The Postharvest Loss Alliance for Nutrition (PLAN) Technical Workshop Series

Transcription

1 The Postharvest Loss Alliance for Nutrition (PLAN) Technical Workshop Series Exploring Models, Tradeoffs and Incentives for Lending, Leasing and Owning Crates along Horticulture Supply Chains WORKSHOP REPORT Source: Ventures Africa Date: May 11th, 2017 Venue: GAIN US Office For More Information Contact: Roberta Lauretti-Bernhard, Senior Technical Advisor Global Alliance for Improved Nutrition (GAIN) E: Skype: rlbernhard67

2 Exploring Models, Tradeoffs and Incentives for Lending, Leasing and Owning Crates along Horticulture Supply Chains Washington, D.C. - Thursday, May 11th, 2017 OBJECTIVE After extensive research and analysis, the Postharvest Loss Alliance for Nutrition (PLAN) has identified the use of proper crating as one of the most appropriate solutions to reduce postharvest loss of highly perishable and fragile fresh fruits and vegetables (FFVs) that can be applicable in Nigeria and other country contexts. In partnership with the Rockefeller Foundation s Yieldwise Initiative, GAIN led a global consultation with industry experts, thought leaders and relevant private sector and non-profit organizations to explore the models, tradeoffs and incentives for lending, leasing and owning crates along the tomato supply chain (as well as other FFVs) in emerging markets. In many emerging markets, the movement of produce from farm to market involves several stages of on-farm cooling, transportation, storage and distribution involving multiple actors. The period of time between harvests to consumption is very precarious for FFVs and potentially has debilitating effects on the value, quantity and quality of the final product. For example, in Nigeria, produce is transported using overstuffed woven raffia baskets covered and separated by layers of leaves and openly exposed to harsh temperatures, dirt, and humidity, which contributes to food loss and food safety issues. Raffia baskets often pierce through the soft exterior of the produce, causing physical and microbial degradation, reducing the safety of the product, depleting valuable nutrients, and reducing both the qualitative value to the consumer and quantitative value to the producers. The use of plastic crates for the harvest, storage, packing and transport of FFVs has been proven to reduce postharvest loss and retain the quality and safety of the produce. However, crate adoption both on farm and through the supply chain has been slow in many developing countries. PLAN supports the adoption of appropriate crates for FFVs to reduce losses and improve the efficiency, food safety, profitability and sustainability of nutritious value chains. The objective of this workshop was to evaluate and discuss the various business models, tradeoffs and incentives for lending, leasing or owning crates in order to better stimulate crate adoption. Presenters and participants at the workshop were experts in their fields with a wide range of experience in crating models. Their input, highlighted below, will greatly assist PLAN in promoting the best options to its members.

3 EXECUTIVE SUMMARY The workshop was attended by public and private organizations from around the world, both in person and virtually, with expertise in reusable/returnable plastic crates (RPCs) in the developing context. There were four presenters: Lisa Kitinoja from Postharvest Education Foundation (PEF), Richard Ogundele from GEMS4, Gurbinder Gill from Agribusiness Associates, and Mike Mullin from Chep. Over the course of the meeting, presenters and participants shared their experience, challenges and suggestions on how to increase the adoption of returnable plastic crates in emerging markets to reduce postharvest loss. The major takeaways and recommendations included: Returnable plastic crates effectively reduce loss of perishable foods from the typically reported average of 30% to 5% or less (PEF, 2013) by protecting the produce from transportation and handling shocks. They also improve food safety by shielding the produce from dirt, other potential contaminates and UV light while still allowing the appropriate air ventilation. Ensuring crates are thoroughly cleaned before use is essential to improving rather than exacerbating food safety issues. Rigid, nestable plastic crates are preferable for long hauls as many collapsible plastic crates can buckle under too much force. Crate adoption rates increase when farmers and other stakeholders have a clear understanding of the benefits of crate usage, when crates are readily available within their supply chain and when crates are promoted and/or regulated by the government. A close circle network is the best option for a crating business model. This occurs when the all supply chain actors use the crates continually to pack, load and transport to their buyer and then the buyer is able to return crates back to farmer. This closed circle ensures buy in from all actors. It is most efficient when farmers have a 2-3 times as many crates on farm as generally two thirds of the crates will be in transit and/or at the market at any given time. The greatest challenge to crate adoption is the availability of crates and the upfront costs of purchasing crates. Experts see more interest in adopting crates for farmer groups or larger businesses than individual farmers because they are more likely to have the upfront costs to purchase the crates and are generally less risk adverse. It is crucial to go over the return on investment of purchasing crates with farmers and other supply chain actors to increase adoption. PEF has a cost-benefit analysis that takes into consideration: initial cost of RPCs, the cost for full RPC transport from farm to pack house to

4 market, the extra labor cost associated with handling/packing/storing, replacement costs (due to breakage or pilferage), cost for cleaning and sanitizing and the cost for return transport of empty RPCs to the farm. Standardization of equipment and crate usages across the supply chain is key to reducing loss and improving efficiency. Governments can push crate adoption by providing crates or subsidies to purchase crates for farmer, increase awareness of the benefits of crate through campaigns, mandate that crates must be used in markets and improve regulation on the usage of crates. AGENDA 10:00am - 10:15am Arrival 10:15am - 10:30am Welcome (Bonnie McClafferty) Participant Introductions Affiliation and/or international PHL/W experience PLAN Objectives and workshop expectations 10:40am 12:00pm 12:00pm -12:50pm 12:50pm - 1:00pm 1:00pm - 2:00pm Crating Business Model Dilemma Lisa Kitinoja Postharvest Education Foundation Richard Ogundele GEMS4 Gurbinder Gill Agribusiness Associates Mike Mullin Chep Discussion Highlight universal challenges and opportunities Solidify clear recommendations or best practices for businesses in emerging markets Next Steps (Robert Lauretti-Bernhard) Lunch

5 BACKGROUND Organizer: The Global Alliance for Improved Nutrition (GAIN) is an international organization that was launched at the UN in 2002 to tackle the human suffering caused by malnutrition. GAIN s mission is to reduce malnutrition through sustainable market-based strategies aimed at improving the health and nutrition of populations at risk. GAIN works on building alliances between governments, businesses and civil society to find and deliver solutions to the complex problem of malnutrition. Since its inception, GAIN has reached over a billion people with improved nutrition. Presenters: Postharvest Education Foundation s (PEF) mission is to provide innovative programs that motivate and empower people to reduce food losses and waste. PEF s strategy includes: Conducting a variety of postharvest e-learning programs for young professionals who work with small-scale farmers in developing countries, Providing free access to postharvest training materials for those who are involved in extension work and training of farmers, produce handlers, small-scale food processors, and marketers, Supplying postharvest tools and basic equipment for use in applied research and for improving practical field operations Organizing postharvest workshops for e-learners who successfully complete their online programs. Offering long-term mentoring for participants in e-learning programs via social networking websites. Conducting short courses, study tours, and workshops. Providing advice and guidance for establishing local postharvest training centers. The Growth and Employment in State for Nigeria (GEMS4) is a market development project in Nigeria funded by DFID/UKaid and the World Bank. The GEMS4 mandate is to stimulate market system changes that encourage growth and access; resulting in the creation of 10,000 new jobs and increased incomes for 500,000 people, especially for the poor, rural dwellers, and for women. GEMS4 initiatives facilitate entry into markets; provide technical support for the adoption of innovations and new business models and leverage investments for the development of key market facilities to support optimal business performance.

6 Agribusiness Associate s mission is to facilitate and enable the optimum resource utilization to make agribusiness more efficient and productive. The farming community has been adopting more professional approaches along with several value additions, however there will always be challenges especially at the interface of commercial adaptation of new technological breakthroughs. Promoted by a team of professionals passionate about agriculture, the Agribusiness Associates was incorporated in the year 2012 in USA with the vision to work with the various stakeholders of the agribusiness community across the globe to overcome the various challenges faced by them. Chep is a logistics solutions company specializing in management of standardized unit-load equipment in some of the world s most complex and efficient supply chains. Chep is an international company that deals in pallet and container pooling services, serving customers in a range of industrial and retail supply chains. CHEP is owned by Brambles Limited. Initiative Background - Postharvest Loss Alliance for Nutrition (PLAN) Poor dietary diversity is largely driven by the limited availability and affordability of micronutrient rich foods such as horticultural crops, animal-sourced foods, pulses, and nutritious grains. Fresh fruits and vegetables, due to their seasonal production and perishable nature, present one of the greatest challenges. In Nigeria, an estimated 50% of fruits and vegetables that are produced never make it to the consumer. The majority of these nutritious foods are lost or wasted post-farm gate where the absence of a strong, postharvest preservation industry creates a direct and swift path from food to waste. Without suitable technologies to conserve, store and process nutritious foods, the cost of better, diverse and nutritious diets increases drastically. A recent study by the International Food Policy Research Institute (IFPRI) estimates that reducing loss/waste in developing countries by 10% could reduce fruit and vegetable prices by 14%, population at risk of hunger by 11%, and child undernutrition by 4% by As a leader in identifying and delivering solutions to address malnutrition, the Global Alliance for Improved Nutrition (GAIN) has created the Postharvest Loss Alliance for Nutrition (PLAN) to bring together the multitude of public and private actors addressing this issue to collectively reduce loss and waste of nutritious food. PLAN will act as both a global nucleus for coordination, programming, research, knowledge exchange and investment on postharvest food loss as well as a national hub in emerging markets for business to business (B2B) engagement. Through National and Global Alliances of stakeholders engaged in postharvest loss and waste

7 (PHL/W) reduction, GAIN will serve as a backbone organization driving for collective impact. At the center of the Alliance is a B2B Engine where local businesses will be matched with international industry leaders and technical experts to increase local enterprises access to knowledge, technologies and the financial services. PLAN s mission is to coordinate and sponsor measureable actions to address losses in perishable and nutritious food supply chains thereby putting much-needed nutrients back into the food system; increasing supply and driving down the cost of these products for low-income households in developing countries. WORKSHOP DISCUSSION Returnable Plastic Crates (RPCs) can significantly reduce postharvest loss (PHL) and increase profits for fresh produce operators. RPCs have many advantages including, but not limited to: improving fruit ventilation, rigid sides that protect the produce, the ability to be stacked for easy storage, and they are made with HDPE plastic with UV light resistance. There are several different business models to provide crates and various styles of crates that can be more applicable than others depending on the produce its holding and the distance it needs to travel. However, in order to use RPCs, smallholders must be able to access them on a regular and systematic basis which can prove to be difficult. In Nigeria for example, farmers see the initial investment as risky and find it difficult to raise the funds needed to make the purchase. The PEF is promoting the adoption of plastic crates to reduce PHL to reduce loss, increase shelf life, improve profits and protect the nutritional value of the produce during handling, transport and storage. By working directly with farmers, the PEF team has found that in order to increase adoption, farmers have to compare the local cost to expected benefit. These costs/benefits will vary depending on location and season. It helps to identify a local champion who is willing to be the first adopter as they will be able to clearly showcase the benefits from personal experience. PEF has created an easy to use cost/benefit calculator that is publically available. Demand for the crates is there when farmers are aware of the benefits, but this awareness is largely lacking. Demand for crates comes more frequently from farmer groups or cooperatives that have the ability to reduce the risk to individuals and fundraise. Costs that need to be considered when investing in RPCs include the initial costs of the RPC, cost of full RPC transport from farm to market and their return, extra labor costs (handling/packing/storage), replacement costs, and costs for cleaning and sanitizing. Potential Business Models and Approaches: Grower/shipper owned - This model works best when the buyer uses the crates for operations within the control of the RPC owner, such as for harvest, pre-cooling or temporary storage. Example from India: EUROFRUIT

8 Plastic crate manufacturer owned/rented or leased to users - Examples of companies in the USA utilizing this business model: BungoBox ( Deposit System - In this system the user pays the owner of the RPCs a deposit for every container s/he uses. The deposit equals at minimum the market value of the containers. Produce buyer owned/managed/provided to users - An example of a retailer controlled RPC system comes from the UK (Twede and Clarke, 2005). Several companies in East Africa that ship to the EU also use this system for fresh vegetables. Harvested produce typically experiences a delay before packing if the buyer is late in sending empty crates to the growers. Regardless of the business model used, farmers need to be trained on how best to pack, store and clean crates. If used poorly, crates will not have their intended effect and the benefits will not outweigh the costs which will ultimately dissuade farmers to use RPCs again. Further, if crates are not properly cleaned and sanitized after use, they could cause illnesses that will also be associated with crates and deter their use. It is recommended that extension workers be trained to show farmers how to properly use and clean crates. Leasing crates is a successful RPC model when it s in a closed circle. This occurs when the all supply chain actors use the crates continually to pack, load and transport to their buyer and then the buyer is able to return crates back to farmer. This closed circle ensures buy in from all actors. The Nigeria Context: Raffia baskets vs RPC. Producers in Nigeria often transport their horticulture products in raffia baskets that are stacked on top of each other as there are very few proper crating options available. Often leaves are placed between the baskets to separate the produce, however due to the long distance between farms and markets (up to 4 days), and poor road infrastructure, the products often arrive damaged. Raffia baskets are a cottage industry and there is no organization unifying them. This is an issue because the baskets cannot be standardized, they do not stack properly on top of each other and fail to protect the tomatoes from damage. There are concerns that an increase adoption of crates would hurt the raffia basket makers, but GEMS4 conducted a study that concluded raffia basket makers are primarily young boys and contribute less than 10% of the household income. Additionally, there are other uses for raffia baskets that can be encouraged. Current Use of Plastic Crates in Nigeria: Some companies, such as Fresh Farms in Lagos, are already using plastic crates. The agribusiness community has already seen the advantage of using them and there are a few manufacturers that can supply a growing demand such as: Ceplas Industries Shongai Packaging Europlast Industries Leoplast Industries

9 Standardization of equipment and crate usages across the supply chain is key to reducing loss and improving efficiency. Standardization is also essential if a country wants to attract more foreign investment in local agriculture markets. Global companies will look for QA/QC to be maintained throughout the supply chain. Governments can push crate adoption by providing crates or subsidies to purchase crates for farmer, increase awareness of the benefits of crate through campaigns, mandate that crates must be used in markets and improve regulation on the usage of crates. Additionally, governments need to review tariffs that negatively impact the importation of improved crates and other technologies that will help reduce PHL. GEMS4 has mapped out two different business models highlighted below:

10 Amanda Brondy, Global Cold Chain Alliance and World Food Logistics Organization Araba Sapara-Grant, Agriculture for Nutrition Global Program, GAIN Ayodele Tella, Postharvest Loss Alliance for Nutrition, GAIN Bonnie McClafferty, Agriculture for Nutrition Global Program, GAIN Camelia Bucatariu, Global Initiative on Food Loss and Waste Reduction, FAO Chase Keenan, Global Knowledge Initiative Elizabeth Mitcham, Horticulture Innovation Lab, University of California Davis Gurbinder Gill, Agribusiness Associates James Eason, Global Cold Chain Alliance Lisa Kitinoja, Postharvest Education Foundation Maryam Rezaei, Global Initiative on Food Loss and Waste Reduction, FAO Mike Mullins, CHEP Richard Ogundele, GEMS4 Roberta Lauretti-Bernhard, Agriculture for Nutrition Global Program, GAIN Teale Yalch, Agriculture for Nutrition Global Program, GAIN

11 ANNEX Presentations - The workshop s presentations are compiled in the Powerpoint link below. (Double click icon below to open presentation) Postharvest Education Foundation Dr. Lisa Kitinoja Error! Not a valid link. GEMS4 Richard Ogundele Error! Not a valid link. CHEP Mike Mullin

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