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Wrote this to someone in an email yesterday but I feel like dropping some knowledge on the TL, so here is my bearish take (once again) on the “business opportunity” to provide cold storage facilities for tomatoes in Nigeria. Issa little thread:
Use case/hypothesis #1
If you store
in a cold room, your post-harvest loss will decrease & you'll be able to sell more. The incremental amount you can sell will be worth more than the running cost of the cold store (& ideally some amortized amount of the capital expense).
If you store
in a cold room, your post-harvest loss will decrease & you'll be able to sell more. The incremental amount you can sell will be worth more than the running cost of the cold store (& ideally some amortized amount of the capital expense).
My issues:
Given how much things cost in Nigeria, I've never been able to make the math work out so that the additional volume covers the cost of refrigeration on paper, so I've never been willing or interested to try it IRL.
(Y’all might remember I did a thread on this)
Given how much things cost in Nigeria, I've never been able to make the math work out so that the additional volume covers the cost of refrigeration on paper, so I've never been willing or interested to try it IRL.
(Y’all might remember I did a thread on this)
Also, this is a volume play. You either have to have a big cold store or make a lot of "turns" in the warehouse each month to make it work. I don't know any buyer in Nigeria that can truly consistently buy the volume of tomatoes that you'd have to sell to make the economics work.
Use case/hypothesis #2
If you store in a cold room, they will be higher quality when you eventually sell them & you’ll get a higher price. The incremental price increase will exceed the running cost of the cold store (and ideally some amortized amount of the capital expense).
If you store
in a cold room, they will be higher quality when you eventually sell them & you’ll get a higher price. The incremental price increase will exceed the running cost of the cold store (and ideally some amortized amount of the capital expense).
My issue: Volume, volume, volume!!!
Question: how many people in Nigeria are actually willing to pay more for a better looking fruit?
Answer: not many. Not enough. You have to go where the market is.
Question: how many people in Nigeria are actually willing to pay more for a better looking fruit?
Answer: not many. Not enough. You have to go where the market is.
Note that there is no use case for somehow incorporating cold storage facilities into a tomato processing biz.
Do I care if my tomatoes are hot & squishy & broken when they enter the factory? Hell no!
Do I care if my tomatoes are hot & squishy & broken when they enter the factory? Hell no!
Does a cold store allow me to “stockpile” tomatoes? Not in any meaningful volume, and not for any meaningful period of time. Even in a cold store, ripe tomatoes start to deteriorate pretty quickly. If you pick green you can store them longer but I need red fruit.
