FRUITS AND VEGETABLES

(East & Southern Africa)(East & Southern Africa)

RTA PRESENTATION

MSM

21 MAY 2008

Current trends

• Organic market produce - US$29 billion in 2005.

• Health is a major growth factor in the global food

market

• Specialized wholesalers are increasingly procuring • Specialized wholesalers are increasingly procuring

directly from producers and investing directly in

producing countries (in farms, cold chain facilities,

and the like).

• Shift from traditional cash crops to high value

agricultural products

Individual Presentation

• Mangoes in Tanzania

• Potatoes in Kenya

• Hot Pepper in Uganda

• Paprika in Tanzania

• Microfinance in Zambia

MANGO VALUE CHAIN

DEVELOPMENT- TANZANIADEVELOPMENT- TANZANIA

Prof. Dazydelian L. Banda.

Associate Professor, Transport

Economics and Policy

GLOBAL OVERVIEW -Mangoes• Estimated 25 million metric tonnes produced annually in

about forty two (42) major production centres:

• Australia, Bangladesh, Brazil, China, Colombia , Costa

Rica, Cuba, Democratic Republic of Congo, Dominican

Republic, Ecuador, Egypt, Florida, Ghana, Haiti, Hawaii,

Honduras, India, Indonesia, Israel, Ivory Coast , Jamaica, Honduras, India, Indonesia, Israel, Ivory Coast , Jamaica,

Kenya, Madagascar, Malawi, Mali, Mexico, Pakistan,

Panama, Paraguay, Peru, Phillipines, Senegal, Sierra

Leone, South Africa, Sri Lanka, St. Lucia, Sudan,

Taiwan, Tanzania, Thailand, Venezuela and West Indies

DAZYDELIAN 5

NATIONAL OVERVIEW

• Horticulture is the fastest growing industry in Tanzania , with export growth estimated at 8% per year.

• Mango production has increased from 165, 514 metric tonnes in 1994/95 to 255,000 in 2003/04.

• Of the total 1,179,491 metric tonnes of horticultural produce in 2003/04, 255,000 metric tonnes or 21.6 % was Mangoes.

• Over the past 3 years, Tanzania has increased its exports of mangoes to both regional and foreign markets.

MANGO VALUE CHAIN-

TANZANIA

DAZYDELIAN 7

CHALLENGES• Poor rural road infrastructure

• Inadequate air freight transport services for exports

• Inadequate availability and high cost of inputs

• Shortage of skilled technical expertise

• Unreliable electricity supplies hence effect on

production

• Inability to comply with various international

standards

• Reluctance by some farmers to be associated with the

“collective” due to experiences of past socialist era.

DAZYDELIAN 8

OPPORTUNITIES• Growing demand for mangoes worldwide-

health reasons (Europe, USA) and religious

control on alcohol (UAE). Current

international food crisis a “blessing” in

disguise. Mango an exotic, healthy (Vitamin A

and C) energy (Carbohydrates), Fibre, and C) energy (Carbohydrates), Fibre,

Potassium, Beta Carotene and helps maintain

healthy blood sugar levels (Cholesterol - free.)

( Australian data, 2005)

DAZYDELIAN 9

• Conducive investment climate – Government policies

• Wide ranging opportunities in mango sub sector-

processing, packaging, standards control, air freight

operations, inputs,

• Contract farming/ Out- grower schemes

OPPORTUNITIES

• Developing an Marketing Information System

especially for meeting export requirements.

• Ability to work through established Associations-

TAHA, AMAGRO

• Conducive climate, abundance of water sources-

rivers, lakes.

DAZYDELIAN 10

Potato Value Chain

In Kenya

Joseph Gichuru Wangombe

Global context

• Global production in 2005: 322 million MT (FAO)

World Production of Potatoes (FAO 2005)

China Russia Federation India USA Others

China

23%

Russia Federation

11%India

8%USA

6%

Others

52%

Source: International Potato Center, World Potato Atlas

Production areas are between 1,400 and 2,700 meters above sea level with mean annual rainfalls of 1,000 mm or greater

Consumers

HotelsRetailersUrban Market Traders

Processors

Potato Value Chain

UrbanCenters

Rural Producers/Potato Farmers

Wholesalers

RuralMarketTraders

Brokers Wholesalers

RuralTowns

RuralAreas

Challenges

• Extension services are limited as crop is not

prioritized in government programs

• The market is controlled by the buyers such

that the farmers are just price takersthat the farmers are just price takers

• Credit is difficult to obtain

• Poor road network

• Poor production methods

• Quality standards

Opportunities• Low yields (8t average) can be improved to as high as 40t

• Information for improving production is available

• Exports

• Urbanization and changing food consumption habits (Nairobi consumes about 30% )

• Per capital consumption (about 26kg), it is only about ¼ of the consumption in high income countriesconsumption in high income countries

• High food prices

• Some production organic by default – group certification

• Convenient food joints for French fries (chips) on the increase

• Gross margin of potatoes is better than that of staples like Maize

• Large scale farmers are able to collapse chain and deal directly with the retailers

Hot Pepper in Uganda

Kennedy Ssejjemba

Global Hot Pepper Market Trends

•In 2002, the EU imported 24,615 MTs of fresh hot

peppers valued at $28.6 million from non-EU sources up

from 20,779 MTs valued at $26.2 million in 1999.

•The general trend is one of slow, steady growth with some

traditional markets like the UK and Netherlands showing

static import volumes, others such as Germany, Austria, static import volumes, others such as Germany, Austria,

and France showing the fastest growth.

•The Netherlands also serves as the EU port of entry for

fresh hot peppers marketed through various channels in

continental markets like Germany and France

Major Hot Pepper Growing Areas in Uganda

Luwero

Iganga

Sudan

DRCMubende

Masaka

Mpigi

Wakiso

Mukono

Tanzania

DRC

Rwanda

Consumption

Wholesaling/Retailing

EXPORTINGHORTEXA +OTHERS

(Packaging, storage

& transport)

RETAILERS

(Kiosks, Hawkers,

Supermarkets)

LOCAL

CONSUMER

OVERSEAS CONSUMER

UK,FRANCE,HOLLAND,BELGIUM,

SWITZERLAND,OMAN

Wholesale markets,

Supermarkets, Consolidating

companies

DOMESTIC FRESH

MARKET

EXPORT FRESH MARKET

Hot Pepper Value Chain

R&D

Extension

Input Supply

Production

Grading

INPUT SUPPLIERS

PEPPER FARMERS

( Smallholders)

AGENTS

MINISTRY OF

AGRICULTURE, ANIMAL

INDUSTRY & FISHERIES

(NAADS)NARO, NGOs, UNAFFE

Hot Pepper Exports:2002-2005

400

500

600

700

800

900

Value('000 US$)

Volume(Tonne)

Source: Uganda Bureau of Statistics (UBOS);2007 Statistical Abstract

www.ubos.org

0

100

200

300

2002 2003 2004 2005

Challenges

• Input supply (seed and other inputs) and selection

• Raising right varieties

• Irrigation/seasonality in production

• Modern farming systems

• Pack houses and packaging materials

• Cold rooms and refrigerated trucks

• Wastage and losses

• Cargo space

• High costs to attend international trade fairs

• Access to higher value markets and accreditation

Opportunities

• Irrigation

• Investment in value addition and infrastructure

• Facilitating exporters’ capacity to connect with foreign

buyers

• Pooling/consolidation of produce (farmers)

• Developing protocols for key fruits and vegetables

• Good climate: moderate temperatures (15 -30ºC) throughout

the year with a bi-modal rainfall pattern(1461mm)the year with a bi-modal rainfall pattern(1461mm)

• Good political and economic stability for the last 15 years

• Skilled manpower

• Upgraded International Airport

• Availability of land

Value chain analysis and

development

Paprika sub sector in Tanzania

Pre-RTA seminar, Maastricht School of Management

May 21st, 2008May 21st, 2008

Presented by:Enock Stanley Ugulumu

Paprika –Iringa

Paprika-Rukwa

Paprika –Kilimanjaro

Paprika –ArushaPaprika Growing Areas in Tanzania

IringaRukwa

Paprika -Mbeya

Paprika –Ruvuma

Global Paprika Sub sector

An overview of World Market

• Global market: 120,000 to 150,000 tonnes

• Of the above tonnage; 25,000 t -used to process oleoresin

• 125,000 t- spice condiment

• Paprika ranks in third position as the most important spice traded globally.traded globally.

An overview of Tanzanian Market

• Paprika production in Tanzania started in 1999/2000

• In 2006 the production was 500 tons

• Profit of -USA $210/hectare

• Sea freight-Container of 18-20 tons costs US$1700 from Dar-Spain

Input supplying Production Processing Transporting Processing Grading Grading Wholesaling

(seed ,fertilizer, pesticide) Selling Packaging Retailing/consumption

Paprika sub sector Map: Tanzania

Buyer/Export

Information flow Information flow

Input suppliers Tanzania Spices Ltd

Contract &input supply & Information flow Pricing

Local Govt &Promoters

Extension services& support services

TRA TBS TDFA

Revenue collection

Quality controlProcessing and Packaging technology

Paprika growers-Rainfed small holdersN=

-Commercial farmersN=

(Exporter) Vol= 500 tons

Global marketWorld vol-150,000 tons

(Consumers: Spain, EU,

USA)

8,000

14

Challenges

• Difficulties in accessing affordable finance

• Weather- small farmers are vulnerable to diseases and pests (rain-fed)

• Competing crops-paprika is grown as secondary cash crop against maize, coffee, cotton etcagainst maize, coffee, cotton etc

• Technical support-advise on crop husbandry, handling, processing and storage and linkages –very limited

• Compliance to various and ever changing International Standards

• Infrastructure eg-Poor rural (feeder) roads, processing plants, storage facilities in rural areas.

Opportunities

• Worldwide initiatives towards the use of natural products and a European ban on the use of synthetic dyes

• Climate that allows large scale production of paprika

• Ready Markets-South Africa, USA & Europe

• Production costs for paprika in Spain makes imports more • Production costs for paprika in Spain makes imports more important in the near future

• Paprika projects-useful frameworks for public, private partnerships and farmers to share risks

• Most of Paprika inputs- available locally/regionally

• Railway networks, roads and Ports in-Tanzania allow for bulk transportation

Microfinance Industry in ZambiaMicrofinance Industry in Zambia

By: Namaya-Morero M- LewanikaBy: Namaya-Morero M- Lewanika

Presented to: Round Table Africa

Maastricht

21st May, 2008

MicrofinanceMicrofinance--Global PerspectiveGlobal Perspective

• Microfinance refers to the provision of financial services to low income clients

• It includes financial services such as:

– Micro credit

– Micro savings– Micro savings

– Micro insurance

– Fund transfer

• Typically banks do not provide financial services to low income clients because of the high cost involved in managing accounts

• Microfinance began about 30 years ago- notably Grameen Bank in 1976, founded by Muhammad Yunus

MAP OF THE REPUBLIC OF ZAMBIAMAP OF THE REPUBLIC OF ZAMBIA

MFI’sMFI’sMFI’sMFI’s

MFI’sMFI’s

Institutional Type Number of

entities

Estimates of Clients

Commercial Banks 13 Up to 1 million

State-owned Accessible Finance

Institutions (NatSave, ZNBS,

DBZ)

3 Equiv. 200,000

Private Accessible Finance Institutions: 2 <= 10,000

Financial Sector Overview Financial Sector Overview -- ZambiaZambia

Private Accessible Finance Institutions:

(A) Building Societies

2 <= 10,000

Private Accessible Finance Institutions:

(B) Social Microfinance

Institutions

20 + Equiv. 50,000

Insurance companies 7 <=0.5 million

Source: Supply-side study on the inclusiveness of Zambia’s financial system, 2007

Micro Finance Sector in ZambiaMicro Finance Sector in Zambia

• Micro finance emerged on the Zambian market in the mid 90’s

• Industry targets those that were considered “unbankable” by mainstream commercial banks.

• Despite the inclusion of microfinance institutions in the financial sector, still around 66.3% of Zambians remain excluded from the financial sector according to a survey undertaken by Finscope in financial sector according to a survey undertaken by Finscope in 2005

• Most microfinance institutions limit their operations to urban areas mainly because of the high cost associated with rural lending

• Recently however, there has been trend by commercial banks such as Barclays Bank to employ strategize that tap onto the people in the BOP.

Microfinance Sector in Zambia Microfinance Sector in Zambia ––

Cont.Cont.

• AMIZ – Records less than 25 MFIs

• In February 2008, MFI Regulations were introduce by the Bank of Zambia

– Provides framework for » Establishment and registration of MFIs» Establishment and registration of MFIs

» Regulation and supervision of MFIs

• Existing MFIs are currently struggling to achieve financial sustainability and are heavily reliant on donor aid

• Financing by microfinance institutions in the agricultural sector has been very limited despite the immense demand

Exporter Market

Value ChainValue Chain

Processor

Trader/Shopkeeper

MF

I/ T

raditio

nal

lenders

Consumer

Cooperatives/groups

Banks

Tra

ditio

na

l Le

nd

ers

Farmers/Producers

Input Suppliers

Other Suppliers

MF

I/ T

raditio

nal

lenders

Tra

ditio

na

l Le

nd

ers

i.e

. K

alo

ba

MF

I/F

ina

ncia

lA

sso

cia

tio

ns

Challenges

• High operational costs related to

– Poor infrastructure

– Low population density in rural areas

• Challenges in attaining financial sustainability

– Balancing social and financial missions– Balancing social and financial missions

• Compliance to new microfinance regulation

• Some MFIs are required to transform in order to be regulated

as deposit taking

• Insufficient supply of energy negatively affecting

businesses

• High risk associated with rain-fed agriculture

Opportunities

• Currently govt. is supporting the MF industry

• Overwhelming demand for microfinance services, particularly in agriculture sector

• Development of client driven financial products

• Linkages with other partners in development such as government, NGOsgovernment, NGOs

• Limited number of MFIs in rural areas hence potential for growth

• Traditional lending has higher interest rates

• Transformation in large banks that service the poor• Poor peoples banks – companies limited by shares

Why Invest in the Fruit & Vegetable

Sector?

• High value sector (Gross margins)

• Favourable climate

• Short production periods

• Competitive labour force

• Availability of fertile land

• Developed networks i.e. farmer & exporter

associations