The New Horticulture and Trade Facilitation Project

INCEPTION REPORT

THE NEW HORTICULTURE AND TRADE FACILITATION PROJECT

MADAGASCAR

Reporting Officers

Martha Byanyima - SPS Expert Brian Nsofu - Assistant SPS Coordinator Julien Razafintsalama- Madagascar Country Officer And

Marianna Theyse General Manager/Fresh produce Importers Association (RSA)

Antananarivo, Madagascar

21 – 22 February 2013

1. Background 1 An inception mission to Madagascar was undertaken from 21st to 22nd February 2013, to kick start the project; “enhancing market access opportunities in the Republic of South Africa (RSA) for COMESA horticulture Exporters”.

Traditionally, Madagascar major export destination for lychees has been the EU. However, lychees are highly perishable and have to be treated with sulfur to retain freshness during the 5 days shipping period, which compromises quality and places demands on Madagascar exporters to ensure compliance with the stringent EU requirements on suplhur residue limits.

In 2006, Madagascar confirmed an interest to South Africa to export litchis. It takes just one day to ship fresh produce to South Africa, which significantly reduces transport costs and preserves quality. Subsequently, The Madagascar National Plant Protection Organization (NPPO) r submitted an official market access request to the Department of Agriculture, Food and Fisheries (DAFF) of South Africa in 2009. Unfortunately, Madagascar NPPO has not yet submitted the pest information package to enable the NPPO of South Africa conduct Pest Risk Analysis (PRA) and generate import requirements for litchis to enter South Africa.

COMESA conceived a technical support project in 2011, to support Madagascar and other COMESA countries facing market access challenges in the RSA to finalise pest information packages and all technical requirements related to market access into the RSA. In consultations with the Fresh Produce Importers Association (FPIA) of the RSA, four countries and commodities were identified, namely: Ethiopia (strawberries), Zimbabwe (stone fruits), Madagascar (litchis) and Kenya (prepared chillies).

2. Courtesy call to the Office of the Permanent Secretary – Ministry of Agriculture

The COMESA Team paid a courtesy call to the Office of the Permanent Secretary (PS) in the Ministry of Agriculture in Antananarivo. The Team conveyed sincere greetings from the Secretary General of COMESA Mr. Sindiso Ngwenya, and further thanked the PS and his staff for facilitating the mission. The Team explained to the PS the objectives of the mission and indicated that South African importers have expressed interest to import litchis from Madagascar.

COMESA was aware of the many economic challenges that Madagascar was facing and it was therefore committed in assisting in its economic recovery. The purpose of the mission to Madagascar was to have a clear understanding of the litchi local industry and how COMESA can work with various stakeholders in resolving SPS market access problems so that litchis can start moving into RSA. The mission also sought to know how the litchis supply chain as well as the logistics are organized in Madagascar. The Permanent Secretary was informed that information obtained during the mission will be 2 used to validate the project and establish a concrete work plan with the Government of Madagascar, working closely with the lychii industry.

Madagascar imports amount to US$ 174.3 million (which year ???) (2.1% share of intra trade ??); the country’s contribution in intra regional trade is very low. COMESA’s intervention will increase Madagascar’s share of intra tripartite trade and enhance the country’s trade competitiveness in litchis and other fresh produce.

The PS welcomed the COMESA Team to Madagascar. The PS and his staff explained that Madagascar litchis are destined to Europe only, and all supply chains and production are tailored for Europe. The Team was informed that the exporters were in control of the supply chain. Business of litchis exports to Europe has been there for decades and it was now monopolized.

In 2006, Madagascar sought to export litchis to the USA. A feasibility study was done and the results are available. Unfortunately, Madagascar had a political crisis in 2009 and hence failed to export litchis to the USA. It was then proposed in the meeting that the study be used as a starting point in the PRA process for the South African market.

It was also suggested that the south port in Madagascar would be ideal for exports being closer to RSA in terms of transportation. Apart from the north east, Madagascar also produces a lot of litchis in the south, and the south port can therefore be used for exports.

The COMESA Team was informed that Madagascar produces 100,000 tons of litchis per year but only 15,000 tons is exported to Europe. The reason for low exports was because litchis are only on high demand in Europe during Christmas period, and Europe also imports litchis from other countries. Therefore, Madagascar is only limited to 2 ships/vessels in a year. At this point, COMESA further clarified although SA and Madagascar have overlapping seasons, there is a two week window at the beginning and end of the season, where SA producers are out of production, and this could be exploited for Madagscar exports.

3. Meeting with Madagascar litchi exporters

Six litchis exporting companies attended the meeting together with the NPPO of Madagascar. The exporters came from the north east and south coasts of Madagascar.

The representative of the South African Importers, expressed their interest in exploring imports oflitchis from Madagascar.

The Importer assured Madagascar exporters that the market was available in South Africa for as much volumes that Madagascar could provide during the window period. It

3 was explained that the demand for now in South Africa was for the local market and not for re-export. There are opportunities for litchi pulp which could also be explored. .

4. Key issues discussed with the exporters

 Shipping to South Africa takes 1-2 days, compared to EU shipments that take 5 days. This makes logistics easier and preserves freshness.

 South Africa’s requirement on sulphur residue limits is not as strict as the EU limit which is also an advantage for Madagscar exporters that are already facing difficulties meeting the EU standard on residue limits.

 Madagsacr exporters are keen to explore joint investments in horticulture production, with the South African industry as well as source improved lychi varieties from South Africa.

 COMESA will immediately link the Madagascar exporters with their South African counterparts to access market information and other relevant information, including information on sources of improved lychee varieties.

5. Outcome of the Mission

 COMESA emphasized the need for Madagascar to include horticulture in the CAADP Compact and investment plan as a priority. This will greatly support resource mobilization especially when it comes to implementing the mitigation options that will require substantial investments and support. Madagascar indicated that horticulture has been included in the Intergovernmental Oceanographic Commission (IOC) document for the region. Madagascar is member of three regional bodies i.e. IOC, COMESA and SADC.

 COMESA has started work on the technical issues. Therefore, phase 1 of the project is underway. A technical team was appointed by the Ministry to work with the COMESA consultant to complete the pest information package and finalize the PRA process with the RSA.

6. Agreed actions and way forward

4 The following is the agreed actions.

Issue Responsible Responsibl Possible Institutions e person Timeframe Activity 1: Write a short letter to Ministry of Head, NPPO Immediately SA indicating interest to export Agriculture/NPPO – - litchis to South Africa Madagascar Madagascar Activity 2: Link Madagscar COMESA/ Fresh COMESA Immediately exporters to SA importers Produce and Consultant Importers Association of SA Activity 3: Complete the pest COMESA consultant NPPO 2 - 3 weeks information package / pest risk and the Ministry of Madagascar analysis questionnaire Agriculture/NPPO – Madagascar Activity 4: Finalize the PRA \ and NPPO South Africa/ COMESA 5 - 6 weeks submission to the South Africa COMESA consultant consultant NPPO Activity 5: Pest list and PRA NPPO/RSA, NPPO South 2 – 3 weeks report – national consultations supported by the Africa / COMESA consultant COMESA consultant Activity 6: communication of the NPPO/RSA, NPPO South 3 weeks quarantine pest list with NPPO supported by the Africa/ Madagascar COMESA consultant COMESA consultant Activity 6: Confirmation of the NPPO/RSA, NPPO South June 2013 quarantine pest list by the NPPO supported by the Africa/ Madagascar COMESA consultant COMESA consultant

Note: Activity 3 to 5 would take about 9 to 10 weeks.

7. Conclusion

By October 2013, a protocol (import permit) will be in place clearly stipulating phytosanitary import conditions established by the RSA. The first shipment of litchis from Madagascar to South Africa is targeted for November 2013.