Which of the following is a major advantage of establishing a tomato-processing factory in a country?

Step 1: Analyze the question The question asks for a major advantage of setting up a tomato-processing factory in a country. In Economics, this is about the benefits of local industrialization (import substitution and value addition).

Step 2: Explain the concept When a country processes its own raw materials (like tomatoes into paste, puree, or ketchup), it:

• Reduces dependence on imported processed goods
• Saves the foreign exchange that would have been spent on imports
• Creates jobs, adds value, and reduces post-harvest waste

This is called import substitution. Nigeria, for example, imports a lot of tomato paste even though it grows plenty of tomatoes, so a local factory would save the country foreign exchange.

Step 3: Evaluate each option

• A. Local consumption will decrease: Wrong. Processing makes more products available, so local consumption would likely increase, not decrease. It is also not an advantage.
• B. More unskilled labour will be employed: Factories do create jobs, but processing factories rely largely on skilled and semi-skilled workers and machinery. This is not the major economic advantage, and it is less directly tied to processing.
• C. Foreign exchange will be conserved: Correct. Locally produced tomato paste replaces imports, so less foreign currency is spent abroad. If exported, it can even earn foreign exchange.
• D. It will attract more tourists: Wrong. A factory has no direct link to tourism.

Step 4: Answer The correct option is C. Foreign exchange will be conserved.

Exam tip: When you see "factory", "processing", or "local industry" in an Economics question, think import substitution, which leads to foreign exchange savings, job creation, and value addition. Choose the option that matches the main macroeconomic benefit.