By Wilfried Aulbur

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.