainable agriculture for a total of EUR 100 million. AGRI-CONNECT focuses on the development of horticulture, coffee and tea value chains, including processing activities (26).
Fiscal incentives: Tanzania offers 0% import duty on project capital goods, raw materials and replacement parts for agriculture, animal husbandry and fishing, including for fruit and vegetable processing. It also offers 100% capital expenditure in the agricultural sector (27).
Regulatory Environment
Crops Laws (Miscellaneous Amendments) Act, 2009: Amends various crops laws with a view to rationalizing roles and functions of Crop Boards, their financing and to provide for other related matters (25).
Food Control Act, Chapter 344: Outlines regulations for importing food into Tanzania, including the necessary permits the importer has to comply with (29).
Plant Health Act, 2020: Has come into play following the dramatic spread of transboundary plant pests and after diseases have increased dramatically in recent years (23).
Plant Protection Act, 1997 and Plant Protection Regulations, 1999: List the pesticides registered in Tanzania (24).
Marketplace Participants
Private Sector
TAHA Fresh, Wade Rain Irrigation systems; Balton Tanzania Ltd; TriaChem (T) Ltd, Syngenta TZ. Ltd, Bayer East Africa Ltd, BASF Tanzania Limited, Arysta Life Sciences Tanzania Ltd, Yara International and Suba-Agro Trading & Engineering Co. Ltd (SATEC).
Government
Ministry of Agriculture, Ministry of Industry and Trade, Tanzania Trade Development Authority (TanTrade), Tanzania Export Processing Zones Authority (TEPZA), Tanzania Investment Centre (TIC).
Multilaterals
African Development Bank (AfDB), European Union (EU), World Bank (WB).
Non-Profit
United States Agency for International Development (USAID), Tanzania Horticulture Association (TAHA), Tanzania-Non State Actors (TNSA), Agriculture Council of Tanzania (ACT).
Public-Private Partnership
Southern Tanzania Agriculture Growth Corridor (SAGCOT): Agribusiness companies, farmer organizations, CSOs, and government agencies work together to boost agricultural productivity, through the commercialization of smallholder agriculture (37).
Target Locations
Tanzania: Northern Zone
Tanzania: Eastern Zone
Tanzania: Southern Highlands Zone
Tanzania: Lake Zone
References
- (1) East African Community (EAC) Secretariat, 2020. Fruits and Vegetable Strategy and Action Plan, 2021-2031.
- (2) World Bank Group, 2019. Transforming Agriculture, Realizing the Potential of Agriculture for Inclusive Growth and Poverty Reduction. https://documents.worldbank.org.
- (3) United Republic of Tanzania, 2021. Third National Five-Year Plan (FYDP 3).
- (4) United Republic of Tanzania, 2020. Agricultural Sector Development Plan 2 (ASDP-2). https://asdp.kilimo.go.tz.
- (5) Research on Poverty Alleviation (REPOA), 2021.Enhancing Competitiveness of Horticultural Industry in Tanzania, Policy Brief.
- (6) United Nations Development Programme, 2018. Mainstreaming, Acceleration and Policy Support (MAPS).
- (7) Empower Women, 2013. Women's Economic Leadership in Agriculture Markets. https://www.empowerwomen.org.
- (8) Tanzania Horticulture Association, 2021. Horticulture Industry Markets Access Strategy (HIMAS).
- (9) EAC Secretariat, 2019. AfriTrade and Enterprise Advisory Services, A Sector Guide for Processed Fruit Juice in the East African Community.
- (10) Tanzania Horticulture Association, 2021. Horticulture Industry Markets Access Strategy (HIMAS).
- (11) World Bank Group, 2018. Horticulture Mapping Study – Tanzania.
- (12) World Agroforestry Centre and Wild Research Alliance, 2008. A Feasibility Study on Production of Indigenous Fruit Juice Concentrate at Tabora, Tanzania.
- (13) World Bank Group, 2018. Horticulture Mapping Study – Tanzania.
- (14) Mordor Intelligence, 2022. Tanzania Fruits and Vegetables Market - Growth, Trends, Covid-19 Impact and Forecasts (2022 - 2027). https://www.mordorintelligence.com.
- (15) Tanzania Invest, 2022. https://www.tanzaniainvest.com/industrialisation.
- (16) AfriTrade and Enterprise Advisory Services, 2019. Sector Guide for Processed Fruit Juice in The East African Community.
- (17) International Trade Centre, 2019. Value Chain Analysis for Processed Avocado in Tanzania.
- (18) Mordor Intelligency, 2022. Tanzania Fruits and Vegetables Market - Growth, Trends, Covid-19 Impact, and Forecasts.
- (19) Institute of Rural Development Planning, Lake Zone Centre, 2022. Feasibility Study for Establishment of a Facility for Processing Canned Green Beans at Tengeru Area in Arusha City.
- (20) United Republic of Tanzania, Vision 2025. http://www.tzonline.org/pdf/theTanzaniadevelopmentvision.pdf.
- (21) Tanzania Horticulture Association, 2021, Tanzania Horticultural Development Strategy 2012- 2021.
- (22) United Republic of Tanzania, 2013. National Agricultural Policy.
- (23) National Parliament of Tanzania, 2020.
- (24) Government of Tanzania, 1999. Plant Protection Act.
- (25) Government of Tanzania,2009 Crops Laws (Miscellaneous Amendments) Act.
- (26) European Union / Government of Tanzania 2021: Joint Press Release. https://eeas.europa.eu/delegations.
- (27) East African Community, 2019. United Republic of Tanzania, Standard Incentives for Investors. https://investment-guide.eac.in.
- (28) United Republic of Tanzania, 2011. Tanzania Agriculture and Food Security Investment Plan (TAFSIP, 2011‐12 to 2020‐21).
- (29) Tanzania Laws, 2022. Food Control of Quality Act. https://www.tanzanialaws.com/principal-legislation/food-control-of-quality-act.
- (30) USAID, 2022. Agriculture and Food Security. https://www.usaid.gov/tanzania/agriculture-and-food-security.
- (31) ILO, 2022. Tanzania. https://www.ilo.org/africa/countries-covered/tanzania.
- (32) SHU, 2022 .Tanzanian Food Security and Health. https://www2.shu.ac.uk/PDAN/tanzanian_food_security_and_health.html.
- (33) Tanzania Horticulture Association, 2020. Industry Position Paper.
- (34) USAID, 2022. https://pdf.usaid.gov.
- (35) International Trade Centre, 2018. Trademap. https://www.trademap.org/Index.aspx.
- (36) UN STATSHUB, 2022. Tanzania. https://country-profiles.unstatshub.org/tza#goal-8.