Final report Opportunities for innovative agribusiness establishment along major Agricultural Value Chains in Benin’s Agricultural Development Poles Opportunities for innovative agribusiness establishment along major Agricultural Value Chains in Benin’s Agricultural 1 Development Poles Cotonou, January 2018© Copyright © Foundation of Abomey-Calavi University2018, All right reserved. Foundation of Abomey-Calavi University, Abomey-Calavi, BP 1968, in front of CLCAM Abomey- Calavi, before Abomey-Calavi’s town hall; Phone: (229) 22 04 14 59 / (229) 66 56 92 44 / (229) 95 96 16 44 Mail: [email protected] Site web: http://fondationuac.org. The names used and the data presented in this publication do not imply on the part of the Foundation of Abomey-Calavi University, any statement of position are in no way the expression of any opinion of the Foundation. Extracts from the publication may be reproduced without permission, provided that the source is duly cited. To cite this document: Foundation of Abomey-Calavi University, 2018. Opportunities for innovative agribusiness establishment along major Agricultural Value Chains in Benin’s Agricultural Development Poles. Consultancy report, Africa Green Corporation.114 pages. Responsibility for the interpretation and use of this publication rests with the reader. In any case, the Foundation of Abomey-Calavi University cannot be held responsible for damages suffered as a result of its interpretation and use. Opportunities for innovative agribusiness establishment along major Agricultural Value Chains in Benin’s Agricultural ii Development Poles Executive summary The overall objective of this study was to build a technical and economic data base on agribusiness opportunities in the major Agricultural Value Chains (AVC) of the seven Agricultural Development Poles (ADP), as set in the Government's Agricultural Program. Specifically, it was to (i) determine the strengths, weaknesses, opportunities and threats of each major AVC; (ii) conduct a comprehensive literature review and critical analysis of agribusiness establishment’s opportunities in the major AVCs for young graduates; (iii) conduct a techno-economic analysis of agribusiness opportunities for young graduates along the major agricultural value chains; and (iv) propose approaches (package of support services) for integrating young graduates into major AVCs. As regarding the methodology, the mission adopted a participatory approach that emphasizes accelerated participatory research methods. At the operational level, eight major complementary steps were followed: (i) methodological framing session, (ii) literature review and secondary data collection; (iii) data collection tools development; (iv) field data collection; (v) data analysis; (vi) mid-term feedback; (vii) report writing; and (viii) restitution and finalization of the mission report. From the analyzes carried out, the following conclusions emerge. - Three types of sectors have been defined, regarding their potential to provide innovative agribusiness opportunities. These include sectors with: (i) high potential, (ii) medium potential and (iii) low potential. Then, AVC were prioritized to keep the most promising chains (two or three) in terms of innovative agribusiness opportunities. The chains prioritization has been done by sector and by ADP. This would facilitate the orientation of youths on relevant agribusiness opportunities. Their success in the business will, however, depend on the originality of the business idea, their degree of motivation to carry the business, and the facilities and opportunities that characterize the business environment. - The SWOT analysis of the major AVCs revealed that they have a lot of potential despite their weaknesses. One of the common opportunities for these AVCs is their sectors consideration in national agricultural policy. This would facilitate the technical and financial support for young graduates wishing to join these AVCs. It has been also realized that, finding solutions to internal or external faced constraints represent an important way of establishing innovative agribusiness in AVCs for youths. However, the performance of these AVCs face several obstacles. Access to adequate financing remain the most important of these obstacles. - Many initiatives for youths’ professional integration especially in the agribusiness were taken in Benin during this last decade but the results remain unsatisfactory. In 2015, nearly 30 institutions and government agencies were involved in youths’ employment and entrepreneurship programs in Benin. Among the causes of the unsatisfactory results obtained by these institutions and agencies despite the resources invested, we can mention: the lack of synergy between the various initiatives, the lack of involvement of local authorities in the development of youths’ integration programs, the lack of partnership between these programs and the private actors. - This study identified 26 innovative agribusiness opportunities ranked by AVC and ADP. These opportunities fall in all sectors of activity (primary, secondary and tertiary). They find their innovative nature either in the: (i) processes of production or manufacturing, (ii) valorization of research results, (iii) valorization of processing residues, (iv) form presentation of a product or service, (v) coverage of a specific need translated by a strong demand, or in the (vi) novelty of a product / service at local or regional level. But the successful implementation of these opportunities Opportunities for innovative agribusiness establishment along major Agricultural Value Chains in Benin’s Agricultural iii Development Poles by youth requires advanced technical and economic analyzes that shed light on the measures to be taken in terms of basic technical skills, capacity building, investments, profitability, etc. - From a technical point of view, the realization of the agribusiness opportunities identified requires a minimum university level of BAC + 3 (License) with capacity building needs in line with the activity and the field of intervention. It would be more interesting for a group of young graduates with varied background and skills to work together to implement one of these opportunities. Initial investments are generally lower for primary and tertiary sector opportunities than for processing and marketing activities (secondary sector). The same is true for the return on investment, which is relatively longer for secondary sector opportunities. In any case, youths wishing to grab identified agribusiness opportunities will need adequate technical and financial support. - Six packages of service have been proposed to facilitate the insertion and success of young graduates in AVCs. These service packages include (i) test and validation of agribusiness ideas; (ii) evaluation of agribusiness projects; (iii) training and capacity building for agribusiness project developers; (iv) financing of agribusiness projects; (v) formalization of agribusiness and (vi) mentoring of young agribusiness entrepreneurs. Opportunities for innovative agribusiness establishment along major Agricultural Value Chains in Benin’s Agricultural iv Development Poles Content Executive summary ................................................................................................................................................ iii Content .................................................................................................................................................................... v Tables list ............................................................................................................................................................... vi Figures list ............................................................................................................................................................. vii Boxes list ............................................................................................................................................................... vii Abbreviations list ................................................................................................................................................. viii 1. Introduction .................................................................................................................................................... 1 2. Research method ............................................................................................................................................. 2 3. Sectors and agricultural values chains diagnosis ............................................................................................ 8 3.1. Overview on agricultural sectors in Benin and by ADP ........................................................................ 8 3.1.1. Overview on agricultural value chains in Benin ................................................................................... 8 3.1.2. Overview of the different sectors by ADP .......................................................................................... 10 3.2. Typology of sectors and VC ................................................................................................................ 11 3.3. Characterization of major sectors and AVCs ....................................................................................... 12 3.3.1. Soy …………………………………………………………………………………………………..12 3.3.2. Rice …………………………………………………………………………………………………..14 3.3.3. Meat and small livestock .................................................................................................................... 17 3.3.4. Market garden products ...................................................................................................................... 19 3.3.5. Cassava ............................................................................................................................................... 22 3.3.6. Aquaculture ........................................................................................................................................ 23 3.3.7. Pineapple ............................................................................................................................................ 25 3.4. Agricultural value chains environment analysis .................................................................................. 27 3.4.1. Operational environment of agricultural value chains ........................................................................ 28 3.4.2. Support Environnent for Agricultural Value Chains .......................................................................... 30 3.4.3. Facilitation environment for agricultural value chains ....................................................................... 32 3.5. Constraints and strengths of major value chains and AVCs ................................................................ 34 3.5.1. Analysis of constraints in major value chains and AVCs ................................................................... 35 3.5.2. Analysis of assets in major value chains and AVCs .......................................................................... 37 3.6. Market trends analysis ......................................................................................................................... 39 3.6.1. Analysis of current markets, potential markets and niche market ...................................................... 39 3.6.2. Trade constraints for young graduate agribusiness ............................................................................. 43 3.6.3. Other Aspects Affecting the Performance of AVCS .......................................................................... 44 3.7. Analysis of Past Experiences in Youth Farm Business Creation ......................................................... 44 4. Agribusiness opportunities critical analysis.................................................................................................. 48 4.1. Innovative business opportunities in the agricultural sector ................................................................ 48 4.2. Major value chains specific opportunities ............................................................................................ 49 4.2.1. Business Opportunities on White Rice for the local market value chain ............................................ 49 4.2.2. Business Opportunities on tomato and traditional leafy vegetable value chains ................................ 49 4.2.3. Business opportunities on meat value chains (ruminants and poultry) ............................................... 50 4.2.4. Business opportunities on soybeans, mustard and soy yoghurt value chains...................................... 50 4.2.5. Business opportunities on cassava flour and lafoun flour value chains .............................................. 51 4.2.6. Business opportunities in the value chain of organic pineapple ……………………………………..52 4.2.7. Business opportunities in the value chains of clarias, tilapia and shrimps …………………………..52 4.3. Cross-sectoral opportunities ................................................................................................................. 53 4.3.1. Training and coaching of farmers ....................................................................................................... 53 4.3.2. Mobile Phytosanitary Service "Mobile Clinic" for plants and mobile veterinary services for animals53 4.3.3. Repackaging and marketing of agricultural inputs (fertilizer) in small volume packages .................. 54 Opportunities for innovative agribusiness establishment along major Agricultural Value Chains in Benin’s Agricultural v Development Poles 4.3.4. Home delivery service for agricultural and agri-food products .......................................................... 54 4.3.5. Agribusiness brokerage ...................................................................................................................... 54 4.4. Youths’ vision on agricultural entrepreneurship .................................................................................. 56 4.4.1. Different categories of studied youths ................................................................................................ 56 4.4.2. Agribusiness success conditions and constraints for youths ............................................................... 57 4.5. Techno-economic analysis of agribusiness opportunities for youths along agricultural AVCs ........... 58 4.5.1. Stabilized aklui production from broken white rice ............................................................................ 58 4.5.2. Establishment of a seed production farm for market garden .............................................................. 59 4.5.3. Production of mixed-breed kids .......................................................................................................... 61 4.5.4. Production of castrated chicks (capon) ............................................................................................... 62 4.5.5. Production and marketing of soybean seeds ....................................................................................... 64 4.5.6. Production of cassava-based bread flour ............................................................................................ 64 4.5.7. Stabilized lafoun production using a microbial starter for Nigerian market ....................................... 67 4.5.8. Production of quality pineapple planting material .............................................................................. 68 4.5.9. Aquaculture Engineering .................................................................................................................... 70 4.5.10. Production of maggots ...................................................................................................................... 71 4.5.11. Freshwater shrimp production .......................................................................................................... 72 4.5.12. Plant Clinic ....................................................................................................................................... 73 4.5.13. Repackaging and marketing of agricultural inputs in small volume packages ................................. 74 5. Approach for young graduate integration in major a AVC........................................................................... 77 5.1. Test and Validation Service for Business Ideas in Agribusiness ......................................................... 77 5.2. Evaluation of agribusiness Start Up projects ....................................................................................... 78 5.3. Personality Test Service for Young Entrepreneur …………………………………………………… 78 5.4. Training and Capacity Building Service .............................................................................................. 79 5.5. Financing service for agribusiness projects ......................................................................................... 80 5.6. Formalization service for agribusiness companies and installation assistance .............................. 81 5.7. Mentoring service for young farmers ................................................................................................... 82 6. Conclusion and recommandation .................................................................................................................. 84 References ............................................................................................................................................................. 86 Appendix ............................................................................................................................................................... 90 Appendix 1. Mission’s Terms of Reference .......................................................................................................... 90 Appendix 2. Details of the study methodology ..................................................................................................... 95 Appendix 3. Details of Financial Calculations for Business Opportunities Analyzed ........................................ 105 Tables list Table 1. Evolution of different plant, animal and fish production between 2008 and 2016 ........................................... 8 Table 2. Objectives of the GAP sectors and sub-sectors ................................................................................................ 9 Table 3. Predominant sectors by pole of agricultural development .............................................................................. 10 Table 4. Spatial coverage of the sectors targeted by the flagship projects of the GAP ................................................ 10 Table 5. Highly promising sectors of innovative agribusiness opportunities by ADP ................................................. 11 Table 6. Major AVC by sector and ADP ...................................................................................................................... 12 Table 7. Description of AVC for the sub-sector "white meat" ..................................................................................... 18 Table 8. Main marketable products / Finals by market gardening ............................................................................... 21 Table 9. Importance of the pineapple industry in Benin ............................................................................................... 25 Table 10. Summary of the strengths, weaknesses, opportunities and threats of the different major AVCs ................. 34 Table 11. Summary on current markets, potential markets and niche market for different AVCs ............................... 39 Table 12. Beninese, sub regional and international institutions for private sector financing and support .................... 46 Table 13. List of some equipment available on the Beninese market for the agricultural transformation of rice ........ 52 Table 14. Youth categories and their agribusiness visions ........................................................................................... 56 Table 15. Criteria for selection of the sectors at the level of each subsector (PV, PA, P fisheries) ........................... 101 Opportunities for innovative agribusiness establishment along major Agricultural Value Chains in Benin’s Agricultural vi Development Poles Table 16. Criteria for choosing AVC by ADP ........................................................................................................... 102 Table 17. Operating account of a castrated chick production enterprise .................................................................... 105 Table 18. Depreciation of buildings, installations, equipment and tools production of capon ................................... 105 Table 19. Operating account of a mixed-breed youngster production enterprise ....................................................... 106 Table 20. Amortization of mixed-race buildings, equipment, materials and tools ..................................................... 106 Table 21. Operating account of a market gardening seed production business .......................................................... 107 Table 22. Depreciation of buildings, plant, equipment and tools of market gardening seeds .................................... 107 Table 23. Operating account of a company producing certified soybean seed ........................................................... 107 Table 24. Depreciation of buildings, installations, equipment and tools certified seeds of soya ............................... 108 Table 25. Operating Account of a Plant Clinic ........................................................................................................... 108 Table 26. Depreciation of Buildings, Facilities, Equipment and Tools Plant Clinic .................................................. 109 Table 27. Operating Account of an Aquaculture Engineering Company ................................................................... 109 Table 28. Amortization of Buildings, Facilities, Equipment and Tools Aquaculture Engineering ............................ 110 Table 29. Operating Account of a Farm Reconditioning and Marketing Business .................................................... 110 Table 30. Depreciation of buildings, facilities, equipment and tools for repackaging and marketing of agricultural 111 Table 31. Operating account of a stabilized aklui production plant based on broken white rice ................................ 111 Table 32. Depreciation of buildings, plant, equipment and machinery for the production of stabilized Aklui ......... 112 Table 33. Operating account of a cassava-based bread flour production enterprise ................................................... 112 Table 34. Depreciation of buildings, facilities, equipment and tools for the production of cassava-based bread ..... 113 Table 35. Operating account of a stabilized Lafoun production company ................................................................. 113 Table 36. Depreciation of buildings, installations, equipment and tools Lafoun production stabilized ..................... 113 Table 37. Operating Account of an Organic Pineapple Release Business .................................................................. 114 Figures list Figure. 1: Steps in the methodology ............................................................................................................................... 4 Figure 2. Evolution of soybean production in Benin from 2006 to 2015 .................................................................... 13 Figure 3. Soy sector mapping and its main AVCs ........................................................................................................ 14 Figure 4. Evolution of rice production in Benin from 2006 to 2015 ........................................................................... 15 Figure 5. Rice sector mapping with its main value chains ........................................................................................... 16 Figure 6. Evolution de la production de viande au Bénin de 2006 à 2013 ................................................................... 17 Figure 7. Cattle, goats, sheep, and meat value chain mapping ..................................................................................... 18 Figure 8. Evolution of the production of some vegetable crops in Benin from 2006 to 2015 ...................................... 20 Figure 9. Share of different vegetable crops in the national vegetable production in Benin in 2015 ........................... 21 Figure 10. Evolution de la production de cassava au Bénin de 2006 à 2015 ................................................................ 22 Figure 11. Clarias fish value chain mapping ................................................................................................................ 24 Figure 12. Evolution of pineapple production in Benin from 2006 to 2015 ................................................................ 25 Figure 13. Pineapple Value Chains mapping ............................................................................................................... 26 Figure 14. System of agricultural value chains ............................................................................................................ 28 Figure 15. Mission Log Flow Chart ............................................................................................................................. 98 Figure 16. Matrix for analyzing the strengths, weaknesses, opportunities and threats of value chains ...................... 103 Boxes list Box 1: Technical analysis of a stabilized aklui production unit based on broken rice ................................................. 58 Box 2: Economic analysis of a stabilized aklui production unit based on broken rice ................................................. 59 Box 3: Technical Analysis of a Market Garden Seed Farm ......................................................................................... 60 Box 4: Economic Analysis of a Market Garden Seed Farm ......................................................................................... 60 Box 5: Technical and Economic Analysis of a mixed-breed kids’ production ............................................................ 61 Technical analysis ........................................................................................................................................................ 61 Box 6: Technical analysis of a castrated chick production farm .................................................................................. 63 Box 7: Economic analysis of a castrated chick production farm .................................................................................. 63 Box 8: Technical analysis of a soybean seed production and marketing unit .............................................................. 64 Opportunities for innovative agribusiness establishment along major Agricultural Value Chains in Benin’s Agricultural vii Development Poles Box 9: Economic Analysis Production and marketing of soybean seeds ..................................................................... 65 Box 10: Technical analysis of a cassava flour production unit .................................................................................... 66 Box 11: Economic analysis of a cassava flour production unit .................................................................................... 66 Box 12: Technical analysis of a stabilized Lafoun production unit .............................................................................. 67 Box 13: Economic analysis Technical analysis of a stabilized Lafoun production unit ............................................... 68 Box 15: Economic Analysis of a Production Unit of Organic Pineapple planting material ......................................... 69 Box 14: Technical analysis of a biological pineapple planting material production unit ............................................. 69 Box 16: Technical Analysis for an Aquaculture Engineering Company ...................................................................... 70 Box 17: Economic Analysis for Aquaculture Engineering........................................................................................... 71 Box 18: Technical analysis for a maggot and earthworm production unit ................................................................... 72 Box 19: Technical Analysis for a Freshwater Shrimp Farm......................................................................................... 72 Box 20: Technical Analysis of a Plant Clinic ............................................................................................................... 73 Box 21: Economic Analysis of a Plant Clinic .............................................................................................................. 74 Box 22: Technical Analysis of a Farm Reconditioning Firm ....................................................................................... 75 Box 23: Economic Analysis of a Farm Reconditioning Firm....................................................................................... 75 Abbreviations list ABOUCOP : Butchers Association of Cotonou and Porto Novo ACED : Action Center for the Environment and Sustainable Development ADMA : Agricultural Mechanization Development Agency AFAS : Action of Solidarity African Women in for Development AFD : French Development Agency AGOA : African Growth and Opportunity Act AGRITEC : Agriculture and Appropriate Technology AKB : Benin Shea Actors Association APIEX : Investment and Imports Promotion Agency ANAFE : National Association of Women Farmers Operators ANAR-P : National Association of Pork Resellers ANAT-P : National Association of Pork Caterers ANEP : National Association of Pig Breeders ANOPER : National Association of Professional Organization of Ruminant Breeders APIEX : Investment and Imports Promotion Agency ASBD : Sino-Beninese Development Association ATCMB : Workshop of Metallic Manufacturers Technicians of Benin ATDA : Territorial Agency for Agricultural Development BECRREMA : Office of Study, Design, Manufacturing in Agricultural Machinery CAFROP : Cooperative for improving the rice sector of Ouémé-Plateau CAIA : Central Purchasing of Agricultural Inputs CAMEMEC : Construction Adjustment Metal Carpentry and Closure CECODI : International Center for Integrated Ecodevelopment CECURI : Cuniculture Research and Information Center CEV : Study and Validation Committee for Agribusiness Projects ECOWAS : Economic Community of West African States CEFACOM : Manufacturing, Adjustment Center of Metal Construction CLCAM : Agricultural micro finance agency COBEMAG : Benin Agricultural Equipment Cooperative CRIAB : Aquaculture Research and Incubation Center of Benin CRR-MC : Regional Council of Rice farmers of Mono and Couffo CRTA : Agricultural Technology Research Center CSFT : Drying Center for Tropical Fruits CSMA : Agricultural Machinery Services Center CTB : Belgian Technical Cooperation Opportunities for innovative agribusiness establishment along major Agricultural Value Chains in Benin’s Agricultural viii Development Poles CTMC : Technical Center of Masonry and Tiling VC : Value Chain AVC : Agricultural Values Chain of DDAEP : Departmental Directorate of Agriculture, Livestock and Fisheries DE : Livestock Directorate DEDRAS : Organization for Sustainable Development, Strengthening and Self-promotion of Structures ECOWAP : Regional Agricultural Policy of West Africa ESOP : Service Company and Producer Organization FA : Faculty of Agronomy FAO : Food and Agriculture Organization of the United Nations FENAPECHE : National Federation of Fishermen FENBOC : National Federation of Butchers and Charcutiers FFOM : Strengths, Weaknesses, Opportunities and Threats FIDA : International Fund for Agricultural Development FSA : Faculty of Agricultural Sciences FUPRO : Federation of Producers Unions GFMA : Agricultural Machinery Manufacturing Group GIZ : German Technical Cooperation GUFE : Single Window of Formalization of Enterprises HVA : High Added Value ICRA : International Center for Development Oriented Research in Agriculture IFDC : International Fertilizer Development Center IITA : International Institute of Tropical Agriculture INRAB : National Institute of Agricultural Research in Benin INSAE : National Institute of Statistics and Economic Analysis of Benin JOLISAA : Joint Learning in Innovation Systems in African Agriculture MAEP : Ministry of Agriculture, Livestock and Fisheries kg : Kilogram NAFDAC : National Agency for Food and Drug Administration and Control ONG : Non-Governmental Organization OPA : Farmers' Peasant Organization OSD : Strategic Directions for Development PADA : Support Program for Agricultural Diversification PAFILAV : Support Project for Sectors Milk and Meat GAP : Government Action Program PAIA-VO : Agricultural Infrastructure Support Project in the Ouémé Valley PASAIA : Support project for food security through food intensification ADP : Agricultural Development Poles ADPC : Agricultural Development Project of the Communes of Benin ADP-VV : Agricultural diversification program through valleys valorization PNIASAN : National Plan for Agricultural Investments and Food and Nutrition Security PNOPPA : National Platform of Farmers Organizations and Agricultural Producers PPAAO : Accelerated Productivity Project in West Africa PPCB : Contagious Bovine Contamination Poison PPMA : Agricultural Mechanization Promotion Project PPP : Private public partnership PSDSA : Strategic Plan for Agricultural Sector Development PSRSA : Strategic Plan for the Revival of the Agricultural Sector PSRSA : Strategic Plan for the Revival of the Agricultural Sector PTAA : Agricultural and Food Technology Program PTF : Technical and Financial Partners PUASA : Emergency Food Security Support Project RCDE : Empowering Jobseekers Opportunities for innovative agribusiness establishment along major Agricultural Value Chains in Benin’s Agricultural ix Development Poles SDI : Intercontinental Distribution Company SEPO : Success, Chess, Potentialities, Obstacles SNV : Dutch Development Service SODECO : Society for the Development of Cotton SONAPRA : National Society for Agricultural Promotion TIC : Information and Communication Technology t : Tons UAC : University of Abomey-Calavi UEMOA : West African Economic and Monetary Union UNA : National University of Agriculture UNPS : National Soy Producer Union URFMAN : Niaouli Research and Training Unit for Agricultural Mechanization URPA : Regional Union of Cashew Producers VVV : Village Poultry Vaccinators Opportunities for innovative agribusiness establishment along major Agricultural Value Chains in Benin’s Agricultural x Development Poles