UK Trade & Investment MASDAR International Consultants 17th November Ghana

UK Trade & Investment MASDAR International Consultants 17th November UK TRADE & INVESTMENT AGRO-PROCESSING SEMINAR Miklin Hotel, Kumasi 17 th November 2003

UK Trade & Investment MASDAR International Consultants 17th November Ghana Agro-Industry Study 2001  Phase 1  Review and diagnosis  SWOT Analysis  Identify  Investment Opportunities  Public Sector Projects  Phase 2  Investment Appraisal  Project design Nationwide study over 12 months funded by African Development Bank

UK Trade & Investment MASDAR International Consultants 17th November Seminar Programme  Agro-Processing - where is Ghana today  James Siggs Bsc. MBA  Marketing Processed Products  Matthew Kofi Ocran BSc. MPhil.  Demand for Processed Foods  Dr. Victor Nyanteng  Agro – Processing Opportunities  Mr. Colin Watson BSc. MBA

UK Trade & Investment MASDAR International Consultants 17th November Oil Palm in Ghana

UK Trade & Investment MASDAR International Consultants 17th November Ghana Agro-industries Where are we today? James Siggs

UK Trade & Investment MASDAR International Consultants 17th November (3% annual growth rate) Population Projection

UK Trade & Investment MASDAR International Consultants 17th November Agro-Industry Flow Chart BreedstocksSeedsEquipment AgrochemicalsOther Supplies Extension & Research Transport Farm Produce Transport Agro-Industry Products Transport ExportersDistributors Storage Raw Materials Finished Goods Inputs Own use Land & irrigation Finance Human Resources

UK Trade & Investment MASDAR International Consultants 17th November Main Features of Ghanaian Agriculture  Mostly rainfed  Majority of producers are smallholders  Low levels of technology utilised  Productivity is generally low and costs of production are high  Quality issues are not addressed

UK Trade & Investment MASDAR International Consultants 17th November Average Yields (mt/ha rainfed) CropActualAchievable Cassava Plantain Yam Cocoyam Maize Paddy rice Cowpeas Millet Sorghum1.12.0

UK Trade & Investment MASDAR International Consultants 17th November Agro-processing Industries? What is an Agro-processing Industry?  Integral component in the processing chain to transform or stabilise crops/products and/or to provide added value. What an Agro-processing Industry is not!  Disposal of periodic crop surpluses  Converting low quality raw material inputs into marketable finished products.

UK Trade & Investment MASDAR International Consultants 17th November Pre-requisites Market  Product  Product specifications  Demand potential  Price  Competitiveness Raw Material Supply  Quality control  Security of supply  Supply chain logistics  Price  Competitiveness

UK Trade & Investment MASDAR International Consultants 17th November Current Issues Issue  Under-utilisation of capacity  Competitiveness Factors  Raw material supply constraints  Markets and market intelligence  Access to credit  Consumer purchasing power  Competitiveness  Raw material costs  Productivity  Inappropriate technology  Under-utilisation of capacity

UK Trade & Investment MASDAR International Consultants 17th November Finance Issues  Long term nature of sector  High risks due to markets and weather  Substantial equity investment required  Availability of collateral  High transaction costs  Exchange rates/Inflation  Track record

UK Trade & Investment MASDAR International Consultants 17th November Ghana Agro-Industry SWOT Strengths  Political stability  Internal security  Land bank  Agro diversity  Low labour costs Weaknesses  Fragmentation  Not quality conscious  Lack of raw materials  Low productivity  Poor credit rating Opportunities  Import substitution  Increasing urban population  Divestment of state assets  Non traditional exports  Inflow of funds Threats  Cheap imports  Exchange rate fluctuation  Entry barriers in EU & USA  Aggressive competitors  Environmental degradation

UK Trade & Investment MASDAR International Consultants 17th November Issues & Constraints Issues  Quality  Trade policy  Land tenure  Infrastructure  Training  Information  Sustainability Constraints  Management  International treaties  Custom  Budget  Attitudes  Dissemination  Cash flow

UK Trade & Investment MASDAR International Consultants 17th November Immediate Priorities  Improved quantitative and qualitative raw material supply for existing facilities  Continued improvement in the enabling environment to augment the operational efficiency of existing facilities  Develop and introduce products with immediate potential in the domestic market  Market and quality awareness training

UK Trade & Investment MASDAR International Consultants 17th November Marketing Processed Products Matthew Kofi Ocran

UK Trade & Investment MASDAR International Consultants 17th November Order of Presentation  Performance of the NTE Sector  Market and Quality Issues  Processing, Packaging and Distribution

UK Trade & Investment MASDAR International Consultants 17th November PERFORMANCE OF NON- TRADITIONAL EXPORTS

UK Trade & Investment MASDAR International Consultants 17th November Growth in the NTE Sector  Exports of NTE brought in US$ 504 million in 2002 (Increase of 9.7% over 2001)  Number of exporters dropped from 3,117 to 2001 to 3,083 in 2002  Products number dropped from 260 in 2001 to 257 in 2002  Product number reduction occurred in semi-processed category whilst number of exporters reductions also occurred in the agricultural commodities

UK Trade & Investment MASDAR International Consultants 17th November Non-Traditional Exports

UK Trade & Investment MASDAR International Consultants 17th November Performance of the Horticulture Sub-Sector  Over the past 5 years;  Total exports of horticultural products have increased from 33,000 tones (1997) to 70,000 tones (2002)  Value of exports has also increased from US$22.9m to US$33.6m  Progress has been restricted to a few areas  Sea freighted pineapples (from 15,000t to 40,000t)  Sales to Europe of Asian vegetables (increasing unit value of air freighted exports)  Fresh produce processing (fresh-cut fruits and juicing)  Fresh produce sales in local and regional market

UK Trade & Investment MASDAR International Consultants 17th November Agricultural Non-Traditional Exports – Sub Sectors

UK Trade & Investment MASDAR International Consultants 17th November MARKET AND QUALITY AWARENESS

UK Trade & Investment MASDAR International Consultants 17th November Quality Issues  It is important that every body in the supply chain appreciates the importance of quality in the EU Market! (farmer-trucker-shipper)  Pesticide management  Pesticide Residue  Post-Harvest practices  Product norms and standards

UK Trade & Investment MASDAR International Consultants 17th November Market Opportunities  New opportunities in supermarket phenomena being brought in from South Africa; U Shoprite, Woolworth e.t.c as well as local supermarkets  Cereals, roots and tubers offer the best opportunity for processing because of their huge annual supplies that matches demand

UK Trade & Investment MASDAR International Consultants 17th November PROCESSING, PACKAGING AND DISTRIBUTION

UK Trade & Investment MASDAR International Consultants 17th November Processing and Packaging  Need for standards and measures  Processing and packaging adds value and leads to higher returns  Need for innovation eg. gari, palm oil, chicken, e.t.c  Benefits of processing  Packaging offers incentive/premium prices for high quality farm produce  Increases shelf life  Expand demand for product  Stabilises farm/agribusiness income  Reduce post-harvest losses

UK Trade & Investment MASDAR International Consultants 17th November Marketing Strategy  Reduce cost of production  Improve quality: consistency and reliability  Create local brands  Add value through processing  Introduce export quality assurance schemes  Commodity Trade Associations  Take advantage of $1/kg freight cost advantage  Diversify product portfolio by entering into high value horticultural products (MD2 variety of pineapple)  Local and regional market development

UK Trade & Investment MASDAR International Consultants 17th November Role for Public Private Partnership  Infrastructure Development  To help in infrastructure support  Eg. development cold chain infrastructure at the ports  Trade Associations to pull resources particularly in ensuring high quality standards

UK Trade & Investment MASDAR International Consultants 17th November Flowers for Export

UK Trade & Investment MASDAR International Consultants 17th November Demand for Processed Foods Dr. Victor Nyanteng

UK Trade & Investment MASDAR International Consultants 17th November Content  Role of Food Processing  Processed Food Commodities for the Domestic Market  Use of Processed Food Commodities in the Preparation of Household Meals Demand for Processed Food Commodities  Prospects for Increased Demand

UK Trade & Investment MASDAR International Consultants 17th November Role of Food Processing  Adds value to low value fresh commodities  Increases shelf life of the perishable fresh commodities  Improves intra-year availability of seasonal food crops production  Reduces wide fluctuations in intra year food prices  Enhances producer prices and incentives for increased production

UK Trade & Investment MASDAR International Consultants 17th November Role of Food Processing  Substitutes for imported processed food commodities  Opens avenues in export markets  Enhances food security  Improves nutritional quality of fresh food commodities  Adds unique taste to meals

UK Trade & Investment MASDAR International Consultants 17th November Processed Food Commodities on the Domestic Market  Some food commodities enter marketing channels and remain fresh throughout.  Others are transformed prior to entering or while in the marketing channels.  Many imported and locally processed food commodities on domestic markets including:  Frozen Meats, Poultry & Fish  Canned Meats Vegetables And Fish,  Edible Oils

UK Trade & Investment MASDAR International Consultants 17th November Levels of Food Processing  Food processed for use in household preparation of meals is at 3 levels:-  Primary Processing  Secondary Processing  Household Processing

UK Trade & Investment MASDAR International Consultants 17th November Primary Food Processing  Minimum transformation required in marketing channels  Carried out by initial producer (farmer), using poor technology

UK Trade & Investment MASDAR International Consultants 17th November Secondary Food Processing  Further transformation of output of primary processing or from raw food commodity where primary processing not required in marketing channels  Carried out by entrepreneurs in marketing systems  Some involve combining two different food commodities (eg dawadawa seed and groundnut).

UK Trade & Investment MASDAR International Consultants 17th November Household Processing  Transformation of raw food commodity in household before preparation of meals e.g.  Palm fruits to puree  Groundnuts to paste

UK Trade & Investment MASDAR International Consultants 17th November Processing of Cereals CommodityPrimarySecondaryHousehold MaizeShellDough/Grits/ Flour Nil RiceThresh/MillGrits/FlourNil Millet ShellNilFlour SorghumShellNilFlour

UK Trade & Investment MASDAR International Consultants 17th November Processing of Roots/ Tuber / Plantain CommodityPrimarySecondaryHousehold Cassava Nil / Chips Dough/Gari/ Flour/Starch Nil YamNil Cocoyam Nil FlourNil PlantainNilFlour / Fried Chips Nil

UK Trade & Investment MASDAR International Consultants 17th November Processing of Vegetables CommodityPrimarySecondaryHousehold TomatoesNilDry Slices/PowderPuree PepperNil / DryPuree / PowderPuree Garden Eggs Nil Puree OkroNil /DryPowderGrated OnionNilDry/FlakeNil

UK Trade & Investment MASDAR International Consultants 17th November Processing of Beans/Nuts CommodityPrimarySecondaryHousehold GroundnutShellPaste/OilPaste SoybeanShellPasteNil DawadawaNilPaste + Groundnut Paste + Soybean Nil CoconutCopraEdible oilNil

UK Trade & Investment MASDAR International Consultants 17th November Processing of Fruits and Other Tree Crops CommodityPrimarySecondaryHousehold OrangesNilJuiceNil PineappleNilJuice / Canning / Fresh Chunks Nil PawpawNilNil / DryingNil Palm FruitsNilPalm Oil/ Kernels /Kernel Oil Puree

UK Trade & Investment MASDAR International Consultants 17th November Processing of Livestock and Fish CommodityPrimarySecondaryHousehold LivestockNilSlaughter/ Feed Production/ Butcher/ Minced/ Sausage Nil FishNilSun Dry/ Salted/ Smoked/ Frozen/ Can Nil SnailNil/ Smoked / Dry Nil

UK Trade & Investment MASDAR International Consultants 17th November Processed Food Commodities Not On Domestic Market  Canned Fresh Snail  Canned Palm Fruit Puree  Canned Sliced Pineapple  Frozen Cocoyam Leaves

UK Trade & Investment MASDAR International Consultants 17th November Processed Food Commodities in Household Meals Preparation (1) Processed Form Use in Meal Preparation Maize Dough Porridge/Kenkey/Banku (+ cassava dough) GritsPorridge FlourAkple (+ cassava flour)/Tuo Zafi Roasted Maize FlourPorridge/aprapransa Rice GritsPorridge Flour Porridge

UK Trade & Investment MASDAR International Consultants 17th November Processed Food Commodities in Household Meals Preparation (2) Processed Form Use in Meal Preparation Cassava DoughBanku (+Maize dough) FlourAkple (+Maize Flour)/Kokonte/Pastries Cocoyam Flour Fufu Plantain FlourFufu Tomatoes Paste/Puree Soup/Stew Dry Slice Soup/Stew Pepper Paste/Puree Soup/Stew PowderSoup/Stew

UK Trade & Investment MASDAR International Consultants 17th November Processed Food Commodities in Household Meals Preparation (3) Processed Form Use in Meal Preparation Okro Powder Stew Palm Fruit Palm Oil Stew Fish Sun Dried Soup Salted Stew Smoked Soup/Stew Powder Soup/Stew Shrimps Smoked Dry Soup Powder Soup Cube Soup/Stew

UK Trade & Investment MASDAR International Consultants 17th November Demand for Processed Food Commodities  Two sources i). Household and ii). Export

UK Trade & Investment MASDAR International Consultants 17th November Household Demand  Two sets of factors i). Positive (promoting) factors and ii). Negative (discouraging) factors

UK Trade & Investment MASDAR International Consultants 17th November Positive Factors  Some processes not easy at home (cassava dough, gari, edible oils  Reduction in cooking time  Convenient and easy in cooking  Convenient for spouses working out of home and cooking evening meals  Convenient and easy to store at home  Providing colour to meals (tomato puree)  Unique taste (processed fish / shrimps)

UK Trade & Investment MASDAR International Consultants 17th November Negative Factors  Availability of fresh forms  High prices compared to fresh forms  Traditionalism in household meals preparation eg, fufu  Adulteration of processed food commodities (groundnut paste/ pepper puree, roasted maize flour, etc)  Unsanitary processing environment (fish processing, drying pepper, cassava chips, etc.)

UK Trade & Investment MASDAR International Consultants 17th November Negative Factors Contd.  Inappropriate and unhygienic packaging  Suspicion of mixing poor quality/rotten raw material in the process (pepper, tomatoes, maize, etc)  Poor packaging that make it difficult to sell in supermarkets, corner shops, etc.  Poor quality meals (fufu, discoloured cassava meal {kokonte})

UK Trade & Investment MASDAR International Consultants 17th November Export Demand  Positive Factors  Large cross-border market (cassava dough /maize dough in Togo, Smoked fish in Togo / Benin  Large population of West Africans in Europe and America  Negative Factors  Phyto sanitary restrictions  Poor / unattractive packaging  Poor result of prepared meals  Intense competition from established suppliers  Limiting infrastructure

UK Trade & Investment MASDAR International Consultants 17th November Domestic Demand Prospects  Strengthening positive factors and  Effective removal of negative factors  Positively correlated with rate of spouses working out of home, and high socio- economic costs of maids  Poverty reduction strategy raising incomes and therefore affordability

UK Trade & Investment MASDAR International Consultants 17th November Domestic Demand Prospects (Contd.)  Effective monitoring of quality to remove suspicion of adulteration and inconsistent quality (Food and Drugs Board / Ghana Standards Board)  Education to improve unhygienic processing environment  Improvement in packaging to enhance distribution outlets and acceptability  Research to improve quality of prepared meals from processed food commodities (Food Research Institute of CSIR)

UK Trade & Investment MASDAR International Consultants 17th November Export Demand Prospects  Substantial overseas niche markets for West African specialities  Developing regional markets

UK Trade & Investment MASDAR International Consultants 17th November Summary  Increasing demand for processed foods in Ghana  Increasing demand for West African specialities in US and EU  Today much processed foods do not mach the standards required by domestic and export markets  The prospects for high quality processors using modern methods are enormous

UK Trade & Investment MASDAR International Consultants 17th November Cotton Bales