ACP regional and local markets news – Post date: June 26th, 2020

How can companies along the value chain act to ensure business continuity?

A McKinsey analysis, “Safeguarding Africa’s Food Systems Through and Beyond the Crisis”, suggests how governments and private sector actors can respond to the impact of COVID-19 on African agriculture. The article shows how the crisis has disrupted regional and global trade and slowed demand for Africa’s agricultural export products, putting jobs and livelihoods at risk. But it also suggests that, to date, the impact on the food and agricultural system as a whole has largely been localised and muted. In addition, “tailwinds”, including good harvests in some African regions at the end of 2019, are helping to minimise the effects of the crisis. But existing vulnerabilities in Africa’s agricultural and food systems, combined with demand and supply shocks likely to flow from COVID-19, could be heightened unless mitigating actions are taken now.
The report outlines how companies along the value chain can act now to ensure business continuity, but also plan ahead to reimagine for the long term. Private sector actors along the agricultural value chain can work with governments to secure the supply chain (including deploying extra storage and working capital), protect the health of employees and value-chain partners, and set up a “cash-management war room” to manage cashflow closely with upstream and downstream value-chain partners.

Agricultural companies can also start thinking about the medium to long term, both to manage through the COVID-19 crisis and then to consider what changes they will need to make to their business models as a result of the impact of the crisis:

  • Manage localised supply-chain bottlenecks that are likely to persist until the end of 2020 or into 2021. As economies reopen, localised COVID-19 outbreaks might recur, and it is likely that Africa and key trading partners will face an “up-and-down” situation over the coming months. Companies will need to prepare for slower logistics overall, and for localised supply and market disruptions.
  • Prepare for demand depression, particularly for export commodities and for food products among the low-income urban population and hospital industry. Exporters, particularly of “luxury” items like flowers, cocoa and coffee, should prepare for price volatility and softer demand overall. Food and agricultural companies targeting either the African lower-income urban population or the higher-end hospitality industry should prepare for decreased or changed demand. Companies may also want to evaluate whether they can participate in food-relief efforts through their distribution chains. For example, Twiga Foods and Jumia in Kenya have partnered to deliver bundles of processed and fresh produce at a reduced cost via Jumia’s e-commerce platform.
  • Embrace digitisation right along the value chain. With restrictions on movement, interacting with farmers and value-chain partners digitally may become more important. Food-distribution chains (particularly in urban areas) are very likely to become more digitised. Activities further up the value chain could also be affected: farmers may increasingly seek e-advice, digital savings products, or access to government subsidies that might be offered through digital wallets. Agricultural players can explore digital marketing and extension to farmers, the offering of digital financial products, and digital tracking of the supply chain to monitor logistics and storage. Existing examples include Bank of Kigali’s Ikofi offering and Safaricom’s Digifarm.
  • Explore new mergers and acquisitions and diversification, including going beyond borders. The crisis could lead to mergers and acquisitions among processors and traders as some smaller or medium-sized players seek to divest themselves of their assets, and others seek to diversify risks across value chains, countries and customers.

Tanzanian agri-tech startup scales up

Tanzanian agri-tech startup East Africa Fruits addresses food distribution challenges to improve efficiencies in the farm-to-market sector via a B2B e-commerce platform (Disrupt Africa, 12 June). The company trades and markets fresh fruits, vegetables and rice for supply to hotels, restaurants and cafés, supermarkets and shops, local vendors and export customers. The company plans to expand to work with more than 10,000 farmers and 15,000 businesses after raising substantial Series A funding (the second stage of startup financing and the first stage of venture capital financing).

Founded by social entrepreneur Elia Timotheo in 2013, East Africa Fruits aims to use the new investment to create a bridge from farmers and small businesses to all sorts of financial inclusion, such as micro-loans, insurance and extension services; and to diversify into other perishable and non-perishable food items. Timotheo launched the company after realising that, for produce to get to the market, it passes through the hands of more than three middlemen, leaving the farmer with less than 22% of the final wholesale price.

Big data helps low-income consumers in Nairobi access fresh fruit and vegetables

A new research project led by the Alliance of Bioversity International and CIAT with Twiga Foods aims to combine big data analytics and participatory survey methods to improve access to and affordability of fresh produce for low-income consumers in Nairobi (CGIAR, 29 May). The “Hungry Cities: Inclusive food markets in Africa” project will analyse five years of commercial data on 17 fruit and vegetable crops, and conduct surveys using innovative ICT tools. Led by the Twiga Foods team, work is currently under way to develop apps that will be used to survey informal wholesalers and retailers at markets across the city. The first app will help to identify commodities sold by retailers and wholesalers, who is buying from them, commodity qualities such as freshness, pricing, and how the businesses of those retailers and wholesalers are shaped over time. A second app will collect crucial commodity data from consumers, including safety, quality and affordability. The project will also leverage big data analytics to gain insight into a wealth of commercial fruit and vegetable data made available by the Nairobi-based start-up and project partner Twiga Foods. The company’s data set, collected using mobile technology, spans 2014–2018 and comes from more than 20,000 farmers and 38,000 retailers in the Nairobi food system.

The project aims to focus specifically on outlets run by women retailers who are connected through ICT tools, increasing economic opportunities for a group often overlooked or excluded by policy and market interventions. More than 75% of the retailers that Twiga Foods work with are women owned.

Kenya: On-demand delivery to online consumers

On-demand delivery firm GoBEBA has entered a deal with Twiga Foods to deliver fresh farm produce from farmers to online consumers (Fresh Plaza, 11 June). The deal will see consumers within and in the outskirts of Nairobi, such as Thika, Kahawa, Rongai, and Syokimau, access fresh Twiga Foods produce from GoBEBA, while increasing demand for farm-fresh produce via online platforms. GoBEBA becomes the fifth on-demand delivery firm to partner with Twiga Foods, increasing the supply of quality and affordable fresh produce to online consumers and creating increased market demand for farmers. The platform will now provide fresh fruits and vegetables including potatoes, bananas, and kales among others to customers visiting their platform at prices significantly lower than supermarket prices. Twiga Foods Chief Executive Officer Mr Peter Njonjo noted that partnerships with other business-to-consumer online platforms will not only increase avenues for access to supply for consumers, especially during this period of COVID-19, but it will also diversify access to demand for local farmers.

COMESA: Rwanda and Uganda record reduced trade flows

Rwanda and Uganda recorded a reduction in trade flows in April and May 2020 according to the latest report from COMESA Statistics: “COVID 19 Impact on Trade” (COMESA News, 10 June). The report was prepared by the Common Market for Eastern and Southern Africa in the first two months in which COVID-19 spread to the region.

Imports into Rwanda declined by 32% in April compared to March. Rusumo and Airport borders posts recorded declines in imports of 35% and 16% respectively. In Uganda a drop in imports were recorded at 30% in April compared to March. Malabo, Busia and Entebbe border posts recorded declines in imports of 35%, 28% and 24% respectively. Imports for the month of May were projected to decline by 20%.

Exports for Rwanda also declined by 8% in April compared to March 2020, while Uganda recorded a decline in exports by 15% in April compared to March.

Both countries have put in place measures to respond to COVID-19. In Rwanda, a dry port has been established near the border that operates 24/7. It is extended to all customs services to facilitate faster clearance of essential and relief goods at the first point of entry in an effort to contain the spread of the pandemic. The country has also intensified the use of online services available in the Rwanda Electronic Single Window System through engagement with both private and public stakeholders. The country has also introduced flexible terms of payment for duties and taxes for essential goods by granting an instalment facility. In Uganda, the government has also introduced measures to facilitate the movement of goods, transport, persons and services. Some of the strategies include testing of drivers prior to transiting through Uganda, and using online engagement with clients.

Ugandan Government supports large-scale avocado production

Uganda’s Ministry of Agriculture, Animal Industry and Fisheries (MAAIF) intends to partner with growers across the country in order to enhance large-scale avocado production (Fresh Plaza, 22 June). In a meeting attended by farmers, commissioners and directors from MAAIF, Cabinet Minister Vincent Bamulangaki Ssempijja noted that there is a huge market for avocado in Europe and in other parts of the world such as the United Arab Emirates and Asia. Consultative meetings have been held between the MAAIF technical team and avocado farmers. The announcement was made during a visit to Masubi Farm, a Hass avocado value chain development project. Masubi Farm has been tasked by MAAIF to take a lead in rolling out the development plan by developing 2500 acres of avocado in Mayuge District.

Nigeria: COVID-19 impact on smallholder farmers

Wandie Kazeem Interviews Arc Ibrahim Kabir, President of the All Farmers Association of Nigeria (AFAN) (Wandieville Media, 23 June). In this interview, Arc Ibrahim talks about the impact of the initial lockdown on smallholder farmers due to Covid-19, such as postharvest loss and logistical challenges. He advises the government to invest in smallholder farmers, mechanisation and storage facilities to help build resilience and build back better. He also advises smallholder farmers to see this pandemic as an opportunity to expand and build a profitable business.

Ghana: Specific policy needed for vegetable value chain development

Ghana’s Agency for Health and Food Security (AHEFS) says that the vegetable sector in Ghana will miss out on huge opportunities of the Africa Continental Free Trade Agreement (AfCFTA) once the implementation of the AfCFTA begins without a targeted policy for the development of the vegetable value chain (Fresh Plaza, 18 June). During a national dialogue on vegetables, the Executive Director of AHEFS, Mr Kwaku Asante, said “There is the need to develop a policy for vegetable sector which is specific enough to address specific commodity needs. Most of the commodities in the vegetables sector require specific value-chain attention, because they have variant needs.” AHEFS proposes that agricultural policies should be designed for specific crops. For example, there should be vegetable industry policy, cereal and legume production/marketing policy, fruit production and consumption policy, tree crop production policy, among others.

Dominicana Fresh Produce B2B e-trade forum

  • Eurocámara RD, the Federation of European Chambers of Commerce in the Dominican Republic, is one of a coalition of public–private entities organising the Dominicana Fresh Produce B2B e-trade forum between 24 and 30 June (14 to 19 CET). The forum, co-organised with the Export and Investments Center of the Dominican Republic (CEI-RD), will facilitate online meetings between Dominican fresh fruit producers and European suppliers, retailers and importers. Fruits featured include bananas, mangoes, avocados, melons, papayas and pineapples, among others, and the virtual meetings will be held on Zoom (alternative platforms can be explored). To participate, register here.
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