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Tomato industry: Vertical integration increases efficiency and profitability

21. September 2020

How to significantly boost the earnings of tomato processors and help farmers become profitable using our three-step approach

"In light of digital verticalization, future platforms will offer full transparency at every step of the cultivation process."
Portrait of Wilhelm Uffelmann
Partner
Munich Office, Central Europe

The tomato industry is going through difficult times. Prices have been falling and stagnating yields have soured the relationship between farmers and processors. But there is hope.

Roland Berger's three-step verticalization approach focuses on introducing central procurement, developing a Center of Excellence for best-practice sharing and integrating the supply chain. We were able to increase efficiency and profitability for both farmers and processors, with a rise of USD 1,520 in net profit per hectare of tomatoes, while incentivizing increased supply from farmers.

We believe that such vertical integration should become the norm.

  1. A central procurement platform enabled attractive savings in input factors for farmers
    Based upon an analysis of farmers' use of input factors such as seeds and agrochemicals, we worked with them to identify the most efficient types and integrated their sourcing into our client's procurement platform. Increased scale meant savings on supplies of almost 10%.

  2. The launch of a Center of Excellence helped farmers shift towards more efficient, data-driven best practices
    The Center of Excellence combined expert local knowledge with world-class international research and improved communications and loyalty between the client and farmers. The CoE provided visibility on best practices at every step of the cultivation process, from soil tests to variety selection and irrigation.

  3. Supply chain integration led to better coordination of farmers' resources and cultivation practices
    The pooling of farming equipment improved utilization and reduced inactivity. Moreover, improved management of campaign lengths decreased fixed costs and generated additional margin.

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How vertical integration increased efficiency and profitability

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Roland Berger highlights the key elements of verticalization that enabled increased efficiency and profitability for a tomato processor and its farmers. We demonstrate how increasing scale and transparency as well as sharing best practices were key success factors.

Veröffentlicht September 2020. Vorhanden in
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