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Money Management
December 20, 2024
Any seasoned tomato farmer will tell you that tomatoes are always profitable. Always. The only profitability question is that of degree.
Will you barely break even? Or will you be eating with a big golden spoon?
In this article, I share two strategies experienced tomato farmers recommend to beginners for assured profitability.
But first, let us talk about something no farmer has control over; the market
Many young farmers, not just those who grow tomatoes, secretly desire to have their produce listed in major supermarkets. It is not just a matter of price, which can go as high as Ksh90 per kg, it is also a matter of prestige.
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As a farmer, some of the biggest fights with buyers have been because of supermarkets. We’d go to the supermarket and find our tomato being sold at Ksh110 bob - yet we had only received Kshs60. We knew those were our tomatoes because the buyer owned the supermarket.
Our young hearts wanted to bypass the buyer and go to the shelves.
A later conversation with the buyer revealed a lot of hidden costs of doing business with supermarkets. I am not saying you should not sell to supermarkets. I am saying I would not go to them as the first target market.
I avoid any market that has an established gatekeeper. These include most town/city markets. Countless tales exist of farmers stranded on these markets, a lorry full of cabbages and an impatient driver.
The second market that has gatekeepers are supermarket shelves. This is not to mean you should produce and hope by the end of it, a market will manifest miraculously.
In fact, best practice suggests that you should find a market first, then work your way back to production. Have contact with a few brokers, hotels and local kiosks. Do not be proud. If you can sell at the farm gate, even better.
If you have a market, you are quarter-way to profitability. Yes, quarter-way. Because real profitability in tomatoes comes from the production end.
Golden Spoon or Barely Profitable? Minimise Your Cost of Production.
One of the things I have to remind the reader is that farmers have zero control over the price of their produce. A lot is being done or can be done to change this narrative. However, the current reality is that buyers set the price in agricultural goods.
On the other hand, the farmer has absolute control over their cost of production. You cannot control the market, but you can control the production.
Let’s do some math. A half an acre will yield at least 10,000 kilograms of tomatoes. Your production has to be excellent:
Half an acre will cost anything between Ksh40,000 (when you are providing most of the labour) and Ksh100,000, when you outsource most of the labour.
The current market is bad for tomato farmers. You may have noticed that you are buying tomatoes at extremely low prices. At farm gate, 1kg is currently going for Ksh20. Therefore, 10,000kgs will fetch Ksh200,000. It is the worst time to be a tomato farmer, but you’ve still made a decent income.
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During peak time, the price may be up to Kshs50…you do the math.
Either way, with good production, you have covered your costs of production.
Golden Spoon or Barely Profitable II? Be a Committed Farmer.
Timing the market is a scam.
Timing the market means doing your production and harvesting when the prices are high. It is impossible to time the market.
Successful tomato producers know to produce throughout the seasons. This creates an average income all through the year. The bad seasons are protected by the good seasons.
As a bonus, buyers love consistency. The market respects consistent producers. This way, you have benefits such as increased bargaining power and priority to markets.
In conclusion, starting tomato farming is easy, but remaining profitable is not.
With these two strategies: minimising production costs and consistent production, you will be profitable. Until next time.
I am Gathoni Mwaniki. A hydroponic and tomato farmer.
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