Susan Sithole
Susan Sithole

Susan Sithole is a Market Linkage Officer with The Adventist Development and Relief Agency in Zimbabwe

Susan has experience in value chain development, civil society strengthening and climate-smart agricultural practices for smallholder farmers. She has proven partnership and relationship-building skills with the public and private sector, together with analytical, capacity building and networking expertise.

I’m dedicated to enhancing productivity and bringing about positive change for smallholder farmers.

Highlights

  • Consumer research reveals significant missed opportunities to differentiate the product from imported substitutes
  • Manufacturers can struggle to create the product that consumers want because of upstream weaknesses in raw material quality and payment systems, hence the need for system-wide improvements
  • Examining activities which are not strictly part of the material flow helps identify where investment is needed to upgrade the chain successfully, for example in new product development and marketing.
consumer testing
Consumer testing

Context

Tomato industry value chains in this case were facing three problems. Smallholder farmers produced excess supply for the fresh market, giving rise to high post-harvest losses and depressed incomes. The tomato paste manufacturer’s supply of processing tomatoes was unreliable and of low quality, meaning that the processing plant operated at 50% capacity, and on some days not at all due to lack of supply of tomatoes. Although the tomato sauce manufacturer produced one brand of sauce that had been available for over 20 years, sales had stagnated with consumers preferring imported substitutes.

Approach

Susan started by identifying a product, tomato sauce, which was important to the actors in the chain and had the potential for increased marketing opportunities. Then she mapped the chain actors, and initiated the project by briefing the chain members on value chain analysis and agreeing on confidentiality and reporting requirements. Next, she conducted a consumer focus group and then interviewed the retailer, the production, marketing and quality control managers at the sauce manufacturer and paste processor, farmers and a seedling supplier.

Understanding the market

Consumer research revealed that the critical attributes are

  • Consistency: while children prefer the current runny sauce, adults wanted something thicker
  • Colour: adults thought the product looked artificial, and would prefer the normal colour of ripe fresh tomatoes
  • Taste: while children liked the sauce’s sweetness, and their parents used the sauce to encourage children to eat food they would otherwise dislike, the adults wanted a more natural tomato flavour
  • Nutritional value: consumers assumed the current sauce had no nutritional benefits
  • Labelling: the current labels did not provide information consumers wanted, including whether the sauce contained Zimbabwean tomatoes, an expiry date, and contact details of the manufacturer for complaints or comments
  • Packaging: consumers would prefer packaging to have a seal

Susan found that, “The focus group members were unlikely to switch from a cheap brand when buying for their children, but some were already buying more expensive, imported products which better met their preferences. This was verified by taste sampling of three different unlabelled tomato sauce products, with all consumers preferring an imported brand. This is a missed opportunity for the Zimbabwe value chain, because money is leaking out of the country.” Indeed, some consumers said they would pay up to $2 for a 375ml of tomato sauce bottle if it met their aspirations, compared to the $1–1.20 price of the chain’s current product.

Mapping the chain

Material flow

Mapping the material flow highlighted where attributes desired by consumers could be created or enhanced. Susan identified some critical activities which are not directly part of the material flow. “Research and development of new products emerged as a key function given that the consumer tests had revealed the need for a wider range of sauce products to meet the preferences of different segments, and then marketing would become important in rebranding products to appeal to children and mothers.”

By walking the chain, she also learnt that the paste processor was not only struggling to source tomatoes in the volume required, but what they could buy did not meet the optimum parameters for brix (sugar) content, flavour, colour and dry matter (solid/liquid ratio). “This highlighted the interdependencies across the chain. To upgrade the final product, the seedling producer will need to change the varieties he offers to ones which could achieve these standards, and then the farmers will need advice regarding irrigation and chemical applications to ensure the seedlings are grown correctly and so meet the processor’s specification. In addition, currently the processor pays farmers according to the weight of tomatoes, which encourages growers to irrigate their crop right up to harvest, and as a result deliver watery tomatoes to the paste processor. So they will also need to agree a schedule which rewards farmers who meet the new specification.”

Susan also identified waste across the chain. Farmers were experiencing up to 25% postharvest losses due either to overstocking of packaging crates or simply delivering tomatoes heaped in trucks because of a shortage of crates. She also recommended that while seed extracted from the tomatoes is treated as a waste by-product, it could have income potential, for example as an ingredient in stock feed.

Information flows

The information flows were weak or basic. Examples included:

  • The product had no contact details for consumer feedback
  • The manufacturer did some consumer research, but did not share the results with other chain members
  • While the retailer and manufacturer conducted fortnightly forecasts of stocks and orders, the data was unreliable because the retailer often ended up with excess stock, and then had to discount the price by 15% to shift it.
  •  Information flows between farmers and the processor are weak, one way and lack transparency with regard to forecasting and budgeting. The processor has shared a crop budget with farmers with hidden costs not factored in.

According to farmers, information is distorted as the inputs stated do not attain the stated yields and quality of tomato with the brix content required.

Relationships

Relationships among chain members are weak. While there is a growing consumer segment that wants a tomato sauce that has a more natural taste, sweetness and colour, and comes from local tomatoes, there is neither strategic alignment nor a common objective towards meeting these needs. Rather, the processor is struggling to source raw material and so cannot meet the manufacturer’s quality parameters. Trust cooperation and commitment are also limited. There are no contractual commitments between the processor and manufacturer, and nocollaboration in terms of investing time, resources and expertise to address the challenges being faced by the chain. While there are contracts between farmers and the processor, these are marred by mistrust due to the pricing structure, distorted information on crop budgets, and a general failure to understand each other’s business.

Findings and recommendations

While further consumer research is required to validate the findings from such a sample, the analysis revealed a wide range of opportunities to improve the chain’s efficiency and effectiveness. “The existing sauce is popular with children, so there could be scope to fortify it to supplement children’s nutritional needs, and so encourage more parents to switch to the brand. Equally, the chain should investigate opportunities for a new product which better targets adult consumers, whose tastes are very different.” More investment in product formulation is critical to improving products that target different market segments, especially amongst more discerning adults, for example by using less sugars and additives, and improving nutritional value, such as by adding garlic, for health conscious shoppers. Consumers also suggested sauces flavoured with chilli, and a “Proudly Zimbabwean” premium product made from locally-sourced tomatoes.

“If this could be sold for a higher price, then there’s scope for chain members to receive a higher return, which would encourage more production from farmers, and so improve the utilisation of processing capacity at both the processor and manufacturer.”

However, the chain will also need to work collaboratively to resolve its supply issues. The processor should discuss value-based pricing with farmers, rewarding them for the quality and reliability required for processing rather than paying by weight alone. For those farmers willing to commit to longer term supply, the processor could provide more technical support and conduct on-farm trials to optimise irrigation and fertiliser application, especially the use of potassium-enriched fertiliser to achieve the dry matter content and brix levels it needs.” They could also work with the seedling supplier to identify better varieties for processing and then ensure they are available in sufficient volumes.

Downstream, the retailer and manufacturer should review the forecasting and ordering process to avoid surplus stock and the resulting need to discount prices. As Susan proposed, “Currently,
these discounts detract from the product’s image and reduce the chain’s revenue, meaning that the scope for innovation and incentives is limited. If the chain is going to introduce a premium
product, it needs a premium image, and regular discounting isn’t consistent with that strategy.”

Externally, the Government needs to be engaged to help meet the challenges of increased production costs.

Lessons

“This project proved how value chain analysis is a very important diagnostic tool that informs research, interventions and improvements that make the value chain function better and promote collaborative relationships, which leads to growing the pie for all actors, rather than the chain’s current state of growing the individual slice for each actor.”

Susan learnt several lessons about conducting value chain analysis. “Some chain members were initially reluctant to release information, or be available for discussions. Persistence was critical, but I also made more progress by calling on the chain captain to encourage people to set aside time for the interviews.”

“It is also important to recognise that teamwork is required, because value chain analysis needs to involve relevant technical experts. Rewardingly, my organisation now recognises me as a value chain expert, and we have added value chain development to the organisation’s profile and capacity statement.”

More information

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