India-Africa Agri food Summit

March 7, 2007

Sanjeev Asthana

Agenda
Introduction
Horticulture Sector

Market Scenario
Horticulture Sector in Africa
Market Trends Need for Differentiation

The fundamental belief for us is that growth is life and we have to continue to grow at all times
- Mukesh D Ambani Chairman & Managing Director

Horticulture Opportunity- Africa

Factor Advantages
Cost Competitiveness Crop Diversification

The Opportunity

Untapped Global Trade

Wastages across the Supply Chain Technology to Enhance Yield Growth

Extrinsic Factors
Government initiatives and Policies

Changing demand
In OECD countries
More variety (product differentiation) Higher quality requirements Niche products, organic, labels

Year-round demand

In developing countries
Income growth Urbanization More consumption of high value products

Horticultural Trade

Volume increased from 37 million MT in 1970 to 135 million MT in 2003 Value increased from US$ 6.5 billion (1970) to US$ 90 billion (2003) Nearly 21% of all agricultural export value in developing countries

Horticulture in Africa
Africa Produces around: 13% of World Fruits 8% of World Vegetables Challenge today in underdeveloped
Marketing Infrastructure Food Processing

Supply Chain Infrastructure

Information Mechanism Price Hedeging Platforms Retail Networks

Source: FAO data, Totals mentioned here are for total F&V production in Region

Production in OOO Tones

Negative Growth

Production in OOO Tones Source: FAO

Africa Share in World Production is continuously Decreasing Horticulture will be the growth driver for the African Continent Focus should shift towards enabling infrastructure for the growth of sector

Proximity to European markets a big plus

Value adding activities will result in higher revenues for the participants

Kenyan Exports of Horticultural and Floricultural Products, 1980-2002

Horticulture product exports increased at a steady rate

Kenya has a factor advantage of freight

cost to European markets One out of every three roses in EU comes from Africa

Canned Pineapple is a case of success story Value addition through export of sliced pineapples

Agri Infrastructure - Key to Sector Development

Warehousing & Storage

Logistics

Primary Processing Community Facilities

Technology Development Food Processing & Export

Retailing

An Engine for Economic Growth

More jobs, more income Horticulture - more jobs / hectare than most other crops Horticulture - potential for off-farm employment - value-addition - processing Increasing importance of horticulture in rural economies

Increased Employment
Average number of labor days per hectare for production of cereals and vegetables Country
Cambodia Vietnam (southern) Vietnam (northern) Bangladesh Lao PDR Philippines India

Cereals
81 111 216 133 101 93 80

Vegetables
437 297 468 338 227 185 124

Increase (%)
440 168 117 154 125 99 55

Horticulture produce is ideal for small farmers since they are labor intensive crops Employment also gets generated through value addition activities like food processing.
Source: Weinberger and Lumpkin, 2005

Higher Incomes
Percent difference in net farm income among smallholders growing horticultural crops and rice Country Kenya Lao PDR Cambodia Vietnam (northern) Vietnam (southern) Bangladesh Difference 497 380 117 189 20 29

Most of Horticulture produce is cash crops results in higher realizations Employment also gets generated through value addition activities like food processing.
Source: Weinberger and Lumpkin, 2005

Impact of Agricultural Initiatives in Horticulture

To significantly contribute towards Poverty alleviation Rural Development Strengthened trade and economic competitiveness Agricultural sustainability and Increased Farm Realizations While delivering direct benefits to the farmers and consumers

Development of Agro-Industry

Processing of fruits and vegetables (cashew, black pepper, Innovative Packaging can transform the value realizations for the African produce

Value Addition Price Realizations

In global commodity markets MANY produce the same product

The market gets saturated and the price decreases.

Value-added products can make a difference in competitive markets

But a CHANGE has to take place..

Producing what is marketable

Existing Products
Phase I

New Products
Phase II

Focus on producing specifically for targeted markets.

Focus on quality, post harvest management techniques, consistency of produce, sorting, grading & packaging, etc. Catalyzing large scale relevant technology processing with

Work on growing products that large developed markets like US & EU consume.
Africa varied soil & climatic conditions support farming of almost every fruit & vegetable

Major Food Trends- Value Addition Opportunities

Wellness
Well-Being Vitality
Fortified/
Vitamin Enriched Naturally Healthy Portion Weight

Safety
Personal Communal Environmental

Gratification
Pleasure Im worth it
Product
Performance Individualism Target specific

Convenience
Saving time Energy and Space

Clean
Organic Sustainability Contaminant free

On-the-Go Portability Single Use No Fuss/ No Muss

Control
Nutrition Rich Anti Aging Self Medicated

Quality
assurance

Comfort
Sensory Ethnic Indulgence Premium

Expedient
One-Handed functionality

Functional
Packaging

Key Market for the African Produce is European Markets which are highly evolved in terms of quality and niche needs

Pineapple

Global market growth: 6% annual Cte dIvoire: 2% yearly growth Costa Rica: more than double volume over 5 years Ghana: 45% growth over 5 years, reaching 3rd position in EU supplier Value addition by Slice Pineapple Exports

Value-adding Packaging

An example of how apples can become a product with more value!

Differentiation by understanding the needs of the customer; Convenience and Food Safety Will be the key Differentiators

Thank You