Growing onions is a rising business in Tanzania’s Blue Mountains

Story written by Baraka Msofe and Ine Tollenaers

Surrounded by the ‘Blue Mountains’ and sugar cane plantations, you can find two villages – Londoto and Msitu wa Tembo – home to more than 2,167 households along the Pangani riverbank in Manyara. Besides providing fish to the communities, the Pangani river is the main source of water, supporting the main economic activity in the villages: agriculture. More than 1,780 acres of farmland in the villages are irrigated with water from the river.

Water as a source of business for farmers

Due to availability of a reliable source of water for the farms, vegetables are often grown during the dry season, while maize and beans are cultivated in the rainy seasons. The production of vegetables plays a major role in increasing farmers' household income, because vegetables are mainly produced for doing business on local, regional, and international markets. Vegetables such as tomato, onion, eggplant, okra, carrot, and cucumber are usually produced by small-scale and medium-scale farmers at different times during the year. This leads to a higher profit since the products are rather scarce but highly demanded on the market. In Msitu wa Tembo and Londoto, around 384 farmers engage in onion and tomato production on more than 781 acres of land during different seasons of the year. Onion and tomato production has become popular amongst farmers, who are incentivised because of the higher profits and fewer risks compared to other vegetable products.

Farmers from the two villages have organised and formed six farmers’ business organisations. Rikolto has supported this process by offering different agricultural services with the aim of transforming their local agricultural practices to agribusiness practices. Previously, most farmers used traditional agricultural practices due a resistance to adapt to changes. Currently, farmers along the Pangani riverbank have adopted Good Agricultural Practices (GAP) that they have learnt from different seminars, workshops and demonstration plots facilitated by Rikolto in collaboration with other food value chain stakeholders. The Government Agricultural Extension Officers have been crucial in training farmers on GAP and linkages to the markets. Rikolto has engaged different agricultural input companies, distributers, traders, and consultants to enable farmers to receive agribusiness services vital to increase productivity and income.

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Agribusiness services? What does that mean?

One example of Rikolto facilitating agribusiness services is the agreement that Rikolto signed with Seed Co Company Limited and East-West Seed Company to supply improved vegetable seeds and technical skills to produce vegetables. East-West Seed Company has been working with smallholder farmers in establishing demonstration plots to show Good Agricultural Practices to farmers and to prove the high performance of the seeds. Among that seeds that the companies have demonstrated are onion seeds, quite literally planting the seeds for a deal with East Africa Fruits Company.

East Africa Fruits: a social enterprise

One of the focus points now is to assist farmers with securing a permanent market for their produce. Most farmers are experienced and already improved their farming practices, so they are capable to reach maximum productivity but need a market to deliver to. Therefore, Rikolto has facilitated a deal between the farmers and East Africa Fruits Company, giving farmers a stable market for their onions.

East Africa Fruits is a social enterprise connecting sellers with buyers of grains and fresh fruits and vegetables. They aggregate demand and deliver wide range of fresh and exotic produce directly from farm to the storage facility of business to business customers, retailers, wholesalers, local vendors, restaurants and café, hotels, and exporters. They support smallholder farmers on crop planning in alignment with marketplaces, upgrading farm infrastructure and transiting to sustainable practices. East Africa Fruits’ mission is to has create a prosperous future which promotes inter-generational equity and strengthens farmers in order to eradicate poverty. They aim to find synergies between economic growth and environmental sustainability through services such as aggregating produce, involving farmers, processing, value addition, and distribution of fresh produce.

Ground-breaking onion contracts

For the first time, Pangani river farmers have been able to enter into a contractual agreement with buyers for securing a market for their produces. In the past, the farmers from Pangani worked always with auctioneers to sell their produce, which rarely gave farmers a fair deal for their work. Auctioneers have been influencing the market prices to benefit their own interest. Rikolto and East Africa Fruits Company therefore decided to give farmers a different experience by introducing a contract that ensures profitability for farmers and high-quality standards for buyers.

How can a fair price be set in the contract? The main production and maintenance costs for quality onions were calculated: Producing onions costs 2,760,567 Tanzanian shillings per acre. From these costs, it was easy to anticipate a minimum price for the onions that will cover the costs and an additional 20% profit. For one acre, a farmer can expect to harvest a minimum of 80 bags of onions weighting 100 kg and maximum of 120 bags. To reach the 20% profit, the minimum price for 1 kg of onions was set at 330 Tanzanian shillings, ensuring that farmers are capable to invest in production and obtain a profit. East Africa Fruits Company have already contracted 20 smallholder farmers that are cultivating 15 acres of onion to fulfil an order of 120 tonnes of onions (1200 bags).

A beneficial contract for all

The contract contains the following terms:

• Farmer will sell their produce to East Africa Fruits at the market price or at the minimum price if the market price is below 330 Tanzanian shillings per kilogram.
• East Africa Fruits will source the produce from the farm and the farmers will ensure the grading, packaging, and loading of the onion bags are done accordingly.
• The farmer has the responsibility to sell high quality and safe produce to the buyer. The buyer has the right to refuse the produce only if it doesn’t meet the quality standards. Produce is categorised into grade 1 and 2: The buyer will purchase grade 1 at market price and grade 2 at half the price.
• It is a one-year contract that can be renewed if both parties agree.
• This contract can only be terminated when one party fails to fulfil their contractual responsibilities. For instance, if the buyer fails to pay the seller on time or if the farmer fails to deliver the produce on time and at the required quality.

Mutually beneficial, but not without challenges

East Africa Fruits is now waiting for the first batch of onions produced by the farmers in Msitu wa Tembo. The company already bought 16 tonnes of onions from Londoto farmers as a first trial to introduce their market to the quality onions from Pangani. One challenge that they encountered was the size of the onions, which was smaller than the size East Africa Fruits wanted. On top of that, many farmers delayed the production of onions in order to meet the demand and have more income during the January and February harvest season. This resulted in a lack of big, quality onions available on the market, not enough to meet the demands of East Africa Fruits. The solution agreed was that East Africa Fruits could source quality onions from other places, giving the farmers more time to prepare for the next harvest season.