UNIDO TCB event

© Bios Partners 2008

Horticultural Products From Africa: A view from the field


SmallholderGrower

Packer – ProcessorExporter

DistributionAir Freight

UK Break BulkFreight Distribution

UK Packer Importer

SupermarketDistribution Hub

Regional Distribution Centre

Supermarket Retail Store

CustomerConsumer

Freight DistributionCustoms & Health Inspections

UK Packer Importer

UK MarketWholesaler

Retailer / CatererTrader

CooperativeInformal Merchant

Field staff & management

%age of product not suitable for export

Freight charges dependent on availability & exchange rate

Capital investment in buildings & packhouses.

Certification charges & staff costs and wages

Expensive levy charges applied to transport

Chilled distribution so expensive running costs

QC inspections grade out & rejections

Inspections , delays, fees & rejections

Capital, rates, staff and running costs

QC inspections specifications & more potential rejections

If product is not sold then wasted

Product wasted if not sold

Consumer looking for best value for money


SmallholderGrower

Packer – ProcessorExporter

DistributionAir Freight

UK Break BulkFreight Distribution

UK Packer Importer

SupermarketDistribution Hub

Regional Distribution Centre

Supermarket Retail Store

CustomerConsumer

Freight DistributionCustoms & Health Inspections

UK Packer Importer

UK MarketWholesaler

Retailer / CatererTrader

CooperativeInformal Merchant

Field staff & management

%age of product not suitable for export

Freight charges dependent on availability & exchange rate

Capital investment in buildings & packhouses.

Certification charges & staff costs and wages

Expensive levy charges applied to transport

Chilled distribution so expensive running costs

QC inspections grade out & rejections

Inspections , delays, fees & rejections

Capital, rates, staff and running costs

QC inspections specifications & more potential rejections

If product is not sold then wasted

Product wasted if not sold



Typical Vegetable Supply Chain


Vertical integration

EU marketing division


Private Standards


Lead Supplier

A Private Sector Solution

MARKETS

PRODUCTS

COSTS

INFORMATION

CAPITAL

EXPERTISE


The model that was needed

Organizedfarmers and agri sector

Organizedfarmers and agri sector

Diagram Source re-governing marketsIIED Bill Vorley


SO WHAT WAS MISSING ?


Receptive commercial sector

• “To you it is a bag of salad, dropped into the supermarket trolley with the weekly groceries”

• “The world is running out of water and British supermarket shoppers are contributing to global drought”

• The Independent May 2006


Receptive commercial sector – still under pressure

Asda• Part of Wal-mart Group• UK Sales of $25B• UK No #2 retailer• Loyal customer base• High customer trust• Committed to

supporting Fair trade at home and abroad

Andy Bond, President and CEO of ASDA will today (Tuesday 6th May) pledge to source an additional £30 million worth of fresh produce from African farmers over the next five years at the Africa Millennium Goals Summit hosted by Prime Minister, Gordon Brown.

ASDA PRESS CENTRE Tuesday 6th May, 2008



Some organized farmers and agri sector




Organised Agriculture Partnerships - Challenges

• Availability of land– Current ownership– State Vs Current occupants– Heritage land and natural boundries– Migration paths of people and animals

Lack of structural points of contact

• Joint venture potential• Expansion capital investment - high cost locally• Eventually acquisitions became inevitable as easier• Integration of local independent capacity (flexibility) – not visible


Organised Agriculture Potential - Challenges

• Long productive seasons with short “shoulders”

• Seasonality causes– Loss of skilled staff or high costs of retention– Transport critical mass issues leading to higher costs– Potential window for competitors to “steal” supply base


• Multiple crops or multiple use of the same crop– ‘Added Value’ or processing potential– Alternative markets or local cash crops

• Possibility of flexible land use with neighbours or other agri-business


Organised Agriculture

• Small Farmers bring OPPORTUNITY– Premium products– Flexibility– Proven technical ability– Good PR for hard pushed brands


– Fresh produce is commoditised and uncertain it is unlikely that small farmer virgin projects will emerge from a cold start

– The coordination and consolidation of projects into bigger more efficient entities is more likely to succeed but who will be the convener ? – SCALE !







Facilitating public technical sector

• Exporting to Europe– Competent authority (EU)– Local certification bodies (PVS)– Suitable testing laboratories (MRLs)– Pesticide registration scheme

GlobalGap

BRC

ETI smallholder

Fair Trade Organisation

BOPP – UK packhouse

Tesco Natures Choice

M&S Field to Fork

Ministry Of Labour

Department Of Health

Kenya Bureau Of Standards

NEMA – National Environment

HEBI – Ethical Business

FPEAK – Exporters Assoc

Marketing Stds 1148/2001

Harmful Organisms 29/2000

Food Safety - 882/2000

MRL Residues 91/414/eec

Traceability 178/2002


Facilitating public infrastructure

• Operating in country– Labour, agriculture ministries, educational infrastructure– Neutral fiscal policies for exporters (import / export )– Stable currency to £,$,€

• Public / Private partnership– Opportunities to develop shared infrastructure– Potential to delegate infrastructure operations to local business over time – Effective public bodies and /or parastatals – facilitators not barriers


• Transport infrastructure– Local links to airports and ports essential– Air / tourist and passenger traffic helpful – competition attractive– Mature industrial relations and high %age operation statistics at exit points



EU marketing division


Private Standards


Lead Supplier

A Private Sector Solution - A closed private loop ?

Develop Competitive Supply-sideCapacities

Develop Competitive Supply-sideCapacities

Prove Conformity with

Market Requirements

Prove Conformity with

Market Requirements

Connect to the Market

Connect to the Market

CompeteCompete ConformConform ConnectConnect

MARKETS

PRODUCTS

& A UNIDO Solution ?


Standards Institute

Accreditation Board

Industrial Metrology Institute

BIPM International Weights and Measures

ISO ILAC / IAF

Calibration

Laboratories

Inspection Bodies

System Auditors

System Certifiers

ISO 22000

ISO 9000

ISO 14000

Testing Services

Adapted from UNIDO TCB

Connecting to markets ten years on ....

CompeteCompete ConformConform ConnectConnect

MARKETS

ConnectConnect?


Thank you

Documents

UNIDO TCB event