Client: Embassy of the Netherlands in Mali/ ministry of foreign affairs of the Netherlands
The embassy of the Netherlands in Mali has a long track record of funding and managing development programs in Mali. For a new long term economic development program with a budget of 20 million eur the embassy needed support to select the right economic sectors. Based on their own research they had shortlisted onions, dairy, meat (beef and mutton) and fish (including aquaculture) as potential candidates. They had also identified 4 regions in Mali as potential focus regions for interventions.
The key question of the embassy was: on which value chains should we focus and in which areas. Furthermore, within those which actors should we support to produce which products for which markets (consumers). They were clear they wanted a program based on clear market opportunities, and were interested in working with dynamic entrepreneurs and companies. Finally, the embassy wanted an idea in which specific areas cooperation with Dutch companies would be possible and beneficial to both the local stakeholders and Dutch companies.
Phase 1: value chain analyses
A consortium of SENSE, KIT (Royal Tropical Institute) and IMARES was asked to analyse these value chains, and come with a clear advice. After an initial decision, the dairy value chain was left out because it was seen as the least promising in terms of impact.
Over a six week period SENSE in cooperation with KIT performed a value chain analyses of the Onion and Meat (beef and mutton) value chains.
Sense always starts a value chain research at the most important link in the chain: the consumer. A qualatative consumer research to understand when how and how often the products are consumed and purchased, asses how competitive the chains currently are, consumer preferences, opportunities to increase consumption and issues with the current product offering; for example price, taste, appearance, availability etc.
After the consumer research, the chain was followed down all the way from retailer to wholesaler, collector/local trader, producer and input supplier. At each level a representative sample was interviewed using semi-structured questionnaires.
Results of the onion & shallot value chain analyses
The result of the analyses for onion was clear. The first business opportunities were two market opportunities: the low availability of onions in the wet season, and the growing demand in coastal countries such as Ivory Coast, Guinée, Ghana and Nigeria.
Consumer research showed that Shallots and onions are used in every dish to provide flavour, provided they are affordable. However, in the wet season priced triple and consumers react by substituting shallots and onions with other vegetables, and consumption decreases with 70%. The high prices and low availability were caused by the fact that onions were mainly farmed in the dry season, and losses of up to 50% during storage. Accesive use of fertiliser, poor transport and storage conditions were to blame. Sense proposed two strategies to take advantage of the opportunity:
- Work with all actors in the chain to improve product quality, storage and transport conditions so storage becomes more profitable and losses are decreased. Producing onions to store them becomes a viable business and allows for an increase in production
- Work with suppliers of seed and farmers to find (hybrid) varieties that can be farmed during the wet season. However, because onion and shallot farming is often taking place in the ‘off season’ of notably rice production, an analyses where wet-season onion production fits in the production system would be needed
The second market opportunity was the large demand for onions and shallots in coastal countries, most notably Guinée Conakry, Ivory Coast, Ghana and Nigeria. Most export was done by cross border traders from these countries buying at wholesalers in Mali, not by exporters from Mali. SENSE proposed to select a number of wholesalers and together perform market research, define strategy and support these wholesalers to export.
Results of mutton and beef value chain analyses
The meat value chain proved much more complex. Demand for meat and fish is clearly increasing in the whole of West Africa with the growth of the middle class and population growth. However, the traditional pastoralist production systems in the Sahel seem to have reached their limits. These are complex systems designed not only for meat production but also for milk, skins, social status and financing. Despite decades of interventions little has changed. Increasingly demand is met by intensive farmers who buy animals from pastoralists, and fatten them in stables using animal feed. After 3 months the animals have doubled in weight and sell for more then double the original price.
The conclusion of KIT and SENSE was that there is enough demand to increase production, and the fast growing intensive farming industry is the most likely intervention point. However, stimulating fattening without knowing the animal feed value chain did not seem wise. Already there were clear signs that animal feed was becoming scarce and prices were increasing. Therefor it was proposed to the embassy to do a follow up study and asses the animal feed sector.
Results fish value chain analyses
Fish is very popular on the national and regional market, but due to overfishing and the construction of dams, production of capture fisheries had clearly reached the limit of the production capacity. Most is to be gained by solving the huge losses in processing (smoking and drying), by introducing better processing methods. These need to be aimed at the largest producers, nomadic fishermen in stead sedentary fishermen, which are the regular beneficiaries of development programs but only responsible for a small part of production.
Fish farming was developing rapidly close to urban markets, and seemed an easier area of intervention. However, IMARES felt a study was needed to asses the availability of ingredients for fish feed.
If indeed there was a scarcity, the consortium felt the question needs to be asked: if you have limited ingredients for fish or animal feed, where can you get the most protein for human consumption?
Phase 2: additional research
After the initial research, The Netherlands Embassy gathered a number of additional research questions, and asked SENSE and IMARES to conduct a more detailed analyses of past projects in the onion, meat and fish value chains, an animal and fish feed study, and an institutional analyses of the semi and public organisations active in the value chains.
The analyses of past projects and institutions was done based on interviews with these organisations, beneficiaries of their programs and other chain actors. This led to a number of interesting conclusions, such as:
- Interventions are focused mostly at production/ producer level
- Private companies higher up in the chain (processors, wholesalers, retailers) are mostly not involved in the programs
- The interventions of the organisations are very fragmented across many chains, areas, and no organisation works with all actors in the chain.
- There is a lack of facilitation of cooperation between actors in the chain
- There is a strong preference for building physical infrastructure (buildings, roads, markets)
- Knowledge on how public infrastructure should be managed is often lacking; it is generally unclear who will use, manage and pay for usage and maintenance of buildings and other infrastructure once build
- Donors and NGOs have the tendency to become actors in the chain, rather then supporting economic actors to develop and fill gaps in the value chain. For example in stead of buying and selling animal feed, donors should be supporting private companies to supply these inputs
- There were no structural interventions on animal feed
Animal feed study
For the animal feed study started with the composition of a list of approximately 30 products widely used in the tropics as ingredients for animal feed(poultry, ruminants such as cattle and sheep and fish). The goals was to find out which ingredients were currently used and in ample or short supply, which ones are available but currently not used and thus could offer an alternative, and for which products production could be stimulated to solve shortages.
The first step in the field work was visits to 20 animal feed manufacturers, from artisanal to semi-industrial and large industrial mills. A list of producers was obtained via the customer database of the only manufacturer of bags for agricultural products in the country. During the interviews the production process was studied, sales and sourcing issues were discussed and the formulations discussed.
The second step was a visit to a selection of intensive cattle and sheep farmers and fish farms to assess the feeds they were using, their perception of the quality of these feeds as well as other issues. We also assessed their profitability and the percentage of the cost price currently spend on feed.
A number of companies that have considerable amounts of by-products commonly used in animal feeds were also visited, most notably sugar mills, beer brewers, grain mills and oil mills.
With the help of animal feed experts and literature a model was built in excel that could calculate the cost and nutritional value of all the animal feed ingredients on our list.
Results of the animal feed study
We found that a large range of agricultural by-products was already used in the feed produced, and that the nutritional value was generally adequate to generate rapid growth of the ruminants and fish. Despite the recent price increases of animal feed farmers still made a healthy profit.
However, probif the intensive farming industry would be stimulated by a development program, this would lead to shortages in animal feed, strong price increases and reduced profitability.
Protein is crucial in animal feed for weight gain, but cotton seed-cake is the only high-protein ingredient used. However because cotton prices are low, production is very volatile and not structurally increasing. Neigboring countries have the same issue. As a result, animal feed producers are already forced to reduce the cotton cake in feeds in times of scarcity.
Most producers replace cotton cake with different brans which already constitute the bulk of the feed. But because rice and grain production is stagnant the supply of most popular ingredients (maize, and weat, sorghum, millet, maize and rice bran) are also increasingly in short supply.
The study also showed that there were no undertutilised agricultural byproducts that could replace maize, brans and cotton seed cake. Anything with a decent nutritional value that could be collected economically was already used.
The conclusion was that stimulation of the production of key-ingredients for animal feed is the only option to improve the availability of animal feed. The emphasis needs to be on high protein and energy crops.
Ten crops were analysed and evaluated according to four criteria:
- Impact on animal feed production,
- Agronomic suitability for Mali and effect on other crops,
- Economic feasibility for farmers and processors
- Strategic fit with the target areas of the embassy.
Soybean was the most promising option. Soy bean is normally processed in two products: oil for human consumption, and the presscake for animal feed. Both are high quality products competitive in price. Soy bean has the following advantages:
- it is one of the best high-protein feed ingredients for ruminants, chicken and can also be used for fish feed. Thus it solves the largest issue in the animal feed industry: the lack of alternatives for cotton cake
- The remains of the plant after harvesting of the beans is a high quality fodder for ruminants.
- Experiences in Mali and Ghana indicate that it can grow well in Mali
- Because soy-beans bring nitrogen into the soil it will increase maize and cotton production if grown in rotation
- Soy-bean farming is profitable for farmers, provided the beans are crushed to extract oil that is marketed for human consumption.
- There is a shortage of oil in Mali. Economic calculations show that soy-bean oil can compete with imported Palm Oil. It could thus reduce the large imports of oil.
The key is to introduce the crop in cooperation with the current cotton oil producers. They have developed marketing channels for marketing of oil and cake, but due to low cotton production are operating far from full capacity. They also have experience in sourcing from small farmers, and have relationships with cotton farmers who may also be interested in soy-bean.
The only ‘downside’ of soy-bean for the embassy is that it is rain fed and therefore not a crop to be farmed in irrigation areas, and can only be farmed in two fo the four priority areas.
Cassava farming and processing was also identified as an option. The roots are a high energy substitute for maize grain fro ruminants. The stems and leafs are a source of protein. But cassava scored lower then soy-bean because it needs fertilizer to prevent soil depletion.
Intensification of grains and rice production was another strategic option. Experiences of IFDC showed that maize yields can be improved from 2 to 8 ton per hectare, us using organic and chemical fertilizer, good farming practises and hybrid seed. This would increase the production of grain for human consumption and animal feed, and maize bran. Similar options are available for rice and other grains.
The main conclusion of the study was thus that in order to intervene in the meat value chain, the embassy would first have to invest in the animal feed value chain.
Fish feed & aqua farming
The analyses done by SENSE and IMARES showed that fish farming was economically feasible using least-cost formulations based on the available resources. However, at national level there is a shortage of protein as wel. The industry is now dependent on imported fish meal. Only part of this can be replaced by plant protein such as soy bean cake. Waste from abatoirs which is now discarded in the rivers is one potential source of animal protein that could solve part of the problem.
The key question for the embassy is whether they want to develop an industry based on imported fish meal. On the other hand, fish farming is much more efficient in turning raw protein into protein for human consumption then intensive cattle or chicken farming.
Final advice to the Netherlands embassy
Based on the results of the institutional analyses SENSE adviced the Embassy to focus on two value chains in one production area, or one value chain in two areas. Fragmentation is to be avoided. Once the project would be running well, a commodity or area could be added.
A Pain-gain matrix can be a handy tool to choose between alternatives, in this case value chains. Each chain was rated according to the effort needed to make the interventions a success, and the potential impact on economic development & food security.
SENSE adviced the embassy to start with the oignon-shallot value chain and fish farming, either around Mopti or Segou. In case Mopti is chosen, fish processing can be added. The inner delta around Mopti is the most important area for capture fisheries. If Ségou is chosen, the meat chain can be added, because South of Ségou soy-bean can still be farmed.