A tomato’s tale
Who decides how much you pay for your food at the supermarket or the local fruit stand? In 2013, Business Monthly followed a recently harvested crop of tomatoes on its journey from a small Egyptian farm to a Cairo housewife’s shopping bag. This month—with
From vine to vendor, how a tomato is priced.
As the sun sets on Mohamed Awad’s farm in Bader City, casting golden rays over the tomato vines, he chews thoughtfully on a piece of bread and white cheese his wife served him moments ago and hopes for a good night. As hired fieldhands harvest the plump tomatoes, Awad silently calculates the price at which he must sell his crop in order for his family to live comfortably through the winter. Some 36 hours later, his tomatoes will arrive at their final destination, more than 100 kilometers away in a dusty, bustling marketplace in the Sayeda Zeinab district of Cairo, where a young housewife named Safia makes her own mental calculations. With tomatoes more than a pound per kilo more expensive than last week, how many can she afford?
With Egypt’s central bank estimating that fresh vegetable prices shot up by 34 percent between January and September, the government in late September accused vendors of profiting from exorbitant markups, threatening to fix prices if they failed to bring them under control. As in many other places, tomatoes are a staple fruit here, appearing in items from streetside falafel sandwiches to LE 100 pasta dishes in five-star Italian restaurants. Like other fresh items, however, consumers complain that their price can fluctuate wildly from week to week—sometimes even hour to hour—depending on where they are sold and even who’s buying them. Grocers argue that they are only doing what’s necessary to make ends meet, that price hikes are simply in response to rising costs. The path that determines that price, like that of many commonly consumed fruits and vegetables in Egypt, follows an entrenched and largely unregulated supply chain that depends heavily on luck and guesswork. Squeezed by tough times, with little support from the government and rising inflation, every one of its links—from the farmer to two layers of traders to the grocer and the housewife on a budget—is struggling to do more with less.
“We are losing. And we are losing badly,” says Awad, a well-built man with a swarthy complexion in a worn galabeya, a third-generation tomato farmer whose 10-acre plantation lies some 40 kilometers west of Cairo. He complains that his profits have barely covered his expenses since the global financial crash of 2008. While consumption is down, he says, government subsidized supplies like seeds and fertilizer are increasingly rare, and when they do materialize, they are often substandard. This year, he resorted to buying supplies on the open market at significantly higher prices. This state of affairs has forced him to choose between planting fewer tomatoes or forking out more for his usual yield. This year, he planted less, ending up with a harvest of around 1,000 crates, each containing 20 to 22 kilograms of tomatoes.
A sizeable portion of the crop never even makes it off the farm: bruised, squished or overripe fruit is declared
“tomato paste” and sold cheap to factories or local restaurants, fed to animals or thrown away. Last year, Awad lost nearly a quarter of his crop to mold, thanks to weak pesticide. Even if the harvest is successful, Awad has a short window of time in which he must sell his tomatoes if he hopes to cover his costs or turn even a modest profit, thanks to the short shelf life of tomatoes. “I know of farmers who have lost almost half their crop,” he says, thanks to shoddy government fertilizer or delays caused by vehicle breakdowns.
As a result, small farmers often negotiate financing schemes with traders in which the latter cover farm costs up front. This arrangement benefits farmers by shifting the risk to the trader, who in turn gets to oversee the crop from the planting stage to ensure he gets the highest possible yield. Awad has thus far resisted resorting to such a patronage scheme because he sees it as a betrayal of his family’s farm-owning legacy. But as costs for everything from seeds to fuel have skyrocketed, he may be forced to consider such a deal.
As evening descends on the red and green tomato fields, a fleet of barefoot, overall-clad teenage pickers spreads out among the vines, placing the tomatoes one by one in wooden crates while taking care not to bruise them or accidentally contaminate the batch with rotten fruit. It’s mid-October— tomato harvest season begins in July— and this will be among the last harvests of the season. Another group of fieldhands stacks and secures the crates. The picking takes place after sundown to minimize spoilage by avoiding transporting the tomatoes in the heat of the day. Awad oversees his workers from the sidelines, anxiously checking his cell phone every few minutes for the arrival of the trader.
Around 10 p.m., an old pickup truck with rusting fenders and one working headlight rumbles up to the farm. Trader Said Mohamed gets out, dressed in a work shirt and jeans, unceremoniously greets the farmer and wastes no time in heading over to inspect the crop. Wordlessly, he picks a few tomatoes from the crates and examines them for a few moments before making Awad an offer. The haggling goes on for several minutes before a price of LE 19 is agreed upon, slightly less than LE 1 per kilo. As Mohamed walks backs to the rickety vehicle to fetch the cash from a briefcase, workers have already begun loading tomato crates onto the truck bed. Neither of the two men comments on the deal, but Awad quickly winds up the transaction and heads for his house wearing a somber expression.
It’s well after 1 a.m. by the time Mohamed’s driver, a scrawny fellow in a ragged galabeya, is en route to Oboor Market, the central depot for wholesalers of fruits and vegetables serving all of greater Cairo. Mohamed sold his fleet of trucks a couple of years ago after several of them were hijacked following the 2011 revolution. Now he simply rents vehicles when he needs them, although this arrangement comes with its own set of problems: Truck rentals in Egypt are controlled by what is essentially a cartel that compels traders to hire vehicles in various states of disrepair that are often chauffeured by reckless drivers, not to mention devoid of refrigeration or other standard features of transporting fresh produce elsewhere in the world. During the approximately four hour journey to Oboor Market—on which the truck rattles along at as fast a pace as Mohamed deems safe for the tomatoes—he sits perched atop his investment, keeping an anxious lookout for road blocks ahead (it is long after curfew) or potential bandits. (Competing traders have been known to sabotage trucks by hiring thugs to jump aboard produce trucks from moving vehicles and loosen the ropes securing the cargo.) He frets about whether or not he’ll be able to recoup the farmer’s price. If the truck doesn’t arrive in time or he misjudged the quality of the tomatoes, “I could lose a lot of money,” he says.
Frequent accidents and hijackings and the general inefficiency that results from the poor quality of Egypt’s transportation networks have long been recognized as a barrier to domestic trade,
a problem that has only gotten worse in the recent climate of insecurity that has accompanied political unrest. Back in 2010, Ahmed El Wakil, President of the Federation of Egyptian Chambers of Commerce, suggested establishing a virtual “stock market for fruits and vegetables” that would do away with several inefficient layers of middlemen, enabling retailers to buy directly from farmers without having to move the crops to a central marketplace, which he argued would save time and reduce waste and transportation costs. But the idea never got off the ground. In an apparent effort to address the poor state of domestic transportation, officials recently announced that more power would be granted to local trade authorities to enforce road safety regulations for trucks traveling on highways, while stricter standards would be instituted for drivers, though they did not specify a time frame.
Mohamed allows himself to breathe a small sigh of relief as the truck finally pulls up to the toll-gate style entrance of Oboor Market at dawn. The moment is short-lived. Waiting his turn in the growing queue of trucks piled high with fruits and vegetables, he prepares himself for the cold-eyed verdict of the market, where he will soon learn if he paid too little or too much for his newly purchased tomatoes. He whispers nervously, “I am not very optimistic.”
After weighing in and paying the LE 7 per ton entrance fee, Mohamed and his tomatoes join the chaos of the market, which at 140 acres resembles a typical Egyptian produce stand but on a far larger scale, with enormous piles as big as buses of technicolor fruits and vegetables sitting atop wooden stands, some shaded by giant palm fronds. By 6 a.m., people are running along the narrow alleyways that divide the displays, shouting, quarrelling, haggling, loading and unloading. Oboor handles some 80,000 buyers a day, while around 361 tons of produce change hands in a single hour. It is one of those places that looks fantastically disorganized but in fact operates according to an elaborate, finely-tuned system in which trucks and people constantly move in and out, often inches apart, without ever crashing into one another. The Oboor Market Authority, a quasi-public body that maintains the marketplace facilities, collects entrance and exit fees from traders and rents commercial spaces to banks and small shops. Apart from that, the market is run entirely by the traders themselves.
The Ministry of Supply and Domestic Trade in 1994 established the Oboor Market some 15 kilometers outside Cairo to replace the various informal produce markets that were then spread out across the capital in neighborhoods like Shoubra and Ghamra. “In the old markets, we were losing close to 50 percent of crops due to poor storage and smuggling,” says Hussein El Sebaay, the head of the market authority. “In Oboor we are
losing between 5 and 6 percent.” The market has more than 2,000 plots dedicated to every imaginable type of produce, from apples to zucchini, plus another 475 plots just for crates and bags. Storage facilities cover 15 acres, including four enormous, walk-in refrigerators, and there is a 16.5-acre parking lot for trucks. There are also five banks (traders don’t like to leave the market carrying cash), a post office, 36 shops selling various items such as phone chargers and scratch cards and 25 cafés as well as a police and a first aid station at the center.
Tomatoes are the second biggest crop at Oboor after lemons (though they’re number one in terms of the amount of fruit that’s moved), occupying some 200 plots. After several minutes of skillfully negotiating the narrow alleys between stands, Mohamed’s driver reaches the tomato section close to the heart of the market. Handymen materialize out of nowhere to unload the newly arrived crop, as interested traders gather to inspect it. After some 15 minutes, the traders agree on an initial assessment of how many kilos of tomatoes in each of Mohamed’s crates remain fresh enough to sell, which worries him further by being some five kilos less than he’d estimated back on the farm, meaning a fair number had gone bad during the journey.
Around 9 a.m., everyone falls silent as a stately figure in a black overcoat approaches. The traders gather around him, awaiting his reaction. This man is among the most powerful people in the market. Since the Fatimid era, around the 10th Century, Egypt has maintained a marketplace tradition of appointing a respected head trader. Even today, such a figurehead exists for each crop traded at Oboor. Hany, better known as “Al Moalem” (“The Boss”)—nobody knows his last name—is the tomato don. Unlike most of the fruit dons, he is self-made, rising up through the marketplace ranks on his own after getting his start at the age of 10 from his father, who was a wholesale trader. At 64, he’s been the tomato don for decades—no one could say for sure for how long. He wears pressed trousers and a button-down shirt under his overcoat, which has gold stitching and nearly touches his shoes. With his intimidating gaze, he somehow seems taller than the other traders as he approaches Mohamed’s shipment.
After inspecting the product in silence for a couple of minutes, the tomato don calls out, simply: “Twelve,” to the two dozen or so traders encircling him. Thus the minimum bid is set at LE 12 per crate—about LE 7 less than the price paid by Mohamed, who suddenly seems serene. The auction commences, with a handful of traders shouting out bids while shoving one another for a better position nearer to the don. When the price reaches LE 31, the don waves his hand and declares the auction over. Accounting for spoilage on the journey, that’s about LE 2 per kilo. Mohamed, looking satisfied,
collects his cash and disappears.
While the don system might seem antiquated, traders argue that it actually prevents market manipulations. “There is no one person who can monopolize a certain kind of fruit or vegetable,” says Nemr Abdou, an Oboor wholesaler. Because of the don’s long years of experience and considerable skill, he is trusted to establish a price based on a crop’s freshness and quality. This prevents traders from colluding to hold prices down, thereby maximizing their own profits. It is also his job to halt the auction when he believes the highest suitable price has been reached, preventing monopoly-seekers from buying out a single product and setting prices too high.
The tomato don himself explains that the key to the whole system is his reputation. “I can’t force traders to buy or sell their product,” says the don, a man of few words who has a slight paunch and the tanned, leathery complexion of all veg- etable sellers. He argues that this also prevents corruption. “The auction decides everything, and I can’t ask for a commission off the sale, because that would damage my reputation,” he explains. He acknowledges that the supply chain for fruits and vegetables in Egypt is too cost-heavy in the middle, with too many layers of traders taking a profit, meaning the start of the chain (the farmer) and the end (the consumer) both lose as a result. But he is firmly opposed to government price fixing. The Oboor system works simply because it essentially operates on supply and demand, he says. “In here, we don’t care about what has or will happen on the outside,” he says. “That is the job of the traders to calculate their own profit margins.”
The fruit stand
By noon, our tomatoes have been delivered to Khaled Ali, a produce retailer in his mid-30’s who, with his father, runs a sizeable fruit stand at the El Naserya Market in Cairo’s Sayeda Zienab district. Ali has worked at the family fruit stand since he was a teenager, but this is his first time to run the Oboor Market tomato buy on his own; usually he assists his father, a veteran vendor who’s been in the business for 40 years. Since trucks aren’t allowed in the capital until after 7 p.m., Ali books a spot in one of the mega-fridges for several hours to keep the tomatoes—already somewhat diminished in number—as fresh as possible. By evening, he departs the market along with other produce trucks heading to hotels, restaurant chains, supermarkets and elsewhere. (Unless a retailer has a special arrangement in which they get their produce from a selffinanced farm, for example, the fruits and vegetables consumed in Cairo all come through Oboor Market.) The freshest tomatoes, which command the
highest price, tend to go to grocers in upscale neighborhoods like Zamalek or Maadi, where customers are able to pay more for them. Fruit that’s aged for a day or so, on the other hand, is usually reserved for poorer districts where residents have less buying power.
It is well after dark by the time Ali steers his truckload of tomatoes onto the narrow, bustling streets of Sayeda Zeinab amid the beeping microbuses and arrives at his family’s fruit stand in El Nasreya, an open air market in which meat, fish and produce is sold to the mostly poor and working class local residents. He finds upon unloading that he has lost another kilo or two in each crate during the trip, saying: “It’s not a bad loss, but we have seen better days.” He arranges the tomatoes so the freshest ones are on top and replaces the price card reading LE 3.5 per kilo for last week’s tomatoes with one that reads LE 4. When his father comes by to inspect the new fruit a couple of hours later, he tells Ali to raise the price by another 75 piastres to allow for likely but unpredictable fluctuations to the wholesale cost of tomatoes in the coming weeks. It’s better for business to set the price slightly higher and keep it constant than to change it every few days, explains Ali. “We could lose a lot of business that way, because people will think we’re crooks.”
Thus, the final price of farmer Mohamed Awad’s tomatoes is determined. From LE 1 at the farm, to LE 2 at Oboor, and finally LE 4.75, which Safia, a housewife in a black khmer, must somehow manage to squeeze into her weekly grocery budget. She knows she needs around two kilos of tomatoes to prepare sauces and salads for supper and white cheese and tomato sandwiches for her two young sons and her construction worker husband to eat for lunch for the next 10 days. Almost LE 10 for tomatoes, however, is more than she can afford. Food prices tend to go up in the Fall, as kids go back to school and the weather turns colder, while summer crops dwindle and winter ones haven’t quite come into season. Ali says many customers have cut back on fresh produce lately, especially as they’ve become noticeably more expensive. In four days or so, he’ll have to throw away whatever hasn’t been sold of Awad’s tomato crop. He declares: “The low demand is putting our profits at risk.”
For Safia, meanwhile, the reality is that buying enough tomatoes to feed her family for the next week and a half will have to mean forgoing something else. In the end, she decides instead to purchase a half a kilo less than usual, which will mean serving three meals a week of boiled vegetables without any sauce, a prospect she doesn’t particularly like and knows her family of four won’t either. But she reasons that, like everyone else, “We are getting by.”
PICKED CLEAN: A TOMATO FARM IN ORABI ON THE OUTSKIRTS OF CAIRO SITS EMPTY OF FRUIT AS THE HARVEST SEASON DRAWS TO A CLOSE. SMALL FARMERS IN EGYPT ARE STRUGGLING TO DEAL WITH RISING SUPPLY COSTS.
FOOD CHAIN: MOST LOCALLY GROWN PRODUCE TAKES A LITTLE OVER 24 HOURS TO GET FROM THE FIELD TO THE MARKET PLACE.
PRECIOUS CARGO: WORKERS AT OBOOR MARKET MUST RACE TO UNLOAD TOMATOES FROM UNREFRIGERATED TRUCKS BEFORE SPOILAGE SETS IN.
SPOILT FOR CHOICE: THE BEST TOMATOES ARE SELECTED FOR MARKET RESALE, WHILE THE DREGS ARE MADE INTO KETCHUP OR TOMATO PASTE.
CREAM OF THE CROP: THE FRESHEST PRODUCE TENDS TO WIND UP IN UPSCALE AREAS, LEAVING LOWER QUALITY BATCHES FOR POORER NEIGHBORHOODS.