characteristics of markets for sunflower products · the report presents statistics and...
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SUNFLOWER PRODUCTSCharacteristics of Markets for
in the East African Community
SUNFLOWER PRODUCTSCharacteristics of Markets for
in The East African Community
KILIMO TRUST, 2017
The Regional East African Community Trade in Staples (REACTS) is a 3 year grant project funded by IFAD and implemented by Kilimo Trust. The project is working with the IFAD-supported agricultural development projects in the EAC region to accelerate incomes and wealth creation by smallholder (women, men and youth) producers of food commodities.
The mandate of REACTS is to enable agricultural development projects in the EAC Region to align, build core skills, and work with relevant partners in enabling business enterprises of smallholder producers to respond effectively to regional markets for food products in the East African Community (EAC) Common Market of nearly 160 million consumers. This study contributes to the output of REACTS on increasing understanding of regional markets.
About this ReportThe report presents statistics and characteristics of markets for sunflower products in the East African region to inform beneficiaries of IFAD projects principally and other stakeholders generally to better take advantage of these markets nationally and regionally.
DisclaimerThe views and conclusions contained in this report are entirely those of the authors and do not necessarily reflect the policy and views of Kilimo Trust or IFAD.
CitationKilimo Trust, 2017. Characteristics of markets for sunflower products in the East African Community: Regional East African Community Trade in Staples (REACTS)
About REACTS
1. Demand and Supply of Edible Oils in the EAC
¬ As at 2014, demand for edible oils in the region was 950,280 MT with 35% of that being consumed in Tanzania. Of this, palm oil constituted between 48-85% while sunflower took up 20%. Current demand is expected to increase by 117% by 2010 driven by increasing disposable incomes, population growth and a growing class of population that consume sunflower oil because of its associated health benefits compared to other edible oils.
¬ Around 184,000 MT of sunflower oil was consumed in 2014 majorly in Tanzania and Uganda, the lead producers of sunflower seed in the region. In addition, the animal feed industry utilized around 274,000MT of sunflower seed cake.
¬ At the same time, production of sunflower seed in the region stood at 1.35 million MT against 1.11 million MT of what was used to produce oil. Tanzania contributes around 78% of the sunflower seeds produced in the EAC followed by Uganda at 21%. There was an increase of sunflower seed production by 21% in these two countries between 2009 and 2014 guided by initiatives by edible oils processors aimed at securing supply of sunflower seed to their plants.
¬ Ironically, going by official statistics, the EAC region produces sunflower seed in excess of 250,000MT. However, regional deficit of edible oils stood at 530,000MT in 2014 valued at USD 442 million. In the same breath, according to available statistic, processors in Tanzania and Uganda produce surplus sunflower seed cake amounting to `241, 000 MT. However, consistent with their low production capacity, Kenya and Rwanda suffer from chronic deficit of sunflower seed and cake amidst high demand especially in the former country.
¬ Sunflower production in Tanzania and Uganda follow a cluster/hub approach as there are very specific agro-ecologies in the two countries where the crop thrives. In Uganda, sunflower is grown in the Lira hub while Tanzania has wider and more diverse suitable agro-ecologies such as Dodoma, Iringa and Tabora.
Executive Summary
i
2. Trade in Sunflower Products in the region
¬ In 2015, the EAC region imported 35,424 MT of sunflower products half of which was in form of seed cake, 33% as crude oil and only 14% of refined oil. These Imports registered a 33% growth in the period 2011-2015 driven by increasing demand for seed cake at an average annual growth rate of 147%. While this is so, palm oil products: crude and refined oil-imports in the region were 57 times more than that of sunflower oil valued at USD 434 million, representing a opportunity for import substitution for the sunflower sub-sector.
¬ Deficit status of sunflower seed for processing and cake for use in the ever burgeoning livestock industry in Kenya positions the country as the lead importer of sunflower products mainly from Uganda and Tanzania. While there is no inter-regional imports of sunflower seed cake, crude and refined oil in the region is sourced from South Africa, Egypt and Argentina.
¬ Meanwhile, there was a positive balance of trade as the region exported 89,885 MT of sunflower products in 2014 majorly seed cake from Tanzania to India which took up nearly 70% of the total exports. Crude oil was also exported by the two largest producers of sunflower: Tanzania and Uganda, shipping 2,549 MT and 1,665MT of crude oil respectively to their EAC counterparts.
3. Market Segmentation and Competitiveness ¬ The biggest markets for sunflower products in the EAC are for crude and
refined edible as well as sunflower seed cake. Refined oil is especially a preference for a crop of urban consumers who have a higher disposable income and associate the oil with health benefits. On the other hand, there exists a cottage industry near production hubs in Tanzania and Uganda which produces crude sunflower oil which is consumed around the hubs at cheaper prices than refined oil.
¬ Demand for seed cake by the animal feed industry in Tanzania and Uganda is satisfied from local production while that of Kenya, the biggest market for the commodity and Rwanda is met by imports.
Executive Summary
ii
Executive Summary
4. Characteristics of Sunflower Value Chain ActorsSuppliers of Sunflower Seed and cake
¬ In Uganda, there exist a dualistic supply chain where on one hand suppliers are organized and have contracts with big processors of edible oils in the country while on the other hand, there exists a independent chain of small-scale farmers and agents who sell their product to the highest bidder. However, suppliers of sunflower seed-smallholder farmers and traders- in Tanzania are relatively fragmented. There is also an appreciable existence of agents who buy the seed on behalf of particular processors.
¬ Animal feeds processors procure seed cake from processors through some informal arrangements or the former engage agents to collect the product from the latter especially where the agents have to move from one processors to another to procure quantities that make economic sense.
Processors of Sunflower Seeds ¬ There is a mix of small, medium and large processors of sunflower seeds
in Tanzania and Uganda the latter category being few and located in major towns of the two countries. Small and medium scale processors are located near areas of sunflower seed production for ease of access to the ever scarce raw material. However, there is a predominance of large scale edible oils processors in Kenya who majorly import crude sunflower oil for processing.
¬ Sunflower oil processors in the EAC operate at an average of 28% of their installed processing capacity due to scarcity of sunflower seeds. Processing capacity of small scale processors is just above 20% of their installed capacity while large scale processors utilize between 25% and 40% of their capacity.
iii
Executive Summary
5. SWOT of Sunflower Products Markets in East Africa
Strengths Opportunities
1) Huge investment in processing capacity in the region
2) Most big companies have already undertaken fortification as a mandatory requirement by the Ministry of Health to help reduce micro-nutrient malnutrition especially vitamin A deficiency
3) Presence of farmer based organizations e.g Area Enterprise Cooperatives (ACEs)
4) Sunflower is among the widely adopted enterprises in major processing hubs.
1) Huge deficit for edible oil products in the region (530,000MT/yearr)
2) Increasing demand especially from niche markets (health conscious urban population) and animal feed industry
3) Underutilized milling capacity (50 – 70%) in the country
4) Regional integration offering large market for sunflower products especially cake
5) Increasing interest in value chain development by big millers such as A.K Oils and Fats and Ngetta Tropical Holdings Limited in Uganda and Bidco East Africa, a regional consumer products conglomerate.
Weaknesses Threats
1) Low utilization of installed capacity (25 -40%) due to low raw material supply (in terms of quantity and quality).
2) Poor quality and adulterated products (oil and cake) i.e. limited adherence to standards and inefficient processing technology employed
3) Weak input system especially timely access to high-yielding variety seeds and low germination rate is the biggest challenge. Supply of sunflower seed is monopolized by the big processors who will only buy produce if the farmer used their seed
4) Reluctance of bulk buyers to commit capacity and procurement targets owing to low and unreliable production and side selling.
5) Limited value chain financing that limit increased production but also produce financing by processors
6) Weak and under capacitated ACEs in terms of leadership and governance, businesses management and entrepreneurial skills.
1) Weak extension system
2) Stiff competition from crude palm oil imports
3) Climate change
4) Decreasing soil fertility
iv
6. Conclusion and Recommendations ¬ Amidst increasing demand for edible oils that are labelled healthier by a
burgeoning middle class in the region, coupled with an conversely increasing demand for sunflower seed cake for manufacture of animal feeds, the productive capacity of sunflower seeds in the region remain largely low and inelastic. This is due to limited number of agro-ecologies where the crop can be grown in the region except in Tanzania and largely a fragmented supply chain that is unable to consistently respond to the supply needs of processors. To remedy the problem of high deficit status of edible oils in the region, the governments of EAC Partner Status have resulted to fiscal rebates to allow importation of alternative and cheaper oils throwing the already stretched sunflower sector deeper into uncompetitiveness.
¬ Given the limited diversity of agro-ecologies for sunflower production at the backdrop of competing use of arable land with staple crops, the only way to turn the sector around is to employ strategies for increasing productivity and structuring trade in sunflower production. In this regard, processors in the region-medium to large scale-hold a pivotal responsibility of structuring the sector by providing critical inputs such as improved seeds, last mile infrastructure to allow aggregation of produce by farmers and provision of the much needed reliable market. Conversely, it is the onus of the public sector to provide favourable environment for investment, public goods such as rural roads and extension services. As a head start, there is need to rethink the fiscal advantage crude edible oils imports enjoy in the EAC countries to allow the sunflower sector to attain a level of competitiveness.
Executive Summary
v
Report Outline � Executive Summary
� Acknowledgement
� Introduction: Background of the study
� Methodology and Limitations of the Study
� Study areas
� Key Findings
� Demand and Supply Dynamics of Sunflower Oil Products in the EAC
� Trade in Sunflower Products and Competitiveness of Sunflower Oil against Palm Oil in the EAC
� Segmentation Of Sunflower Oil Consumers in EAC
� Utilization of Installed Sunflower Oil Processing Capacity, Swot and Prospects of Contract Farming of Sunflower Seed
� Challenges, Proposed Interventions and Implications For IFAD Projects
� References
vii
viii
Acknowledgement
ix
The authors would like to thank all the organizations, private companies and individuals who provided data and information that went into developing this report. Kilimo Trust would also
want to thank IFAD for funding this study.
x
Background of the study
¬ There is an increasing demand for healthy edible oils in the EAC driven by absolute increase in population and a change in lifestyle of the urban populace including a move towards healthier oils alternatives.
¬ Most of the edible oil demand is currently satisfied by palm oil imports. However, the region has capacity to produce substantial amount of sunflower seed but has only been sub-optimally exploited resulting to massive importation of especially crude palm oil at the detriment of development of the regional sunflower value chain.
¬ However, Tanzania the eighth producer of sunflower seed in the world and to a smaller extent Uganda are the main EAC producers and hold a promise of accelerating production and substituting imports of edible oil products in the region.
¬ It is against this backdrop that IFAD commissioned Kilimo Trust to conduct a study to characterize markets of sunflower products in East Africa towards guiding the IFAD projects to leverage increased production and competitiveness of the sunflower value chain.
¬ The study targeted sunflower processors and other value chain actors in four of the five EAC countries: Tanzania and Uganda ,Kenya and Rwanda. However, processors were hard to come by in the latter two countries.
1
Introduction
Review of Secondary data and Literature
Primary Data Collection
Data Analysis Report writing and validation
A draft report was generated and gaps to be filled using primary data were identified.
Data was collected from a sample of sunflower processors in Uganda and Tanzania. Purposive sampling was done based on prior knowledge of where processors and other value chain actors are located.
Both qualitative and quantitative analysis: Excel and SPSS techniques were used to analyze primary data.
Report was generated from supplementary secondary data and literature and results from analysis of primary data. The report was then validated by key industry players.
Methodology and limitations of the study
Limitations:¬ Primary data was not collected in Burundi due to the political instability in the
country at the time of the study.
¬ Sunflower processors were hard to come by in Kenya and Rwanda and some few identified ones did not give us audience.
¬ There was limited budget to cover more sunflower processors in Uganda and Tanzania.
2
Study areas
UGANDA
TANZANIAKizotaDodomaTaboraSingidaIringa
Lira Note: Sunflower is produced in many regions in Tanzania but Dodoma region is the single largest one producing 20% of the national output 4. Conversely, around 80% of production and processing of sunflower in Uganda happens in the Lira hub region 2.
Source : 46
3
KeyFindings
DEMAND AND SUPPLY DYNAMICS OF SUNFLOWER OIL PRODUCTS IN THE EAC
¬ Edible oil consumption in the EAC stood at 950,280 MT3 in 2014 with the highest consumption in Tanzania (336,902MT) and the least in Burundi (20,700 MT). Demand is expected to increase by 117% by 2020.
¬ Palm oil, majorly imported constitutes between 48% - 85% of edible oils consumed in the EAC with Rwanda and Kenya taking up the biggest share as the countries do not or in a very limited way produce sunflower oil.
¬ Average per capita consumption of edible oil in EAC is 5.02kg lower than FAO recommended per capita consumption of 21kg/year5.
Consumption of Edible oil in EAC
4%8%
2%
7%
5%
0.08%44%
3%
1%26%
Edible oil consumption in Tanzania (336,902MT)
Coconut Oil Cottonseed Oil Groundnut Oil
Maize Germ Oil Other oilcrops oil Olive Oil
Palm Oil Sesameseed Oil Soyabean Oil
Sunflowerseed Oil
5%0.05%
85%
2%
0.28%
5%
3%
Edible oil consumption in Rwanda (26,501MT)
Groundnut Oil
Maize Germ Oil
Palm Oil
Soyabean Oil
Olive Oil
Other oil crops oil
Sunflowerseed Oil
2%2%
0.1%6%0.07%
48%
8%9%
25%
Edible oil consumption in Uganda (304,572MT)
Cottonseed Oil Groundnut OilMaize Germ Oil Other oilcrops oilOlive Oil Palm OilSesameseed Oil Soyabean OilSunflowerseed Oil
1.52%0.48%
7.56%
0.14%
79.70%
0.03%
0.59%3.32%
6.66%
Edible oil consumption in Kenya (261,605MT)
Coconut Oil
Cottonseed Oil
Maize Germ Oil
Olive Oil
Palm Oil
Rape & MustardOilSoyabean Oil
Sunflowerseed Oil
Other oilcrop oil
Source: 3
Other edible oilsOther edible oils
Other edible oils
Other edible oils
8
Consumption expected to increase by
by 2020
117%
Sunflower oil contributes about 20% of the total edible oil consumed in EAC3. There is potential to increase production to substitute palm oil imports; provided that production is made cost effective.
¬ Generally, sunflower oil consumption in EAC has been increasing by 6.4% annual rate over the period 2010-2014.
¬ Sunflower oil consumption is mainly driven by the Ugandan and Tanzanian markets that consume the highest proportions (44% and 50% respectively); a factor this is consistent with their productive capacity.
¬ Consumption of sunflower oil is expected to increase by 117% between 2014-2020. This is likely to be driven by increase in incomes, population growth, increasing perception of health benefits of sunflower oil and demand for sunflower by-products i.e. cake in the livestock industry 6.
Consumption of Sunflower oil in EAC
184
9685
8 0.48
374
Totalconsumption
in 2014
Uganda Tanzania Kenya Rwanda Total
Projected EAC sunflower oil consumption in ‘000’ MT by 2020
2020
117%
Source : Calculation based on 3, 6 , Assumption B
Consumption of Sunflower oil in the EAC (‘000’MT)-2014
Projected Consumption of Sunflower oil in the EAC by 2020 (000 MT)
9
Considering the currently used
processing capacity, EAC has a surplus of about 250,000MT. However, this value reduces greatly due
to postharvest losses; reported to be 15% in Tanzania 7. If the processors were to
operate at optimum capacity, there would be
no surplus.
¬ Tanzania and to a smaller extent Uganda are the biggest producers of sunflower seed in the region. Sunflower production in Tanzania is widely adaptable to many areas around the country but majorly, Eastern, Central, Northern and Southern Highlands regions. Besides, the crop is preferred by smallholder farmers as it is cheaper to produce than other oil seeds and more profitable than other cash crops8.
¬ Between 2009-2014, production in increased at an annual rate of 22% with consumption almost following the same trend. Consumption lagged slightly behind production resulting in a surplus especially in Tanzania (163,000MT) and Uganda (81,400MT). However, these volumes can drastically reduce as it is estimated that about 15% of seed is lost post harvest 8 . Increasing production in Uganda is
Market size: Production vs Utilization of Sunflower seed in the EAC
Production vs Utilization of Sunflower Seed in the EAC (‘000’MT)
Source: 3, 7
553 601
1,066
1,369 1,335 1,354
463 464
864
1,150 1,112 1,107
2009 2010 2011 2012 2013 2014
UtilizationProduction
Utilization of Sunflower seed in the EAC (1,107,325MT)-2014
Production of Sunflower seed in the EAC (1,354,000MT)-2014
19%1%
80%
0.0031%
Uganda Kenya Tanzania Rwanda
21%
1%
78%
Uganda Kenya Tanzania
10
mainly driven by increase in acreage under the crop in the production hub of Lira in Northern Uganda 2, Mukwano Group of Companies, the largest edible oils manufacture in Uganda has contracted more than 70,000 small-scale sunflower producers in Nothern Uganda more especially in the Lira region11.
¬ Farmers in Kenya have traditionally had little appreciation for sunflower. It is only as recently as 2014 that concerted efforts by edible oil processing companies resulted into more production with farmers planting the crop more citing high productivity and shorter maturity periods of 3 months compared to other crops such as tobacco 9. For example, in 2013, Bidco Oil Refineries, a leading producer of edible oils in East and Central Africa contracted 10,000 farmers in Kenya to grow sunflower (and soya) 10. The company is also scouting for more famers to grow the crop citing underutilization of the firm’s processing capacity at only 50% 7.
Production in EAC increased at an annual rate of
22% between 2009 and 2011.
11
¬ Paradoxically, from official production and consumption statistics, Tanzania produces surplus sunflower products despite the country being generally an importer of edible oils. For example, in 2014, Tanzania produced 162,000 MT more than what was consumed. However there is a vibrant informal crude oil processing and marketing sector in Tanzania which is not captured but which largely satisfies demand especially around production areas.
¬ Going by what was imported as crude palm and sunflower oil in 2014, the regional edible oil deficit stood at 530,000MT valued at USD442 million 15.
¬ Tanzania imports 60%8 of her edible oil requirements while the productive capacity of Uganda meets only 33% of the country’s edible oil requirement 16 . This translates into large imports of mainly palm oil from Indonesia and Malaysia.
¬ While the value chain in Uganda appears to be relatively organized, and Tanzania has a comparative advantage in production of the crop, proliferation of imports could water down gains made in increasing production of sunflower seeds and potential of these countries to substitute inter-regional imports of edible oils.
Sunflower oil Surplus/deficit (‘000’MT) in EAC
Sufficiency of sunflower oil to meet demand in EAC
Tanzania imports
productive capacity of Uganda meets only
of her edible oil requirements
of the country’s edible oil
requirement
60%
33% (100)
-
100
200
300
400
500
600Tanzania
Uganda
Kenya
Def
icit
Surp
lus
2010 2011 2012 2013 2014
Domestic Production-Consumption: Source: 3 12, 13, 14
12
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
2009 2010 2011 2012 2013 2014
Qua
ntity
(MT)
Uganda Kenya Tanzania Rwanda
Demand for Sunflower seed cake in the EAC
¬ About 203,110MT of sunflower seed cake is utilized in the EAC annually3. This is against production of about 444,659MT resulting to a surplus of about 241,549MT in 2014. Tanzania is the major contributor of this surplus which is exported to the region mainly Kenya & India, additionally.
¬ Highest utilization of sunflower seed cake is in urban and peri-urban areas where feed processors are located as well as intensive livestock production.
¬ Tanzania, Kenya and Uganda have the highest sunflower seed cake utilization. However, Tanzania and Uganda can satisfy their demand using domestic production while Kenya has to rely on imports. This presents a market opportunity for the lead producers of sunflower seeds: Tanzania and Uganda to take advantage of.
¬ Sunflower cake demand is mainly driven by animal feed industry
especially poultry (accounts for more than 60% of feed produced) 17,9,10. In the EAC, demand for poultry meat is expected to increase by 200% by 2020 thus increasing demand for poultry feed.11
Utilization of Sunflower seed cake in the EAC
93,782 90,112 77,842 80,990 83,440
4,576 5,171 4,760 5,272 4,658
106,357 267,406 376,582 358,386 354,818
81
7 10 14
2010 2011 2012 2013 2014
Uganda Kenya Tanzania Rwanda
Production of Sunflower seed cake in the EAC
Source: 3
EAC produced 444,659 MT of sunflower seed cake in 2014, out of which 203,110 MT was utilized regionally
13
Major Markets for Sunflower Products in the EAC
Source : 46
14
¬ The biggest sunflower oil markets include;
Î Uganda – Lira, Gulu, Jinja, Busia, Kampala
Î Tanzania – Dar es salaam, Dodoma, Arusha, Mwanza
Î Rwanda – Kigali
Î Kenya – Nakuru, Nairobi, Eldoret, Mombasa
Î Burundi – Bujumbura, Ngozi
¬ Markets for sunflower seed are areas where processors are located. In EAC, they include;
Î Uganda – Lira, Gulu, Jinja, Busia, Masindi, Arua
Î Tanzania – Dar es Salaam, Kibaigwa, Dodoma, Iringa, Songea, Tabora, Mbeya
Î Rwanda – Kigali
Î Kenya – Nakuru, Busia, Nairobi
Î Burundi – Bujumbura, Ngozi
¬ Major markets for sunflower seed cake are found near edible oil processing and animal feed manufacturing plants as well as areas with intensive livestock production.
¬ In the region, Uganda and Tanzania are the biggest suppliers of sunflower and its products.
Major markets for sunflower products in the EAC
15
16
TRADE IN SUNFLOWER PRODUCTS AND COMPETITIVENESS OF SUNFLOWER OIL AGAINST PALM OIL IN EAC
Trends in imports of Sunflower Products in the EAC
Forms of Sunflower Products imports into EAC-2014
50%
33%
14%
3%
Oil cake Crude oil Refined oil Seed
Imports of Sunflower Products in the EAC
of imported sunflowerproducts was in form
of seed cake
of imported sunflower products was in form of
crude oil
of imported sunflower products was in form
of refined oil
50%
33%
14%
As of 2014...
-
5,000
10,000
15,000
20,000
25,000
2011 2012 2013 2014 2015
Impo
rt V
olum
e (M
T)
Oil cake Crude oil Refined oil Seed
33%
Source : 14
Source : 14
18
¬ The EAC spent over USD 32 million (44,644MT) on imported sunflower products in 2014 14.
¬ At the same time, the region exported 89,885 MT of sunflower products, making it a net exporter mainly to:
Î Rwanda and Myanmmar - Seed
Î Switzerland, Belgium - Crude oil
Î Congo, Kenya, Rwanda, Netherlands - Refined oil
Î India, Kenya, UAE - Sunflower seed cake
¬ There has been a general increment in sunflower imports over a period of 5 years to 2015- by an annual rate of 33%.
Î Seed cake has had the highest increment by about 147% annual rate.
¬ Kenya is the largest import market for inter-regional sunflower imports of about 1,653MT with crude oil being over 90% of these imports. The country spends USD 6.44 million on crude oil imports and seed cake annually.
Imports of Sunflower Products in the EAC
19
¬ Kenya, followed by Tanzania are consistently the lead importers of sunflower products in the EAC.
¬ The high increase in sunflower seed cake imports could be attributed to the rapidly growing intensive livestock production in the region.
¬ Tanzania and Uganda supply their regional counterparts with sunflower seed cake while crude and refined oil imports are mainly from outside the region. In 2014, cake imports in EAC were entirely sourced from the region.
¬ South Africa, Egypt and Argentina are the major suppliers of sunflower products in the EAC.
Imports of sunflower products in the EAC
Increasing livestock
production in the region
is steering increased
importation of Sunflower
Cake.
5,6
57
13,
791
4,4
51
618
34
0
2,1
50
7,0
08
2,4
35
74
0
1,1
19
12,
570
1,7
67
1,2
15
96
1,4
24
27,
48
9
13,
288
1,9
53
49
0
1,0
24
24
,34
5
8,5
87
1,3
86
82
Uganda Kenya Tanzania Rwanda Burundi
2011 2012 2013 2014 2015
Sunflower imports by EAC Countries (MT)
0%10%20%30%40%50%60%70%80%90%
100%
Oil cake Crude oil Refined oil Seed
Perc
enta
ge
From EAC From Outside EAC
Source of Sunflower Imports - 2014
Source : 14
20
Imports of Palm and Vegetable Oil products into EAC
¬ Between 2011 and 2015, the EAC imported 57 times more palm oil than it did sunflower oil. Crude palm oil amounted to 73% while 27% was in form of refined oil all at an average of 520,000 MT valued at USD 434 million14 per annum. This presents the extent of the opportunity that sunflower sub-sector can take advantage of.
¬ Kenya, Tanzania and Uganda spent USD 2.2 billion worth of crude palm oil imports between 2013 and 2015. Kenya took up 52% of the total shipment followed by Tanzania and Uganda at 26% and 22% respectively 21 majorly from Malaysia and Indonesia 17.
¬ Development of sunflower and other oil seed value chain in East Africa is perpetually threatened by oligopolistic nature of two of the biggest and heavily subsidized oil processing companies-Wilmar (an associate of Bidco) and Louis Dreyfus Commodities. These companies have bulk liquid stocks of crude palm oil at Mombasa and Dar es Salaam ports. What is more, most of the unaffiliated oil millers buy crude palm oil from these two firms, both of which have palm plantations in Malaysia and Indonesia 17.
¬ Palm oil production is preferred by both public and private investors than that of other oil seeds such as sunflower because of bigger return to investment as besides the crop being perennial, it produces 10 times more per unit area than other oil seeds 21. Palm oil constitutes 80% of edible oils in the EAC.
¬ As long as there is no level playing field for potential processors coupled with investment oversight by public sector, investment by private sector in the sunflower sub-sector will remain slack.
EAC imported
57 times more palm oil than it did sunflower oil, valued at USD 434 million between 2011 & 2015
21
22
¬ In 2015,EAC held a positive balance of trade in sunflower products with a growth rate of 131% in exports compared to 33% in imports.
¬ Sunflower exports from the EAC are dominated by Tanzania and are mainly in form of seed cake. In 2014, India was the largest market for oilseed cake, with 69% of the share, while Kenya accounted for 27% of total exports14
¬ Uganda is the second largest supplier of sunflower products in the EAC. Through the Supporting Indian Trade and Investment for Africa (SITA) project, sunflower export to India is duty free a move that is expected to result in competition for markets for sunflower products from Uganda22.
¬ Under the Economic Partnership Agreement (EPA), the EAC has a duty free access of selected products to the EU market. As such, the EU provides a ready market for EAC exports in sunflower oil. The top three importers of sunflower oil in the world: UK, Belgium and Germany in that order, the latter two being in the EU took up over 22% of the world total imports of sunflower oil in 2009. Annual growth rate in demand for sunflower oil in the UK alone stood at 19% in 201023 . In 2015, Belgium, the UK and Germany in that order imported refined sunflower oil valued at over USD 473 million14 .
¬ While this presents an opportunity for the region, production is still very low to even meet the regional demand.
131%increase in export of sunflower products compared to 33% increase in imports. 27% of the intra-regional exports of sunflower products ends up in Kenya
Export of Sunflower Products in the EAC Region
Source: 14,. NB. Kenya data for 2014 & 2015 was not available
% Share of exports from EAC countriesForms of Sunflower Products exports from EAC in 2013 (MT)
Sunflower exports from EAC in (‘000’MT)
24313, 24%
3673, 3%
821, 1%
72810, 72%
Seed Crude oil Refined Cake
13.3
77
95.5
46
101.6
17
61.7
01
26.6
83
2011 2012 2013 2014 2015
131 %
0
20
40
60
80
100
2011 2012 2013 2014 2015
Kenya Rwanda Tanzania Uganda Burundi
23
Intra-regional trade in Sunflower products in EAC
Source: 14
24
4,7381.747
7302147 8
12
1827
1832
5348
1,1261,680
17,1303,225
47
117116
7329235
171
372465
1,0081,325
43
3040
197297
231443
53119 109
219
73738
47
2,3593.268
153280
326146
South Sudan
Kenya
Tanzania
Rwanda
Burundi
Volume
Value
Volume
Value
Volume
Value
Volume
Value
Volumes of Refined Oil (MT) and value (USD)
Volumes of Crude Oil (MT) and value (USD)
Volumes of Seed (MT)and Value (USD)
Volumes of Seed Cakeand Value (USD)
Direction of Flow
Intra-regional trade in sunflower products in EAC
¬ In 2014, Uganda and Tanzania shipped 2,549 MT and 1,665MT respectively of crude oil to their EAC counterparts but majorly to Kenya at 92% and 60% of the total lot respectively. In addition, 22,379MT of seed cake, 2,687MT of refined oil and 1,867MT of seed were also traded among EAC countries.
¬ Although production capacity of sunflower seed in Kenya is very limited, the country trades more in refined oil ironically exporting 1,126MT of the commodity to Tanzania in 2013. This is explained by the fact that Kenya imports significant volumes of crude sunflower oil from outside the region that supports refined oil production. However, the country only consumes 3.33% of sunflower oil produced. In 2013, Kenya imported 4,866MT crude sunflower oil from the EAC region.
¬ Trade in crude oil in Uganda and Tanzania is indicative of an underdeveloped oil processing industry in these two countries despite their productive capacities and increasing demand for sunflower oil. It is also implicit of poor integration of sunflower output markets. However, price sensitive consumers prefer crude oil which is cheaper.
¬ Interventions should therefore focus on strengthening integration of the sunflower value chain towards developing the processing node to “pull” more production. This has been exemplified by establishment of an out-grower scheme involving about 45,000 smallholder farmers in Northern Uganda by Mukwano Industries resulting in increased seed uptake from 5,000MT in 2004 to 40,000MT in 200824.
In 2014, Uganda and Tanzania exported 4,214 MT of crude sunflower oil to their regional counterparts.
In 2013, Kenya exported 1,126 MT of refined sunflower oil to other countries in the EAC.
25
Supply Chain of Sunflower Products in the EAC
Calendar of Sunflower Seeds Harvesting in EAC
Country Product Main destination
Production area
Period of purchase
Lowest Price (US$/Kg/Ltr)
Highest price (US$/Kg/Ltr)
Tanzania Sunflower seed Dodoma Chamwino Apr-Sept 0.12 0.30
Sunflower oil Tabora Igunga Aug-May 1.38 1.61
Sunflower seed Singida Mukinkoto Nov-May 0.18 0.28
Sunflower oil Iringa Isimani Oct-Apr 1.38 1.61
Sunflower seed Iringa Isimani 0ct-May 0.18 0.28
Uganda Sunflower seed Lira Lira Mar-Jul 0.29 0.40
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Uganda
Kenya
Tanzania
Rwanda
South Africa
Egypt
KEY Timing of harvest from the main (long) rainy season
Timing of harvest from the secondary (short) rainy season
¬ Trade flow of sunflower seed is dependent on harvest seasons
¬ Supply of sunflower seed in Tanzania and Uganda, the two lead producers of sunflower seeds is high between May to August and November to January. This coincides with major trades flow.
Source: 46
Source: 46
26
Intra-regional Trade is also affected by seasonality in supply
¬ Using Uganda as a case study, imported palm oil is produced at USD 415/MT cheaper than locally produced sunflower oil. This is attributed to lower cost of crude palm oil in addition to the fact that palm trees produce more oil from a unit of palm fruit than sunflower seeds. Also, duty free regime of crude palm oil imports in the EAC and economies of scale exploited by oligopolistic big processors who have integrated backwards into palm plantations in Malaysia and Indonesia puts palm oil up on the scale of competitiveness with sunflower oil. Besides, palm nuts are 10 times more productive per unit area and is a perennial crop that does not compete with other crops for land unlike other oil seeds26. However, sunflower oil and cake has higher margins (about USD 571/MT) than palm oil and also has healthy associated qualities such as good fatty acids and vitamin E.
¬ To increase competitiveness of sunflower oil industry, there is need to take advantage of economies of scale through availing high-yielding varieties of seed with high oil content and increasing overall production. Also, in future, considering revising the import duty free status palm oil into EAC enjoys would provide a leveled playing field and inch sunflower oil closer to competitiveness.
Competitiveness of sunflower oil Vs Palm oil: case of imported palm oil Vs locally produced sunflower oil in Uganda
palm nuts are
10times more productive per unit area than sunflower seeds
It is USD 415 cheaper to produce a MT of palm oil than a MT of sunflower oil.
CPO: Crude Palm Oil
413 45
67 67 45 22
39
699 45
22
34
16
6 56 78 8 27
9 70
1,312
44
32
1 107
1,047
73
7 1,7
85
1,204
184
58
10
55
897
150
3 59
685
70
615
67
548
74
123
138
130
43
40
Land
hire
& pr
epar
ation
Seed
/inpu
tsPl
antin
gW
eedin
gHa
rves
ting
Bird
scar
ingPe
st an
d dise
ase c
ontro
lPr
oduc
tion c
ost
Thre
shing
Tran
spor
t to t
he st
ore
Dryin
g and
winn
owing
Pack
aging
of gr
ainSt
orag
eCo
ordin
ation
Tran
spor
t to p
roce
ssing
plan
tLo
ading
and o
ffloa
ding
Cost
of pr
oces
sing
Pack
aging
for o
ilTo
tal C
ost
Tran
spor
t fro
m Ar
ua to
Kam
pala
Value
adde
d tax
Mark
upPr
ice of
refin
ed su
nflow
er oi
lRe
venu
e fro
m ca
keTo
tal R
even
ue
Price
in K
ampa
la (20
16)
Loca
l tax (
18%)
Mark
upPa
ckag
ing th
e oil
Proc
essin
g var
iable
costs
Total
cost
Carg
o tra
nsit t
o Kam
pala
Clea
ring a
nd fo
rwar
ding
Freig
ht &
Insu
ranc
eFO
B Pr
ice in
Indo
nesia
Proc
essin
g, tra
nspo
rt &
marg
inTo
tal co
st of
palm
fruit
Tran
spor
tPr
oduc
tion c
ost
Field
maint
enac
e and
harv
estin
gFe
rtiliz
erPl
antin
g in p
lantat
ionLa
nd cl
earin
gNu
rser
y esta
blish
ment
Pre n
urse
ry es
tablis
hmen
t
Cost of 4MT of sunflower grain/seed required toproduce 1MT of sunflower oil
Cost of 1MT of sunflower oil * Cost of 1MTrefined oil
Cost per 1MT of CPO Costs for production of 3.66MTof fresh palm fruit required toproduce 1MT of crude palm oil
Uganda Indonesia
(USD)(USD)
(USD)
(USD)Cost of 1MTrefined oil
(USD)
Source: 27, 28, 29, 31 & 33
27
28
SEGMENTATION OF SUNFLOWER OIL CONSUMERS IN EAC
Kenya
¬ Sunflower oil is majorly consumed by a crop of urban population-well educated middle class who are becoming increasingly healthy conscious. These consumers are quality as opposed to price sensitive thus major market players engage in no-price competition by highlighting quality superiority of their products36. Moreover, demand for sunflower oil is expected to rise thanks to growth in Kenya’s middle class, which is primarily comprised of consumers with increasing disposable income to buy relatively more expensive oils 37 like sunflower. Sunflower is mainly consumed as refined oil in the urban markets.
¬ Refined sunflower oil is produced in Kenya is supplied to local and regional market as well as EU and USA markets37.
¬ Seed cake is utilized by the animal feed producers and almost all of it is consumed by the domestic market 37
Tanzania
¬ Consumers in the rural areas purchase crude sunflower oil from farmers or processors while their urban counterparts get sunflower oil from urban retailers, wholesalers or from rural areas when they visit. While locally produced oil is consumed around the rural areas, that imported is majorly consumed in the urban centers8. Almost all the produced oil is consumed domestically.
¬ Consumption of crude sunflower oil near production areas is unaccounted for.
¬ Sunflower cake is consumed domestically by animal feed manufacturers and exported to India, Kenya and United Arab Emirates for use in animal feed manufacture 1,14.
Uganda
Rwanda
¬ Refined sunflower oil is the major sunflower product consumed in Rwanda and is mainly imported from Tanzania as crude oil and refined oil from Uganda, Ukraine, Turkey and Kenya14.
¬ Almost all of sunflower oil consumed by an increasingly health conscious urban population in Rwandan is imported 38.
¬ Sunflower cake is imported from Tanzania and Uganda for use in the animal feed industry 14
¬ Some sunflower oil processed by local processors is consumed around production hubs: Lira, Arua, Gulu and Mbale. Otherwise, Mukwano Industries, a leading manufacturer of consumer goods in Uganda has a factory in Lira where sunflower oil is processed and transported to stores around the country but majorly Kampala 11.
¬ Small and medium sized oil processors buy local varieties of sunflower seed from farmers to produce oil for the local market while large processors purchase improved seeds35.
¬ Unrefined sunflower oil is also consumed in the Ugandan market mainly by households in production areas and areas in proximity with oil processors. Crude oil produced by large processors also supplies refineries in Switzerland and Kenya 14.
¬ Oil cake is used in the domestic animal feed market as well as that of Kenya and Rwanda
Market segmentation: Who and where is sunflower oil Consumed?
30
Suppliers of Sunflower seed to Processors in EAC
Group in supply contracts with farmers while on the other are independent but fragmented suppliers who may be farmers or traders who sell seeds to local processors 38,2. Mukwano Industries is working with more than 72, 000 farmers organized in groups and 250 lead farms 39.
¬ However, the value chain in Tanzania is relatively fragmented, dominated by smallholder farmers, traders and local processors. Farmers can either sell their sunflower seeds to independent traders or those that are agents of local processors. Alternatively, they have their seeds processed by local processors after which they sell oil to rural retailers or traders for onward marketing 8. Although sunflower is grown widely around the country, farmers have weak horizontal linkages thus lack a bargaining power, leading to exploitation by middlemen.
¬ Kenya has the largest number of large scale edible oil processors in the region who majorly import sunflower crude oil as the country has very limited productive capacity45.
¬ Through private-led linkages in the sunflower sub-sector in Uganda, there has been a 400% increase in production of sunflower as well as crowding in of critical services to the sector. This should serve as an example to Tanzania, to strengthen horizontal and vertical linkages vital for upgrading and improving competitiveness of the sector.
¬ The sunflower value chain in Uganda and Tanzania is short and concentrated around hubs/clusters. Uganda has a dualistic supply chain where on one hand are big processors such as Mukwano
increasein the production of sunflower in Uganda through private-led linkages
400%
Source: 46
Source of Sunflower seeds/grain for Processors
0
25
50
75
100
Smallholder farmers Traders
% o
f res
pond
ents
Uganda Tanzania
31
Varieties of Sunflower seed grown in Uganda and Tanzania
Country Variety % of Processors Demanding It
Uganda
Hybrid (PAN7033, PAN7351 (Mukwano), AGSun 8254 (Ngetta Holdings Ltd)
50
Local (Sunflora) 50
TanzaniaZebra 44
Jupiter 33
¬ Uganda processors broadly classified the varieties of sunflower seed that they demand from farmers as “hybrid and “local”. Indeed, there are two varieties of sunflower that are predominantly grown in Uganda: Sunflora, a local open-pollinated variety and PAN 7351, a hybrid variety introduced in Uganda by Mukwano Industries and which is preferred by processors due to its high yield and oil content40,24. Due to the unavailability of hybrid seed, farmers resort to recycling of seed. Large processors were not satisfied with
of processors are dissatisfied
with the varieties of the sunflower seed they
procure
...around
75%
Major varieties of sunflower seed processed in East Africa
Source: 46
Source: 46
25
100
75
0
20
40
60
80
100
120
Uganda Tanzania
Perc
enta
ge o
f res
pond
ents
Yes No
Level of Satisfaction by processors with the Sunflower varieties available in the market
32
the varieties in the market and because of this, they have resorted to distributing or selling specific seed varieties to farmers that are contracted to supply them and paying lower prices for alternative varieties.
¬ In Tanzania, apart from the local varieties mentioned by processors, others are “Black”, “Kilimo”, “white” and Serena”. However, farmers prefer demand driven “Kenya fedha” and “Record” varieties which are improved and are characterized by high yields, disease resistance, high oil content and palatability. However, these varieties are not widely available and even when they are, they are not affordable resulting to farmers just growing the local varieties 34. Around 75% of processors expressed dissatisfaction with the varieties of sunflower seed they procure noting that they are in low volumes and oil content.
¬ It is against this backdrop that provision of demand driven varieties to farmers is cardinal to increasing availability of sunflower seeds to processors. One way of doing so would be to facilitate arrangements between processors and farmers for provision of hybrid seed and uptake of produce by the former.
Major varieties of sunflower seed processed in East Africa
33
UTILIZATION OF INSTALLED SUNFLOWER OIL PROCESSING CAPACITY, SWOT AND PROSPECTS OF CONTRACT FARMING OF SUNFLOWER SEED
Utilization of Installed Processing Capacity of Sunflower processors in the EAC
Source: 46
2228
0
20
40
60
80
100
0
50
100
150
200
250
Tanzania Uganda
% U
tiliz
ed
Vol
ume
(MT
)
Operational Installed % utilized
Installed Vs Utilized Processing capacity per 24 hours in TZ and UG
36
Utilization of Installed Processing Capacity of Sunflower processors in the EAC
¬ Small scale and medium scale sunflower processors in Uganda and Tanzania operate at an upper limit of 28% of installed processing capacity too low for them to remain competitive. This is due to scarcity of seed. The situation is so dire such that like in Tanzania, some processors only operate during harvest seasons 41. Small scale oil processors use an estimated 20% of their capacity, while their larger counterparts utilize between 25% and 40% of their installed capacity. Large processors in Uganda have just above 60% of their processing capacity utilized with smaller ones operating at below half of their capacity 42.
¬ Even then, Ugandan processors have bigger installed capacity than their Tanzanian counterparts. This could perhaps be explained by the fact that, the sunflower industry in Uganda is relatively organized and there are interventions to increase sunflower seeds production both of which factors incentivize processors to install large processing capacities.
¬ The biggest culprit of low optimization of installed processing capacity of sunflower processors in these two countries is limited scale in supply of sunflower seeds owing to production constraints 43, ,40, 24, 8.
¬ If the status quo remains, sunflower processors cannot remain afloat for long unless there is a urgent paradigm shift in increasing production and productivity of sunflower seed and structuring of the supply chain to reliably supply processor with the much needed raw materials.
of their installed processing capacity
Uganda and Tanzania operate at almost
28%
37
Major sunflower Processors in Tanzania Company Location Current Daily
Processing/Crushing capacity
(MT)
Current daily oil extracting capacity
(MT)
Current Daily seed cake production
(MT)
Mount Meru millers Arusha & Singida 1,200 420 830
Sunshine Co. Ltd Dodoma 300 84 176
Murzah oil mills ltd Dar es Salaam 300 84 176
Uncle Milo Co. ltd Dodoma 62 17 36
Others 37 12 26
Jakma Enterprises Dodoma 29 8 17
Magin Co. Ltd Kondoa 24 7 14
Nyemo Investment Co. ltd Dodoma 10 3 6
Three sisters Co. Ltd Dodoma 6 2 4
Major sunflower Processors in Kenya Company name Location
Arkay manufacturing plant Eldoret
Bidco Oil refineries Nairobi
Kapa Oil refineries Nairobi
Rifty valley product Ltd Nakuru
Voi Industries Nakuru
Examples of major Processors in Tanzania, Uganda and Kenya
Major sunflower Processors in Uganda
Name of Processing Company Location Production capacity (MT/day) Brand
A.K. Oils and Fats (Mukwano) Lira, Industrail Area 400 Sunseed
Mt. Meru Millers (U) Ltd Lira, Plot 28-36 Railway Division, Stadium Road
300 Goldy & Superfry
Nile Agro Ltd Jinja, Plot 1-15 Miro Rd 100 Nile & Victoria
Guru Nanak Oil Mills Lira, Industrial Area (Plot 26) 50 None
Ngetta Tropical Holdings Ltd Ngetta Road 40
Shiva Oil Mills Ltd Lira, Industrial Area 30 Mo power
Kirik River Co. Ltd (Tofa Products Ltd) Soroti, Plot 69/73 Aliabu Rd 18 None
Ronco oil Enterprise Lira, Odokomit - Kla Rd 14 None
Kitgum Mission Parish (Gulu Arch Diocese)
Kitgum Town Council 10None
Louise Enterprise Gulu Municipality, Plot 1 Ring Rd (Plot 51 Adreaolal Rd)
10 Citizen
St. Francis Sunflower Press Lamwo District, Padibe Town Council
10None
St. Isidoro Farm (oil press)Gulu Municipality (Gulu Arch Diocese)
10None
38
¬ A significant number of processors in Uganda and Tanzania have resorted to contract farming in a bid to secure a reliable supply of the otherwise scarce sunflower seeds. This scenario is different compared to other food commodities sector as it is the processors who drive the agenda of formalizing linkages with farmers. The small and medium scale processors, who are the majority however just procure at farm gate and uptake any available varieties and volumes.
¬ This points into the pivotal role of large scale processors in structuring the sector to on one hand ensure a reliable supply of raw materials to their factory while on the other, providing an assured market for producers. A structured industry is also critical in pulling necessary services from both the public and the private sector for its overall growth.
¬ However, processors who do not have contracts with farmers, who are the majority (In Uganda, 91.7% of the processors are small and medium scale processors44) cited low volumes of supply of sunflower seeds from farmers thereby watering down the gains envisioned in contract farming.
Further structuring of the industry can be enhanced by pooling together more producers and increasing production of sunflower seeds.
Percentage of Large processors with Contracts with Farmers
Source: 46
13
87
100
0
20
40
60
80
100
120
Tanzania Uganda
Perc
enta
ge o
f res
pond
ents
Yes No
39
Prospects of Contract Farmers by sunflower processors in the EAC
40
SWOT Analysis of markets for Sunflower Products in East Africa
Strengths Opportunities
1) Huge investment in processing capacity in the region
2) Most big companies have already undertaken fortification as a mandatory requirement by the Ministry of Health to help reduce micro-nutrient malnutrition especially vitamin A deficiency
3) Presence of farmer based organizations e.g Area Enterprise Cooperatives (ACEs)
4) Sunflower is among the widely adopted enterprises in major processing hubs.
1) Huge deficit for edible oil products in the region (530,000MT/yearr)
2) Increasing demand especially from niche markets (health conscious urban population) and animal feed industry
3) Underutilized milling capacity (50 – 70%) in the country
4) Regional integration offering large market for sunflower products especially cake
5) Increasing interest in value chain development by big millers such as A.K Oils and Fats and Ngetta Tropical Holdings Limited in Uganda and Bidco East Africa, a regional consumer products conglomerate.
Weaknesses Threats
1) Low utilization of installed capacity (25 -40%) due to low raw material supply (in terms of quantity and quality).
2) Poor quality and adulterated products (oil and cake) i.e. limited adherence to standards and inefficient processing technology employed
3) Weak input system especially timely access to high-yielding variety seeds and low germination rate is the biggest challenge. Supply of sunflower seed is monopolized by the big processors who will only buy produce if the farmer used their seed
4) Reluctance of bulk buyers to commit capacity and procurement targets owing to low and unreliable production and side selling.
5) Limited value chain financing that limit increased production but also produce financing by processors
6) Weak and under capacitated ACEs in terms of leadership and governance, businesses management and entrepreneurial skills.
1) Weak extension system
2) Stiff competition from crude palm oil imports
3) Climate change
4) Decreasing soil fertility
Source: 46
41
CHALLENGES, PROPOSED INTERVENTIONS AND IMPLICATIONS FOR IFAD PROJECTS
Limited availability of raw material (Sunflower seeds)
Poor milling technologies and skills
� Breeding and multiplication of varieties with desirable characteristics such as high yielding and oil content
� Organization of sunflower producers to build economies of scale
� Creating linkages between producers on one hand, national and regional markets and critical service providers on the other to provide ready market as a way of incentivizing increased production; out grower models
� Leveraging formation of clusters to exploit complementarities in provision of necessary support services
� Improving access to finance by farmers to take advantage of economies of scale
� Capacity building of farmers and groups in financial literacy, business management, post harvest handling and general GAPs
� Fiscal incentives such as tax rebates to import better quality processing technologies.
� Build capacity of small and medium processors to absorb knowledge on appropriate processing technologies, business management, financial literacy and product certification.
� Enforce standards & capacity building for the same
Poor postharvest Handling Low economy of scale
� Capacity building on good postharvest technologies and practices
� Improving access to finance to improve postharvest quality through procurement of technologies e.g. moisture meters, tarpaulins, storage units, etc.
� Leverage formation of horizontal and vertical linkages among small and medium processors themselves and big processors to achieve economies of scale in standardization & branding, certification & licensing, handling & transportation, as well as trade logistics.
� Investment in necessary infrastructure such as feeder roads and storage facilities.
Challenges and Proposed interventions to improve Sunflower oil Markets in EAC
Source: 46
44
46
Conclusions and Recommendation
¬ Amidst increasing demand for edible oils that are labelled healthier by a burgeoning middle class in the region, coupled with an conversely increasing demand for sunflower seed cake for manufacture of animal feeds, the productive capacity of sunflower seeds in the region remain largely low and inelastic. This is due to limited number of agro-ecologies where the crop can be grown in the region except in Tanzania and largely a fragmented supply chain that is unable to consistently respond to the supply needs of processors. To remedy the problem of high deficit status of edible oils in the region, the governments of EAC Partner Status have resulted to fiscal rebates to allow importation of alternative and cheaper oils throwing the already stretched sunflower sector deeper into uncompetitiveness.
¬ Given the limited diversity of agro-ecologies for sunflower production at the backdrop of competing use of arable land with staple crops, the only way to turn the sector around is to employ strategies for increasing productivity and structuring trade in sunflower production. In this regard, processors in the region-medium to large scale-hold a pivotal responsibility of structuring the sector by providing critical inputs such as improved seeds, last mile infrastructure to allow aggregation of produce by farmers and provision of the much needed reliable market. Conversely, it is the onus of the public sector to provide favourable environment for investment, public goods such as rural roads and extension services. As a head start, there is need to rethink the fiscal advantage crude edible oils imports enjoy in the EAC countries to allow the sunflower sector to attain a level of competitiveness.
47
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49
50
COUNTRY OFFICESHeadquaters
Plot 42, Princess Anne Drive, BugolobiP.O.Box 71782, Kampala - Uganda
Tel: +256 392 264 980/1, +256 200 926 498, Email: [email protected]
Kilimo Trust TanzaniaPlot 455, Avocado Street, Kawe
P.O.BOX 106217, Dar-es-Salaam, TanzaniaTel: +255 22 278 1299, Email: [email protected]
Website: www.kilimotrust.org