afganistan rosi.ppt

COPYRIGHT 2004 - ALTAI CONSULTING, KABUL - AFGHANISTAN1

MAY


Flower Power – Project Summary

Develop the oil roses cluster in Afghanistan to produce rose essence for the fragrance industry worldwide

Objectives

Production

Local

Development

/

Beneficiaries

240 ha. of cultivation

Excellent conditions for organic cultivation of Damascena rose

Value adding processing and distillation done locally

Oil roses yield US$ 3,000 per ha. (US$ 1,650 farm-gate price), a good economic alternative to poppy

500 to 1,000 farmers involved

Harvest: temporary employment for 3,000/5,000 workers including many women

10 to 30 local processing units will employ 50 to 150 workers – opportunity for women entrepreneurship

25 qualified workers in the central distillation unit


Phase 1

Market research

Identification of opportunities for Flavor and Fragrance crops in Afghanistan

Phase 3 Implementation and Business plans

Phase 2 Field feasibility study

Selection of crops Technical scheme for project implementation

Phase 4 Sourcing of stakeholders

IMPLEMENTATION

Approach & Methodology

Work plan


GENEVAGENEVAGENEVAGENEVA

GIVAUDAN-Rémi Pulvérail, International Buyers Naturals -Francis Chabagno, New molecules development Director

FIRMENICH

Jean-Pierre Rozat, Director Global Purchasing Perfumery Natural Raw Material

Gordon Sanders, Buyer Perfumery Natural Raw Material

GIVAUDAN-Rémi Pulvérail, International Buyers Naturals -Francis Chabagno, New molecules development Director

FIRMENICH

Jean-Pierre Rozat, Director Global Purchasing Perfumery Natural Raw Material

Gordon Sanders, Buyer Perfumery Natural Raw Material


People interviewed

PARISPARISPARISPARIS

OTHEROTHEROTHEROTHER

MT ROMANCE / AUSTRALIAN SANDAL WOOD Co.Stephane Picquart

DESMARET SAM. Desmaret, General Manager

BIOLANDES SADominique Roques, General Manager

MT ROMANCE / AUSTRALIAN SANDAL WOOD Co.Stephane Picquart

DESMARET SAM. Desmaret, General Manager

BIOLANDES SADominique Roques, General Manager

GRASSEGRASSEGRASSEGRASSE

ROBERTET

Jean Daniel Dor, Development Director

Robert Sinigaglia, Production Director

Anne Sophie Boulet, Account Manager

IFF

Bernard Toulemonde, General Manager Laboratoire Monique Rémy

ROBERTET

Jean Daniel Dor, Development Director

Robert Sinigaglia, Production Director

Anne Sophie Boulet, Account Manager

IFF

Bernard Toulemonde, General Manager Laboratoire Monique Rémy

Key industry leaders across all levels have been consulted through one to one interviews.

GIVAUDAN

Natalie Garcia-Cetto, Perfumer fine Fragrance

Anna Estevane, European Marketing DirectorFIRMENICHOdile Pelissier, Account ManagerTAKASAGOJean Gatignol, Senior Vice PresidentDUCROS

Alain Carronnier

L’OREAL

Mathias Houpillart, Naturals RM buyer

Marie Claude Fonade, Perfumer

KABUL / JALALABADKABUL / JALALABADKABUL / JALALABADKABUL / JALALABAD MADERA

Alain de Bures, Founder

Anne Lancelot, Country DirectorGERMAN AGRO ACTIONDr. Julius Obermaier, Expert in rose cultivationAlexandra Rueth, Field ManagerURDFrancois Grunewald, FounderOTHER

Zalmai Chawali, Teacher and Farmer


The Flavor & Fragrance Market

Market Mapping

0

5

10

15

20

2000 2002 2003 (est.)

Market Size, in Bn US $, estimates

CAGR* = 10.1%

Note: *Figures come from the aggregated revenues from the companies dealing in the market. Actual growth should be lower according to our estimates Source: Freedonia Inc; Givaudan; Firmenich; Robertet; Altai Consulting analysis

60%

40%

0%

50%

100%

87%

13%

1 2

3 4

Market Size

47.4 MM

0.9 Bn $

16.6 Bn $

6.3 Bn $

13.8 16.6 18.4

Flavors

Fragrance

Natural Raw Material

- Uniqueness

- Bio / Well being

- High Quality

Synthetic Raw Material

- Non speculative

- Affordable

- Allergy free

Flavor/Fragrance Split 2002

2002Flavor and Fragrance Market Size

Of which we consider only the RM

Of which we consider only the Natural RM

The Flavor and Fragrance Market is a growing market estimated at 18.4 billion US $

Fragrances account for 40% of the market

Natural Raw Materials (RM) represent 13% of the total RM used

The market size for Natural Raw Material for the Flavor and Fragrance Market is 900 M $


Pre-selection Criteria

for F&F crops in Afghanistan

Size and growth of the market

Differentiators in the market: Is it a value (quality) or volume (low cost) driven market?

Structure of the market: presence of oligopolies, speculation…?

Non-sustainability of the current supply chain: non-socially responsible suppliers, cartels,…

Willingness of the buyers to find new variants

Attractiveness of Afghanistan in this market: primary suitability (climate, soil)

A

B

C

D

E

F


Pre-selection

Fragrance Crops

Suitability to Afghanistan HighLow

Business Attractiveness

Low

HighSandal (15-21 M $; 500-700 $/kg)

Fragrance Crops (Market Size in M $; Essence Price per kg), 2002, est.

Vetiver (6-14 M $; 50-120 $/kg)

Clove (4.5 M $; 3 $/kg)

Citronella (3-6 M $; 3-6 $/kg)

Rose (18 M $(*); 4,400 $/kg)

Geranium (9-12 M $; 45-60 $/kg)

Sage (7.5 M $; 25 $/kg)

Patchouli (25 M $; 25 $/kg)

Jasmine (5.5 M $; 550 $/kg)

Lavendin (12-13 M $; 12-13 $/kg)

(*) including rose essence and concrete


The Damascena Rose is recognized as the best oil rose

Market price for rose essence, has been US$ 4,000 to 5,000 per Kg

It takes 3,500 Kg of rose flowers to make one Kg of essence

Rose concrete is sold for US$ 700 to 800 per Kg

It takes 450 Kg of rose flowers to extract one Kg of concrete

Value Chain:

Focus on the Damascena rose

4,400

400

800

700

400

700

1,400

0

1000

2000

3000

4000

5000

Raw Material ProducerMargin

ProcessingCosts

ProcessingMargin

IntermediateMargin

WholesalerMargin

Final PriceWholesale

Production: 2,100 $

Production + Processing: 3,200 $

Value Chain of 1 kg of Rose Essence (~1.3 hectare), est., in US $


Damascena Rose: Market Research and Feasibility Study

Market size: the “rose extract for fragrance” market segment represents US$ 18 million (*) yearly worldwide (10,000 tons of flowers)

Main producers are Bulgaria and Turkey (~90% of the market), others include Morocco, Lebanon, Iran

Market Opportunities:

– buyers want to change suppliers

– production costs in Bulgaria likely to increase with entry in EU

– “Afghan Rose” quality and concept

(*) including essential oil and concrete

Oil roses will grow well above 1,000 meters elevation in the central and eastern regions:

– water quality is good– salt content is low

Other fragrance crops can be cultivated there:

– geranium under 1,000 meters– lavender at all altitudes– other local specialties to be

explored Farmers can intercrop with

vegetables and clover for additional revenue

Market Research

Main findings

Feasibility Study

Main findings


Phase 1 Market research

Phase 3 Implementation and Business plans

Financial scheme for project implementation

Phase 2 Field feasibility study

Sourcing of stakeholders

IMPLEMENTATION


Work plan

Phase 4


Production Plan

Farmers

Rose FlowersProcessing

Unit

Rose

Flowers

Distillation

/ Extraction

Unit

Farmers

Rose

Flowers

Farmers

Rose

Flowers

Rose

Water

Rose

Essence

/ Concrete

Rose FlowersProcessing

Unit

Distillation

/ Extraction

Unit


Site selection

Spring frost free areas south of the Hindu Kush

1,000 meters elevation

Irrigation water security

Low salt content

The Central region (around Kabul) and Eastern regions (around Jalalabad) have been identified as suitable

See details on map

%

##

#

#

#

#

Mandol

Wama

Andarab

Azra

Khinjan

Surobi

Jaji

Nuristan

Rodat

Puli Alam

Alingar

Qarghayi

Charkh

Waygal

Pech

Hisa-I-Awali Panjsher

Nijrab

Salang

Hisarak

Achin

Panjsher

Lal Pur

TagabKohi Safi

Dih Sabz

Alishing

Dawlat Shah

Khushi

Asadabad

Sayid Karam

Sherzad

Dih Bala

Goshta

Khogyani

Mihtarlam

Muhammad Agha

Nurgal

Bagram

Khaki Jabbar

Dur Baba

Paghman

Shinwari

Kama

Chapa DaraAlasay

Lija Mangal

Bagrami

Jani Khel

Kabul

Surkh Rod

Kuz Kunar

Hisa-I-Duwum Panjsher

Jaji Maydan

Narang

Chawkay

Chamkani

Khas Kunar

Shakar Dara

Baraki Barak

Sirkanay

Dara-I-Nur

Chaharikar

Istalif

Shinwar

Bati Kot

Pachir Wa Agam

MusayiChahar Asyab

Chaparhar

Marawara

Jalalabad

Koh Band

Maydan Shahr

Guldara

Jabalussaraj

Muhmand Dara

Nazyan

Dand Wa Patan

Mahmud Raqi

Mir Bacha KotKalakan

0 50 Miles

N

EW

S

Suitable Areas for Rose damascena Cultivation in Eastern Afghanistan

Elevation below 1000 meters -Not suitable for Rose Cultivation

National landcover

Fruit Trees/Vineyard and Gardens

Irrigated: Intensively Cultivated(1 Crop/Year)

Irrigated: Intensively Cultivated(2 Crops/year)

Districts Administrative Divisions

Provinces Adminitrative Division

Rivers

Legend

Central region:

Easier logistics, less transportation costs and time

Rehabilitation (Chamali plain)

Bigger landholdings – potential for more efficiency and quality

Eastern region:

Smaller landholdings

Remote locations

Natural flower garden

Alternative livelihood for farmers


Site Selection: Suitable areas for Rose Damascena

cultivation in Eastern Afghanistan

%

##

#

#

#

#

Mandol

Wama

Andarab

Azra

Khinjan

Surobi

Jaji

Nuristan

Rodat

Puli Alam

Alingar

Qarghayi

Charkh

Waygal

Pech


Nijrab

Salang

Hisarak

Achin

Panjsher

Lal Pur

TagabKohi Safi

Dih Sabz

Alishing

Dawlat Shah

Khushi

Asadabad

Sayid Karam

Sherzad

Dih Bala

Goshta

Khogyani

Mihtarlam

Muhammad Agha

Nurgal

Bagram

Khaki Jabbar

Dur Baba

Paghman

Shinwari

Kama

Chapa DaraAlasay

Lija Mangal

Bagrami

Jani Khel

Kabul

Surkh Rod

Kuz Kunar


Jaji Maydan

Narang

Chawkay

Chamkani

Khas Kunar

Shakar Dara

Baraki Barak

Sirkanay

Dara-I-Nur

Chaharikar

Istalif

Shinwar

Bati Kot

Pachir Wa Agam

MusayiChahar Asyab

Chaparhar

Marawara

Jalalabad

Koh Band

Maydan Shahr

Guldara

Jabalussaraj

Muhmand Dara

Nazyan

Dand Wa Patan

Mahmud Raqi


0 50 Miles

N

EW

S



National landcover






Rivers

Legend

%

##

#

#

#

#

Mandol

Wama

Andarab

Azra

Khinjan

Surobi

Jaji

Nuristan

Rodat

Puli Alam

Alingar

Qarghayi

Charkh

Waygal

Pech


Nijrab

Salang

Hisarak

Achin

Panjsher

Lal Pur

TagabKohi Safi

Dih Sabz

Alishing

Dawlat Shah

Khushi

Asadabad

Sayid Karam

Sherzad

Dih Bala

Goshta

Khogyani

Mihtarlam

Muhammad Agha

Nurgal

Bagram

Khaki Jabbar

Dur Baba

Paghman

Shinwari

Kama

Chapa DaraAlasay

Lija Mangal

Bagrami

Jani Khel

Kabul

Surkh Rod

Kuz Kunar


Jaji Maydan

Narang

Chawkay

Chamkani

Khas Kunar

Shakar Dara

Baraki Barak

Sirkanay

Dara-I-Nur

Chaharikar

Istalif

Shinwar

Bati Kot

Pachir Wa Agam

MusayiChahar Asyab

Chaparhar

Marawara

Jalalabad

Koh Band

Maydan Shahr

Guldara

Jabalussaraj

Muhmand Dara

Nazyan

Dand Wa Patan

Mahmud Raqi


0 50 Miles

N

EW

S



National landcover






Rivers

Legend


Flower Power – Presentation of

Actors and Roles

FARMERS

Cultivation – HarvestDONORS

Funding

PROJECT MANAGEMENT

Research – Steering – Coordination – Marketing

- Local Processing Units (10 to 30)Post-Harvest Processing – Rose Water Distilling

- Afghan Rose Co.Production – Distribution – Logistics – Marketing

NGOs

Training – Production Control

PRIVATE BUSINESSES


Infrastructure

Cultivation

Actors and Roles

Rose Water

Production Units

Afghan Rose Co.Transformation

and Sales

•Training

• Production Control

Funds

Rose

Flowers

Rose

Water

International

Market

Rose

Essence

Farmers

Donors NGOs

Processing

Sales


Action Plan

Post Harvest

Processing

Post Harvest

ProcessingInvestmentMarket

ResearchMarket

Research

DONORS

TrainingTraining ProductionMonitoringProductionMonitoring Distillation Distillation Sales and

PromotionSales andPromotion

FUNDING

IMPLEMENTATION

DONORS (Grants for R&D and Infrastructure)

Market Research

Feasibility Study

Business plans and partner recruitment

Train the trainers

Practical training for farmers

Demons-tration plots

PROJECT

MANAGEMENT

TEAM

Capacity building

Develop Quality Control procedures

10 to 30 decentralized post-harvest processing units

Potential for women entrepreneur-ship programs

Develop relationship with international buyers

Certification of the production process

Main distillation units

Distillation Techniques R&D

NGOsPRIVATE

INVESTORS

PRIVATE INVESTOR

AFGHAN ROSE CO

PRIVATE INVESTORS

PROJECT MANAGEMENT TEAM

Project Management – Marketing – CoordinationProject Management – Marketing – Coordination


Focus on Farmers

Expected average landholding: 2 jeribs (0.4 hectare)

Investment is US$ 1,050 per hectare

Revenue of rose flowers is US$ 1,650 per hectare after year 3, and reaches over US$ 2,000 per hectare including intercrops

Profit is around US$ 400 per year after year 5

The return rate for this investment is 17% a year on 10 years cash flow

Advantages for farmers: income security, training, access to international markets


Focus on Farmers – Financing Scheme

Early farmers (50 of them) will need to import cuttings for an expensive US$ 1 a piece. They will nevertheless make more profit from selling many cuttings for reproduction.

These early farmers will produce cuttings and sell them to new farmers for US$ 0.35

All farmers will need a credit scheme in order to make up for the investment and lack of production in year 1

These figures do not include any grants from donors. Interest free credit schemes or grants could be built in to help farmers invest in cuttings


Value to farmers and their communities

US$ 280

US$ 5,200

US$ 1,500

NPV(*) of

10-year cash flow

Very high labor costs (harvest) are detrimental to the farmer’s bottom line, but they are a plus for the extended family / community:

(*) NPV= net present value of projected cash flow

Value to the community

Value to the extended family

Value to the farmer


Business Plan – Local Processing Unit

Investment is $4,000

Good return on investment

US$ 500 profit per year

With donor grants of $3,000 per unit, each unit can bring a 35% return on a 10-year period

Advantages for entrepreneurs: proven technology, natural investment for the surrounding community


Business Plan – Afghan Rose Co.

Investment is US$ 400,000

The company shows 19% Internal Return Rate on a 10-year period, when taking into account:

US$ 150,000 grants to purchase equipment

Donors participation in R&D, Marketing

Other flowers, roots and herbs can be distilled for the fragrance industry, adding to the profitability of the distillation and marketing company

Advantages for private investors: market segment where Afghanistan can be very successful (and become a brand)


Donors Involvement

Funding for agricultural infrastructure

Project Management

Import and reproduction of roses

Selection and contracting of farmers

Grants and credit scheme for farmers

Training of extension agents and farmers

Extension / field work

Funding for distillation infrastructure

Research and Development, Marketing, Project Management

Grants for test distillation units

Training of distillation staff

Early test of roses for distillation

Sourcing or cultivation of test crops for distillation


How to get started

Cultivation of potential crops (flowers and herbs)

Training of personnel

Distillation tests/ Research and Development

Market research, involvement of key stakeholders in the market

Support of other Essential Oil projects (local roses, other flowers, dried spices and wild herbs)

Phase 1 – Pilot farm and distillation unit

Phase 2 – Development

Production and marketing of successful Phase 1 Essential Oils

Expansion of pilot farm by private investors

Final selection of crops for Afghanistan

Extension projects in several regions


Pilot Farm - Objectives

Market research and selection of crops, sourcing of cuttings and seeds (potential crops are geranium, lavender, iris, sage, mint, basil, citronella)

Hiring and Training of personnel (management, horticulture, distillation)

Cultivation and harvest

Sourcing of additional distillation raw material (such as orange blossoms, vetiver, cardamom, aniseed, cumin, saffron)

Distillation

Test of distillation material

Promotion of results

Phase 1


Pilot farm - Details

25 to 40 hectares

Cultivation

7 to 10 hectares imported Damascena roses

Remaining lands and intercrops: local roses, other flowers and herbs

Employment: 20 to 30 employees

Potential to populate 20 hectares every year with local cuttings of Damascena roses

Phase 1


Milestones and Timeline

Phase 1 – Pilot FarmPhase 1 – Pilot Farm

ExtensionExtension

Jun 04Order

cuttings

Oct 04Plant

cuttings2005 2006 2007 2008 20092004

Apr 07First Large Scale

Rose FlowersHarvest

• Contracting and training of farmers• Production and Quality control

• Import and cultivation of roses and other crops• Training of personnel• Test distillation

• Build more capacity• Production of essential oils

Processing and DistillationProcessing and Distillation

Sales and PromotionSales and Promotion

2010


Afghan Roses – Executive Summary

Position Afghanistan on a promising market segment: flowers for the fragrance industry worldwide

Provide access to international markets for 500 to 1,000 farmers in mountainous remote areas

Create 100+ jobs and 3,000 to 5,000 temporary jobs

Help private companies invest in processing and distillation capacity in order to add value locally

Create a sizeable revenue stream for the country

afganistan rosi.ppt

Documents

provinces

methodology

natural raw

rose damascena

farmers rose

rose essence

damascena

credit scheme