The procurement for development forum at Chatham house brings together UK retailers to discuss opportunities to invest more in Sub Sahran Africa supply chains

1. Fruit Market Opportunities in Sub-
Saharan Africa
A “win-win” opportunity to improve the fruit supply chain
Presentation for Procurement for Development Forum
April 30th 2009

2. Bill & Melinda Gates Foundation and TechnoServe focus on value chain
partnerships that reduce poverty in a scalable and sustainable way
• Objective: Reducing number of hungry people Improved banana value chains
in SSA by 146 million (~75%) from 2004 to in Kenya & Uganda
2025 through increasing farm income
40,000 smallholder fruit farmers directly linked to
Approach to prioritize Investment urban wholesalers.
MNCs partnership areas Farmer incomes more than doubled. Increasing
productivity and product quality to further boost
• Value chains prioritized
• Export led income.
by size and growth,
stakeholder commitment cash crops Now looking to invest in expanding and
and level of impact diversifying fruit production – farmers see fruit
• Fruits and as a viable cash crop.
• Geographic focus driven vegetables
by investment readiness Business development for wholesalers and fruit
index and greatest need • Staple crops process companies to ensure maximum
utilisation of the farmers crop and maximum
• Cost-benefit ratios
income.
• Degree of impact on the • Alternative
greatest number of poor crops Trade volumes in banana alone now approaching
140,000Mt/yr and valued at over $11 million .
• Size of current market
demand and growth rate
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3. There is growing interest and momentum in multi-party partnership focused on
the fruit value chain
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4. MNCs have a critical role to play in the partnership
Value Chain Approach to Strategic Intervention
Enabling Environment:
•Policy / Regulation, Access to Finance, Infrastructure
Production Processing Marketing
Bill & Melinda Gates Foundation Multinational corporations (MNC)
• Fund analysis to identify opportunities • Demand generation / down-stream promotion
• Convene key stakeholders to collaborate on public • Demand guarantees to processors; bankable
sector policy and investment pledges of future demand
• Grant-making to implementing agencies • Financial and managerial support for the in-country
juice processing sector
• In-kind contributions of technical assistance in
processing, warehousing, and distribution
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5. Three strategies stand out for having the greatest potential to increase SSA
smallholders’ participation in the fruit value chain
Intervention strategies
Complexity of interventions
needed
Medium
1
Domestic markets -
processed
Export to “Mature”
2
proximate markets
- processed
6 3 Export to “New”
Export to “Mature”
proximate markets proximate markets
- fresh – processed
4 Export to “mature” 5
proximate markets Domestic markets-
- processed fresh
High
Low High
Growth opportunity
Processed Fresh for SSA
4
Source: Interviews; Euromonitor market intelligence: Fruit and Juice

6. Mango and passion fruit juice concentrate has been identified as an area of
focus due to strong demand and opportunities to reduce costs
Strong demand for fruit juice concentrate Switching to locally sourced concentrates
– esp. mangoes and passion among could reduce costs by 15-20% and
leading commercial players improve lead times
Current demand for juice concentrate from commercial
players Relative cost structures
(Expressed in MT of fresh production)
100
20,000 18,000 100
80-85 -18%
15,000 80
60 Overhead
10,000
40
5,000 2,800 Packaging
20
0 Concentrate
Mangoes Passion 0
Import model Local sourcing
MT of 1200 185 model
concentrate
Note: *Major commercial players include Coke, Del Monte, and Britania ; assumes that concentrate is 3X the strength of fresh fruit for Mangoes and Passion;
assumes that 5kg of fresh fruit (including stems and skin) is required to yield 1kg of fresh pulp; total production calculated for Uganda and Kenya only
5
Source: Coke; Britania; Del Monte; Milly processors; Ministry of agriculture, Kenya (2006); Ministry of agriculture, Uganda (2006)

7. Market growth rates in local demand for mango and passion juice
concentrates could involve ~20-65K farmers by 2011
Potential number of smallholders impacted from increased local
juice concentration production
(in K’s)
70 66
60
50 49
40 36
High
30 27
High 22
20 16
High
High 12
10 9 Low
Low
Low Low
0
2008 2009 2010 2011
Note: Assumes that farmers have an average of 1 hectare of land with a 55% wastage rate on fruit; assumes that farmers attain the average Kenyan yield for the
two fruits; Low case is where a farmer dedicates 1/2 hectare to production, high cases assumes 1/6 of a hectare is dedicated
6
Source: Interviews; data from commercial players; Dalberg analysis; Ministry of Agriculture (Kenya)

8. Success story: Frigoken, a vegetable processing company in Kenya, grew
annual exports to 1,300 containers and raise farmer income by up to 400%
Impact
Frigoken green bean production
• Frigoken currently provides support
(containers shipped)
1,400 1,300
to famers through:
1,200
1,000 • Subsidized inputs
800
600 +6,400% • Training from agronomists
400 • Maintain close contact throughout
200
20
0 production via field controllers
1989 2008
Smallholder farmers Frigoken works with
• Frigoken’s model can be adapted and
70,000 65,000
60,000 applied to the fruit market
50,000 • Considering a move into high-value
40,000
30,000 +4,233% fruits such as passion fruit.
20,000
10,000 1,500
0
1995 2008
Source: Frigoken 7

9. Significant challenges in the supply chain constrain food transformation in
SSA
Consolidation /
Production Processing Wholesale Retail
Distribution
Domestic / • Decentralization • Value capture • Lack of local • Insufficient • Difficult for farmers
regional • High cost of through dis- processing market to access market
markets inputs intermediation facilities information directly
• Lack of of the value • Limited access • Farmers receive
irrigation / use chain to “premium” low price for
of technologies • Lack of cold- channels produce
• Poor market storage
information capacity
• Low quality • High transport
• Lack of fertilizer cost
Export • Lack of • Cold-storage • Certification • Preference for • Product
markets production for capacity Standards estate perishability
export- • Lack of production of • Lack of
oriented sufficient / cash crops sufficient port
tastes / needs efficient port • Lack of infrastructure
• Access to infrastructure production for
export export-oriented • Tariff barriers
markets • Tariff barriers tastes / needs
Difficult to access finance across the value chain
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Source: Interviews; Dalberg research

10. We are engaging relevant MNCs to partner with in the structuring and
implementation of a multi-year intervention in SSA
Stakeholder Intervention
Research Implementation
engagement structuring
Research Identify Conduct TechnoServe BMGF to fund
macro specific stakeholder to develop implementation
opportunity in market workshop in plans for of multi-year
fruit supply opportunities London multi-year intervention
chain intervention
Nov Feb May Sep
2008 2009 2010 – 2012
Today
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11. Questions and comments?
Our contact information
UK US
• Steve Harris • Richard Rogers
(SHarris@tns.org) (Richard.rogers@gatesfoundation.org)
TechnoServe Bill & Melinda Gates Foundation
• Steve Homer • Simon Winter (SWinter@tns.org)
(steve@biospartners.co.uk) TechnoServe
Bios Partners • Susan Bornstein
(SBornstein@tns.org)
TechnoServe
• Thomas Carroll
(Thomas.Carroll@dalberg.com)
Dalberg Global Development Advisors
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12. Background on TechnoServe:
A global non-profit development organization
Key facts
• Founded in 1968 by
businessman, Ed Bullard,
who pioneered the private
sector approach to solving
poverty
• $50M in projected revenues
in 2009 from various public
and private sector sources
• Employs approximately 550
people, many of whom are
former industry experts or
management consultants
• Operates in 19 countries; 7
countries in Latin America
Current Work
and 9 countries across
Extensive past work
Africa, and India
Short term past work
Affiliates
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13. Our Approach – Building Businesses and Industries
The core elements of our approach:
Analyze the Identify the Develop the Refine and scale up
business entrepreneur business to expand impact
opportunity
Identify a high-potential industry Find someone with business Provide the necessary technical Improve the business model
that can support scaleable, aptitude and the drive and and business development based on experience and use it
replicable businesses that determination necessary to support to help the business to launch or expand more
benefit the rural poor, and the succeed reach its full potential businesses within the industry
point(s) along the value chain
where interventions can be most
effective
Improve the business environment
Promote regulations and policies that improve the business climate
2007 Results: 706 businesses generating $149M in revenues,
buying almost $50M in products from 255,000 rural producers