PRIVATE SECTOR PERSPECTIVES FOR STRENGTHENING AGRIBUSINESS VALUE CHAINS IN AFRICA CASE STUDIES FROM ETHIOPIA, GHANA, KENYA, AND MALI

Mima Nedelcovych and David Shiferaw May 2012

BACKGROUND The Partnership to Cut Hunger and Poverty in Africa (“the Partnership”) recognizes that increasing the level of foreign assistance and African government spending on agricultural development is critical to achieving long-term, sustained economic growth in Africa. In addition, private investments – both domestic and foreign – are increasingly becoming important drivers of agricultural productivity and income growth. From the private sector perspective, the role of donors and national governments in Africa is to improve the investment climate, institutions and policies for private business owners, including smallholder farmers, to thrive and expand their businesses. Such enabling environment includes investments in:  roads and ports that provide market access and reduce the transaction costs of getting products from farms to consumers;  energy that allows commodities to be processed, chilled, dried, packaged, and sold with minimal wastage;  research and extension services that enable producers and agribusinesses access new, productive technologies; and  education and training that results in a growing group of agricultural professionals capable of providing needed services and entrepreneurial leadership. But perhaps the most critical role of governments is establishing systems of laws, regulation and governance, which:  set rules for fair and competitive markets and trade, and ensure the rules are followed;  reduce investors’ financial uncertainties and risks, e.g., through enforceable contracts, and fair and transparent judicial procedures; and  permit business owners (farmers, marketing agents, processors, and others) to acquire and secure property rights. Value chains have been accepted as an effective way of focusing on measures to improve the scale and impact of private sector investments, which include the investments made by smallholder farmers themselves as well as those made by larger-scale domestic or foreign agribusiness investors. Development partners have adopted value chain approaches when designing interventions and project implementation to coordinate their support to specific sectors and commodities. Particularly due to the emphasis on targeted value chains by the US Government’s Feed the Future Initiative, a better understanding of the linkages being made (or missed) along a value chain will be essential to realizing the returns that they promise. In September 2010, the Partnership decided to investigate the constraints impeding greater private sector investment within specific value chains in several African countries. Partnership Board member Dr. Mima Nedelcovych and research fellow David Shiferaw held a series of interviews with a wide range of representatives from the public and private sectors over a five-month period, and complemented outcomes from these interviews with 2

information from literature and other printed resources. Although there is a growing commitment to private sector investments in agricultural development in general and to specific value chains, these results of the interviews pointed towards a number of constraints that continue to limit progress. The interviews identified several areas where, from a private business perspective, governments could better support private sector investments through their actions and policies in order to grow the agricultural sector. This report is a summary of observations made in four country studies: Mali, Ghana, Kenya and Ethiopia. The findings suggest that African governments have significant opportunities to take actions that would directly stimulate private investments in agriculture. The private investors interviewed believed that, with greater government support in creating an enabling environment and less direct government intervention in value chains, critical barriers to their businesses would be reduced or eliminated. Observations specific to the four countries and four agricultural commodity value chains are summarized below and call for practical reforms that promote the growth of successful agribusinesses and more productive farming in Africa.

METHODOLOGY AND OBJECTIVES This study involved four countries with some record of success in promoting private investments and, within each country, meetings with participants engaged in selected value-chains deemed as high priority by the respective governments. The selected value chains include two grains (maize and rice), in order to represent commodities that had large domestic markets, and livestock and horticulture value chains due to their volume of export trade in each country. Countries were paired for comparison purposes. The two country-pairs selected for study were Ethiopia and Kenya in East Africa, and Mali and Ghana in West Africa. Each country pair included a coastal and a landlocked country, and all the countries are part of the US Feed the Future priority countries. Historically, each country has pursued different approaches toward private sector development, although all of them have indicated deep commitment to greater private investment in the selected value chains. The fact that Ethiopia and Kenya are members of the regional Common Market for Eastern and Southern Africa (COMESA) and Mali and Ghana belong to the Economic Community of West African States (ECOWAS) allows for consideration of some regional issues. Table 1. Countries and Value Chains Selected for Analysis Ethiopia Kenya Ghana

Mali

Livestock (Export) Maize Horticulture

Livestock (Export) Rice Horticulture

Rice Maize Horticulture

Rice Maize Horticulture

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Field interviews of agribusiness leaders and government officials in the four countries took place between December 2010 and January 2011. The specific objectives of the consultations were to explore the following:  Existing levels of private sector investments in the selected value chains;  Policies and actions by governments, donors and development partners that encouraged or discouraged private sector investment; and  Lessons learned from successful efforts of promoting agribusiness investments, and their possible relevance for other countries and value chains.

SUMMARY FINDINGS AND COMPARISONS In each of the four countries, the government played a key role in either assisting or constraining private investment in the identified value chains. By prioritizing investments in selected value chains, governments have the ability to focus public investments on key constraints impeding the expansion or efficiency of those value chains. Expanding irrigation facilities has been important for value chain development in all the countries, especially for horticulture exports in Ethiopia and rice production in Kenya, Mali, and Ghana, mainly for the domestic markets. Public sector research was also important in supporting growth and expansion of private investments, especially for the key staple crops, e.g., maize in Kenya and Ethiopia. Effective regulatory institutions helped private exporters comply with international sanitary and phyto-sanitary standards and facilitated trade relationships with competitive markets, e.g. the case of Mali’s mango exports, Kenya’s horticultural exports, and Ethiopia’s livestock/meat exports. However, in all four countries, lack of adequate roads and electricity continued to raise transaction costs of marketing the commodities and limit growth in the value chains in both export and domestic markets. Public investment in transport, availability and cost of electricity, water, telecommunications, and physical storage could significantly mitigate risks of private investment, and aid scaling up production. 1 This signals a dire need for sustained attention to critical infrastructure development and maintenance, and also an opportunity for public-private partnership in infrastructure investment. Access to land and tenure security emerged as a common constraint to increased private investment in all the countries, in some ways more important for domestic investors than for foreign investors, it would appear. Even smallholders who acquired rights to grow rice in government-managed schemes, as in Mali and Kenya, did not have adequate security to invest in maintaining the land at maximum productive capacity. Farmers who wanted to increase their holdings size had no clear path for doing so. Lack of transparency with government land allocation procedures and potential conflicts with traditional land rights was a barrier to scaling up large-scale operations to profitability levels, especially in processing operations. Rules and regulations for establishing out-growers schemes, contract farming or successful incorporation of smallholders into larger agribusiness 1

In Mali, the government made large investments in infrastructure in the rice value chain, which between 2002/3 and 2008/9, yielded a 132% increase in production.

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operations were problematic. In Mali and Ghana, these institutional and organizational issues limited the success of the export horticulture value chains. Even with justifiable concern about land grabbing, current practices and institutional constraints hinder private investments in these value chains. All four countries compete for high-value horticultural products in European markets. Ethiopia has also oriented its high-value livestock/meat export value chain towards Middle Eastern markets. Non-African export markets are demanding in terms of quality, timing, and cost. In spite of the European market requirements becoming tougher, these export markets had potential for significant expansion. Both Mali (livestock/meat and rice) and Ethiopia (maize) also had opportunities for significant expansion into regional markets, although actions needed to increase the volume, improve the quality and reduce market transaction costs were absent. The rice value chains in Ghana and Kenya were oriented toward import substitution, effectively making local producers and private investors compete with the highly efficient rice value chains in Thailand, Vietnam, and Pakistan that already export into Ghana and Kenya. This poses a steep challenge to the nascent rice value chains in Ghana and Kenya and has engendered somewhat erratic policy decisions by governments struggling to protect local production. The maize value chain stories in Ghana and Ethiopia demonstrate the challenge of developing cost-efficient value chains by increasing farm-level productivity without, at the same time, building more robust, diversified market outlets. In both cases, greater private sector investment in post-harvest processing could respond to a variety of local demands, such as animal feed, brewery, other processed maize food products, and strengthen producer incentives to target production for those markets. Governments’ interventions in staple crop value chains tended to increase uncertainties for private investors at all levels, from production to marketing. The Kenya government’s attempt to simultaneously raise prices for producers while reducing prices for consumers is perhaps the most extreme example of mixed signals, but ad hoc price controls, export bans, and import tariffs are also common. Public sector interventions in export value chains, on the other hand, tended to be more supportive, but often incomplete or misdirected, leaving private investors and donors to fill gaps and provide additional assistance.2 A stronger engagement and institutionalized communication between the private and public sectors is needed in all of the countries. Where large amounts of capital or other investments, such as technology or know-how, are involved, the public and private sectors should partner to lower risks. Indeed, 2

The scope of the public sector intervention tends to differ as a result of a country’s development ideology and public sector capacity. Ethiopia with its emphasis on priority export sectors provides technical and market-related assistance as well as attractive investment incentives to actors within the priority sectors. Kenya, on the other hand, tends to focus more on institutional arrangements, e.g. export processing zones and special economic zones, and the business environment. Ghana, like Kenya, tends to emphasize Free Zones and the business environment – however, its public sector tends to actively assist (through equity or the use of development banks) private sector operators within key priority value chains. Mali’s comparatively weak public sector capacity on the other hand has left private investors and development partners filling the gaps.

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governments must walk a fine line between stimulating and encouraging the private sector to play a bigger role in the agricultural growth sector, and “crowding out” the private sector in countries like Kenya, where the private sector is more vibrant, willing and capable of doing more. Below are suggested key reforms, by country and value chain: Ethiopia Maize value chain: a) Facilitate access to breeder’s seed including development of a supportive regulatory environment for private seed producers; b) Facilitate investments in storage capacity at all levels through PPPs; and c) Encourage cross-border trade in cereals and the entry of institutional buyers Livestock value chain: a) Invest in strengthening pastoralist associations; b) Encourage entry of private sector service providers for veterinary services, animal feed processing, etc.; c) Enlist the private sector assistance in disease surveillance; and d) Facilitate sector investments by promoting certifications and structural upgrading through PPPs. Horticulture value chain: a) Provide incentives to private sector ancillary service providers (graders, inspectors, transport and packaging companies); b) Develop PPPs in human resources development programs; and c) Ease foreign exchange controls to facilitate international transactions. Ghana: Maize value chain: a) Facilitate varietal release protocols for maize seed and encourage private seed production; b) Develop PPPs in transport, milling and storage infrastructure; and c) Streamline process for obtaining land rights, including those for aggregating land holdings. Rice value chain: a) Continue efforts to improve varietal releases and encourage private seed production; b) Encourage PPPs in irrigation, processing, etc.; and c) Streamline and facilitate process for aggregating land holdings. Horticulture value chain a) Continue efforts to improve varietal releases and encourage private seed production; b) Encourage PPPs in transportation, pack-house development, and irrigation; and c) Streamline and facilitate process for aggregating land holdings. 6

Kenya: Maize sector: a) Encourage investments in storage facilities at all levels; b) Develop aflotoxin testing capacity, including among private sector value chain participants such as at the farmer association level and private trader level; and c) Build on Kenya’s regional orientation by promoting a structured East African grain marketing system. Rice value chain: a) Clarify and secure land tenure rights in government run rice schemes; b) Encourage PPPs in electricity and transport; and c) Build on Kenya’s regional orientation by promoting a structured East African grain marketing system. Horticulture value chain: a) Revise investment climate so as not to discriminate against foreign interests; b) Seek to establish PPPs in transport, communication and energy sectors; and c) Encourage direct air links with the U.S. and freighter competition to broaden horticultural market reach. Mali: Rice value chain: a) In irrigated areas, shift to a system where farmers pay for actual water use b) Seek to establish PPPs in milling/energy production c) Foster private sector entry in the input supply chain, including that of improved seed production Livestock value chain: a) Government to refrain from setting prices b) Encourage investments in transportation and cold storage infrastructure through PPPs or other Horticulture value chain: a) Assist the establishment of small holder farmer associations b) Assist farmer associations with extension services for mangoes and other crops Below are the overriding themes and suggestions across value chains and countries: Setting priorities. Often with encouragement from donors and development partners, all countries’ governments have played a role in identifying and setting out plans to support selected value chains and priority sectors for development. This is also evident through on-going development of CAADP Investment Plans. Although “picking winners” is sometimes considered ineffective, all the governments have practiced this with evidence that it works, e.g., Kenya´s success in the horticulture value chain. Some private investors interviewed stated that without a clear government vision or strategy for development in a particular sector or value chain, the government is often unwilling to create the kind of 7

dynamic growth environment that private investors need. Another setback noted was that governments’ designation of “key” value chains made it difficult for some private investors to participate in agribusinesses supplying different markets, e.g., maize for animal feed production rather than supply of food, and firms that process mangoes that cannot be exported in the fresh markets. Incentives for private investors. In the past, governments have provided specific incentives to producers and processors to expand production, processing and marketing. This is most typical for export products. But for domestic markets, governments offered little support for market development. In some cases, governments provided mixed signals, e.g., pricing, in a way that discouraged investments. There was perception that foreign investors get more support than local investors, giving the former comparative advantage. Some local private investors believed that they were not trusted or respected by their governments, and the formation of business associations is one way to build their voice, influence and respect. Infrastructure. Governments must accept the responsibility to provide adequate infrastructure, particularly transport/roads and power. Lack of infrastructure limited agribusiness growth in all countries especially through uncertainty and high transactions costs. The specific infrastructure services identified as limiting varied by country. In Ghana, for example, the cost of electricity, the quality of the interior road network, and the adequacy of storage for cereals were cited as major constraints. In Ethiopia, however, the cost of transportation and the poor quality of telecommunication were the culprits. Further, all governments under-invested in irrigation development. Although all of them were taking steps to remedy that, forging public-private partnerships in supporting infrastructure development is crucial to making progress. Other countries have made great strides through developing transport corridors that entail scaling up other complementary infrastructure investments such as energy and water alongside these road networks. Land. The ability to acquire suitable land for production is a major constraint for agricultural investors, especially when developing larger farms is necessary to achieve economies of scale. Quite often, there are conflicting rules governing property rights (e.g. customary or tribal rights versus written laws or rights; and rural versus urban use) that make acquisition of land a time-consuming and costly. Some countries, such as Kenya, have restrictions on the ability of foreigners to own land. Leasing land to foreign or diaspora investors has become common, but is often non-transparent, confusing and having potential for long disputes and litigation. Uncertain land and land use rights greatly inhibit private investment. When other related services such as the provision of irrigation water are involved, negotiations become even more constrained and drawn out for timely investment decisions. Integrating smallholders into an agribusiness. The inability of smallholder farmers to organize themselves into efficient associations or groupings, or produce consistently quality products hinders the capacity of integrating them into larger operations. Many smallholders are even unfamiliar with requirements of agribusinesses. Contacts in Ethiopia and Mali indicated that one of the greatest difficulties was ensuring sufficient smallholder 8

production to supply to established food processors. The skill level among smallholders, as well as among technicians and managers along the value chain, were cited as insufficient to achieve desired value chain performance. Capacity building at all levels, from production to processing and marketing was a major need. Government participation. Government interventions in some value chains, especially those of staple foods, increased market uncertainties and risks, and thereby discouraged private investment. There were a range of opinions, both positive and negative, on whether governments should subsidize inputs such as seeds and fertilizer, maintain buffer stocks of inputs or commodities to stabilize prices, or participate in warehousing and storage. Examples of poorly-located warehousing or processing facilities were cited as evidence that public investment in such infrastructure was inadequately geared to market conditions and needs. Others cited direct government interventions, e.g., in seed production and distribution, as crowding out potential private investment. Finance. Financing was a major issue for some private investors. Some believed that public agricultural development banks could provide more financial resources, especially medium to long term capital. However, these public banks lacked the capacity to perform needed due diligence across the wide range of agricultural value chains. Moreover, their political orientation made them vulnerable to crony capitalism. This is one reason why private investors have had to turn to international Development Finance Institutions (DFIs) and other sources of patient capital to seek concessional financing for longer-term needs of agricultural development. Financing for smallholders and cooperatives are also important. However, the costs and risks associated with financing these actors discouraged the involvement of private sources of financing. Where agriculture was prioritized, acquiring financing for services not directly linked to agricultural production was hard. For example, pre-production financing and financing for transportation are critical but were often not supported, even when contracts had been signed. Under-developed staple crop value chains. All of the value chains oriented to domestic markets were under-developed. There were not adequately meeting national or regional demand, producing the range of consumer products desired, or minimizing market price volatility through effective storage and processing operations. In many ways, Mali’s rice value chain was the most developed, but issues of achieving economies of scale, regional market development, and greater productivity were identified by private investors as hampering the realization of potential. Staple crop markets were subject to political interventions that responded to short-term changes in the national food security situation, e.g., export bans, price controls, state-led imports, or the establishment of public buffer stocks. While understandable, these interventions raised the risks for private investors in these staple crop value chains and undermined the confidence of farmers in markets. In fact, some staple crop value chains were only marginally competitive with imports, e.g., rice in Ghana and Kenya and maize in Kenya. But many investors believed that, given the growing food demand, there were great opportunities to increase efficiencies and productivity through greater private investment in these value chains. However, 9

government support in the form of tax holidays or concessional financing for certain nascent agro-industries, albeit on a phase out basis, was essential for food production for the local market. Competitiveness. All of the export horticulture value chains organized faced stiff competition from exporters in other countries. Only East African horticultural producers had begun to orient themselves toward Middle Eastern markets (taking advantage of their geographic proximity), but all the countries continued to see Europe as their major market. This competitive forced producers, processors, and shippers to maintain high quality standards and expedited delivery schedules. Meat export value chains – beef from Mali, beef, sheep, and goat meat from Ethiopia – were not mainly focused on European markets. Mali’s products were targeting regional markets in West Africa while Ethiopia was targeting the Middle East. Health standards, cold chain maintenance, and variable markets (with much competition from other sources) all posed serious problems to the performance of these value chains. Governments’ role in promoting and constraining investments and competitiveness in the agribusiness sector extends from overall macroeconomic stewardship and investment promotion to specific government actions throughout the value chain.

FINDINGS RELATING TO SPECIFIC VALUE CHAINS, BY COUNTRY In this section, we review briefly, by country: the current state of a key value chain; the potential for value chain expansion or growth; and the main constraints perceived to limit private sector investment in the value chain. We end with key recommendation(s).

ETHIOPIA MAIZE VALUE CHAIN Current Situation Maize is the most widely grown cereal crop in Ethiopia and has the highest current and potential yield from available inputs.3 An IFPRI diagnostic study of maize in Ethiopia indicated that a considerable yield gap still exists, however, and increases in maize productivity could help address the nation’s food security challenges. On-farm trial yields of maize resulted in yields of 4.7 tons/ha compared to the current average yield of 2.2 tons/ha.4

3

In 2008, Ethiopia was ranked third largest maize producer in Africa after South Africa and Nigeria, respectively. The FAO estimates that in 2008, maize production in Ethiopia was 3.8 million metric tonnes. 4 Shahidur Rashid et al, Maize Value Chain Potential in Ethiopia - Constraints and Opportunities for Enhancing the System, (IFPRI, 2010), page 2.

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Maize production in Ethiopia is predominantly carried out by smallholders who produce for both home consumption and local markets.5 On average, these producers have access to small plots of land (between 2 ha and 5 ha), utilize very limited amounts of purchased inputs, and market approximately 20% of their produce at harvest. 6 Land tenure security has been improved in recent years through a process of land certification, but there is no private market for farmland and acquisition of additional land is difficult. However, there is a relatively small number of maize farmers who operate farms between 50 ha and 500 ha in size. Some of the large farms specialize in the production of maize seeds for distribution to small-scale farmers by Ethiopia’s regional governments, and others produce maize for institutional buyers, processing companies, wholesale/retail markets in Ethiopia, and export. Recently, the Ethiopian government actively solicited the interest of large-scale private investors to produce a variety of crops, including maize.7 These investors are primarily foreign investors or members of the Ethiopian diaspora, and are encouraged, with a number of incentives, to develop large tracts of land in western Ethiopia (particularly in the regions of Gambella, western Oromia and Benishangul Gumuz). Figure 1 provides a schematic of Ethiopia’s maize value chain and shows a diversity of buyers. In terms of volume, rural and urban consumers account for the vast majority of buyers. Maize, a comparatively low cost source of calories and protein,8 is the food of poor consumers. The World Food Program (WFP) is an institutional buyer of the commodity for distribution through food assistance programs.

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Shahidur Rashid et al indicate that approximately 8 million holders grow maize in Ethiopia, compared to 5.8 million for teff and 4.2 million for wheat. Moreover, their study indicates that subsistence farmers grow maize on plots that average 2ha and market-oriented smallholders grow maize on plots that average 5ha. Source: Shahidur Rashid et al, Maize Value Chain Potential in Ethiopia – Constraints and Opportunities for Enhancing the System (IFPRI, 2010), page 2. 6 Ibid, page 16. 7 One of these companies is Karuturi Global, which is growing primarily maize on land over 20,000ha around Bako, Oromia in Ethiopia. In addition, Karuturi plans to grow maize among other crops in its large Gambella land holding. 8 Shahidur Rashid et al estimate that maize provides 1.5 times and 2 times the calories per dollar of teff and wheat, respectively. Source: Shahidur Rashid et al, Maize Value Chain Potential in Ethiopia – Constraints and Opportunities for Enhancing the System, (IFPRI, 2010), page 2.

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Figure 1. Ethiopia’s Maize Value Chain

Note: Cooperatives & Bureau of Agriculture procure some hybrid maize seeds from large farmers for resale at concessional terms to small-scale farmers.

The Government of Ethiopia has made an effort to improve the productivity of maize through attempts to increase the access and availability of hybrid maize seeds to Ethiopia’s smallholder farmers. In recent years, the government contracted with private sector growers to produce such hybrid seeds, generally on a significant scale. 9 IFPRI’s diagnostic study of maize in Ethiopia indicates that the private sector’s share of total production of hybrid maize seeds in Ethiopia increased from 28% in 2006 to 40% in 2008. 10 Seed producers indicated that much of their seed output is sold to local governments for distribution to small-scale farmers.11 Potential for Value Chain Expansion The government is targeting a 50% increase in maize production by 2015 by both increasing total land planted and volumes produced. A 2007 baseline is being used: 1.814 million ha planted to maize and 3.570 million tons produced.12 Additional lands available for maize production in Ethiopia are estimated at 1.4 million ha.13 To achieve this goal, the government is providing attractive incentives to large-scale investors by providing both attractive land rental rates and renewable lease periods. The establishment of the Agricultural Investment Support Directorate (AISD) in 2009 is expected to facilitate investor acquisition of land for agricultural development. It is not yet clear how these 9

Reviews of World Bank project documents on fertilizer supply in Ethiopia indicates that Ethiopia does not provide direct input subsidies to farmers, but instead provides farmers with inputs on credit. 10 Dawit Alemu and Rob Tripp, Seed System Potential in Ethiopia – Constraints and Opportunities for Enhancing Production, (IFPRI 2010), table 3, page 14. http://www.ifpri.org/sites/default/files/publications/ethiopianagsectorwp_seeds.pdf 12 February 2012. 11 Discussion with ILRI staff in January 2011. 12 Sourced from Ethiopia’s Cereal and Agro-Processing 5 Year Master Plan provided courtesy of UNDP-Addis Ababa in December 2009. 13 Frederic Mousseau and Granate Sosnoff (editors), Understanding Land Investment Deals in Africa – Country Report: Ethiopia, (Oakland Institute, 2011). http://www.oaklandinstitute.org/sites/oaklandinstitute.org/files/OI_Ethiopa_Land_Investment_report.pdf 12 February 2012.

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incentives will promote the growth of smaller-scale commercial maize production by Ethiopian farmers, or how they might be encompassed in the larger agro-industrial schemes. The government’s efforts to encourage private sector participation in the production and distribution of hybrid maize seeds have already resulted in a number of large private farms competitively producing hybrid maize in Ethiopia. However, private sector operators noted their lack of adequate access to breeder seeds, the difficult regulatory framework governing production and sale of improved seeds, and the difficulties they face in accessing commercial financing.14 All agreed that there is still a need for an improved maize seed system which effectively supports private sector participation and appropriate regulation by the government. The Ethiopian government continues to encourage the entry of large institutional buyers such as the World Food Program (WFP) into the Ethiopian maize market, and specifically that such purchases take place through the recently-established Ethiopian Commodity Exchange (ECX). Despite this, recent government interventions in the national maize market, such as banning cereal exports and instituting price controls on cereals, including maize, create disincentives to scaled-up “commercial” production and diminish the government’s credibility in effectively formalizing the market. Donors and development partners appear engaged in strengthening maize value chains, with the bulk of donor attention supporting public interventions to increase smallholder yields and improve market coordination. There is less emphasis placed on supporting and enhancing private sector participation throughout the value chain, and expanding the size of the market for greater development of the maize sector. Contacts also indicated that there is significant demand for commercially produced maize as feed for Ethiopia’s livestock industry (particularly poultry), but current volumes going to this market appeared to be low. As Ethiopia’s urban populations grow and incomes rise and increase demands for animal-sourced foods, there appear to be new outlets for maize producers in Ethiopia’s poultry and animal feed agribusinesses. In addition, it was reported that there is opportunity for increased regional trade within COMESA. It was suggested that maize exports to countries such as Kenya and Sudan could be expanded. Help from development organizations working within Ethiopia and neighboring countries could contribute to developing mechanisms that would enable crossborder trade in maize to grow. Constraints Limiting Private Investment Maize production is usually small-scale and of subsistence nature, and markets are typically local and are not well integrated across the country. The lack of a fully integrated 14

Dawit Alemu and Rob Tripp, Seed System Potential in Ethiopia – Constraints and Opportunities for Enhancing Production, (IFPRI 2010), table 3, page 14.

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maize market in Ethiopia has resulted in significant price volatility (with intra-annual price swings up to 40- 50%). Partly due to the lack of proper storage, most trading activity is conducted within three to four months after harvest and is not consistently available in markets. In addition, Ethiopian consumers with greater disposable income often prefer teff and wheat, which has put maize in the position of a non-preferred, low-price commodity. Trade of maize has only a few large buyers and limited maize processing activities (for food) in Ethiopia. The fragmentation of farms in Ethiopia and the limited use of modern inputs mean that relatively small volumes of grain are produced and even smaller amounts are marketed. The market is dominated by a series of traders or aggregators who work along the maize value chain, trading in small volumes of maize without the ability to effectively store maize. This augments the levels of risks and costs associated with marketed maize. The lack of appropriate storage facilities has reportedly resulted in high-post harvest losses of about 15-30%. 15 The Ethiopian government has experienced significant difficulty instituting transparent market interventions that reinforce farmer’s confidence in the market. The Ethiopian Grain Trade Enterprise (EGTE) was established by the government to lead price stabilization, but it has been criticized in its handling of past supply shocks by (1) not instituting a clearly defined price floor (in 2001/2), and (2) intervening on an ad hoc basis, rather than on a transparent and predictable basis.16 EGTE has also been responsible for instituting price controls and export bans, adding further uncertainty to maize markets in the country. Limited urban demand for maize and the underdeveloped maize agro-processing sector has meant that the servicing of the animal feed sector with crushed maize or byproducts from maize processing for food has been limited. While the Ministry of Agriculture has placed significant emphasis on expanding extension services and has programs to provide improved seed and fertilizer for maize production, input supply (and credit) has been irregular. Private sector involvement in input supply has been limited. There have, however, been recent efforts to encourage private sector participation in input supply (e.g., hybrid seeds and livestock semen). The new Agriculture Transformation Agency also envisions the clarification of public and private roles in input supplies as is evident in the recently released “5 Year Roadmap toward Vision for the Seed Sector”.

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Shahidur Rashid et al, Maize Value Chain Potential in Ethiopia – Constraints and Opportunities for Enhancing the System, (IFPRI, 2010), page 2. 16 Ibid.

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Table 2. SWOT Analysis of Ethiopia’s Maize Value Chain Strengths Weaknesses Relatively competitive private sector Low productivity due to fragmented farms capacity (compared to public sector) in the and limited input use production of hybrid seeds Demand for maize in humanitarian High levels of post-harvest losses including assistance and from institutional buyers high prevalence of aflotoxin High yield potential when coupled with inputs

Weakness in public sector regulatory oversight

Opportunities Latent demand for maize in animal feed market

Threats Ambivalent role of Ethiopian Grain Trade Enterprise interventions, export bans and price controls Extensive government interference in input markets inhibits private sector suppliers Lack of transparency and oversight of land leasing leads to future conflict/litigation Adoption by neighboring countries of selfsufficiency policies thereby inhibiting cross country trade

Potential opportunities for regional trade to Kenya and Somalia

Key Recommendations: a) Facilitate access to breeder seed including the development of a supportive regulatory environment for private seed producers; b) Facilitate investments in storage capacity at all levels through PPPs or other; and c) Encourage cross-border trade in cereals and the entry of institutional buyers MEAT VALUE CHAIN Current Situation Ethiopia has one of Africa’s largest livestock populations. In 2009, the FAO estimated that Ethiopia had cattle, sheep and goat stocks of 50.9 million, 22.0 million and 26.0 million, respectively.17 Cattle production in Ethiopia is primarily carried out by pastoralists in South-Eastern Ethiopia. They supply animals to abattoirs that feed the export market and consumers in Ethiopia in addition to engaging in unofficial cross-border trade in live animals. More recently, operations that integrate meat production and processing plants with cattle ranching are emerging.18 17

Data retrieved from FAOSTAT on 19 March 2011. Elfora, a Midroc company, emerged in 1997 with the acquisition of eight livestock and meat processing plants totaling $54.7 million. One of Elfora’s plants, the Melge Wondo Meat Plant is utilized exclusively for the export of beef carcass to Egypt, see http://www.ide.go.jp/English/Data/Africa_file/Company/ethiopia02.html 18

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Overall, Ethiopia is well located geographically in order to meet the demands of the very large animal and animal product importers in the Middle East and North Africa (MENA) region. The United Arab Emirates and Saudi Arabia are currently Ethiopia’s top two meat export destinations. These two countries alone imported $294.6 million worth of cattle, sheep and goat meat in 2008. Across the MENA region, beef imports in 2009 and 2010 were estimated at 1 million tons and 1.3 million tons, respectively.19 The Potential for Value Chain Expansion The Ethiopian government designated meat exports as a high priority for growth, due to the size of the livestock resource base and the majority of the rural population relying on livestock for their livelihoods. The creation of a Livestock Development Master Plan Study is intended to guide this development. To date, the government has collected and inventoried sector-wide data and is currently contracting services for the development of a livestock investment master-plan that covers the next twenty years.20 Bankable livestock value chain investment projects are to receive attractive tax incentives, priority land access, and attractive financing terms from the Development Bank of Ethiopia. Exporters, including livestock and meat exporters, are generally provided with the following tax incentives:  a 100% exemption from import customs duty and other taxes levied on the importation of raw materials. Taxes and duties paid on raw materials and packaging materials are drawn back at the time of export of finished goods;  the exemption of income tax on income derived from a new approved investment for two to eight years, depending on the area of investment, volume of export and the location in which the investment is undertaken;  the exemption of income tax on income derived from expansion or upgrading an existing manufacturing, agro-industrial or agricultural enterprise for a period of two years if it exports at least 50% of its products and increases, in value, its production by 25%;  ability of business enterprises that suffer losses during the tax holiday period to carry forward such losses for half of the income tax exemption period, after the expiry of such period; and  foreign investors are entitled to make remittances out of Ethiopia in convertible currency at the prevailing rate of exchange on the date of remittance. To monitor progress toward established agricultural export goals, including the goal of increased live animal and processed meat exports, a National Export Committee chaired by

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See news article http://www.thebeefsite.com/news/33038/middle-east-north-africa-beef-imports-to-grow Request for Expression of Interest – The Federal Democratic Republic of Ethiopia Ministry of Agriculture and Rural Development Livestock Development Master Plan Study, African Development Bank, 2009, http://www.afdb.org/fileadmin/uploads/afdb/Documents/Project-relatedProcurement/EOIEthiopiaLivestock%20%2012-09.pdf 8 April 2011 20

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the Prime Minister attempts to address problems facing exporters and meets once a month to evaluate overall progress in Ethiopia’s exports. Ethiopia’s export earnings from officially-recorded livestock exports have been on a dramatic upward swing (albeit from a very low base) in the past decade.21 Between 2000/1 and 2009/10, meat export volumes increased dramatically. Meat exports increased from 870 tons to 10,300 tons (US$1.7 million to US$34 million)22 and exports of live animals exploded from 4,919 animals to 334,000 animals (US$0.2 million to US$91 million).23 Ethiopia exports primarily to the Middle East, where live animal demand is the greatest. There have been attempts by the government and private sector actors to add value to Ethiopia’s meat exports by exporting canned meat and frozen meat, but it is reported that the existing infrastructure in Ethiopia has inhibited the production of competitively-priced frozen meat exports. Donors and development partners provide strong support for Ethiopia’s livestock sector. USAID provides a wide range of support through research, marketing, livelihoods, and livestock is a continued priority in its Feed the Future program in Ethiopia. Development organizations such as the International Livestock Research Institute (ILRI) have also been very active within the sector. Figure 2. Ethiopia’s Meat Value Chain Regional Export of Live Cattle e.g. Middle East Pastoralists (South Eastern Ethiopia)

Inputs

Domestic Market

(Veterinary Services, Animal Feed)

Private Ranches

Slaughter/Abattoir

(Very few players e.g. Elfora)

(e.g. Ashraf Group)

Chilled Meat for Export

The opportunities for further development of Ethiopia’s livestock value chains, particularly the export-oriented aspects, reportedly include:  increase reproductive performance and offtake through the improved public and private provision of inputs, i.e., veterinary services, animal feed, etc.;  development and adoption of scalable solutions that tackle communicable livestock diseases, e.g., setting up of cordoned, disease-free zones, 21

In addition, there is a significant informal cross-border trade in live animals, which has been estimated to be between $150 million to $300 million per year. 22 Trade Bulletins 1 and 2 of the Ethiopia Sanitary & Phytosanitary Standards and Livestock & Meat Marketing Program. 23 Ibid.

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 

increase the organization, communication, and trust among various actors in the value chains, and upgrade logistical infrastructures to enable private sector actors to compete more effectively in higher-value export markets, perhaps through public-private partnerships with the Ethiopian government.

Constraints Limiting Private Investment A diagnostic study of Ethiopia’s live cattle value chain indicated that input constraints (feed and water) and limited access to appropriate health services are primarily responsible for the currently- low reproductive performance of animals. 24 The lack of publicly-provided animal health care services and disease surveillance by the Ministry of Agriculture has reportedly dramatically impacted exports. The low provision of vaccinations and treatments to cattle and the limited capacity to administer national-level disease surveillance in Ethiopia’s livestock have led to outbreaks of common diseases in the region, e.g., Rift Valley fever or foot and mouth disease. These strongly affect the potential of Ethiopian animals to enter into international trade. Outbreaks in recent years resulted in blanket bans being imposed on Ethiopia’s key exports by buyers in the United Arab Emirates (UAE) and Saudi Arabia, for example, during the period January to September 2007 and from the first week of March to the first week of May 2009. 25 There is some question whether these bans were imposed for reasons of health and food safety, as asserted, or whether they were motivated by political or other market reasons26. Despite some setbacks, the government has taken steps to establish Disease Free Zones (DFZs) of around 125,000 square km in Ethiopia’s cattle-producing areas of Afar, Borena and Ogaden. These will be demarcated in order to monitor livestock and necessary disease surveillance. DFZs will be complemented by designated Export Zones, where certain areas are declared free of certain diseases and measures are in place to satisfy the requirements of a particular importing country, and will administer a system of examination and certification of livestock for export. Pastoralists’ cultural attitudes toward commercialization of cattle are also believed to constrain supply chain development. Short-term thinking, lack of organization at the pastoralist level, and high-levels of mistrust among value-chain actors have hindered coordination of efforts to increase value in the animal/meat supply chains. Abattoir owners mentioned, for example, that pastoralists attempt to increase the weight of their cattle by providing them with significant water prior to sale. The government has identified support to pastoral cooperatives as a way to help improve coordination and collaboration between the export-oriented abattoirs and cattle-producers in Ethiopia.

24

See Diagnostic Study of Live Cattle and Beef Production and Marketing – Constraints and Opportunities for Enhancing the System (ILRI, 2010) 25 See page 2 of Trade Bulletin 1of Ethiopia Sanitary & Phytosanitary Standards and Livestock & Meat Marketing Program 26 Based on discussion with sector expert Dr. Wondwossen of SPS-LMM

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Issues regarding the location, design and capacity of the abattoirs27 processing meat for export also emerged as undermining Ethiopia’s competitive position in chilled/frozen meat exports. Only two abattoirs in Ethiopia were identified as modern, large and well-designed: the Abergele International Livestock Development Plc. (AILD PLC) in Mekelle and Ashraf Group’s in Bahir Dar. However, these abattoirs are not located where the livestock are produced for export, i.e., in South-East Ethiopia. Two other abattoirs, Luna Export and Mojo, are better suited for export processing due to their more central location, but they are inadequate in size and in need of capital investments to improve design. Further infrastructure constraints noted surrounded logistical capacity (trucks, cold storage, etc.). Some contacts believed that these areas need significant upgrades and investment before the country is able to competitively export, especially perishable (chilled/frozen) meat products. Presently, some processors believe that Ethiopia is only competitive in airfreighting chilled sheep/lamb by air to the Middle East. Infrastructure investments might be most usefully prioritized through closer consultation between public and private actors in the value chain, or through public-private partnerships (PPPs) which would reduce risks for the private sector while mobilizing additional public support. One such example is a USAID-supported project that is working together with the Ethiopian government and Ethiopian Meat Producer and Exporters Association (EMPEA) to develop cold-storage logistical solutions to enable Ethiopia to competitively market, produce and export beef and other perishable meat products by sea. However, there are questions around the Development Bank of Ethiopia’s capacity to effectively determine bankable projects when providing loans to this sector, as evidenced by the investments in poorly-located abattoirs.

27

Abattoir design is critical for meat quality and there are only two large, well-designed, modern abattoirs in Ethiopia; these are Abergele in Tigray region, which is owned by EFFORT and Ashrafe in Amhara region, which is owned by a private Sudanese investor

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Table 3. SWOT Analysis of Ethiopia’s Cattle-Meat Value Chain Strengths Weaknesses Established and large livestock sector Low livestock reproductive performance and off-take Favorable location for exporting to MENA Prevalence of diseases in Ethiopian and region High priority by government and existence Lack of organization at the pastoralist level of comprehensive sector master plan and mistrust among value-chain actors Strong donor support including USAID and Inadequate infrastructure including poor USDA location of existing, large abattoirs Public sector support for productivityWeakness in public sector´s capacity for enhancement including bull semen and disease surveillance and health services artificial insemination stations provision Opportunities Considerable and growing demand for meat products in MENA Scalable solutions that tackle communicable livestock diseases (diseases-free zones)

Threats Human resource limitations in professional management and business support services Institution of bans by MENA countries, which professionals deem to be not scientifically-based.

Opportunities for PPPs to upgrade sector´s logistical infrastructure Productivity levels and off-take responsive to input provision (vet services, quality feed) Key Recommendations: a) Invest in strengthening pastoralist associations; b) Encourage entry of private sector service providers such as in veterinary services provision and animal feed; c) Enlist the private sector assistance in disease surveillance; and d) Facilitate sector investments by promoting certifications and structural upgrading through PPPs. HORTICULTURE VALUE CHAIN Current Situation Ethiopia’s climatic conditions and the availability of irrigable land provide ideal conditions for the cultivation of a broad range of horticultural products. While Ethiopia has not traditionally been a major exporter of these products, the country witnessed a significant increase in production of fruits and vegetables for exports in recent years. Contacts with growers and processors of passion fruit, mangoes, papaya and avocados in the Upper Awash valley indicated that these value chains are increasingly developed. In just a four20

year period, starting in 2005, horticultural exports increased as a share of Ethiopia’s agricultural exports from 3% to 12%.28 The Ethiopian government has taken the lead in identifying Ethiopia’s horticulture sector as a priority export sector and supporting its growth. Bankable investment projects in horticultural production for export are provided attractive tax incentives, priority in land access, and attractive financing terms from the Development Bank of Ethiopia. In addition, the recently-created Horticultural Development Agency, an autonomous agency within the Ministry of Agriculture, is mandated to ensure the sector’s fast and sustainable growth. The government has also played a central role in shaping the sector’s development by identifying the main crops and setting targets around the total land to be allocated. In the 2005/6 to 2009/10 five-year plan, a total of 3,000 ha of land were allocated for fruits and vegetables. Mangoes, avocados, bananas, pineapples, apples and vegetables (such as green beans, tomatoes and zucchini) were deemed priority crops.29 In the 5-year period from 2010/11 to 2014/15, the government intends to bring a total of 15,000 ha allocated to fruit and vegetables for export. The government is also attempting to mitigate skill-deficiencies in the labor market by establishing centers for technical training such as the Horticulture Practical Training Center (HPTC) and clustering development in certain geographical zones. Potential for Value Chain Expansion Ethiopia offers competitive advantages in supplying horticultural products to Europe and the Middle East. This is supported in part by a well-developed air transport system out of Addis Ababa, where Ethiopian Airlines is constructing a new perishable cargo center at the airport. There are also plans to develop a larger, central facility for sorting, grading, packaging, pre-cooling, and storage. Timing of production seasons in Ethiopia is also advantageous. Vegetables for export in Ethiopia are mainly harvested from September/October to March, which coincides with winter in Europe. Moreover, Ethiopia’s geographic proximity to the Middle East and Gulf markets provides an advantage, as there is significant demand for fresh horticultural products in those markets. The head of the Ethiopian Investment Agency underscored the abundant, trainable labor-force in Ethiopia as well as the efforts by the Ethiopian government to ramp up Ethiopia’s infrastructure (electricity, roads, and water) in support of Ethiopia’s ambitious growth plan. A genuine effort by government to attract private sector investments into any exportoriented horticultural production is widely perceived. In addition to production, there are thought to be opportunities for public-private partnerships in the horticultural sector to: (1) upgrade needed infrastructures (e.g., cold storage facilities) and (2) promote sectorwide best practices that would improve the conduciveness for investment and improve the marketability of the Ethiopian brand. Anecdotal evidence suggests that private sector 28

Tsegay Lubelu, Ethiopian National Position Paper - (Ethiopian Horticulture Development Agency, 2010), http://www.globalhort.org/media/uploads/File/Video%20Conferences/VC4_Position%20Paper%20Ethiopia2.pdf 29 Frank Joosten, Development Strategy for the Export-Oriented Horticulture in Ethiopia,(Wageningen Ur, 2007), http://library.wur.nl/way/bestanden/clc/1891396.pdf

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investors in Ethiopia’s horticulture sector are inhibited by continued experiences of delays in acquiring land leases and difficulties in negotiating the length of the lease period. In addition, government efforts to discourage speculation on land by repossessing uncultivated land have been deemed by some private sector investors as problematic. Constraints Limiting Private Investment Many of the foreign investors in Ethiopia’s export-oriented30 horticulture sector have criticized Ethiopia’s tight foreign exchange regime and limitations on the participation of foreign banks as it makes international transactions and transfers cumbersome, and curtail the repatriation of foreign exchange earned on exports. Institution of policies that would increase foreign participation in the banking and telecommunication sectors has been met with stiff resistance by policy makers. In addition, there are several concerns around the absence of trained workers in the labor market, as well as shortages on the logistical side such as the transfer, storage, and inspection of goods. Across the horticultural value chain, there is a lack of well-trained individuals and business service providers. As a result, a significant number of enterprises bring in their skilled manpower from abroad, particularly, Kenya and India. For example, AFRICAJuice brought processing-line engineers from India because the skilled personnel were not available in Ethiopia. Local packing supplies that meet international standards are lacking, and there are a limited number of appropriate cold storage facilities in Ethiopia. There is a lack of adequate pesticide regulation and weak phyto-sanitary inspection being provided by the government. These hurt the “Ethiopian” brand name overseas. Effectively marketing horticultural products in the highly competitive international market requires an ability by producers to respond quickly to changes. This ability to respond by Ethiopian horticultural producers is severely constrained by (i) the skill levels across the value chain and (ii) a weak telecommunication infrastructure.

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Our interviews highlighted that export-oriented horticulture and floriculture in Ethiopia incorporated a greater number of established foreign investors as compared to other agricultural value chains. There are, however, such as Karuturi and Midroc Group that have been involved in the horticulture sector and are expanding into other agricultural value chains.

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Table 4. SWOT Analysis of Ethiopia’s Horticulture Value Chains Strengths Weaknesses Favorable climatic conditions for growing Limited availability of local packing supplies horticultural products and cold storage facilities High priority by government including tax, Tight foreign exchange controls and finance and rent incentives limitations on participation of foreign banks Favorable location and air transport system Weak capacity for phyto-sanitary inspection for exporting to Middle East and Europe Inadequate pesticide regulations Opportunities Abundant, trainable and relatively cheap field labor force Opportunities for PPPs to upgrade sector´s logistical infrastructure Establishment of industry-led training hubs

Threats Human resource limitations in professional management and business support services Increasing SPS standards in importing countries Limited oversight for environmental impacts of water and chemical usage in peri-urban areas

Key Recommendations: a) Provide incentives to private sector ancillary service providers (graders, inspectors, transport and packaging companies); b) Develop PPPs in human resources development; and c) Ease foreign exchange controls to facilitate international transactions.

GHANA MAIZE VALUE CHAIN Current Situation Maize is a major staple crop grown in Ghana, with production averaging 1.33 million tons per year from 2005 to 2009. 31 In 2006, 73% of maize produced nationally was reportedly either consumed at the farm level or informally traded. The remaining 27% was either formally traded for human consumption or as poultry and fish feed.32 Estimates are that 90% of the land under maize cultivation in Ghana is comprised of plots of less than 1 ha.33 Maize yields in Ghana are relatively low, about 1.6 tons/hectare, but there is potential for

31

FAOSTATdata accessed 27 June 2011. See page 8 in WABS Consulting’s Draft Report titled Maize Value Chain Study in Ghana, Enhancing Efficiency and Competitiveness, (WABS Consulting, 2008). 33 Ibid, page 8. 32

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increased productivity, with yields of over 8 tons/hectare recorded in demonstration farms.34 Maize farming in Ghana today is perceived to be inefficient and uncompetitive.35 Small farm sizes are believed to pose significant obstacles to increasing needed investments in agricultural inputs; conflicting regulations over land rights make it difficult to scale up farm sizes. Moreover, aggregating production from the various small-scale producers augments the transaction costs of getting the maize to market. Size is not the only barrier to competitiveness, however, as even large, commerciallyoriented maize farms in Ghana find it hard to compete with imported maize. Ghana’s largest maize farm, Ejura Farms, which produces on over 14,000 acres36 (~5,665 ha), has found itself unable to meet import prices, in part because of the high costs of imported production inputs, but also because agricultural subsidies for maize farmers elsewhere (as in the U.S.) enable low-price exports.37 Despite this outlook, the government is actively supporting private investors to establish large-scale farms in order to increase food production and contribute to food security. In 2009, for example, Kwanim Ghana Denmark (GDK) Farm, a joint Ghanaian-Danish private investment, was established on 22,000 ha, with active support from the Ghanaian government, for the purpose of cultivating maize and soybeans.38 Potential for Value Chain Expansion In general, experts believe it is possible for Ghana’s farmers to more than double yields from the national average levels by improving farming practices and utilizing higheryielding varieties. Whether this increased productivity will translate into a reduction in farm acreage planted to maize (with the released land devoted to other crops) or to an expanded volume of marketed maize will depend on the demand and the capacities of the agribusiness players in the maize value chain. There is evidence which suggests that demand for maize is stagnant, meaning that land would be converted to other crops. Still, it appears that a sizeable national population (25 million), and a growing urban population that is increasingly removed from farms and rural village roots, would support the development of commercial mills providing easy-to-cook maize meal. Population growth, however, appears to be balanced by annual declines in per capita maize consumption. A growing middle class will want to eat more protein in the form of poultry or fish, the local production of which will increase the need for locally-milled maize as the basis of animal feed. The Ministry of Food and Agriculture estimated that 110,000 tons of 34

Ibid, page 7. Ibid, page 11. 36 See news article titled Give Ejura Farms Water to Survive, Article on Ghana Districts.com at http://www.ghanadistricts.com/news/?read=8287 37 See video titled Competing with Imported Maize in Ghana, on 5 minLife Videopaedia, http://www.5min.com/Video/Competing-with-Imported-Maize-in-Ghana-458397579 38 See news article titled Multi-purpose farm is established at Afram Plain on Ghana Web http://www.ghanaweb.com/GhanaHomePage/NewsArchive/artikel.php?ID=161783 . 35

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poultry and beef products and 130,000 tons of fish products are imported annually. According to most contacts, however, the broiler industry is very weak and underdeveloped at this time and is not purchasing large amounts of maize as feed. Only 150,000 tons are currently sold for commercial feed production. These sizeable markets could be attractive for investments into local production for import substitution, and could drive up the demand for maize as a feed product. The consumption of beer is also projected to rise with growing incomes, which could create an additional commercial market for maize. Again, there is a significant potential for growth of local inputs. Now, just 25-40,000 tons of local maize goes to breweries, when their annual requirement surpasses 200,000 tons.39 Constraints Limiting Private Investment Constraints to building a more robust value chain include: issues with input supplies for farmers, a mismatch between the qualities of maize demanded and those supplied, lack of irrigation in potential production zones, and, possibly, producer credit. Input supplies to support production do not seem to be a problem at first glance. There is a robust presence of agricultural input retail service providers throughout Ghana which are mostly supplied by large national importers.40 There is a strategic alliance between Wienco (general agri-supplier) and Yara (fertilizer importer and distributor) to supply improved seed, fertilizer and other inputs to farmers, through commercial associations, in northern Ghana on the basis of advances against purchase contracts for future maize production. This partnership has been very successful in encouraging surplus commercial production and demonstrates a positive role for private sector investment in the sector. Since 2007, the Ghanaian government has also implemented a subsidized fertilizer voucher system (worth approximately 50% of the fertilizers’ price). In addition, it has increased the provision of capital inputs such as tractors and established mechanization centers across the country. But lack of improved seeds is a large constraint to increasing production. The history and experience of private seed companies in Ghana has not been very successful. The commercial market for improved maize seed is only now becoming a reality with the passage of the new Seed Law, and more attention will have to be paid to matching production capacities with demand. For example, Ghana’s farmers produce primarily white maize, which is used for food, while imported yellow maize is used in animal feed. There will be a need to develop and integrate new seed varieties into production and to shape value chains toward specific markets. Recent steps by the government to encourage local supply have been broad-brush, such as the banning of the importation of white maize and import restrictions on yellow maize. It is not clear that these will contribute to appropriate differentiation of maize value chains. 39

See page 8 in WABS Consulting’s Draft Report titled Maize Value Chain Study in Ghana, Enhancing Efficiency and Competitiveness, (WABS Consulting, 2008). 40 Ibid, page 25.

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The role of processors in the value chains will also be important to link producers to markets. Currently, Ghana’s maize milling sector is reportedly very weak. The largest miller, Ghana Agro Food Company Limited (GAFCO), is unable to purchase volumes to assure throughput for milling year-round and lacks storage capacity to be able to buy maize when prices are low. Advances in this segment of the value chain could help to increase production volumes demanded, stabilize producer prices, and assure steady volumes of processed commodities. The best maize growing land is in the far north of Ghana, where there are not readily available irrigation schemes to allow for double cropping which would maximize return per hectare. Other areas that are very promising for maize production are the Affram Plains and areas west of Lake Volta; these, unfortunately, have very poor infrastructure facilities, including roads and power. There was little information on the broad availability of credit for players in the value chain. However, the Ghana Grains Council (GGC),41 with other implementing partners, is beginning to institute a warehouse receipt program, with the aim of incentivizing smallholder maize growers by ensuring attractive financing from stored grain, backed by the receipt system. The GGC hopes to utilize this system in seven of Ghana’s warehouses, located at varying places within the country. Table 5. SWOT Analysis of Ghana’s Maize Value Chain Strengths Weaknesses Robust network of private agricultural Small average farm size and dispersed input suppliers producers Potential to more than double yields with Weak maize milling and storage sector better farming practices and higher yielding varieties Government support for cereal self- Inadequate seed supply systems for maize sufficiency Opportunities Threats Increasing urbanization is providing market Poor irrigation and transport infrastructure opportunities for maize products Opportunity to develop a robust animal Complex process for the acquisition of land feed sector that utilizes maize for agriculture given the state and tribal land regimes Key Recommendations: a) Facilitate varietal release protocols for maize seed and encourage private seed production; 41

The Ghana Grains Council was established as a legal private sector entity on 18 March 2010 with support from USAID that aims to represent and advocate on behalf of all participants and service providers in Ghana’s grain industry. See GCC’s website http://ghanagrainscouncil.org/index.php?option=com_content&view=article&id=3&Itemid=9.

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b) Develop PPPs in transport, milling and storage infrastructure; and c) Streamline process for obtaining land rights, including those for aggregating land holdings. RICE VALUE CHAIN Current Situation A fast-growing demand for rice by Ghana’s increasingly wealthy consumers is driving interest in expanding Ghana’s own rice production. The country’s National Rice Development Strategy projects rice consumption to increase to 1.68 million MT by 2015 as Ghanaians continue to move into urban areas and enjoy higher levels of income, a trend that will likely be accelerated with the discovery of offshore oil.42 At a per-capita level, rice consumption is projected to increase from 30 kg in 2008 to 63 kg in 2018. 43 Ghana’s rice production in 2008 provided approximately 30% of the 600,000 MT consumed that year, with between 120,000MT and 180,000 MT of rice milled from locally grown rice. 44 Rice is presently grown in the Accra Plains east of Accra and in the northern regions of Ghana. Commercial rice mills are available in Tamale, in the north, and in Wora Wora in Eastern Volta.45 With the exception of two irrigated schemes in Tamale and in the Prairie Volta in Aveyime, which cultivate about 1000 acres each and have plans to add up to 800 acres, the predominant method of rice production is on rain-fed lands managed by smallholder farmers. 84% of Ghana’s total production is rain-fed and the remaining 16% is irrigated.46 Through the Ghana Investment Promotion Center (GIPC), Ghanaian authorities are making a concerted attempt to attract private investments in rice production and processing. GIPC is providing incentives such as duty-free imports of agricultural equipment, fiscal incentives and tailored assistance to investors. According to GIPC officials, there are nearly 7 million acres (~2.8 million ha) of arable land in Ghana presently not being cultivated, so expanding acreage for rice cultivation is an option. The Ministry of Food and Agriculture (MOFA) is reported to be able to assist in accessing arable land. Ghana, alongside development partners, is attempting to improve the land 42

See page 3 of the Ghanaian government’s National Rice Development Strategy, http://www.jica.go.jp/english/operations/thematic_issues/agricultural/pdf/ghana_en.pdf 43 Olfa Kula and Emmanuel Dormon, Attachment I to the Global Food Security Response – West Africa Rice Value Chain Analysis,(ACDI/VOCA, 2009), page 3 44 Ministry of Food and Agriculture’s National Rice Development Strategy, (Ministry of Food and AgricultureGhana, 2009), page 1. 45 Many of Ghana’s large rice mills have been privatized with the government of Ghana, however, holding a minority share interest. Aveyime Rice Project, for example, is owned 40% by Prairie Volta of the U.S., 30% by Ghana’s Commercial Bank, and 30% by the Ghanaian government. See article on Ghana Districts titled Aveyime Rice Project, Ahwoi Upbeat http://www.ghanadistricts.com/news/?read=24515. 46 Olfa Kula and Emmanuel Dormon, Attachment I to the Global Food Security Response – West Africa Rice Value Chain Analysis,(ACDI/VOCA, 2009), page 3

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tenure system. Currently, Ghana is implementing Phase II of the Ghana Land Administration Project – a World Bank and Canadian International Development Agency (CIDA) funded project – that attempts to remove business bottlenecks, promote transparency and address various challenges in Ghana’s land tenure system.47 Attention is reportedly also being directed to other interventions that could support the rice value chain: improving research and extension, promoting micro-finance, building ricestakeholder capacity, improving communication and collaboration, promoting private sector partnership, developing rice information systems, improving seed supply, and addressing gender, human health and sound environment management.48 Potential for Value Chain Expansion Generally speaking, the soils around the Volta Lake and downstream from the Akwosombo Dam are very fertile and accessible to irrigation schemes. With improved varieties and double-cropping, yields of 7-8 tons per acre are believed to be achievable. Quality standards for production must also be achieved. Current rice imports to Ghana are typically high-quality rice (i.e., low percentage of broken rice) from Vietnam, Thailand and Taiwan. A 2006 study indicated that 5.5% of all rice imported to Ghana was Grade 1 and 51% was Grade 2. According to one large-scale producer in Ghana, Prairie Volta Rice, there is a strong preference by the consumer for locally-produced rice when high quality is maintained, and specific varieties such as perfumed, long grain rice are preferred. With such discerning local consumers, where price sensitivity is not as critical as in many other African countries, there seems to be ample opportunity to expand the Ghanaian rice value chain to meet their needs. Constraints Limiting Private Investment Key challenges reportedly lie in organizing sufficient production of paddy, either on nucleus estates or in assemblages of small growers, and improving seed variety development and distribution. In addition to encouraging private investors to acquire land for production, the government appears to be ready to leave input supply totally in private hands which creates attractive opportunities for the private sector, as evidenced by Wienco and Yara. Further, the West Africa Rice Institute is testing and developing new rice varieties, with a focus on a new variety incorporating material from Vietnam that could yield up to 8-10 tons/acre. This rosy outlook is tempered by Ghana’s record of poor performance of rice production in recent years. Both the total quantity and the average quality of Ghanaian rice have been well below expectations. The GFSR Ghana report indicates that Ghana does not produce any Grade 1 rice and that only 4.3% of Ghana’s domestic rice is of Grade 2 quality. 82.6% of 47

See the World Bank’s reports on Ghana’s Land Administration Projects (i.e., 1 and 2) on the World Bank’s website. 48 See Annex 2 of the Implementation Completion and Results for Phase 1 of Ghana’s Land Administration Project, World Bank report no. ICR00002083.

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Ghana’s domestic rice is of Grade 5 quality. Post-harvest handling and milling are obviously critical to improve quality to meet consumer demands. Further, the task of acquiring appropriate land for rice cultivation has been more timeconsuming than anticipated. Getting both the national and tribal authorities onboard with respect to large-scale land projects has been difficult. Even with MOFA help, the reality of assembling land in sufficient scaled-up quantities (i.e. several thousand acres for starters) is quite complex. There is also a lack of Government capacity to implement regional water retention schemes that would provide the supplemental irrigation water that private producers would need to tap into. Farmers’ organizations reportedly lack capacity to ensure smallholder participation in the rice value chain, even when commercial companies are providing some support services. Some associations are merely “associations of convenience.” Others, especially when tied into the value chain by commercial companies such as Wienco, which pre-finances inputs and guarantees purchase of product, seem to perform well. Table 6. SWOT Analysis of Ghana’s Rice Value Chain Strengths Weaknesses Increases in population and income Poor performance as measured in yields and levels imply foreseeable growth in quality demand Active private sector involvement in Poor perception of quality of local brands input supply Opportunities Threats Fertile land accessible to irrigation Land acquisition process is complicated around Volta Lake and downstream from Akwosombo Dam Weakness in government conception and implementation of regional water retention program Import liberalization policies, which threaten domestic rice production in favor of imported milled rice from South East Asia. Key Recommendations: a) Continue efforts to improve varietal releases and encourage private seed production; b) Encourage PPPs in irrigation; and c) Streamline and facilitate process for aggregating land holdings.

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HORTICULTURE VALUE CHAIN Current Situation Ghana has emerged as a significant exporter of horticultural produce, particularly fresh fruits, over the past twenty years. Between 1994 and 2006, Ghana’s horticultural exports increased fivefold, from $9.3 million to $50 million.49 Good climatic conditions and reasonably good soils have provided Ghana a comparative advantage for the cultivation of a variety of tropical fruits and vegetables. The leading fruit and vegetable exports from Ghana are pineapples, bananas, mangoes and papaya, as well as yams, chilies and vegetables.50 The horticultural processing industry, particularly fruit pulping, juicing and drying, has recently experienced substantial growth, with the overall value of semiprocessed and processed fruits estimated to have increased from 2.7% of Ghana’s total fruit exports in 2003 to 19.1% of Ghana’s total fruit exports in 2009.51 Ghana’s proximity to Europe has made that region the principal customer for its horticultural exports, and Ghana enjoys logistical advantages over its Latin American competitors. Sea-freight from Ghana to southern and northern EU ports results in shipping periods of 9 and 13 days, respectively, compared to Latin American exports that require 16 to 20 days, respectively.52 Air freight from Ghana to the EU takes only six hours. Some Ghanaian horticultural exporters have also managed to comply with the rules of fair trade certification, further increasing their competitive advantage in strict European markets. Among the numerous fruit processors and fresh fruit exporters that have established themselves in Ghana are: Don Simone (pineapples for Spain); Fruitiere/Golden Exotics (fresh fruit for Europe); and Blue Skies (fresh cut and individually packed fruit for UK). In spite of the competitive edge provided by the transport connections with Europe, Ghana’s horticultural exporters face stiff competition from Latin America producers and processors. Introduction of a new variety of pineapple by Dole in Latin America, the MD2 variety, demonstrated just how important this competition could be. The new variety became preferred in Europe very quickly. Ghana’s horticultural sector was initially very slow to respond. As a result, Ghana’s pineapple exports fell from 44,000 tons in 2003 to 35,000 tons in 2007.53 Now, Ghana’s commercial producers have adapted, but not all of 49

See page 15 of Denise Wolter, Ghana – Agriculture Is Becoming A Business,(OECD Development Centre, 2008). Peter Jaeger, Ghana Export Horticulture Cluster Strategy Profile Study, Part I – Scoping Review, (Accord Associates LLP, 2008) 51 FAO data indicates that between 2003 and 2009, the export value of semi-processed fruits increased by 222% from $1.073 million to $3.457 million. Key to this growth has been the exports of orange juice, which increased from $5,000 in 2003 to $1,461,000 in 2009. Export value of fruits, on the other hand, decreased by 62% from $38.883 million to $14.629 million. 52 See page 100, Martin Webber, Using Value Chain Approaches in Agribusiness and Agriculture in Sub-Saharan Africa, A Methodological Guide, (J.E. Austin Associates, Inc. 2000), http://bnppkd.org/sites/default/files/TF054197VCGuideJuly28FinalDraft.pdf. 53 See page 6 of Peter Jaeger, Ghana Export Horticulture Cluster Strategy Profile Study, Part I – Scoping Review, (Accord Associates LLP, 2008), http://www.euacpcommodities.eu/files/0WSTD06GhanaExportHortScopingReviewFinalReport.pdf 50

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Ghana’s smallholder farmers have been able to switch production to the MD2 variety as it requires more investments.54 Potential for Value Chain Expansion The Government of Ghana has taken steps to promote expanded horticultural exports, with the Horticultural Exporters Industry Initiative (HEII) in the Ministry of Food and Agriculture specifically tasked with increasing Ghana’s market share of horticultural products at the international level.55 The HEII is supported by a number of development partners, including: the AfDB financed Export Marketing and Quality Awareness Project (EMQAP); USAID’s Trade and Investment Program for a Competitive Export Economy (TIPCEE); and the Millennium Challenge Corporation.56 TIPCEE was initiated in 2004 to promote key value chains among nontraditional agricultural exports including pineapples, mangoes, papaya, Asian vegetables, cashew, medicinal plants, maize, tomatoes, oranges, onions and soya. 57 ACDI/VOCA has been collaborating with Coca Cola to expand into fruit drinks by sourcing concentrates of pineapples, citrus and mango from Ghana. The World Bank and the Ghanaian Ministry of Food and Agriculture have commissioned studies of the horticulture sector and funded infrastructural projects including: a perishable fruit terminal at the Tema Harbor for sea-freighted produce, a perishable cargo center at the airport and a number of on-field pack houses at various locations. 58 The Ghana Investment Promotion Center (GIPC) is also making a concerted effort to attract large scale international fruit packers and processors to tie them into the growing sector. Private and public stakeholders are generating a constructive dialogue among themselves regarding upgrading Ghana’s logistics and infrastructure to better support horticultural exports. Constraints Perceived to Limit Private Investment From the perspective of private sector stakeholders in the value chain, one of the biggest challenges facing fruit and vegetable processors has been assuring themselves of sufficient supply of raw material to maintain desired levels of throughput. The problem has been amplified by the lack of strong legal or customary enforcement of supply contracts. Scaling up production of the raw commodities, however, has been hindered by the difficulties associated with obtaining large surfaces of land. Processors believe they need to assure sufficient production volumes to support their processing operations, but are 54

Ibid. See page 25 of Denise Wolter, 2008, Ghana – Agriculture Is Becoming A Business, Business for Development, http://www.oecd.org/dataoecd/8/8/40533289.pdf 56 Ibid. 57 See Trade and Investment Program for a Competitive Export Economy – Final Report, (Chemonics 2009), http://pdf.usaid.gov/pdf_docs/PDACP167.pdf 58 See Peter Jaeger, Ghana Export Horticulture Cluster Strategy Profile Study, Part I – Scoping Review, (Accord Associates LLP, 2008). http://www.euacpcommodities.eu/files/0WSTD06GhanaExportHortScopingReviewFinalReport.pdf 55

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confronted by a disorganized and scattered smallholder sector unable to provide required supplies under contract. VegPro of Kenya is an example of an international investor wanting to be assured of sufficient land availability (in their case, in the Accra Plains area) in order to be able to scale up and be commercially viable. Infrastructure also poses problems for interested private investors. While electricity, a large cost component of handling and processing fresh horticultural products, is generally available in Ghana, it is expensive. The transactions costs also reduce the competitiveness of Ghanaian products. The costs and availability of imported packing materials, which account for up to 70% of requirements, were also cited as issues that impede efficient and profitable operation of export value chains for horticultural products. Table 7. SWOT Analysis of Ghana’s Horticulture Value Chain Strengths Weaknesses Good climate and reasonably good soils Smallholders insufficiently organized Proximity to EU market Difficulty in acquiring and aggregating land Prioritization of the sector by government High cost of electricity and donors Increasing cluster of active foreign High cost of imported packing materials investors Opportunities Regional trade in certified seeds

Threats Stiff competition from Latin America and Caribbean Opportunities for increased value added, Increased SPS standards in importing yields and commercialization through countries adding significant costs to technology sourcing from smallholder producers Key Recommendations: a) Invest in smallholder farmer associations; b) Encourage PPPs in transportation, pack-house development, and irrigation; and c) Streamline and facilitate process for aggregating land holdings.

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KENYA MAIZE VALUE CHAIN59 Current Situation Maize is the most important staple crop in Kenya. Its central role in the Kenyan diet defines maize as a commodity important to national security, and the demand for maize is very strong. Total national consumption is estimated at 3.24 million metric tons (MT), with local production accounting for just over 2.5 million MT on average in the most recent five-year period.60 Annual per-capita maize consumption in Kenya is estimated to be about 90 kg.61 Of the total maize produced in country, 75% is grown by about 3.5 million small-scale farmers, largely for their own consumption, and 25% is produced by 1,000 large scale commercial farmers.62 The national average maize yield in Kenya is 1.8 MT/ha, but there is a wide variance in individual farm yields with some farms averaging between 4 MT/ha to 5 MT/ha.63 The structural deficit of maize production means that, in most years, Kenya is reliant on maize imports to feed its people. Private sector operators generally manage imports through both formal and informal markets. South Africa and Uganda are often important suppliers of maize to Kenya. Potential for Value Chain Expansion Productivity on Kenya’s maize acreage is remarkably low, and average yields have increased only marginally over the past twelve years. Cited among the reasons for Kenya’s low maize yields relative to its neighbors’ is that maize has been grown extensively and continuously for decades in Kenya, while both Ethiopia and Uganda are recent commercial producers of maize.64 Other hypotheses assert that many Kenyan smallholders produce maize as a subsistence crop and invest their capital in other production operations (especially dairy) that yield higher economic returns. Kenya’s input markets are relatively well-established with active private sector participation. There is a well-established seed production and certification system and strong regional demand.65 The Kenya Seed Company’s long history of developing maize seed varieties, active “self-regulation” by the Seed Trade Association of Kenya (STAK), 59

A significant portion of the data for the maize value chain in Kenya was sourced from Stanley Guantai and Paul Seward, Maize Handbook, (ACDI/VOCA, 2010) as well as discussions held with various actors in the maize value chain in Kenya. 60 Stanley Guantai and Paul Seward, Maize Handbook, (ACDI/VOCA, 2010), page 7. 61 The amount of 90kgs was obtained from a discussion with ACDI VOCA Nairobi office. 62 Ibid, page 7. 63 Ibid, page 7. 64 Moreover, recent droughts in Kenya and the 2007-2008 post-election violence have obstructed efforts to increase Kenya’s maize yields. 65 Stanley Guantai and Paul Seward, Maize Handbook, (ACDI/VOCA, 2010), page 7.

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active agricultural research by the Kenya Agricultural Research Institute (KARI), and agricultural oversight by the Kenya Plant Health Inspection Service (KEPHIS) have supported the development of this seed system.66 Kenya’s strong human capacity in research, policy development, and business service provision across the maize value chain is well-known. While Kenya has not yet released genetically-modified varieties of maize, Kenya has adopted the biosafety protocol and there is potential for developing such varieties in the future. Kenya’s maize sector is characterized by high levels of post-harvest loss, estimated at about one-third of grains harvested.67 Discussions with various participants in the sector indicated that Kenya’s large-scale storage facilities are either poorly located and/or of inadequate quality. Post-harvest management practices have also exacerbated the problem of aflatoxin contamination in maize, which is known to cause liver damage and death. A recent IFPRI study found that aflatoxin contamination in Kenya is higher than was previously thought, with 60% and 38% of samples from stores in southwestern Kenya and eastern Kenya, respectively, having aflatoxin levels greater than the maximum allowed by the Kenyan government in maize for human consumption.68 Moreover, the same study found evidence of little or no testing for aflatoxin in Kenyan markets.69 The government has stepped up testing in high-risk areas and is actively engaging in stakeholder discussions about this issue to expand public awareness of aflatoxin. Commercial processing of maize in Kenya is relatively well-developed and should support such aflatoxin-monitoring measures. The total installed milling capacity in Kenya is 1.35 million tons.70 Of the total maize produced in Kenya, one-third is processed by large-scale millers and the other two-thirds by medium and small-scale millers.71 Of these large-scale millers, four millers—Mombasa Millers, Pembe Millers, Unga Ltd. and United Millers— account for 80% of maize purchased for milling.72 By-products from the maize milling process go into the corn oil industry and animal feed industry. 73 Kenya’s relatively welldeveloped animal feed sector adds to an already-strong demand for maize, and as a result, maize prices in Kenya are among the highest in Africa.74 Both public and private actors are actively working to facilitate a structured grain marketing system in Kenya and in East Africa. The East African Grain Council has led the way toward the establishment of a warehouse receipt marketing system and a commodity exchange in Kenya. Kenya also has the opportunity to act as a hub for improved seed production in regional markets. Kenya is one of three countries in southern and eastern 66

See website of Kenya Seed Company http://www.kenyaseed.com/about/history.html Stanley Guantai and Paul Seward, Maize Handbook, (ACDI/VOCA, 2010), page 132 68 New Study Documents Spread of Aflatoxins in Kenya, http://www.ifpri.org/pressrelease/new-study-documentsspread-aflatoxins-kenya 13 January 2011. 69 Ibid. 70 Stanley Guantai and Paul Seward, Maize Handbook, (ACDI/VOCA, 2010), page 161. 71 Ibid, page 175. 72 Ibid, page 161. 73 Ibid, page 161. 74 See “Kenya – Kenya Maize Development Program (KMDP)”, on ACDI/VOCA’s website at http://www.acdivoca.org/site/ID/kenyaKMDP/ 10 May 2011. 67

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Africa that produces certified seeds and already exports these seeds to countries within the East African Community.75 Liberalized, dynamic financial and telecommunication sectors in Kenya allow for innovative solutions to address transactional issues across the value chain. Included among these are the use of phone cash credits by farmers to reduce the large float between brokers and distributors on the input-supply side.76 Constraints Limiting Private Investment Given the importance of the value chain for Kenya’s consumers, the government’s stated policy of maintaining a liberalized maize market is often contradicted in practice in order to ensure supply and mitigate concerns around price. Under the National Cereals and Produce Board (NCPB) Act of 1985 (which has not been subsequently amended), the NCPB is legally empowered to control maize marketing and movement.77 With this authority, the government has, at times, intervened in the maize market by making sizeable purchases of grain for the strategic purpose of assuring adequate supplies and by setting both consumer and producer prices, i.e., establishing a dual pricing policy for maize. 78 The stated objective of these interventions is to protect farmers’ livelihoods when maize prices fall and to protect consumers when maize prices rise. Typically, however, the principal beneficiaries of NCPB procurement or price actions are well-connected, large commercial farmers. In the latter part of 2008, for example, there was an “unprecedented escalation in the price of maize in Kenya”.79 The temporary dual pricing policy implemented during this time resulted in the government purchasing maize from farmers through the NCPB at KSH 1,950 for a 90 Kg bag, while millers were offered the same bag from the NCPB at KSH 1,750. 80 However, most millers reportedly failed to get the NCPB stocks as the heavily-subsidized stocks released by the NCPB went to only a few well-connected individuals.81 The World Food Program is a frequent purchaser of grains in Kenya, though it is reported that procurement of maize is difficult, in part due to the Kenyan government’s interventions in the market. Due to the government’s price-setting policies, the market price of maize in Kenya is often higher than the import-parity price. 75

In Eastern, Central and Southern Africa, Kenya is one of the three countries that produce certified seeds. The others are South Africa and Zimbabwe. See http://www.the-star.co.ke/business/features/22987-feeding-a-regionmaking-markets-work-for-food-security-in-eastern-central-and-southern-africa 76 ACDI/VOCA’s Nairobi office indicated how Kenya’s well-developed and liberalized financial and telecommunication sectors have enabled them to assist farmers use cash credits on phone cards to pay intermediate input suppliers. As a result of these instantaneous payments to the intermediate input suppliers, these suppliers have a reduced need for credit from the input distributors. 77 Ibid, page 215. 78 Ibid, page 215-6. 79 See Kenya Food Security Update – December 2008 http://www.fews.net/docs/Publications/Kenya_2008_12_final.pdfhttp://www.fews.net/docs/Publications/Kenya_200 8_12_final.pdf 11 May 2011 80 Ibid. 81 Stanley Guantai and Paul Seward, Maize Handbook, (ACDI/VOCA, 2010), page 216.

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Table 8. SWOT Analysis of Kenya’s Maize Value Chain Strengths Weaknesses Strong demand for maize reflected in high Low national maize yields prices Strong human capacity in research, policy High post harvest loss development and business support services Relatively well established and private Inadequate location and size of large-scale sector input market storage facilities High levels of aflatoxin contamination Opportunities Regional trade in certified maize seeds Productivity responsive to inputs

Threats Highly politicized sector Deterioration due to climate change

Key Recommendations: a) Encourage investments in storage facilities at all levels; b) Develop aflatoxin testing capacity, including among private sector value chain participants at the farmer association level and private trader level; and c) Build on Kenya’s regional orientation by promoting a structured East African grain marketing system. RICE VALUE CHAIN Current Situation Rice is the third most important cereal consumed in Kenya, following maize and wheat, with annual average per capita consumption estimated at about 8 kg in 2008. 82 However, rice consumption in Kenya has been increasing at a faster rate than that of either wheat or maize. Annual rice consumption in Kenya has been increasing by 12%, a rate three times that of wheat and six times that of maize,83 and is expected to continue to rise. A study by Kenya’s National Cereal and Produce Board attributes the growth in rice consumption to the fact that rice is easier to cook than other cereals and consumes less energy. It projects that Kenya’s consumption of white rice will overtake that of wheat over time.84

82

PowerPoint Presentation by Dr. Johnson Irungu, Director of Agriculture, Ministry of Agriculture, Kenya, titled Kenya National Rice Development Strategy – 2009 to 2018 and dated 15 May 2009. 83 R. A. Emongor et al, The Rice Value Chain in Kenya with Reference to Rice Producers, (KARI, 2010), http://www.kari.org/biennialconference/conference12/docs/THE%20RICE%20VALUE%20CHAIN%20IN%20KE NYA%20WITH%20REFERENCE%20TO%20RICE%20PRODUCERS.pdf 84 See NCPB’s website http://www.ncpb.co.ke/index.php?option=com_content&task=view&id=31&Itemid=46

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Currently, 80% of the 300,000 MT of rice consumed each year in Kenya is imported.85 These imports are subject to tariffs, which increased in 2005 from 35% to 75% when the East African Customs Union came into effect.86 This was intended to provide incentives to local producers for the regional market. However, due to pressure from Pakistan, which is the biggest exporter of rice to Kenya, a side agreement was negotiated to exempt Pakistani rice from the import-tariff increase. Rice is primarily grown in Kenya by small-scale farmers on irrigated land managed by the National Irrigation Board (NIB). About 84% of domestic consumption is produced on irrigated land covering 13,000 ha.87 The remaining 16% of rice produced is grown on rain-fed land. Average rice yields in 2008 were 4.7 MT/ha on irrigated lands and 2.7 MT/ha on rain-fed lands.88 Figure 4. Kenya’s Rice Value Chain G o v / A g. R e s e a rc h NGOs/Extensio n C o m m e rc ia l S e e d C o m pa nie s & Input S upplie rs

G o v t . R un R ic e S c he m e s

P ro c e s s o rs

P riv a t e R ic e P ro duc e rs

Who lesalers/Retailers

D o m e s t ic C o ns um e rs Who lesalers/Retailers Im po rt e rs / Who le s a le rs

Potential for Value Chain Expansion Government sources indicate that there is a potential to irrigate 540,000 ha for rice, and with this significant undeveloped potential for irrigation comes a potential to increase domestic production.89 According to Kenya’s National Rice Development Strategy (NRDS), 85

See Rice Value Chain with Reference to Rice Producers, (KARI, 2009), http://www.kari.org/biennialconference/conference12/docs/THE%20RICE%20VALUE%20CHAIN%20IN%20KE NYA%20WITH%20REFERENCE%20TO%20RICE%20PRODUCERS.pdf 86 See Kaburu Mugambi Akaburu’s article on the Daily Nation article titled Kenya: Low Import Duty on Rice Used to Appease Tea’s Largest Buyer , dDated 1 August 2010. 87 Ibid. 88 PowerPoint Presentation by Dr. Johnson Irungu, titled Kenya National Rice Development Strategy – 2009 to 2018 and dated 15 May 2009. 89 Ibid.

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plans are to increase the land under irrigated rice from 12,500 ha in 2008 to 26,000 ha in 2018,90 and to double production in both rainfed and irrigated conditions. The government also intends to address post-harvest loss issues and improve input products and service delivery to farmers.91 The government’s initial development is the Tana Delta Project, which commenced operations in December 2010 and was jump-started through a Government economic stimulus program.92 This scheme aims to produce 60,000 MT of rice on large estates run by the Tana and Athi Rivers Development Authority.93 Kenya’s developed agricultural and finance institutions are well-positioned to support the development of Kenya’s rice sector. This support is most likely to come from Kenya’s wellestablished seed production and certification system, strong agricultural research institutions and private banks that have substantial experience lending to the agricultural sector. Some see the potential to produce branded, quality rice for regional markets, given both production capacities and Kenya’s well-developed processing sector. This potential is particularly relevant within the East African Community market where there is an attempt to eliminate tariffs on goods traded among regional member countries, while protecting local production with tariffs on goods produced in non-member countries. Constraints Limiting Private Investment Kenya’s current government-run rice schemes reportedly provide little tenure security to smallholder producers. The current allocation system under the National Irrigation Board (NIB) is tenant-based, with farmers not having title to the land.94 Unit farm sizes have dramatically fallen as a result of informal subdivisions of land among family members, and farmers have had great difficulty accessing credit.95 However, the Kenyan government has recently provided some foreign private investors with substantial land allotments for the production of high-quality rice for the domestic market. Dominion Farms, a subsidiary of Dominion Group, and Capwell Industries are among these investors. An ongoing institutional restructuring in Kenya’s agricultural institutions has led to concerns with their institutional effectiveness in supporting the rice value chain, e.g., movement of rice research from National Irrigation Board (NIB) to KARI and movement of extension services from NIB to the Ministry of Agriculture. This has been perceived to 90

Ibid. See page 10 of Kenya’s Ministry of Agriculture’s National Rice Development Strategy 2008-2018, http://www.jica.go.jp/english/operations/thematic_issues/agricultural/pdf/kenya_en.pdf 92 Patrick Githinji, Feeding the Nation and Weaning Off Rice Imports, (The Standard Newspaper, 2011), http://www.standardmedia.co.ke/agriculture/InsidePage.php?id=2000033005&cid=465&story=Feeding%20the%20 nation%20and%20weaning%20off%20rice%20imports 12 February 2012. 93 Daily Nation, Kenya: Once Forgotten, Tana Is Now Targeted By Investors, Daily Nation, 29 June 2011, http://allafrica.com/stories/201106291154.html 12 February 2012. 94 Ministry of Agriculture, National Rice Development Strategy, (Ministry of Agriculture, Kenya, 2009), page 7. http://www.jica.go.jp/english/operations/thematic_issues/agricultural/pdf/kenya_en.pdf 95 IRIN Kenya, Kenya: Improving Yields Key To Boosting Rice Farmers’ Livelihoods, (IRIN Kenya, 2011), http://www.irinnews.org/report.aspx?reportid=92086 91

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compromise the level of service delivery.96 In a KARI study, 43% of farmers surveyed indicated that they had no access to extension services and some farmers indicated that KARI has not taken the role of rice research effectively.97 Physical infrastructure problems also pose bottlenecks for the potential development of a regional rice market. Transport costs and reliability of electricity must both be addressed to allow Kenya’s rice producers and processors to take advantage of regional market opportunities. Colonial-era constraints to irrigation in Western Kenya along the rivers that drain into Lake Victoria must also be addressed. Irrigation efforts in this area remain constrained by the Nile Water Agreements of 1929 (which was amended in 1959). Table 9. SWOT Analysis of Kenya’s Rice Value Chain Strengths Weaknesses Rapid increase in rice consumption Unfavorable land tenure systems in Kenya´s expected to continue government run rice schemes Well developed agricultural support High electricity and transport bottlenecks institutions, including finance institutions Opportunities Significant irrigation potential Processing sector has capacity for regional branding of market quality rice

Threats Political pressures that compromise adherence to the principles and letter of the EAC trade regimen Ongoing restructuring of Kenya’s agricultural institutions which compromises their effectiveness Political and legal constraints to irrigation in Western Kenya as a result of the Nile Waters Agreement of 1929 (amended 1959).

Key Recommendations: a) Clarify and secure land tenure rights in government run rice schemes; b) Encourage PPPs in electricity and transport; and c) Build on Kenya’s regional orientation by promoting a structured East African grain marketing system.

96

R. A. Emongor et al, The Rice Value Chain in Kenya with Reference to Rice Producers, (KARI, 2010), http://www.kari.org/biennialconference/conference12/docs/THE%20RICE%20VALUE%20CHAIN%20IN%20KE NYA%20WITH%20REFERENCE%20TO%20RICE%20PRODUCERS.pdf 97 Ibid.

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HORTICULTURE VALUE CHAIN Current Situation Kenya’s favorable climatic conditions and fertile soils permit the growth of a wide range of fruit and vegetables that are harvestable year round.98 Kenya has had a relatively long and successful track record in exporting fruits and vegetables. Kenya Canners Fruit Processing Plant (currently operating as Del Monte Kenya), for example, was established in 1948 to export canned fruits to the United States and Europe.99 Today, Del Monte Kenya is the nation’s leading producer and exporter of pineapple products, producing and processing 250,000 MT of pineapples and 20 million L of juice annually. 100 Kenya’s fresh produce exports (fruit, vegetables and cut flowers) have also grown exponentially over the past twenty years. Over the past three decades, with continuous support from donor programs (particularly the World Bank and USAID), Kenya has experienced a four-fold increase in the value of fruit and vegetable exports.101 In 2009, Kenya was the second largest horticultural exporter in sub-Saharan Africa after South Africa.102 Moreover, Kenya’s horticultural value chains (including those for flowers and nuts) have been the country’s fastest growing agricultural sub-sector and its third largest foreign exchange earner.103 Potential for Value Chain Expansion Continuous innovation and new investments have helped to build this strong growth. The example of Kenya’s success with mangoes is illustrative. It was not until 1980 that new export varieties of mangos were introduced in Kenya; now mangos are Kenya’s second most important fresh fruit export.104 There appears to be broad awareness of the importance of investing in research and development for more productive, diseaseresistant strains of horticultural crops with commercial potential. The fact that Kenya’s horticultural exporters are facing stiff competition from Israel, South Africa, Egypt, Columbia, Thailand and Mexico in connecting with its key market, the European Union (EU), is well appreciated. 105 98

USAID – Assessing the Impact of Kenya BDS and Horticulture Development Center Projects in the Tree Fruit Value Chain in Kenya, Baseline Research Report, microReport #3, Don Snodgrass and Jennefer Sebstad, 2005 99 Swainsan, Nicola. 1980. The Development of Corporate Capitalism in Kenya 1918-1977, University of California, page 156 100 See “About Us” on Del Monte Kenya’s website http://www.delmonte.co.ke/our_juice.php 101 Utilized FAO and IMF statistics to determine rate. 102 Horticultural Crop Development Authority’s Brief on the Horticulture Industry in Kenya, http://www.hcda.or.ke/downloads/BRIEF%20ON%20THE%20HORTICULTURE%20INDUSTRY%20IN%20KE NYA.pdf 103 HCDA Strategic Plan 2009-2013, dated June 2009. 104 Assessing the Impact of Kenya BDS and Horticulture Development Center Projects in the Tree Fruit Value Chain in Kenya – page 30. 105 The Kenyan Export Horticulture Industry – Poster Board #15, American Society for Horticultural Science, 2009.

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Kenya’s well-developed government agencies have provided Kenya’s horticultural producers with strong regulatory and marketing support. Kenya’s Horticultural Crop Development Authority (HCDA) has reportedly been critical in supporting the rapid growth of Kenya’s horticultural sector over the past thirty years. 106 More recently, Kenya’s Plant Health Inspectorate Service (KEPHIS) has enabled Kenyan exporters of horticultural products to the EU the ability to certify their exports locally rather than at EU ports.107 As a result, the costs of certifying exports to the EU have been reduced and the bureaucratic process streamlined. The move toward greater product traceability and EU-regulated phytosanitary standards, however, has increased the cost of horticultural production and made it much more difficult for smallholder farmers to comply. As a result, the share of smallholder horticultural producers exporting their commodities fell from 75% in the early 1990s to about 45% in 2005.108 Kenya’s air, road and port infrastructures, while still subject to criticism, have been sufficiently developed to allow for the shipment of fresh produce by air and bulky produce by sea. Moreover, tourist traffic and consistent charter flights to two of Kenya’s international airports have provided Kenyan horticultural producers with significant north-bound air-freight opportunities. However, literature reviews have indicated some problems with respect to high air-freights and cargo capacities to certain export destinations. 109 Anecdotal evidence suggests that Kenya’s horticultural exporters are well-educated with a strong entrepreneurial bent. The example of Kevian, a Kenyan company that is a leader in the marketing of fruit juices in Eastern Africa, is illustrative of this. The company has been able to successfully compete against new imports from South Africa and Coca Cola. Another example is Avenue Fresh, a successful fruit and vegetable grower and exporter headed by a young, college-educated private investor. After only two years of operation, Avenue Fresh has built a base of clients in France, the U.K., and Germany, and is aggressively attempting to expand its reach into new markets in Eastern Europe. The prevalence of a robust private sector supplying agricultural inputs has ensured that producers’ needs for products and services are readily met. Reportedly, input suppliers often provide technical support for their products along with delivery. A very high-level of business development and financial services geared toward the horticultural sector—often with the support of a very active donor community—is also notable. The Kenyan government is reportedly trying to stimulate greater foreign private investment by responding to investor concerns. For example, the government has reduced 106

The HCDA established in 1968 has actively regulated and marketed Kenya’s horticultural sector without excessively interfering in the market. 107 European Commission Trade – 27 January 2009 - http://trade.ec.europa.eu/doclib/stories/full_stories.cfm?ID=113 108 Ibid, page 16. 109 See Jennefer Sebstad and Don Snodgrass, Assessing the Impact of Kenya BDS and Horticulture Development Center Projects in the Tree Fruit Value Chain, (ACDI/VOCA, 2004), http://www.valuechains.org/dyn/bds/docs/386/mR9%20Assessing%20the%20Impact%20of%20Kenya%20BDS%209-04.pdf

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minimum investment levels for foreign investors from $500,000 to $100,000 and has attempted to address some of the bureaucratic investment procedures.110 Constraints Limiting Private Investment Nevertheless, Kenya’s problematic investment policy framework for foreign investors in agriculture has been identified as one reason for the relatively low foreign investment levels in Kenya’s horticultural sector.111 These policy issues include a complex approval mechanism on foreign investment as well as difficulties faced by foreign investors in acquiring land for agricultural purposes. Poor infrastructure such as dilapidated roads, high electricity tariffs, and blackouts remain problematic.112 In addition, many Kenyan horticulture producers complain about the attractive investment regimen that neighboring countries such as Ethiopia are providing. These attractive packages have already resulted in the relocation of some floriculture producers from Kenya to Ethiopia. Consequently, some of Kenya’s horticulture producers have encouraged the Kenyan government to ensure that Kenya’s investment regimen for horticulture is regionally competitive.

110

Samuel Njoroge and Timoty Okech, An Assessment of the Factors Influencing Foreign Direct Investment Flows in Kenya’s Horticultural Industry, (International Journal of Business and Social Science, 2011). 111 Ibid. 112 Department of State, 2011 Investment Climate Statement-Kenya, http://www.state.gov/e/eeb/rls/othr/ics/2011/157303.htm

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Table 10. SWOT Analysis of Kenya’s Horticultural Value Chains Strengths Weaknesses Favorable climatic conditions and fertile Difficult environment for foreign investors soils permit the growth of a wide range of fruit and vegetables that are harvestable year round Kenya’s well-developed government Poor transport and communication agencies have provided Kenya’s infrastructure, high electricity tariffs and horticultural producers with strong issues with blackouts and traffic jams regulatory and marketing support. Robust private sector on Kenya’s agricultural inputs-side has meant that needed inputs are readily available. Horticultural exporters that are welleducated with a strong entrepreneurial lean Opportunities Kenya’s relatively well-served air, road and port infrastructures

Threats Stiff competition from other major producers Move toward product traceability and phyto-sanitary standards have increased costs; made it more difficult for small farmers to compete

Key Recommendations: a) Revise investment climate so as not to discriminate against foreign interests; b) Seek to establish PPPs in transport, communication and energy sectors; and c) Encourage direct air links with the U.S. and freighter competition to broaden horticultural market reach.

MALI RICE VALUE CHAIN Current Situation Rice is a crop of strategic importance in Mali as the sector constitutes approximately 5% of Mali’s GNP. In 2010/11, Mali’s per capita rice consumption was estimated at 62 kg/person/year and rice was the principal cereal consumed in Mali’s urban settings.113 Though still relying on imports, primarily from South Asia and some from West African trade partners, to match total rice consumption, the Malian government has made efforts to 113

USDA’s Foreign Agriculture Service, Grain and Feed Annual: West Africa Rice Annual, (USDA, 2011), http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Grain%20and%20Feed%20Annual_Dakar_Senegal_5-62011.pdf

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increase production as part of its efforts to ensure food security. Additionally, the goal of the Malian government in the coming years is to become a rice exporter by dramatically increasing production.114 Rice is currently cultivated on 283,400 ha, or about 11% of the total cultivated land in Mali. The bulk of rice in Mali (about 405,000 MT or 51% of total) is cultivated on 90,000 ha of land under the Large-Scale Gravity Fed System in the Office du Niger/Segou, Baguineda and Selingue geographic zones. Other rice production systems in Mali with significant potential for expansion include the rainfed system, the rainfed system with small water retention, and the controlled flooding system. See Table 11 below. Table 11. Major Rice Production Systems P roductive System

Large-S cale Gravity Fed S ystem

Geographic Zone

ON/S egou, Baguineda, S elingue

S mall-S cale Village Irrigated Perimeters Timbuktu, Mopti Controlled Flooding Uncontrolled Plain Flooding Rainfed S ystems with S mall-scale Water Retention Rainfed S ystem

Mopti, S egou Mopti

Current

Current

Average

P otential for

Areas (Ha)

P roduction

Farm Size

Expansion (Ha)

(MT)

(Ha)

90,000

405,000

1-2

900,000

3,300

19,800

0.3

30,000

75,000

111,000

2.5-10

225,000

10

150,000 to 300,000

150,000 to 300,000

S ikasso, Cotton Zone

5,000

10,000

< 0.5

300,000

S ikasso, Cotton Zone

14,000

28,000

< 0.5

300,000 to 800,000

Source: Michigan State University, Mali Agricultural Sector Assessment, 2011, (Michigan State University, 2011). page 53.

In recent years, Mali has seen steady growth in rice production and yields.115 Between the 2002/3 and 2008/9 production periods, for example, rice production in Mali increased by 132% from 415,921 MT to 964,585 MT. Moreover, average rice yields were estimated to have increased by about 20% over the same period.116 This growth in rice production and yields has been attributed to public sector investments, particularly in the large-scale gravity-fed irrigation infrastructure in the Office du Niger (ON) as well as the liberalization of rice marketing and processing.117 Rice consumption in Mali has also shown a steady increase, though not at levels comparable with domestic production. Between 2002/3 and 2008/9, total rice consumed

114

Ibid. Tom Lenaghan and Salifou B. Diarra, Global Food Security Response Mali Rice Study, (DAI, 2009), page 13. In addition, see Coalition for African Rice Development(CARD) http://www.riceforafrica.org/cardcountries/g1/mali/352-malis-rice-statistics 116 See page 50 of Mali Agricultural Sector Assessment, 2011, (Michigan State University and page 4 of Analysis of the Competitiveness of the Rice Subsector in Mali: The Case of Gravitational Irrigation and Bas Fond Production Systems, 2011, by Ramziath T. Adjao, Michigan State University. 117 Michigan State University, Mali Agricultural Sector Assessment, 2011, (Michigan State University, 2011), page 50. 115

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increased by 83% from 618,735 MT to 1,130,301 MT. 118 As a result, Mali’s net selfsufficiency in rice increased from 67% to 85% over the period. The government has targeted building up rice stocks for food security by 10,000 MT/year between 2007 and 2018. In addition, it is believed that further increases in Mali’s production could feed a growing regional market for rice. Figure 5. Mali’s Rice Value Chain

Note: Figure derived from data in Mali Agricultural Sector Assessment 2011, (Michigan State University, 2011).

Potential for Value Chain Expansion Mali has a significant potential to increase rice production through increased and improved irrigated production and through expansion of rice growing areas in the rainy season. A 2009 JICA report indicated that only 20% of Mali’s 2.2 million ha of potential irrigable land is utilized.119 USAID estimates that there is the potential to expand the Large Scale Gravity Fed Systems in the Office du Niger/Segou, Baguineda, Selingue geographic zones ten-fold, from the current area of 90,000 ha to 900,000 ha.120 The government of Mali has, in the short term, launched a “Rice Initiative” in order to boost local rice production through the provision of subsidized fertilizers and improved seeds to farmers. Various studies indicate that rice production in Mali is profitable; the 2009 JICA report, for example, indicated that rice growing is financially profitable for the majority of rice producers in Mali.121 Moreover, USAID’s Global Food Security Response Initiative’s study on Rice in Mali found that rice production and marketing in Mali can be profitable even 118

Per-capita consumption estimates of rice in Mali are estimated to have increased from 53kgs in 1998 to 57 kgs in 2007. 119 Ministry of Agriculture, National Strategy for the Development of Rice Growing, (Ministry of Agriculture, Mali, 2009), http://www.jica.go.jp/english/operations/thematic_issues/agricultural/pdf/mali_en.pdf 120 Michigan State University. 2011. Mali Agricultural Sector Assessment, 2011, page 53. 121 Ministry of Agriculture. 2009. National Strategy for the Development of Rice Growing, Ministry of Agriculture, Mali, March 2009,

45

without the import tariffs that currently protect local producers from global competition.122 In line with these projections, the Malian government has outlined a very ambitious plan for increasing rice production and yields between 2008 and 2018. Over this period, the government aims to increase production by approximately 138% from 1.7 million tons to 4.0 million tons123 as well as the area under rice by over 70% from 626,573 ha to 1,087,254 ha. The government also aims to increase average yields by 37% from 2.663 MT/ha to 3.651 MT/ha through the provision of farm inputs and advisory services to farmers. In view of the abundant land available within and adjacent to Mali’s large-scale irrigation schemes, such as in the Office du Niger, there is a great potential to utilize this by establishing PPPs that would mobilize private investors and entrepreneurs and integrate smallholder producers in larger, more productive operations. The model might involve modern mechanized nucleus farms surrounded by independent contract outgrowers who would benefit from the economies of scale. The independent farmers would have the benefit of a nearby large modern mill and off-taker, providing them an incentive to produce beyond consumption levels and commercialize rice sales, while, at the same time, the miller would be assured of sufficient raw material supply in addition to what is produced on the nucleus estate to justify larger, modern and more efficient mills that can also cogenerate electricity from the rice hulls. The ability to cogenerate electricity would lower the cost of milling, increasing profitability and competitiveness in the regional markets, and allow the miller to offer a better price for the paddy from the small farmer. Such an approach is ripe for testing in the area around the Alatona Irrigation Project where 9,000 ha of prime irrigable land are situated.124 The government has already opened up to private investors significant areas of land suitable for large-scale rice production in the Office du Niger area, as well as the possibility of managing irrigation of secondary networks—a precondition for organizing outgrowers. The Libyan government and the West African Economic and Monetary Union (WAEMU) have been provided 100,000 ha and 11,288 ha of land, respectively125. Constraints Limiting Private Investment Many smallholder farmers in the major irrigated production zones on the Niger River are reportedly heavily in debt to the Office du Niger, the para-statal organization charged with overall management of the large-scale, gravity-fed irrigation system. This farmer indebtedness is reportedly the result of a government-propelled expansion of production credit availability over the past four to five years to tenant farmers that had insecure land tenure. 122

Lenaghan, Tom and Salifou B. Diarra. 2009. Global Food Security Response Mali Rice Study, microReport #158, Prepared by DAI and ACDI/VOCA (subcontract) for USAID, August 2009. 123 See page 12 of Ministry of Agriculture’s National Strategy for the Development of Rice Growing at http://www.riceforafrica.org/downloads/NRDS/mali_en.pdf 124 Comments received from Daria Gage, Enabling Agricultural Trade project, February 2012 125 Events in Libya and Mali are changing rapidly and could alter have impacts over requests for land

46

One very large challenge is inefficient use of water in Mali. The cost of water charged to smallholders in large irrigated schemes such as the Office du Niger is a flat rate based on the size of the landholdings being irrigated, rather than on volumetric measurements of the actual water used. This discourages farmers from using less water or maintaining canals for more efficient water delivery. There is also inadequate maintenance of irrigation infrastructures, primarily by farmers who perceive their rights to be insecure as a result of not having paid their water user fees.126 Additionally, seed multiplication is not very well organized. The government is responsible for certifying and harmonizing the production of seeds and providing basic research for variety development. The capacity of the national Institut d’Economie Rurale (IER) is weak in basic research and extension services. There are also many inefficiencies in post-production operations, which pose constraints for investors. While small-scale rice producers have improved yields, losses in the milling and storage links in the value chain are evident. Milling involves high levels of breakage, and there are no long-term storage facilities. The government, with support from donors and development partners, encouraged and financed the widespread use of small rice hullers throughout production areas, while larger mills, formerly owned by the government, were privatized. The small mills now undermine the ability of the larger, privatized mills to access a sufficient supply of paddy for them to operate at top efficiencies. Only two of thirteen large mills continue to operate—both at sub-optimal capacity utilization. A solution proposed by the large millers, including Modibo Keita and the AMI Group, is the possibility of setting up their own nucleus farms to provide the minimum throughput to guarantee efficiencies in milling. Support services are also weak. When the state-owned mills were privatized, the input supply and credit services associated with them were terminated. However, a strong private agri-supply and milling sector did not emerge to take over those associated functions. According to IICEM, a USAID-funded program to support integrated initiatives for economic growth in Mali, the private sector is very “timid,” there is no culture of farming as a business, and there exists no tradition of contract farming between the producer and the processor. Low levels of education, weak farmers’ associations and uncertain land titling only further impede the emergence of a group of farmers oriented toward expanded commercial production. Further, despite the underlying competitiveness of Mali’s rice value chain, the sector has received limited private sector investment aimed at expanding output and markets.127 There are periodic exonerations of taxes and tariffs on imported rice, as was done in 2008 126

It is reported that farmers do not pay their water fees due to their inability to sell their produced rice either as a result of export bans, which prevent these farmers from selling rice to Mauritania, or being undercut by rice importers who had to sell their rice domestically at or below cost. See http://www.foodfirst.org/en/node/3321 127 USAID’s Global Food Security Report on Mali indicates that the bulk of investment in Mali’s sector continues to come from either donors or the Malian government.

47

in order to lower consumer prices at a time of high global prices, which have increased uncertainties among potential investors in rice production and processing activities. Government subsidies are often implemented in ways that bypass private operators, and this ultimately discourages their involvement in the chain. As rice production increases beyond the national requirements, attractive export opportunities can materialize. To create a successful export industry, however, postharvest handling, including milling and storage facilities, will have to be drastically improved. Table 12. SWOT Analysis of Mali’s Rice Value Chain Strengths Weaknesses Rice production can be profitable Difficulty of large millers to get sufficient throughput from existing farmers/associations Consumer preference for local rice over Government interference in the rice sector imported rice that increase uncertainty among investors Strong commitment by government to Heavy indebtedness of farmers in the Office increase rice production du Niger and the related tenure insecurity Water user rights and fees not adequately managed Opportunities Domestic and regional opportunities exist

Threats market Limited entrepreneurial spirit in the farm sector

Key Recommendations: a) In irrigated areas, shift to a system where farmers pay for actual water use; b) Seek to establish PPPs in milling/energy production; and c) Foster private sector entry in the input supply chain, including that of improved seed production LIVESTOCK VALUE CHAIN Current Situation Mali is among the top ten cattle-producing countries in sub-Saharan Africa, and the cattle sector experienced positive growth in both numbers and meat production between 1999 and 2009. According to FAO statistics, cattle stocks increased by 51% during that same period, going from 5.8 million head of cattle to 8.7 million head of cattle,128 and the number of cattle slaughtered almost doubled from 563,900 to 1,048,500.129 Offtake levels in Mali 128 129

FAO Stats accessed 1st September 2011. Ibid.

48

are estimated at 11% per year.130 Improvements in animal nutrition and animal health could, it is believed, result in higher offtake levels. The growth in Mali’s cattle population has been partly attributed to a structural change in its location. Most of Mali’s cattle population (about 52%) now reside in the higher-rainfall, mixed-cropping area in the southern areas of Mali.131 The traditional pastoral systems of northern Mali, in which herds are moved south during the dry season and return to the north at the onset of the rainy season, now account for less than half of the national herd.132 Mopti and the Northern regions accounted for 28% and 20% of Mali’s total cattle population, respectively.133 The vast majority of cattle sold in Mali (approximately 82%) are consumed domestically, with the remainder exported.134 Domestic market prices are attractive as local demand is growing, with meat prices in Bamako generally surpassing those in Abidjan. The major abattoirs in Mali include the following: two refrigerated abattoirs in Bamako that were designed to produce meat for both export and domestic consumption; five regional abattoirs (in Kayes, Mopti, Segou, Sikasso and Koutiala); and 124 officially recorded slaughter slabs.135 According to industry experts and abattoir operators, the cattle-rearing sector is relatively well organized, and opportunities are more likely to arise in developing the weak sectors of feed lots, feed production and meat processing. The bulk of cattle exports from Mali have been in the form of live animals, despite the government’s efforts at adding value through the export of meat. There is significant potential demand for live cattle in countries surrounding Mali. Traditionally, Cote d’Ivoire constituted about 75% of Mali’s live cattle exports.136 However, the onset of the civil war in Cote d’Ivoire led to a significant fall in the amount of exports, as this market has not yet recovered. Some estimate a potential net export market of 500,000 to 1 million head per year by 2016 in the area covering Burkina Faso, Cote d’Ivoire, Ghana, Togo and Benin, and double that for the basin including Nigeria, Chad, CAR, Cameroon and Niger. 137 Crossborder trade of live animals in the ECOWAS region is still subject to required authorizations and the payment of certain fees. Attempts to export chilled beef by air, rail and road both within West Africa and to other African markets (Gabon, North Africa) have generally proved unprofitable, largely due to infrastructure constrains. 138

130

Ibid. Food and Agriculture Organization, 2005, Livestock Sector Brief – Mali, (FAO, 2005), page 85, http://www.fao.org/ag/againfo/resources/en/publications/sector_briefs/lsb_MLI.pdf 132 Mali Livestock Sector Brief (FAO), page 6 http://www.fao.org/ag/againfo/resources/en/publications/sector_briefs/lsb_MLI.pdf 133 Ibid, page 85. 134 Ibid, page 85. 135 Ibid, page 86. 136 Ibid, page 85-7. 137 Ibid, page 86. 138 Ibid, page 12. 131

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Figure 6. Mali’s Livestock Value Chain Regional Export of Live Cattle

Inputs (Veterinary Services, Animal Feed)

Livestock Production (Cattle Herders)

Domestic Market

Slaughter/Abattoir

Chilled Meat for Export

Potential for Value Chain Expansion Traditionally, the government of Mali has been less involved in livestock production systems than it has been in other agricultural value chains.139 Livestock rearing is reportedly still performed largly in a traditional pastoral manner and within traditional family units. Families have little incentive to sell the cattle because they are considered part of a family’s capital savings and are only sold when cash requirements exist. Hence there is little incentive to increase cattle sales except in time of need, and a strong preference for increasing the size of the herd. The pastoral system of cattle-raising involves moving the herd over wide areas of territory, taking advantage of seasonal pastures and shifting rainfall patterns. Deposits of manure help to maintain the pastures as well as the fields grazed in the off-season. However, the system is often said to result in degradation of the grazing land (especially when rainfall is inadequate) and to conflicts with farmers producing crops. Traditional dry season grazing areas along the Niger River have been encroached by the expanded irrigation schemes along the Office du Niger. The growing importance of cattle in mixed farming systems in southern Mali suggests greater sedentarization of cattle and, potentially, the emergence of a more commercial approach to cattle-raising. The government’s role in the sector has been more or less focused on vaccination campaigns, maintenance of trade corridors, supporting improved pasture management schemes and the public health regulation of slaughter facilities.140 Constraints Perceived to Limit Private Investment However, the government has maintained a downward pressure on domestic prices through price-setting mechanisms. When the abattoirs were privatized the government set fixed prices for slaughtering and controlled prices for meat in the domestic market. 141 139

Michigan State University, Mali Agricultural Sector Assessment, 2011, (Michigan State University, 2011), page 85. 140 Ibid, page 85. 141 In 2002, Mali adopted a law that allowed for the privatization of its meat processing plants. And in 2003, the Malian government contracted out to a private company management of the government-owned slaughterhouse that

50

These provide little incentive for investments in modernizing abattoirs or investing in the cold storage value chain needed to expand meat supply and scale up production for exports. There are also several constraints to Mali’s meat exports by air or rail. These include high refrigerated transport costs; the unreliability of refrigerated transport; preferences in regional markets for offal, hide and hooves; and competition in major urban markets (such as Abidjan) from imported frozen beef.142 Further, there is a need for tight coordination in order to provide importers with a functioning cold chain.143 The Agricultural Competitiveness and Diversification Project (PCDA), which receives funding from the World Bank, prioritizes several value chains (including livestock/meat) for increased competitiveness, productivity, and efficiency. PCDA emphasizes interventions that support among other things: demonstration and dissemination of irrigation, postharvest and value adding technologies; access to finance support, and investments in collective, market-oriented infrastructures.144

has a capacity of 10,000 tons per year. See IMF, Mali Poverty Reduction Strategy Implementation Report, (IMF, 2005) 142 Ibid, page 87. 143 Ibid. 144 See Yéyandé Sangho and Christophe Ravry, Growing Mali’s Mango Exports: Linking Farmers to Markets through Innovations in the Value Chain, (The World Bank, 2010), page 19.

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Table 13. SWOT Analysis of Mali’s Livestock Value Chain Strengths Weaknesses Large established cattle population Livestock rearing is still performed very much in a traditional pastoral manner and within traditional family units Attractive domestic pricing and growing The war in Cote d’Ivoire significantly demand impacted Mali’s live cattle exports. Cattle rearing sector well organized Attempts to export chilled beef by air, rail and road both within West Africa and to other African markets (Gabon, North Africa) have generally proved unprofitable Government price interventions along the value chain have provided little incentive for investments in modernizing abattoirs The shortage of feed and feed lots, which reinforces the need for continued pastoral herding, further compresses demand for feed Opportunities Threats Potential demand for cattle meat in Potential encroachment of traditional dry countries surrounding Mali. season grazing areas along the Niger River with the expanded irrigation schemes along the Office du Niger Potential to increase offtake-levels in Mali Difficulty in exporting value-added meats with an improvement in animal nutrition regionally due to preference of offal as well and animal health as high transport costs Key Recommendations: a) Government to refrain from setting prices; b) Encourage investments in transportation and cold storage infrastructure through PPPs and other routes. HORTICULTURE VALUE CHAIN Current Situation The southern part of Mali has favorable climatic conditions for mangoes and smallholder farmers across the country have traditionally grown mangoes for domestic consumption.145 Estimates of total annual production range up to 8 million tons.

145

Michigan State University, Mali Agricultural Sector Assessment, 2011, (Michigan State University, 2011), page 53.

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Over the past fifteen years, the government of Mali and its development partners (including the World Bank and USAID) have focused on development of the Malian mango value chain, with the objective of increasing exports to Europe.146 These efforts have incorporated policy and technical support to improve the enabling environment for Mali’s horticulture sector with a view to enhance private sector investments, particularly in conditioning and cold-storage infrastructure improvements. Ample opportunities exist for investing into the whole mango value chain, and in particular into the post-harvest processing into dried mangoes, juices and pulp. Technical and promotional assistance has also been provided to local participants in the chain, including producers, processors and traders.147 Currently, Mali’s export mango value chain is dominated smallholder producers (orchards of less than 5 ha) and independent traders (pisteurs) who select, harvest and transport the mango fruit from the orchards to packhouses owned by exporters.148 At the packhouse, mangoes are “conditioned”, or washed, dried, polished, sorted and boxed for export. Mangoes that do not meet export quality are returned to the independent traders for sale on the domestic market. Export quality mangoes are transported either by air or through a multimodal chain (truck/train/ship). Potential for Value Chain Expansion Demand for mangoes in Mali’s main export market, Europe, has experienced robust growth and the market is expected to continue growing.149 Between 2001 and 2008, imports of mangoes into the EU increased by 68%, from 136,000 tons to 230,000 tons. 150 Moreover, as Malian mangoes comprise only 2% of total EU imports, it is believed that there is some opportunity for Malian mango exporters to expand their market share.

146

Yeyande Sangho et al. 2010, page 14. Ibid, page 9. 148 These packhouses tend to be owned by local exporters with ties to foreign buyers. 149 Michigan State University, Mali Agricultural Sector Assessment, 2011, (Michigan State University, 2011), page 53. 150 Yéyandé Sangho et al, Growing Mali’s Mango Exports: Linking Farmers to Markets through Innovations in the Value Chain, (The World Bank, 2010), page 9. 147

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Figure 7. Mali’s Mango Value Chain151

Adapted from page 16 of Yeyande Sangho et al, Growing Mali’s Mango Exports: Linking Farmers to Markets Through Innovation in the Value Chain, (World Bank, 2010).

In 2005, the Malian government with World Bank support launched the Agricultural Competitiveness and Diversification Project (PCDA) with the objective of growing and diversifying agricultural incomes in Mali where Mali has a clear competitive advantage.152 Mangoes were one of the nine value chains identified as priority areas for support, and not only have exports risen significantly, but there has been a rise in training of exporters, increased financing tools, and assisted greatly with packing technologies and materials. 153 To date, the PCDA project has (i) built a packhouse in Bamako that provides conditioning services to exporters, (ii) supported the provision of local financing to the horticultural sector, and (iii) provided training on business practices in the mango-subsector.154 In addition, an investment project in a new pre-cooling155 and shipping facility in Sikasso is currently being planned.156 Currently, the packhouse in Bamako (PLAZA) is government owned; however, there are discussions to transfer the management of the PLAZA to a specialized private operator and its ownership is due to be taken over by the nascent interprofessional organization.157 USAID is funding Integrated Initiatives for Economic Growth (IICEM), a project implemented by Abt Associates and other implementing partners, which is focusing on 151

This section borrows heavily from Yeyande Sangho et al, Growing Mali’s Mango Exports: Linking Farmers to Markets through Innovations in the Value Chain, (World Bank, 2010). 152 C. Martin Webber and Patrick Labaste. 2010. Building Competitiveness in Africa’s Agriculture – A Guide to Value Chain Concepts and Applications, World Bank, 2010, page 33. 153 The other value chains deemed as priority areas for support are potatoes, onions, karate (shea), papaya, tomatoes, fresh fish and cattle/beef, see http://www.pcda-mali.org/?-Filieres-&lang=fr, and http://go.worldbank.org/HNS4XP1RB0 154 Yéyandé Sangho et al, Growing Mali’s Mango Exports: Linking Farmers to Markets through Innovations in the Value Chain, (The World Bank, 2010), pages 21-3. 155 Pre-cooling refers to the process of cooling products to the appropriate temperatures prior to refrigerated shipment or cold storage. 156 Yéyandé Sangho et al, Growing Mali’s Mango Exports: Linking Farmers to Markets through Innovations in the Value Chain, (The World Bank, 2010), page 21. 157 Refer to the World Bank Blog titled Mali Makes a Breakthrough in Mango Exports on http://blogs.worldbank.org/africacan/african-successes-one-pager

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initiating and supporting the value adding transformation businesses (pulp, juice, dried, etc.). Despite success connecting the pulp-processor Comafruit with rural producers, there have been difficulties expanding the project to include other processors as (i) there are a very limited number of domestic investors in Mali’s pulp-processing sector and (ii) government efforts to attract foreign investment in pulp-processing has been difficult except for the example of Comafruit, which established its factory in July 2010. Constraints Limiting Private Investment Mali’s mango sector involves limited investments at the production level. Orchard growers reportedly do not maintain the orchards well, resulting in an infestation of pests such as the fruit fly. As a result, it has been estimated that about 50% of mango production is lost each year.158 A system for proper quality/pest control and inspection prior to export has not been put in place by the government, according to exporters, so mangoes are rejected—with great losses—at shipping destination. Additionally, harvesting practices are reportedly poor. Independent traders harvesting mangoes focus on harvesting for quantity rather than quality, and often harvest unripe fruits. Compliance issues vis-à-vis standards and phytosanitary requirements are common. Studies conducted by APROFA indicated that about 30% of mangoes produced in the Sikasso region are of export quality, compared to the national average of 25%.159 The biggest weakness in the value chain, however, appears to be organizing the collection of mangoes produced in scattered locations for delivery to processing facilities. As currently done, there are high rates of spoilage. A shortage of sufficient throughput for processing discourages investments into value-added production, which in turn leads to a further increase in spoilage as only a limited amount can be shipped fresh into European markets. For example, a recently established company, Comafruit, found itself unable to access sufficient mangoes to run its pulp processing facility at anywhere near optimal efficiencies. Seasonality is also an issue for processors. Mangoes are available only four months of the year, hence the need for processors such as Comafruit to expand their fruit processing operations to handle other horticultural crops, such as grenadine, orange and tomato in order to ensure consistent products. Input supplies (such as boxes and packing material) as well as refrigerated transport vehicles are prohibitively expensive, if in fact the sufficient quantities can even be found. The management of cold warehouses also has been reported to be difficult due to the high cost of electricity as well as the lack of reliable electricity. Financial services and risk management mechanisms are needed but are not readily available. The government provides no insurance for exporters. 158

Yéyandé Sangho et al, Growing Mali’s Mango Exports: Linking Farmers to Markets through Innovations in the Value Chain, (The World Bank, 2010), page 12. 159 Ibid, page 22.

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Opportunities to improve the value chain’s performance would seem to exist at every step: for an effective mango growers association to coordinate production; for more marketsavvy collectors to improve quality and value; for privately-run processing firms to produce a diversified set of processed products; and for government investments in services and infrastructure. While consulting studies are abundant and donor support remains high, effective linkages between the producers and processors of mango continue to be elusive. There are significant information gaps as well: on up-to-date market information related to growers and exporters, as well as statistics on exports of Malian horticultural products, including mangoes. Table 14. SWOT Analysis of Mali’s Horticulture Value Chains160 Strengths Weaknesses Southern part of Mali has favorable agroScattered production of small mango climatic conditions for mangoes particularly producers, which makes logistics of in the Bamako and Sikasso regions. collection for a processor costly. Horticulture sector has been declared a Information gaps: market information, priority value chain. production information, Limited investments in production and in processing facilities. Difficulty achieving compliance vis-à-vis standards and phyto-standard requirements. And issues related to preexport inspection. Opportunities Robust growth of demand for mangoes in Europe and this demand for mangoes in Europe is expected to grow. Opportunity for domestic processing of mangoes for domestic, regional and international markets.

Threats Availability of mangoes only 4 months a year, which means processors have to find other products for throughput for the rest of the year Difficulty accessing finance as banks consider the horticultural sector as too risky. Prohibitive costs of importing needed inputs, e.g., packaging supplies.

Key Recommendations: a) Assist the establishment of small holder farmers associations b) Assist farmer associations with extension services for mangoes and other crops

160

The SWOT analysis draws heavily from an assessment of Mali’s mango value chain.

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ANNEX A: SELECT COMPETITIVENESS RANKINGS FOR KENYA, ETHIOPIA, GHANA AND MALI

OVERALL COMPETITIVENESS

Kenya Ethiopia Ghana Mali Ranking out of 139 countries 106 119 114 132

Public Institutions and Inflation Strength of investor protection

77

99

33

119

Burden of government regulation

106

27

47

54

Irregular payments & bribes

134

88

92

139

Inflation

126

139

136

56

Quality of primary education

61

91

82

136

Quality of education system

32

60

71

125

Quality of management schools

51

106

64

126

Labor [Pay & Productivity]

67

90

119

131

88

87

85

107

Extent & Effect of Taxation

122

62

40

116

Total Tax Rate

100

32

42

122

82

129

70

122

Availability

53

124

78

112

Affordability

67

119

89

123

Production Process Sophistication

66

129

104

133

Value Chain Breadth

66

115

104

120

Human Resources

Infrastructure Quality of overall infrastructure Tax Rate & Capital Flow Restrictions

Restrictions on capital flows Financial Services

Private Sector Development

Source: World Economic Forum’s Competitiveness Report 2010-11

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ANNEX B: SUPPORTIVE PUBLIC INTERVENTIONS FOR PSD ACROSS THE AGRIBUSINESS SUPPLY CHAIN161 •MACRO-ECONOMIC MANAGEMENT AND PROMOTION OF INVESTMENTS •CLARITY AND CONSISTENCY IN STATED POLICIES. Foundation

•ADEQUATE REGULATION OF INPUT-SUPPLY. •CAUTION AGAINST CROWDING OUT OR BY-PASSING PUBLIC SECTOR ACTORS.

Input Supply

Actions to Increase Crop Yields

•ADEQUATE SUPPORT OF AGRICULTURAL RESEARCH INSTITUTES [WHICH ARE RELEVANT TO THE NEEDS OF PRIVATE SECTOR ACTORS] •TIMELY INSTITUTION OF NEW SEED TECHOLOGIES AND PROGRESS IN ACCEPTING AND ADOPTING "SAFE" BIOTECHNOLOGY PRACTICES.

•RATIONAL AND SIMPLE PROCESS FOR ACQUIRING AGRICULTURAL LAND [DOMESTIC AND FOREIGN INVESTORS] •TRANSPARENT AND ACCOUNTABLE TRANSACTIONS OF [SIZEABLE] LAND LEASES. Farming-Land

•BOOSTING OF PUBLIC AND COMMERCIAL FINANCING TO AGRICULTURAL SECTOR. •TRANSPARENT AND ACCOUNTABLE PROVISION OF BANKABLE LOANS [BY DEVELOPMENT BANKS] Farming- Finance

Politicization in agr. mrkts

•RATIONALIZATION OF POLITICAL INTERVENTIONS IN THE AGRICULTURAL MARKETS. •CONSIDERATION OF IMPACTS ACROSS THE SUPPLY CHAIN OF ANY GOVERNMENT INTERFERENCE.

•SUPPORTIVE LEVELS OF PHYSICAL INFRASTRUCTURE AND HUMAN RESOURCES TO AGRIBUSINESSES. •EXPLOTING OPPORTUNITIES FOR PUBLIC-PRIVATE INTERVENTIONS THAT IMPROVE PHYSICAL INFRASTRUCTURE AND HUMAN RESOURCES. Processing

Marketing

• REGIONALIZATION - PARTICULARLY OF CEREALS/GRAINS. •EXPORT - PROMOTION/DEFENDING EXPORTS & GETTING CERTIFICATION LOCALLY. •DOMESTIC - ENSURING EFFECTIVE REGULATION OF PRODUCTS FOR THE DOMESTIC MARKET.

Note: Economic Stewardship is included under the category Foundation.

161

PSD refers to Private Sector Development.

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ANNEX C: LIST OF PEOPLE CONSULTED IN ETHIOPIA162 Name Ethiopian Government Mr. Tadesse Haile Dr. Abera Deressa Mr. Dendena Gemede Mr. Tadesse Hatiye U.S. Embassy and USAID: Amb. Donald Booth Ms. Kary Hintz-Tate Mr. Thomas H. Staal Mr. Jason D. Fraser Mr. Daniel Moore Mr. Lazarre Potier Private Sector Actors: Mr. Fasil Tsegaye Dr. Abayneh Esayas Mr. Tesfalidet Hagos Mr. Tesgaye Kifle Mr. Eyassus Zafu Mr. Lemma Ms. Hilde Duns Mr. Yared Demissie

Position

Organization

State Minister State Minister (Ret.) Agro-Industry Proc. Dev. Dept. V.P. Credit Services

Ministry of Industry Ministry of Agriculture and Rural Ministry of Industry Development Bank of Ethiopia

U.S. Ambassador Second Secretary Mission Director Deputy Mission Director Office Chief - BEAT Business, Environment, Agriculture and Trade (BEAT)

Embassy of the United States of Embassy of the United States of USAID-Ethiopia USAID-Ethiopia USAID-Ethiopia

Managing Director Community Lia. & PR Manager General Manager Manager, Commercial Dept. Director Chairman General Manager Sales and Marketing Manager Early Investor - Feedlot

Akaki Feed Plant PLC AfricaJUICE Luna Export Slaughterhouse Ethio Agri-Ceft United Bank and United Insurance Ethiopian Chamber of Commerce Alema Farms & Alema Koudjis Alema Koudjis Feed Fairfax Technologies

USAID-Ethiopia

Public-Private Institutions: Ms. Elleni Gabre-Madhin, Phd CEO Mr. Bemnet Aschenaki Senior Manager

Ethiopian Commodity Exchange Ethiopian Commodity Exchange

International Institutions Mr. Achim Foch, PhD Mr. Ermias Sehai Mr. Kahsai Berhe

World Bank-Ethiopia IPMS Ethiopian Farmers Project IPMS Ethiopian Farmers Project

U.S. and International NGOs: Mr. Hank Fitzhugh, Phd Dr. Wondwosen Asfaw Mr. Asfaw Alemayehu Mr. Addis Alemayehou Mr. John Bick Riley Mr. Thomas H. Carr Mr. Marc Steen Mr. Khalid Mohamed Mr. Brady P. Wilkinshaw Ms. Heather Ho

Senior Economist Knowledge Management Advisor Research Officer

Chief of Party SPS-LMM Senior Veterinary Epidemiologist SPS-LMM Ethiopian Representative Corporate Council on Africa Chief of Party VEGA Country Rep and Chief of Party ACDI-VOCA Ethiopia Project Director Fintrac-Ethiopia Portfolio Coordinator, Head of SNV-Ethiopia Value Chain Dvpt Gates Foundation/Ethiopia's Agricultural Transformation Agency Associate Program Officer Gates Foundation Business Development Manager TechnoServe East Africa

162

Field trip to Ethiopia by both Mima Nedelcovych and David Shiferaw occurred between 17 January 2011 and 22 January 2011.

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ANNEX D: LIST OF PEOPLE CONSULTED IN GHANA163

Individual Government officials Samuel Dapaah W. Kofi Larbi Mahama Ayariga Stephen Debre Stephen Kpordzih USG Officials/Contractors Peter Argo Allen Fleming John Mullenax Pearl Coleman Ackah Fenton Sands Vanessa Adams Roger Brou Christophe Bruyas Nicholas Railston-Brown Samuel Baba Adongo Olaf Kula Emmanuel Dormon Ernest Kweku Koranteng NGOs/Associations Andre Bationo Leovegildo Lopes de Matos Jose Luiz Bellini Leite Private Companies Everett Anderson Peter Stelzel Richard Amoasi-Anoh Edward Ayensu Jon Vandenheuvel Justin Bruch T.G. Parthasarathy Marc Kok Bert Spenkelink 163

Ministry/Company/Org

Title

Min Food & Agriculture Min Trade & Industry Min Trade & Industry Ghana Invest. Promo Centre Agric Development Bank

Adviser to Minister Chief Director Deputy Minister Senior Inves. Officer Managing Director

USAID USAID USAID USAID USAID West Africa Trade Hub West Africa Trade Hub West Africa Trade Hub Technoserve Technoserve ACDI VOCA ACDI VOCA ACDI VOCA

Deputy Mission Director Director Econ. Growth Office Agric Advisor, Econ Growth Priv Sec Spec., Econ Gr Off Policy Advisor/ Feed t Future Director Business & Finance Director Finance Program Coordinator Country Director Deputy Country director Country Director Deputy Chief of Party Change Manager

AGRA

Director, West Africa

Embrapa Embrapa

Regional Res Rep Agribusiness Coordinator

Prairie Volta Ltd Prairie Volta Ltd Prairie Volta Ltd Ayensu & Associates Africa Atlantic Global Farming Solutions Olam Ghana Ltd. Wienco Ghana Ltd. IntEnt Ghana

CEO Chief Operations Officer Finance Manager President President CEO Vice President Africa Managing Director Director

Field trip to Ghana by Mima Nedelcovych between 6 December 2010 and 16 December 2010.

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Rene Haveman George Kporye Mehdi Saint Andre George Osieku Ken Ofori-Atta Kwabena Amporful Yofi Grant

Agric Knowledge Centre Golden Exotics Ltd Yara Ghana Cotton Company Ltd Data Bank Databank Private Equity Ltd Databank Private Equity Ltd

Managing Director Managing Director Managing Director Managing Director President Vice President Executive Director

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ANNEX E: LIST OF PEOPLE CONSULTED IN KENYA164 Name Position Kenyan Government and Government Agencies Dr. Romano Kiome Permanent Secretary Mr. Humphrey Mwangi Director of Agriculture Dr. Mussolini Kithome ASCU - Coordinator Eng. John Mosonik Industrialization Secretary Mr. David Magawaro Head-Medium & Large Industries Mr. Samuel Barchok Keter Head-Micro & Small Industries Mr. George Makateto Assistant Director Industries Eng. Abdulrazaq Adan Ali Permanent Secretary Mr. Simon Chacha Nyangi Secretary, External Trade Mr. Gabriel Kaunda Chief Economist Mr. Mathere Wanderi Chief Executive Ms. Margaret Waithaka Manager Investments Mr. Jonathan Chiffalu Commercial Relations Dr. James Kahuro ARIS Manager Ms. Florence Jelengat Marketing Manager Dr. Moses Ikiara Director Dr. John Omiti Assistant Director Ms. Roslyn Ngeno Investment Advisor

Ministry of Agriculture Ministry of Agriculture Ministry of Agriculture Ministry of Industrialization Ministry of Industrialization Ministry of Industrialization Ministry of Industrialization Ministry of Trade Ministry of Trade Ministry of Trade Export Processing Zone Export Processing Zone Export Processing Zone Kenya Agricultural Research Institute Kenya Horticultural Development Institute Kenya Institute of Public Policy Research Kenya Institute of Public Policy Research Kenya Investment Agency

U.S. Embassy and USAID: Mr. Larry Meserve Regional Director Ms. Erna Kerst Mission Director Mr. James Hope Deputy Mission Director

USAID USAID USAID

Private Sector Actors: Mr. Richard Kimani Rugendo Managing Director Mr. Nick Hutchinson Managing Director Mr. Charles Muchiri Managing Director

Kevian Kenya Ltd UNGA Holdings Ltd Avenue Fresh

International Organizations, NGOs and Associations Mr. Fred Ogana Country Director Mr. Henry Kinyua Deputy Regional Manager/Nurture Project Mr. Sebastian Wanjala Oggema Deputy Chief of Party Mr. Nduati Kariuki National Chairman Mr. Kanywithia Mutunga CEO Ms. Anne Mbaabu Mr. Nsanya Ndanshau Structured Trade Syst Mngr Mr. Samwel Rutto Structured Trade Prog Officer Mr. Jackson Kiraka Data Analyst Ms. Fostina Mani Vice Chair Ms. Aida Der Hovanessian Director, Agriculture and Agribusiness Africa Mr. Martin Kabaluapa Purchase for Progress Coordinator

TechnoServe TechnoServe ACDI-VOCA Kenya Natn'l Federation of Agricultural Kenya Natn'l Federation of Agricultural AGRA East Africa Grain Council East Africa Grain Council East Africa Grain Council East Africa Grain Council IFC WFP

164

Organization

Field trip to Kenya by both Mima Nedelcovych and David Shiferaw between 22 January and 29 January 2011.

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ANNEX F: LIST OF PEOPLE CONSULTED IN MALI165 Individual Title Government officials Minister of Agriculture Fousseyni Mariko Advisor to Min of Agric Minister of Industry Abou Diallo Deputy Director General USG Officials/Contractors Gillian Milovanovic Ambassador Jean Harman Director, Acc. Econ Growth James Lykos Priv Enterp Devel Officer Halima Ouattara-Ayanou Mngr, Markets & Trade Prog Jean Francois Guay Director Dick Cook Marketing Specialist Djiguiba Kouyate Specialist, Rice Value Chain Veronique Praz Value Chain Specialist Leigh Hartless Project Coord Agribusiness Private Companies Bakary Yaffa President Christian Lods Director General Cyril Achcar Director General Amandine Hourt Mngr, Develop Partners Abdoul Whab Moulekafou Chairman Marc Ibrahim Traore Director General Amadou Ba Director General

165

Ministry/Company/Org

Ministry of Agriculture contacts at home Agence Promotion Invest US Embassy USAID USAID USAID Abt/IICEM Abt/IICEM Abt/IICEM ACDI/VOCA/IICEM ACDI/VOCA/IICEM AMELEF Moulins de Sahel Groupe A.M.I. Groupe A.M.I. Abattoir of Bamako CATEK COMAFRUITS

Field trip to Mali by Mima Nedelcovych between 30 November 2010 and 7 December 2010.

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