BABY VEGETABLES FOR EU MARKET SUB SECTOR QUICK SCAN TANZANIA

Transcription

1 BABY VEGETABLES FOR EU MARKET SUB SECTOR QUICK SCAN TANZANIA JANUARY 2008 FINAL DRAFT STUDY COMMISSIONED BY SME COMPETITIVENESS FACILITY AND CONDUCTED BY MATCH MAKER ASSOCIATES LIMITED (MMA)

2 TABLE OF CONTENT TABLE OF CONTENT... II ABBREVIATIONS... III ACKNOWLEDGEMENT AND DISCLAIMER... IV 1. INTRODUCTION BACKGROUND TO THE STUDY OBJECTIVES AND RESULTS OF THE STUDY APPROACH AND METHODOLOGY LIMITATIONS STRUCTURE OF THE REPORT SUB SECTOR OVERVIEW SUB SECTOR DEFINITION SUB SECTOR OVERVIEW SUB SECTOR ACTORS AND MAP STRENGHTS, WEAKNESSES, OPPORTUNITIES AND THREATS SUB SECTORS DYNAMICS SUB SECTOR/VALUE CHAIN DEVELOPMENT GENERIC INTERVENTIONS VALUE CHAIN DRIVEN INTERVENTIONS WAY FORWARD...13 ANNEX I: LIST OF PEOPLE MET...14 ANNEX II: REFERENCE DOCUMENTS...15 LIST OF TABLES AND FIGURES Table 1: Fresh Vegetable Exports from Tanzania to Target Countries, (tonnes) Table 2; Tanzanian Fresh Vegetable Export Growth, (tonnes) Table 3: Tanzania s Export of High Value Vegetables by Destination Country Table 4: SWOT Analysis Tanzanian Horticultural Export Sector Table 5: Key Success Factors and Methods Figure 1: High Value Vegetables for Export Sub Sector Map Figure 2: Serengeti Fresh Export Value Chain Figure 3: ULT Export Value Chain Figure 4: MIM model Box 1: Serengeti Fresh Baby Vegetables for EU Market Sub Sector Quick Scan Final Draft MMA March 2008 ii

3 ABBREVIATIONS ADF: African Development Fund DAR: Dar es Salaam Airport DAI: Development Assistance International FT: Fair Trade EU: European Union JKIA: John Kenyata Airport - Nairobi JRO: Kilimanjaro Airport MIM: Market Intermediary Model MMA: Match Maker Associates PASS: Private Agricultural Sector Support PSCF: Private Sector Competitiveness Fund SCF: SME Competitiveness Facility SHOP: Smallholder Horticulture Outgrower Promotion Project SME: Small and Medium Enterprises ULT: Usambara Lishe Trust TAHA: Tanzania Horticultural Association TOR: Terms of Reference TPSF: Tanzania Private Sector Foundation Tshs: Tanzanian Shillings UK: United Kingdom Baby Vegetables for EU Market Sub Sector Quick Scan Final Draft MMA March 2008 iii

4 ACKNOWLEDGEMENT AND DISCLAIMER This report has been prepared by Henri van der Land, Principal Consultant with Match Maker Associates Limited (MMA) with support from the other colleagues in MMA. The authors would wish to sincerely thank each and every one who contributed in one way or another towards the preparation of the report including the provision of crucial data and information. While it is not possible to mention every one who contributed to this study, the authors would like extend many thanks to all those unreservedly offered information relevant for the preparation of this report. In particular, the authors wish to convey very special thanks to the various people who took time off from their busy schedule to provide relevant information for this study. Without their contributions, this task would have been much more onerous if not impossible at least in such a short time. Special thanks go to SCF Board and management team, who entrusted MMA Ltd with this assignment. Our gratitude also goes to Sosthenes Sambua, SFC Manager, Barbara Steenstrup, SCF Advisor, and the other SCF colleagues for their knowledgeable inputs and logistical support. We are indebted to Mr. Mital Shah, MD Serengeti Fresh, and Mr. Mike Chambers, Director WIMBO Export, who freely shared their knowledge and experiences in exporting high value vegetable to the UK and EU. Last but, definitely not least we are indebted for the openness and insights of all our colleagues from various developmental programmes and supporting institutions, like TAHA, SHOP and MIM, Their help and advice has been invaluable. Finally, it must be stressed that opinions expressed in this report are purely those of the authors based on observations and findings during the study. It therefore goes without saying that the authors, and not SCF who takes full responsibility for any errors of commission or omission that may be found in the report. Baby Vegetables for EU Market Sub Sector Quick Scan Final Draft MMA March 2008 iv

5 1. INTRODUCTION 1.1 BACKGROUND TO THE STUDY SME Competitiveness Facility (SCF) is a matching grants opportunity for businesses in Tanzania that wish to develop or increase their ability to trade and export. The SCF aims to support product quality improvement and the meeting of international standards to enable SMEs access potential markets within and outside Tanzania. SCF supports the Government of Tanzania s endeavour to develop the business sector as an engine of pro-poor economic growth, in line with Tanzania s National Strategy for Growth and Reduction of Poverty (MKUKUTA). The SCF focus is on business activities that contribute to export, economic growth, employment creation and the reduction of poverty. Since early 2006 SCF has focused primarily on two types of interventions: agro processing for fruit and vegetables, spices, natural products such as seaweed, and sisal; and three services: food safety (traceability, food safety audits), trade development (effective trade fair participation, branding, supply chain management) and packaging. SCF phase I will end in June 2008 and SCF II is currently being planned. It is projected that fruit and vegetables will also be in focus in Phase II. For the purpose of preparing for phase II, a tender was opened for consultancy companies to bid for value chain analysis in the fruit and vegetable sector. Match Maker Associates (MMA), a private sector development consultancy and training company based in Tanzania, submitted a proposal among others, which was considered the best and the assignment was awarded to MMA. 1.2 OBJECTIVES AND RESULTS OF THE STUDY According to the Terms of Reference (TOR), the purpose of the study is to identify ways to improve competitiveness through three strategies: producing and delivering goods and services more efficiently; differentiating products through processing, improving quality standards, branding; and exploiting new market demand. More specifically, the objectives were formulated as: Identify specific fruit and vegetables with high-value domestic and export market potential Identify the key players for each step of production and marketing using the value chain approach Identify key input suppliers including technologies, services Identify productivity issues at farm level Conduct an end-market study of the current demand and future growth prospects of the sector. This could include the high-value domestic market (supermarkets, hotels, resorts, lodges and the food service industry) and key regional markets (Kenya, Middle East, EU, etc.) Identify current market outlets and alternatives Analyze the factors affecting performance of the value chains Identify ways to improve competitiveness through three strategies: producing and delivering goods and services more efficiently; differentiating products through processing, meeting quality standards and branding; and exploiting new market demand Analyze the roles and relationships of actors in the industry for implementation of the interventions Baby Vegetables for EU Market Sub Sector Quick Scan Final Draft MMA March

6 Make recommendations that are useful for promoters of the study related to economic development through the growth of SMEs in agriculture and the objectives of MKUKUTA and the on-going planning for SCF II. The focus of the study is to be on the Lushoto, Tanga, Moshi and Arusha fruit and vegetable corridor of Tanzania. 1.3 APPROACH AND METHODOLOGY The fruit and vegetable sector is very wide and consisting of many different sub sectors 1 and hence MMA conducted with support of SCF a sub sector selection process; broad secondary data was collected and analysed by MMA and by applying tools as attractiveness matrix and ranking matrix in a participatory manner a choice was made among the various sub sectors. The results of the process that included a (internal) workshop was: Two major sub sector analyses Dried fruit and vegetables for urban market and export High value and fresh vegetables for local market Four quick scans Fresh and processed tomatoes for local and regional markets Baby vegetables for EU market Fresh mangoes for Middle East market Fresh citrus for local and regional market For each of the analysis, with exception of this study, MMA went through its standard step by step process, which is: - sub sector analysis (i.e. mapping, gross margins calculations, constraints & opportunities, driving forces); - value chain identification (i.e. attractiveness matrix and ranking); - value chain analysis (i.e. mapping, governance analysis, market segmentation, critical success factors) - value chain development (i.e. generic interventions and value chain upgrading strategies) - way forward (i.e. short, medium and long term interventions). This study was conducted differently for two reasons: 1. A detailed Export Market for High-Value Vegetables from Tanzania was completed in July 2007 by DAI and it contains a wealth of information. 2. The only exporter of baby and high value vegetables left in Tanzania is Serengeti Fresh 2 and hence the sub sector if at all is very small. Instead of applying the steps as explained above, the sub sector information from the DAI study was validated and updated were necessary with assistance of Mr. Mital Shah Managing Director Serengeti Fresh Ltd and Mr. Mike Chambers from WIMBO. Otherwise, it is literally copied from the DAI report. For the value chain analysis and development, the focus is on Serengeti Fresh export of high value vegetables and on the Market Intermediary Management (MIM) model that was founded by Gateway to Growth and the now defunct Gomba Estate. 1 MMA uses the following working definition to define sub sectors: all the firms that buy and sell from each other in order to supply a particular set of products or services to final consumers 2 The other one was Gomba Estate but it has meanwhile collapsed Baby Vegetables for EU Market Sub Sector Quick Scan Final Draft MMA March

7 1.4 LIMITATIONS In contrary to many other sub sector/value chain studies the absence of secondary data was not a problem due to the DAI rapport. The major limitation in this study was that the sub sector basically consists of one major player. 1.5 STRUCTURE OF THE REPORT After the introduction and background chapter, chapter 2 follows with the sub sector overview, including the sub sector map, constraints and opportunities and sub sector dynamics. The next and last chapter focuses on sub sector/value chain development and concludes with the recommended way forward. As annexes are included an overview of the people met and their contact details during this study and a list of reference documents. Baby Vegetables for EU Market Sub Sector Quick Scan Final Draft MMA March

8 2. SUB SECTOR OVERVIEW 2.1 SUB SECTOR DEFINITION During the sub sector selection workshop the sub sector was defined as: baby vegetables for EU market. The sub sector was rather narrowly defined and as baby vegetables are part of high value vegetables, it was decided to broaden the sub sector. Hence, the sub sector is defined as High- Value Vegetables for EU market. 2.2 SUB SECTOR OVERVIEW In comparison with the Kenyan industry, attempts to get the horticultural export industry off the ground in Tanzania have over a long period of time been relatively slow and sporadic. The market for green beans is perhaps the most obvious and recent success story but at the moment only Serengeti Fresh is exporting. Gomba Estate, which was Tanzania s largest fresh vegetable exporter, ceased its operations in 2007 due to financial constraints. The majority of high value vegetable exports from Tanzania go to the UK and it is only the UK and the Netherlands that have any significant, growing and regular trade in these vegetables with Tanzania. Also according to EU trade data, only peas and beans are exported in any significant volumes to Germany, UK, Netherlands and France with a developing market for sweet corn since Table 1: Fresh Vegetable Exports from Tanzania to Target Countries, (tonnes) Beans Peas Sweet corn Leeks Totals UK 2, ,944 Netherlands France Germany Total 2, ,923.5 Source: Eurostat Table 1 shows that exports of the target products to the target markets to date from Tanzania are very small, but strongest in green beans. Table 2; Tanzanian Fresh Vegetable Export Growth, (tonnes) UK ,134 Netherlands France Germany Total ,344 1,550 Source: Eurostat Baby Vegetables for EU Market Sub Sector Quick Scan Final Draft MMA March

9 Table 2 above shows that although still small, volumes of fresh vegetable exports from Tanzania to the target EU markets have increased significantly since 2000, and that the main markets for success have been the UK and the Netherlands. Table 3 below provides Tanzania export data for selected high value export vegetables based on data from the Tanzania Revenue Authority. While these data show some discrepancies with the Eurostat data above (which are based on EU import statistics), the two datasets largely confirm some major points. The data show that, while fluctuating around 3,000 ton per year, export volumes have generally trended down over the period , especially for key destination markets UK and the Netherlands Table 3: Tanzania s Export of High Value Vegetables by Destination Country Destination Country Val Vol Price Val Vol Price Val Vol Price Val Vol Price United Kingdom 4,084 1, , ,994 1, , Netherlands , , Other EU Kenya 218 1, , Other non-eu 752 2, TOTAL: 5,380 4, ,656 2, ,108 3, ,585 2, Notes: Calculated from Tanzania Revenue Authority data. Values are FOB in 000US$. Volumes are in ton. Prices are in US$ per kg. Other EU countries include: France, Germany, Belgium, Italy, Hungary, Greece. Other non-eu countries include: Botswana, Oman, DR Congo, India, Bulgaria, Rwanda, US, UAE, Australia, South Africa, Pakistan, Singapore, Bangladesh, Switzerland, Brazil, Australia, Equador, Gambia, Israel. Products included: leeks, cauliflowers, red and white cabbages, carrots and turnips, peas, beans, leguminous vegetables, eggplant, celery, and other vegetables, fresh. 2.3 SUB SECTOR ACTORS AND MAP The high value vegetables, including baby vegetables, for export sub sector is concentrated around Serengeti Fresh which is the only remaining exporter from Tanzania. The next box provides some highlights about this company and hereafter the sub sector map is presented. Box 1: Serengeti Fresh Serengeti Fresh Ltd is an independent company that is part of the Sunripe Group, based in Nairobi. Serengeti Fresh is based in Arusha, Tanzania and has 5-6 EUREPGAP certified units that supply a BRC accredited (Higher Level) packhouse. Serengeti Fresh produces Extra Fine & Fine Beans, Mangetout, Sugar Snaps, Baby Leeks, Passion Fruit, and Okra that are exported out of Kilimanjaro, Dar es Salaam and Nairobi (Jomo Kenyatta International Airport). The total 275 ha site of production area under Serengeti Fresh which enables it to guarantee whole year round supply of quality products. In total the group exports tonnes per week of ready packed vegetables. Production will increase in 2008 with the expansion through the high care facility between tonnes packed vegetables. Currently Serengeti Fresh employs an average of some 800 people directly and indirectly with over 80% female workers. These are employed in the farm, packhouse/export operation and offices Baby Vegetables for EU Market Sub Sector Quick Scan Final Draft MMA March

10 Figure 1: High Value Vegetables for Export Sub Sector Map Retailing Importation UK and EU supermarkets Designated Importers Exportation Transportation Packaging Bulking Production Serengeti Fresh Medium Scale and Global Gap certified farmers Small Scale Farmers Vertical Integrated Channel As the map shows, Serengeti Fresh is a vertical integrated operation. In addition to its own production, it is sourcing from medium scale farmers who with the assistance of Serengeti Fresh are Global Gap certified and also it buys some produce from Small Scale Farmers. Serengeti arranges for the collection of all products grown and uses its own fleet of refrigerated trucks to transport it to its central pack house from where it is after quality check and packaging transported and shipped out via JRO, DAR or JKIA. Serengeti Fresh has a strategic alliance with Flamingo in the UK, Exofi and Jesfruit in Europe. Flamingo is the leading sellers of horticultural produce to major UK supermarkets Mark & Spencer, Tesco and Sainsbury. The horticultural sector in Tanzania is very much in the picture by various donors, support organisations and local institutions. The various organisations/programmes and their services are extensively described in the Vegetable Sub Sector report that was also produced by MMA in the context of these SCF studies. It will not be repeated here but special reference is made to the SHOP programme by ACDI/VOCA that has a strong interest to support Serengeti Fresh for the purpose of promoting the export of high value vegetables by small holders. This programme is not yet in place and hence no specific details of the support activities can be provided, however, it is recommended to monitor the developments in this respect. Baby Vegetables for EU Market Sub Sector Quick Scan Final Draft MMA March

11 2.4 STRENGHTS, WEAKNESSES, OPPORTUNITIES AND THREATS Based on the (desk) research carried out during the DAI study and interviews with some leading UK and Continental EU importers and distributors, strengths, weaknesses, opportunities and threats (SWOT) of the Tanzanian high value vegetable export sub sector were identified. While validating the SWOT analysis it was observed that most of the EU importers and distributors interviewed were not (yet) importing from Tanzania. Hence, some of their perceptions were found not to be true based on the experiences of Serengeti Fresh. Obviously, Serengeti Fresh is a special case as the Sunripe Group it is already trading with EU importers for more than 40 years. The next table highlights the results of a SWOT from the perspective of Serengeti Fresh. Table 4: SWOT Analysis Tanzanian Horticultural Export Sector Strengths Weaknesses Favourable climate, available water Insufficient direct air freight links to support high export volumes Long and good experience of exporting to the UK Currently a fringe player in a highly competitive and EU (by Serengeti Fresh) market Presence of conducive micro climates around Mt No clear differentiating factor or strategic Kilimanjaro and Mt Meru advantage at present Possibilities to export via Kenya and other Small holder farmers lack modern business and countries for logistics reasons farming knowledge for export markets Opportunities Threats Growth in overall speciality vegetable consumption Downward pressure on costs and further in the EU rationalisation of the supply chain make it difficult for new suppliers to enter Consumer trends point at further growth of exotic Increasingly high standards raise barriers to entry and baby vegetable consumption Production in Zimbabwe which was a significant supplier to UK and EU has collapsed Growing niche markets in organics and Fairtrade Adding value through pre-preparing and packing At the end of 2007 Kenya has lost its preferential status (Lowe convention) thus driving up the costs of Kenyan product especially for small growers With increasing export of high quality vegetables, grade II will increasingly been sold on the local market Consolidated markets and increasing power of supermarkets: exports tend to be in high volumes by big exporters. Growth in sole sourcing. Established long-term relationships with more sophisticated exporters. The new minimum wage law is driving up labour costs while productivity remains generally low 2.6 SUB SECTORS DYNAMICS It is likely hard for new entrants in the Tanzanian high value vegetables for export sub sector to compete at least in the short term - with the long established exporters like Kenya. However, it is possible as the case of Serengeti Fresh shows to gain market share in a few niche areas for highvalue (and value-added) vegetables in the UK and EU market. Building on long established contacts and trade relations of the Sunripe group in the UK and EU market made it possible to grow but now that the sub sector has become much more competitive and the client more demanding, including compliance with health and food safety standards, replication of the Serengeti Fresh success will be challenging, particularly if strong trade relations does not yet exist. Baby Vegetables for EU Market Sub Sector Quick Scan Final Draft MMA March

12 Specialising in the supply of baby vegetables may fill a growing gap in the EU market. Not only are these products sold for a far higher value at retail in the more developed European countries, there are also significant opportunities for adding value through pre-preparing, bundling (having more than one variety in one packet) and packaging. This should return more revenue to Tanzanian farmers and exporters and may therefore require less volume as the market and infrastructure in Tanzania develops. Serengeti Fresh is exactly applying this strategy. In terms of other market opportunities to add value and differentiate, Tanzanian producers/exporters should be as a minimum looking at the following: retail ready packaging/ labelling/ bar coding (being done by Serengeti Fresh) pre-preparation: trimming, slicing etc (being done by Serengeti Fresh) organic production Fairtrade accreditation new products (perhaps new ideas on preparation or growing the first organic or Fairtrade products for a certain variety) the use of more certification schemes for higher standards The EU market for exotic fruits and vegetables including so called baby vegetables will continue to increase over the next 5 years (at approximately 4% according to UK importers). Though the market is currently dominated by growers and exporters in Kenya, Central America and other countries such as Thailand, strong and innovative companies like Serengeti Fresh show that it is possible to break in to this club of successful exporters of high value vegetables to the UK and EU. The market in the UK and other EU countries will continue to change over the next 5 years interest in organic and FT products will increase. Consumer demands for products that are deemed to be convenient will continue to grow in this context the opportunities for baby vegetables, pre packed products and snack based products will also continue to develop. A growing market for all these products exists in the EU. 3. SUB SECTOR/VALUE CHAIN DEVELOPMENT Sub sector development can be stimulated both by generic interventions that address the constraints in the sub sector, mostly executed by supporting and service delivery institutions, and value chain development interventions that explore the opportunities in the sub sector in a collaborated and coordinated effort driven by the private sector. In this chapter both type of interventions will be presented but the focus is on the latter as they prove to have a bigger impact and are generally more sustainable. 3.1 GENERIC INTERVENTIONS For Tanzania to develop a successful horticultural sector, the following needs to be put in place over a period of time: Table 5: Key Success Factors and Methods Baby Vegetables for EU Market Sub Sector Quick Scan Final Draft MMA March

13 Key Success Factors Priority Methods Entrepreneurship. Strong technical and commercial management skills able to meet the demands of leading EU retail operations, able to manage working capital, cash flows. Most Essential (starting point) Create conditions to attract investment. Training, R&D, investment in EU standards systems, working capital management. Develop data collection and analysis capability. Attract a financial partner for working capital management, who understands the business. Links with key EU importers Essential Market research, visits, promotional Well developed physical infrastructure and excellent air freight links to key EU target markets Compliance with systems of production and management control such as GLOBALGAP, BRC, ISO & HACCP Dedicated farming operations specific to EU retail requirements in terms of product quality, timing of delivery and the ability to meet set price parameters Effective use of cool store and cool chain facilities once produce has been picked and packed throughout the rest of the supply chain Essential Essential Essential Essential activity, stakeholder workshop in Tanzania Attract investment, use best practice models, establish strategic international and inter-modal partnerships Work with EU organisations, learn from best practice examples. Seek EU technical advice, e.g., from importers Research specific client requirements and realistic supply lead times. Work through scenarios for costings as well as fluctuations in supply. Management training. Research best practice (Kenyan) examples. Seek investment and strategic partnerships. Highly efficient and customer focused export businesses Important Ensure sufficient knowledge transfer as to EU requirements and establish effective dialogue with importers Support from both trade sector and government agency organisations involved in export promotion and agricultural extension services, R & D and education all focused specifically on the development of export horticulture Ongoing commitment to reducing supply chain costs and adherence to good agricultural practise Important Important Promotional activity, lobbying, awareness and capacity building with key contacts Monitoring costs, internally and the rise of globally sensitive costs like fuel and pesticides. Planning for cost reduction Promotional support at key times of the year Important Plan trips with key international contacts, maintain active communication and open dialogues to establish key times of year A willingness to work proactively with suppliers in other parts of the world in order to increase continuity of supply, share key aspects of R&D, good agricultural practice and reduce supply chain costs A willingness to focus on a small number of retail customers, maybe no more than 2 3, rather than looking to supply a wider spectrum of customers in wholesale and/or in foodservice, i.e. for the local market Increasingly, the ability to develop category plans to build business on behalf of major retail customers over the next 3 years NDP and a culture of on going business and technical improvement across the business Source: DAI July 2007 study Desirable Desirable Desirable Desirable Develop contacts through international marketing activity including trade shows, country visits, conferences, research Build up slowly from initial contacts. Place importance on quality, best practice and consistency as well as keeping an eye on competitiveness of prices Commit to business plan and product portfolio without over-stretching and diversifying too much On going communication and research to keep on top of market and consumer trends Baby Vegetables for EU Market Sub Sector Quick Scan Final Draft MMA March

14 3.2 VALUE CHAIN DRIVEN INTERVENTIONS As may be expected the value driven interventions will be mainly focused on the chain in which Serengeti Fresh is the chain leader and it is presented first. However, there is also another small chain emerging based on the ongoing efforts of MIM to capacitate and link farmers groups. It is explained later in this chapter. Figure 2: Serengeti Fresh Export Value Chain Delivery as per contract specification Market Information Medium Scale Farmers Small Scale Farmers Serengeti Fresh Consistent Supply Importers UK market EU markets Inputs, extension, business and financial support Certification and Traceability Support Finance Support SCF Serengeti Fresh and the Global Gap certified medium scale farmers, who produce on specification of Serengeti Fresh, are collaborating closely. These farmers have received much support inputs, extension, business and financial support - from Serengeti Fresh and it is ongoing to enable them to expand their operations. New small scale farmers, some of whom were producing for Gomba Estate before, are also supported but in order to upgrade them to Global Gap standards more support is needed. SCF II could play a meaning full role in this respect. Serengeti Fresh is currently exploring a new venture that has even more potential for outsourcing to small scale growers. They wish to produce and export avocado something which is already done by the Sunripe group in Kenya and many small holder farmers (starting approximately from 1 acre) could benefit from this promising venture. It will require substantial support of the same nature as shown in the above chain but also additional capital for particularly the sorting and packing facility. A special case is the Usambara Lishe Trust (ULT) which is a farmers organisation in Lushoto with around 300 members. Currently, they are selling a broad range of vegetables to high end markets in Dar es Salaam, including Mövenpick Hotel, Saverio Pizzeria and Dar Es Salaam Corridor Group (which supplies the ships in the DSM harbour). Recently, SHOP is supporting them for the purpose of exporting high value vegetables 3 via Serengeti Fresh. The latter will enable the farmers to 3 Potential products for export are among others: French beans, baby corn, garden peas, mangetout, sugar snaps, chilli, passion fruits, gooseberries, okra and cherry tomatoes Baby Vegetables for EU Market Sub Sector Quick Scan Final Draft MMA March

15 become Global Gap certified through technical assistance though the follow-up and monitoring will be mainly undertaken by SHOP s extension staff. SHOP will also assist with organisational development of ULT, including human resource development and finance for attracting a manager (on local conditions). Moreover, 3 collection centres and 1 grading/packing facility will be erected under the SHOP programme. Additional support from SCF II is required for the certification costs of the farmers as well as the financing of the inputs. The market linkage model is visualised below. Figure 3: ULT Export Value Chain Delivery as per contract specification Market Information Usambara Lishe Trust Serengeti Fresh Importers UK market EU markets Extension, Organisational Development, Capital Development, Training SHOP Technical Support Certification and Input Finance Support Consistent Supply Finance Support SCF The MIM model is rather different from the above. It started as an outgrowers scheme linked to Gomba Estate and hence it was - similar to Serengeti Fresh - strongly enterprise driven, it has meanwhile transformed more in a small holders co-operative model. The MIM model is one that can accommodate numerous market chains. The manner in which it does so is very business oriented. When the model was applied to fulfill the Gomba requirement it came up with the particular slightly different coop arrangement. MIM is building the capacities of initially 8 co-operatives in a very comprehensive and coherent manner. These co-operatives differ substantially from the usual ones as they consist of 4 to 8 clubs and each club is having around 25 family groups. These groups designate a certain percentage of their land for the production of high value (export) vegetables. They need to have available 0.15ha and this should not be more than 40% of their land. Some of these co-operatives are already EUREPGAP compliant through their earlier interaction with Gomba and support by MIM. Though the collapse of Gomba also affected MIM, they were able to sustain their operations, albeit in a reduced form, and continued securing resources for the capacity building of the co-operatives. In addition, MIM ensured that the groups remained business oriented and did not lose hope and focus during the (ongoing) transition period. Baby Vegetables for EU Market Sub Sector Quick Scan Final Draft MMA March

16 Two groups are supported with funding from African Development Foundation (ADF), an agency of the American Government, for capital investments stores and offices as well as training and management development. Another two groups are capacitated with support from PASS and a credit scheme by CRDB Bank. Kilimo Trust is expected to come in to complete the package to these groups. Also, the Private Sector Competitiveness Fund (PSDF) has provided funds for the training and basic capacity building to all 8 groups. With these resources and a well developed and comprehensive training package, MIM is moving forward to make these co-operatives viable exporters of high value vegetables. The linkage to the market is provided by WIMBO Export; it is a locally registered company with two individuals and one institutional shareholders. The director is Mike Chambers who was has a vast experience with exporting due to his involvement in Gomba and he has already established a number of promising contacts with buyers in the UK and the Netherlands. WIMBO has contracted MIM to enable the producers (in the family groups) to produce a high quality product, i.e. baby corm, fine beans and peas, and though volumes may initially be low (11 tons is targeted for ), it is projected to increase rapidly to over 1,000 tons in and above 2,000 tons in The model is portrayed below. Figure 4: MIM model Delivery as per contract specification Market Information Farmers Groups MIM WIMBO Importers UK market EU markets Extension & Technical Support, OD and Consistent Supply Capital Development, Input Support &Training ADF, KILIMO Trust, PASS, CRDB Bank SCF Certification and Input Finance Support Finance Support Baby Vegetables for EU Market Sub Sector Quick Scan Final Draft MMA March

17 3.3 WAY FORWARD Though the sub sector basically has few actors and one chain leader, it still has ample opportunity to grow with the right support from programmes like SCF (II). These interventions are in brief presented below. Short term interventions Team-up with Serengeti Fresh for the purpose of supporting the expansion of operations by the current contracted medium scale producers as well as to enable the inclusion and upgrading of medium scale producers. Support SHOP and Serengeti Fresh to develop an market linkage scheme with ULT, i.e. certification of farmers and input finance scheme Medium term interventions Assist MIM to link the co-operatives with high value market niches, such as the fair trade market Assist Serengeti Fresh to develop a business proposition for venturing into the avocado export chain. Based on the above analysis develop a support package that will enable Serengeti Fresh to include many small holder farmers in the avocado export chain Long term interventions Identify and support other investors/entrepreneurs that are able to transform the comparative advantages of the Tanzanian horticultural sector into lasting competitive advantages and replicate the successes of Serengeti Fresh. Baby Vegetables for EU Market Sub Sector Quick Scan Final Draft MMA March

18 ANNEX I: LIST OF PEOPLE MET Name/Position Contact Details Alexander Fernando; Chief of Party SHOP Jacqueline D. Mkindi, Executive Officer TAHA Mital Shah; Managing Director Serengeti Fresh Ltd Mike Chambers; Director WIMBO Baby Vegetables for EU Market Sub Sector Quick Scan Final Draft MMA March

19 ANNEX II: REFERENCE DOCUMENTS DAI (2007); Exports Markets for High-Value Vegetables from Tanzania; An AMAP BDS K7P Task Order Study prepared for USAID Baby Vegetables for EU Market Sub Sector Quick Scan Final Draft MMA March