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Strategic Options for Edible Oil Industry Development: Case of Sunflower sub-Sector 3 rd Annual Policy Conference March 02, 2017

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Strategic Options for Edible Oil Industry Development:Case of Sunflower sub-Sector

3rd Annual Policy ConferenceMarch 02, 2017

Sunflower Market System in Tanzania

2

Why a Systemic Approach?

• Structure: Players, functions

• Patterns of behavior: Strategic or relational

• Rules of doing business: Formal or informal

Tanzania position in Seed & Oil Production in Africa

4

FAO (2015)

Sunflower is produced in about 19 regions

5

Where is the value-add in Sunflower sub-sector?

6

• Seeds & Oil capture largest share of value-add

• Ensuring higher proportion of these benefits are captured by large majority (inclusiveness) contributes to growth + transformation

• Current improvements offer higher pricing points for both seed & oil: productivity + Oil composition & proportion

National Sunflower Strategy (2015)

6

Key systemic constraints Demand side constraints Compliance & adherence to food safety & quality standards Branding & promotion of in-demand products Responsiveness in meeting clear buyer demand (sooner)

Supply side constraints (production & processing) Availability & accessibility of improved seed varieties Access to bundled services/technologies suitable for enhancing production &

productivity: Finance, extension, inputs, soil testing, insurance, post-harvest + processing technologies

Capacity of farmer organisations to do farming as a business Business environment constraints Unharmonised taxes, levies Trust & transparency; coordination in the sub-sector

Strategic Options: End Markets

7Immediate

• Specialist food-safe cold pressed oil

[EU, Middle East]

• Food-safe cooking oil• Bulk food-safe crude Oil[Domestic, India]

• Food-safe bulk oil (tied to social impact)

[EU]

• Food-safe branded oil [China]

• Cake & by-products[Domestic, UAE, India]

• Confectionery grade food-safe seeds for direct consumption

[EU]

3 – 5 years 1 – 3 years

National Sunflower Strategy (2015)

Low

Good

High

Strategic Options: Increased production & productivity (Seeds)

9

Options from improved seeds

• 4 hybrid varieties already registered • Easy identification / differentiation by

farmer• Double current yield (0.8mt/Ha)• Up to 40% oil yield (cf. 22 – 28%)• Seed cover more conducive for

crushing• Shorter maturity (harvest): 3 months

cf. 4 - 5 months

Strategic Options: Increased production & productivity (Improving pollination by bees)

10

Targeted pollination by bees has proved to increase up to 80% sunflower head productivity in Tanzania – even when using improved seed varieties

Strategic Options: Increased production & productivity (Sourcing Structure & Logistics Considerations)

11

Gary Gereffi (2004)

Factors Influencing Supply Logistics• Role of a logistics facility e.g.

aggregation, storage• Nature of processing taking place

(primary or secondary agro-processing)

• Capacities that should be at particular locations

• The nature of market being served: national, regional (EAC/SADC), export outside regions

Strategic Options: Increased production & productivity (Bundling Services, Production & Post-Harvest Technologies)

11

Key technologies

• Production equipment & machinery

• Customised input packages (seed, fertiliser, agro-chemical combinations)

• Post-harvest handling equipment & machinery

• Climate smart supportive technologies

Key services• Scalable access to finance;

• Business development services (agro-enterprise management)

• Soil testing, profiling, mapping

• Insurance: multi-peril, weather

• ICT-based information and extension provision models

Strategic Options: Agro-processing technologies

12

Strategic Options: Infrastructure (Last Mile Infrastructure)

13

Movement

Processing/Storage/Marketing

Productivity

3rd Order Class(Processing/ storage

Infrastructure)

2nd Order Class(Power Infrastructure)

1st Order Class(Transportation Infrastructure)

FAO, EAC Secretariat, Kilimo Trust (2014)

14

Key factors for agro-processing to drive inclusive growth & competiveness

Domestic, Regional (EAC &SADC), selected export markets: aim at both product & end market diversity

Options for increasing production & productivity: seeds, bundling services/technologies, utilising better pollination

Agro-processing technologies: Modular small-scale (3 – 5 MT/day), with better longevity and less down time; build skills and supportive capacity for sustenance of technologies

Infrastructure: Last Mile Infrastructure of roads, power, and storage

Enabling environment: Harmonise the different taxes & levies; build capacity for public-private dialogue

Thank You